Santa Clara University

Santa Clara Magazine

Without meaning to, America has reinvented itself as a nation of entrepreneurs. For better and for worse, the repercussions will be global. And guess where you’ll find the epicenter.

High technology, and the digital revolution that came from it, is famous for its laws.

The most famous of these is, of course, Moore’s Law of semiconductors—which, because chips are at the heart of the modern world economy, has also proven to be the most powerful predictor of both industrial and cultural change in our time.

Nearly as famous is Metcalfe’s Law of networks, which, with wonderful simplicity, makes the case that each new participant makes a network much more powerful. Metcalfe’s Law has done a better job than anything else at explaining the extraordinary growth and impact of the Internet.

There is another rule in technology that is known by everyone but rarely expressed. It’s not an equation regarding chips or networks, but rather a statement about the relationship between human beings and technological change. It is that technological revolutions— and the cultural transformation they carry in their train—take longer than we anticipate but arrive more quickly than we are prepared for.

By that I mean that while it is comparatively easy for prognosticators, futurists, and corporate planners to take stock of the current state of the electronics industry and then, for example, use Moore’s Law to predict radical new inventions and products to come, it is infinitely more difficult for society and culture to assimilate those changes once they arrive.

For example, if you had surveyed the trade magazines, and even the mainstream media, a decade ago, you would have seen some pretty accurate descriptions of what mobile phones would look and perform like today. You would have even seen some very accurate predictions of how many cell phones would be in use today around the world.

But no one back then could have foreseen the cultural and economic shock waves that would be created by the Apple iPhone or the BlackBerry. Or how Motorola Razrs and other cheap, trendy phones would become permanently attached to the ears of every teenager in the developed world, or how texting would supplant e-mails as the prime communication medium of that generation.

By the same token, you can make a logical assumption, based on current trends, that sometime within the next five years we are going to experience a rare convergence of historic trends—technological, demographic, and cultural—that will create the kind of cultural discontinuity that we only read about in history books—what author Tom Hayes calls the “Jump Point.” But we have absolutely no idea what kind of world will emerge from that discontinuity after we triple the number of participants in the global economy; introduce fads, trends, opportunities, and threats from a thousand brand-new markets; and unleash the intellectual capital of 2 billion more imaginations on the world.

In our tech-driven age, it isn’t the unforeseen consequences that should scare us the most but the foreseen ones whose ultimate impact we cannot yet imagine.

This isn’t entirely new: America has always been a nation driven by the unlikely consequences of technological innovation. We were, after all, founded thanks to the invention of the compass and the sextant, created by the rifle and the steel plow, and formed into a global economic power by the cotton gin, the harvester, and the mass-production factory. And every time, even as we recognized the commercial impact of these great inventions, we almost always were surprised by their cultural impact.

And this is precisely what is happening again today. We are thrilled by our iPods and smartphones, our laptops and broad-band Internet access. We’ll even accept the idea that the rest of the world—from the industrial societies of Europe to the poorest developing nations in Africa—is being transformed by the digital revolution.

Yet, at the same time, we have failed to notice that the United States—once again in the vanguard—has undergone its own transformation in the last decade. We have now become something never seen before: the world’s first truly Entrepreneurial Nation.

The closing of the frontier

One hundred fifteen years ago, at the Chicago World’s Fair, a young academic named Frederick Jackson Turner appeared before the American Historical Association. The paper he read, “The Significance of the Frontier in American History,” is the most famous ever given by an American historian. Turner noted that the most recent U.S. census had shown that so much of the nation had now been settled that there was no longer an identifiable western migration—and that the very notion of an American "frontier" was now obsolete.

This fact, Turner suggested, represented a turning point in American history. Since the time that the English had settled at Jamestown, the frontier—what Turner called the “outer edge of the wave,” the “meeting point between savagery and civilization”— had always loomed large in the American imagination. It had defined us, tantalized us with the perpetual chance to “light out for the territories” and start our lives over. And it had underpinned those very American notions of “federalism” and “rugged individualism.”

Now, Turner noted, those three centuries were at an end…and it remained to be seen just what new metaphors would define the American personality in the 20th century.

What Frederick Jackson Turner told Americans that day was something they already knew but had yet to elucidate in their own minds: It was that they had crossed an invisible line in history and were now entering into a new world with a whole new set of rules they had yet to discover. Two months later, my great-grandfather would literally cross that line when the guns fired, and he raced off into the Cherokee Strip as part of the Oklahoma Land Rush.

What Turner couldn’t guess, but that we can now see in retrospect, is that we Americans simply traded one frontier for another: The unexplored prairie became the uninvented new product, the unexploited new market, and the untried new business plan. The great American frontiers of the new century proved to be those of business, science, and technology— of the cell, the integrated circuit, and outer space. And in the course of that century, the United States invented more milestone technologies and inventions, created more wealth, and reorganized its major institutions more times than any country had ever done before. It increased the average American’s lifespan by 50 percent and tripled his or her total hours of leisure.

The United States accomplished all of these historic feats despite experiencing a massive economic depression and fighting in two world wars. And it all reached a crescendo in the magical year of 1969, with the creation of Internet, the invention of the microprocessor, and, most of all, a man walking on the Moon.

With the addition of genetic engineering, we are still busily spinning out the implications of all three of those crusades, 40 years later. Yet, even as we do so, it is becoming increasingly apparent that the social structures, the cultural underpinnings beneath which all of these activities play out, has changed in some fundamental way. Even when the traditional forms are still there, the machinery that drives them has been radically transformed. Let me give you some examples:

  • We still have schools, but a growing number of our children are studying at home or attending private schools—and those still in public schools are doing ever-larger amounts of their classwork on the Internet.
  • We still have companies and corporations, but now they are virtualized, with online work teams handing off assignments to each other 24/7 around the world. Men and women still go to the office, but that office is just as likely to be down the hall or at the neighborhood espresso house. In 2005, when Intel surveyed its employees, it found that nearly 20 percent of its professionals had never met their boss face-to-face—and half of them never expected to do so.
  • We still have a military, and soldiers in battle, but the heart of combat today is small-unit tactics backed by a vast digital command and control apparatus. The single most emblematic image of our time may just be that Special Forces soldier in Afghanistan riding into battle, equipped with state-of-the-art weaponry and communications, on the back of a horse.

Newspapers are dying, networks are dying, and if teenage boys playing "Grand Theft Auto IV" and "World of Warcraft" have any say, so is television itself. The New New Media is the blogosphere, and the number of individual blogs in the world already exceeds the number of citizens in this country when Frederick Turner gave his speech. More than 200 million people around the planet now belong to just two social networks: MySpace and Facebook—and yet the Web 2.0 era is just five years old. There are 10 million entries—the equivalent of an encyclopedia the size of an average university library—on Wikipedia, all written by voluntary contributors. And there are more than 80 million videos on YouTube, all put there by the same individual initiative.

Meanwhile, in this presidential election year it was hard to miss the fact that almost every primary, Republican and Democratic, was decided not by the dwindling numbers of party faithful but by self-described “independents.” These independents have no interest in sharing their voting decisions with pollsters; they reserve the right to change their minds up until the instant they step into the polling booth, and their loyalty will only last as long as it is earned. It is they who decided our next president.

Who’s the boss?

Almost everywhere you turn, things may look the same, but ours is a Potemkin society: pretty, but fragile, shells that look completely different once you get past the door. And that brings us to what I think is the most compelling statistic of all: Half of all new college graduates now believe that self-employment is more secure than a full-time job. Eighty percent of the colleges and universities in the United States now offer courses on entrepreneurship. Sixty percent of GenY business owners consider themselves to be serial entrepreneurs. And, most tellingly, 18- to 24-year-olds are now starting companies at a faster rate than 35- to 44-year-olds.

Don’t think that the rest of Generation Y is still dreaming of a gold watch: 70 percent of today’s high schoolers intend to start their own companies.

And don’t think that our current economic woes will slow this trend. On the contrary, recessions have historically been the best time to start new companies— because top talent is available, laid-off employees have more time to pursue their entrepreneurial dreams, and established competitors are hunkered down and distracted. A recent New York Times article reported on the growing number of middle-aged entrepreneurs who were choosing to use their 401(k)s to finance their new companies—a once-crazy idea that lately seems almost prudent.

What all of this means is that the upcoming wave of new workers in our society will never work for an established company if they can help it. They plan to spend their careers in those jobs in which they have the maximum control over their own hours, over their own results, and over their own destinies. They plan to work where and when they want to, to move from project to project in pursuit of what interests and challenges them, and they expect to be directly rewarded for their successes and penalized for their failures. To them, having a traditional job is one of the biggest failures of all.

We Silicon Valleyites know these traits and attitudes all too well. They are the personality of the entrepreneur, the spirit of the start-up. And what began here in the Packard garage and in the Wozniak garage and on a thousand kitchen tables has suddenly become the spirit of the age, the new American zeitgeist.

Today, the heroes of our culture are almost all entrepreneurs. Not just the living legends like Steve Jobs, or the young tycoons like Facebook’s Mark Zuckerberg. But also athletes, like Tiger Woods or Michael Jordan, whom we now automatically assume sit atop sophisticated multiproduct, self-made business empires. Think of movie stars who produce their own films and of politicians who construct private, virtual corporations as they campaign for office. Even record companies are dying, replaced by entrepreneurial musicians who produce and distribute their own creations online.

Look around: Much of childhood today is spent not in organized sports or organizations but in creating ad hoc teams to compete in Internet games such as "Half-Life," or forming as groups into robotics competitions, or constructing, ornamenting, and managing one’s own Facebook page. Without knowing it, for the last decade we have been a training a whole generation of young entrepreneurs. And who is going to dissuade them? Mom, who is a self-employed consultant working out of the spare bedroom? Or Dad, who is at Starbucks working on the spreadsheet of his new business plan?

And speaking of careers, is anyone out there still planning on keeping a job at one company for 20 years? Is there any stigma still attached to having had 10 employers in 10 years? Not that I know of. On the contrary, a perpetual motion career with a few smart failures is about the best résumé you can have in Silicon Valley—and increasingly, that’s true for the rest of America.

A nation of entrepreneurs

I’m not an academic, nor a professional historian, but as a reporter, I find it hard to look at these fundamental changes in how we live and in what we value—and not conclude that we Americans have, in the last decade, crossed yet another historic demarcation. We are now a nation of entrepreneurs. The first in history.

If this statement doesn’t surprise you, then it only shows just how far we’ve come, how much we’ve changed, and how transformed is our worldview. Just imagine if I had made this statement in 1948—or, in the memories of more of you reading this, in 1988. My words would have sounded absurd.

But here we are, like those historians in 1893, intuitively knowing something that is only now reaching our thoughts.

In the past there have been trading states, like Venice, and commercial regions, like the Hanseatic League and the Po River Valley, and there have been so-called “nations of shopkeepers,” most famously England, China, and India.

But there has never been a nation in which the dominant paradigm is that of entrepreneurship. Not just self-employment or sole proprietorship, but serial company-building. Of entire careers built on perpetual change, independence and the endless pursuit of the next opportunity.

Without noticing it, we have once again discovered, and then raced off to settle, a new frontier. Not land this time, nor innovation, but ourselves and a growing control over our own lives and careers. And as different as this next step may seem from the past, it is nevertheless of a piece: Each of these steps in the evolutionary development of American society has been toward an ever-greater level of independence, freedom, and personal liberty. And as the rest of the world catches up to where we were, we have already moved on to the next epoch in our national story.

But as our ancestors would remind us, freedom doesn’t come cheap. Liberty exacts its own demands. A nation of entrepreneurs will undoubtedly exhibit all of the traits, good and bad, of the entrepreneurial personality, multiplied by 300 million.

What that means is that our economy is likely to be even more innovative than now. Twentieth-century America may have been the most inventive country ever—but we may look back at it as a mere prelude to the 21st. And that innovation is likely to spread across society, not just as products and inventions, but as new ways of living, new types of organizations, and new cultural breakthroughs. We will live longer, healthier—and if we so choose—richer lives.

But Entrepreneurial America will also be much more volatile. In the continuous fervor to create new institutions, it will become increasingly difficult to sustain old ones. New political parties, new social groupings, thousands of new manias and movements, and millions of new companies will pop up over the next few decades. While the rest of the world will still be building global Goliath enterprises, America will be creating, to use blogger Glenn Reynolds’ phrase, “an Army of Davids” to sweep around and over them. And if existing U.S. companies don’t figure out how to somehow combine permanence with perpetual change they will be swept away as well.

This higher level of anarchy will be exciting, and often quite rewarding, but it will also sometimes be very painful. Economic swings will be of greater frequency, but of shorter duration. Entire industries will die almost overnight, laying off thousands, while others will just as suddenly appear, hungry for employees.

Continuity and predictability, in almost everything, will become the rarest of commodities. And if the entrepreneurial personality honors smart failures, by the same token it has little pity for weakness. That fraction of Americans—10 percent, 20 percent?—who still dream of the gold watch or the 30-year pin will suffer the most—and unless their needs are somehow met as well, they will remain a perpetually opened wound in our new society.

The entrepreneurial personality almost never looks back—not even to learn from the past—because it is all about the future, and managing the present to get there. The entrepreneurial mind is audacious, but the entrepreneurial heart is risk averse—that contradiction explained by the fact that entrepreneurs see their boldest moves often as the safest option. Interestingly, my own experience has convinced me that older entrepreneurs are actually greater risk-takers than young ones—the long-term implications of which I frankly have a hard time imagining.

Last, but hardly least, the entrepreneurial personality is unilateral. You become an entrepreneur to be the master of your fate, to never leave the key decisions of your life and career to others—at least not to anyone beyond your partners, “your team.” That creates enormous friction, and from that competition comes great inventions, great products, and great fortunes. But it’s going to lead to a lot of tension, not just within this country, but as we’ve already seen in the last few years, among other nations regarding our future role in the world.

The pursuit of…

Scary, exciting, liberating, frustrating, infinitely ambitious, and thoroughly amnesic: I could ask you to imagine what such a world would look like, but I don’t have to. We are citizens of Silicon Valley. We already live in this new world. And it’s hard to imagine a more exciting place to be. That’s why we’re here—and when the place defeats us, we go to ground and plot our comeback. But we almost never pack up and leave for good.

Why? Because I think the lesson of America is that liberty, the freedom to make our own lives, as frightening as it is, is still the thing we desire most. This new frontier is just the latest step in our pursuit of happiness. For all that will be wrong with it, for all of our fears about privacy and security, for all the added pressures that will be created by heightened competition and clashing ambitions, America as an entrepreneurial nation will reward each of us with greater independence—and perhaps even greater happiness—than ever before. In a way Jefferson could never have imagined, we are at last achieving his 200-year-old dream of a nation of yeoman farmers.

How well we use this independence will now depend entirely upon how well we manage ourselves. That is, it will depend upon how we behave as the founders and CEOs of our own lives. The opportunities are unlimited, but so are the risks.

Our country was built on liberty—and the scope of that liberty has just expanded once again. Right now, if we so choose, we have the chance to once more experience, in Abraham Lincoln’s words, a “new birth of freedom.” It lies out there for each of us—and being good entrepreneurs, it’s time now to look ahead, develop a smart plan…and then bet everything on ourselves.

undefinedMichael S. Malone was the nation’s first daily high-tech reporter and, in the three decades since taking that post, has chronicled the transformation of Silicon Valley in numerous articles, books, and television series. His new book, The Protean Corporation, is forthcoming from Random House. This essay was adapted from a talk delivered as part of the President’s Speaker Series at SCU.