Melissa Mazzeo began her career with the goal of making a big impact on the world. Her first professional role was at a global public health organization, which took her to Uganda, among other areas in need. Later, she went to Yale University for an MBA and master’s in environmental management. At that point, she was resolved to do something bold for a business student at an elite institution; she wanted to take over her mom’s small business.
Mazzeo’s mother had been running a resale clothing shop for children called Merry Go Rounds since 1989 in Easton, Massachusetts, where Mazzeo grew up. Earlier this year, before the pandemic, Mazzeo achieved her goal of taking over the business as well as opening a complementary online store.
As an entrepreneurship coordinator at Yale, I work with a lot of students like Mazzeo. They’re committed to innovations that can make a profit while also making the world a better place. Sometimes these innovators aim to scale up their ventures, but often they aim to stay small, with a focus on local communities. Entrepreneurship education tends to discount or overlook small businesses. These humble enterprises don’t fit the high-growth trajectory that many venture capital investors expect. However, there’s no reason for universities, as institutions of higher learning, to set the same standards as investors.
In the broader landscape of entrepreneurship, VC-backed companies are a tiny niche, comprising less than 1% of businesses in the U.S. On the other hand, enterprises with fewer than 500 employees represent 99% of U.S. businesses and employ nearly half of the U.S. workforce.
“The VC track is a small fraction of businesses. We overlook that at business school, especially,” Mazzeo says.
In the last few months, the coronavirus pandemic has shone a spotlight on small-business entrepreneurs as the bedrock of communities. Small businesses have been hit hard by lockdowns, but they also have stepped up to provide critical services and support. Additionally, they have fostered a vital sense of resilience and camaraderie.
During the pandemic, Mazzeo needed to close one of two Merry Go Rounds locations and temporarily laid off most of her staff. It was gut-wrenching, but that didn’t stop her from making adjustments, including the move to outdoor shopping events and the final push to launch online.
Minority-owned businesses have been hit the hardest by the virus outbreak. In April 2020, during the height of pandemic lockdowns, more than 40% of Black small-business owners reported that they weren’t able to keep working, compared to just 17% of white small-business owners. This disparity may stem from the fact that Black-owned businesses are less likely to have a traditional banking partner, so they have less access to public loans or public resources like the Paycheck Protection Program.
Small business entrepreneurs are often women and people of color, and I doubt it’s a coincidence that those are also the groups who least often receive venture capital funding. When we widen the lens on entrepreneurship, we see that these groups aren’t waiting on VC investments to start being entrepreneurial. In fact, women of color start new businesses at a far faster rate than any other demographic group.
The cultural narrative of entrepreneurship has been captured by venture capital, but that narrative is shifting. For instance, the Zebras Unite movement rallies together entrepreneurs who aim for sustainable prosperity over exponential growth. They call themselves zebras as a contrast to the frequently overhyped unicorns of the tech world. While running Merry Go Rounds, Melissa has leaned on these zebra perspectives to balance out the growth-oriented mentality she’s heard elsewhere: “It’s hard for VCs to wrap their heads around the idea that a business with growth potential would choose not to pursue that growth potential to the fullest extent possible.”
It’s the responsibility of those who teach entrepreneurs to actively embrace small businesses and acknowledge that they’ve long been at the heart of entrepreneurship. I’ve learned a few important lessons about the changing tale of entrepreneurship through my work at the Tsai Center for Innovative Thinking at Yale and the Yale Center for Business and the Environment. Here are some key points I can share with you.
Actively include small businesses in programming. This inclusive approach welcomes small business entrepreneurs and assures them that they won’t be the odd one out in a room full of VC-seeking tech companies. For instance, in our venture development programs, we support any form of of student innovation that addresses a real-world problem, including for-profit enterprises, not-for-profit organizations, and even short-term projects.
Use language that’s small business-friendly. It’s obvious that word choice matters. Dismissive language can inhibit or even discourage a budding entrepreneur. In the parlance of entrepreneurship, a small operation, like Merry Go Rounds, might be classified as a “lifestyle” business, which implies a form of passive income and fails to appreciate the hard work that goes into running a community enterprise. So, do your best to avoid this term. Also, pause any time you use the word “scale” or “growth” and think about whether it is necessary.
Give small businesses public recognition. I’ve helped to coordinate at least a dozen startup prize competitions, and I’ve noticed that small businesses rarely win. These competitions are often judged with expectations of scale, whether or not that’s explicitly part of the rubric. The one exception I’ve seen has been the New Haven Civic Innovation Prize (established this year at Yale) to find “the best student-led venture, project, or policy focused on benefiting the city of New Haven.” Most successful entrepreneurs I’ve known haven’t depended on prizes to move forward, but they are high-profile showcases for innovation, and as such, they reflect the principles of the institution that is awarding them.
Teach about small businesses. Any general entrepreneurship course that leaves out these businesses is missing a key part of the picture. The same goes for co-curricular programs and workshops. When planning a syllabus, include pathways that don’t prioritize growth and incorporate small business case studies where possible.
If there’s ever been a time to elevate small businesses, it is now, when many people feel deeply disconnected and loss of camaraderie. Regular interactions with the people who run small businesses can become a vital form of community-building. These businesses aren’t a lifestyle; they’re our lifeblood.
Ben Soltoff is an environmental innovation fellow at Yale University, where he works with students to explore how new ideas, technologies, and business models can address the world’s most pressing environmental problems.
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