The so-called new economy created a bubble on Wall Street because people were throwing money at any company with a dot com name. Companies were no longer valued based on the old fashioned notion of profit. How quaint.
No, the new economy was based on a completely different valuation: Market share, defined as users without regard to profit. The thinking was simple. We'll give away our product or service until we own all the users. Then we'll start charging.
This was flawed reasoning on several counts. First, as soon as something new emerged, competition for users also emerged. So no one could ever own all the users. Second, a lot of people will try anything for free and nothing if they have to pay.
Eventually, the whole "new economy" was a massive house of cards built on electrons instead of sound economic principles. People got rich - stupid rich - by raising money for a golden future that could never come to fruition.
The .com bubble burst.
Millennials (or "Generation Y") are those folks born about 1980-1999. This is now the largest age cohort in our economy - larger than the baby boomers. And as the boomers die off, the millennials will constitute a larger and larger percentage of the population.
So what is the fake economy? We've been told that there are certain traits of the millennials that we have to bend to. In particular, we're told that we have to treat them differently as employees and consumers. For example, they insist on working less and earning more. They want more benefits more quickly. They want everything to be like a video game. They have no attention span, and can't learn big, complex things.
In my opinion, all of that just sounds stupid.
The millennials are beginning to learn the truth: You have to work really hard in this life to get ahead. And it has always been the case that those who don't work harder or smarter will be part of the less paid masses. Period. Being born in a certain year and being surrounded by technology doesn't change that economic reality.
Here are a few things to consider.
First, the top 1%, 5%, and 10% of any profession will always make the most difference in any generation. They'll be responsible for all of the innovation and take home the vast majority of all the money. Period. Fact.
Second, those who are self-disciplined and train themselves in the really hard jobs are the ones who get to be in the top 10%. Someone will always decide to focus on the hard jobs and therefore move up the ladder. Anyone CAN but only the top 10% will. Period. Fact.
Third, the people who are hiring, firing, and promoting employees care about performance, not your birth year. In any generation, a company has to earn money. Those who help a company earn more or save more will be rewarded. Those who simply cost money will be targeted for replacement (by cheaper labor, automation, and outsourcing). Period. Fact.
Fourth, if the attitudes of any group look like those attributed to the millennials, they will be passed over. People who want to skip the step where you work hard and pay your dues will simply self-select themselves out of the top 10%. Sorry. Fact.
In any generation, only a few people push themselves to the top. It's true of every profession. It always has been true. It always will be true. If the millennials think the laws of economics will be different for them, they have a hard lesson ahead.
It would be horrible for such a large cohort of the economy to simply opt out of the top 10%. Someone will fill that space, either those who are older or those who are younger.
The unchanged facts are:
- Life owes you nothing.
- Those with high levels of self-discipline always excel.
- Those who take on the hard jobs force themselves to learn the highest-paying skills.
- Anyone with normal skills and intelligence can push themselves into the top 10%, top 5%, and top 1%.
As with all economics, there are few action plans that can be applied to "everyone." But any one single person can succeed. Any one person can choose to be self-disciplined. Any one person can stop focusing on today's rewards and begin focusing on the long-term goals. Any one person can choose to do the hard work.
The good news for millennials is that they appear to be learning about reality. Maybe they're a bit surprised or disappointed. But I've hired several and found them to be hard working and dedicated.
So maybe all the reports about the millennials were always just as wrong as they sound.
Beware pundits who tell you that the most fundamental rules of anything have changed. When big, macro-economic rules change, they change very slowly.