A 2011 SBA study found that “veterans are at least 45 percent more likely than those with no active-duty military experience to be self-employed.” Interestingly, the study found that elevated rates of entrepreneurship were most pronounced among two distinct veterans groups: young veterans who had served four or fewer years on active duty and retirees with over twenty years of military service. Veterans’ disproportionate tendency towards entrepreneurship is no doubt driven by many variables, but I’ve listed a few possible reasons why veterans make terrific entrepreneurs.
Deconstructing Myths about Veteran Unemployment
There has been significant media coverage about the difficulties that younger veterans have finding jobs. For Post-9/11 veterans, the unemployment rate stands at 9.5% against a national unemployment rate of 8.2%. The overall veteran unemployment rate, however, is 7.4% -- significantly below the national unemployment rate.
Given that context, the employment data suggests that veterans have a disproportionately harder time finding employment during their transition out of the military, yet once they find a job, they are more likely than their non-veteran peers to keep that job. The asymmetry of high unemployment rates for younger veterans contrasted against abnormally low unemployment rates for older veterans suggests that the free market is undervaluing transitioning veterans when making hiring decisions. One possible explanation for this phenomenon might be HR managers who are inexperienced with translating military skills into private sector qualifications.
As a result, a veteran is significantly more likely to pursue self-employment relative to his nonveteran peers. At the same time, the military has taught veterans skills that prepare them well for entrepreneurship, increasing their chances of success.
Military Training and Entrepreneurial Skills
Many nonveterans view the military as the most hierarchical – and therefore stifling -- organization on the planet. On paper, that might seem to be true, but, in practice, the military delegates significant authority to junior leaders who are often expected (and encouraged) to fail during the early stages of their careers. A twenty-two year old responsible for leading forty-six men and tens of millions of dollars of equipment is going to screw up; he is also going to develop much faster as a leader relative to his peers. The military’s culture has adapted to support that development process, creating leaders well-suited for entrepreneurship by teaching how to plan for failure, how to seek knowledge from direct reports and how to learn iteratively as a group.
Planning to Fail: Inexperienced leaders develop a plan that will accomplish the mission, but they do so without considering a competitive response or an internal failure to execute. Taking this into account, the military proactively teaches leaders to plan for unexpected variables and to develop a commonly understood response before actually executing their plan. For instance, if you don’t prepare and rehearse for how your platoon should react to an ambush, then your platoon will be in bad shape if you get ambushed on your way to an objective. Similarly, if you don’t prepare and rehearse for a competitive response that might be reasonably anticipated, your company will find itself in a crisis without a playbook to guide the early response while management develops a more detailed plan.
Seeking Knowledge From Subordinates: Combat patrols and realistic training exercises expose military leaders completely. Just like in a startup, success and failure alike are both highly visible. As a result of this pressure, successful military leaders learn to privately seek advice from subordinates who have more practical experience in a given area rather than to fail the group publicly. Since most successful startups pivot around two times on average before finding their true business model, entrepreneurs must be able to simultaneously assess their own performance while keeping the team motivated around a mission that might change significantly over time. Veterans are uniquely prepared to execute this critical leadership task.
Learning Iteratively: The most valuable practice the military cultivates is the After Action Review (AAR). After every exercise, a unit will discuss what went well and what went poorly. This feedback is taken immediately after each patrol is completed. Importantly, the purpose of the exercise is not to assign blame, it is focused on learning. The result of this feedback loop is an agile learning process that helps a unit progressively adapt to a new and uncertain environment through validated learning over time. Tech entrepreneurs would refer to this iterative process as an agile development philosophy; the military has been teaching it for decades.
Veterans already have the core skills necessary to succeed as entrepreneurs. But the high unemployment rate among the young veteran population indicates they need help finding their way as they transition from the military. TechStar’s Patriot Boot Camp in Washington DC this week is one great example of how a community can bind together to help veterans transition. Many more veterans need support from Startup America chapters across the country – that’s where you can help.
Blake Hall is the CEO and Co-Founder of TroopSwap.com, the first ecommerce platform that provides military discountsexclusively to veterans, service members and their families. A combat veteran, Blake led a battalion reconnaissance platoon in Iraq for fifteen months during 2006-07. The Tacoma News Tribune featured his platoon for two weeks after the Army decorated nearly every member of his platoon for valor for heroic actions during a firefight in Mosul, Iraq. His educational degrees include a Bachelor of Science magna cum laude from Vanderbilt University and a Masters of Business Administration from Harvard Business School.
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