The Entrepreneur Exodus: The Next Phase Of The Great Resignation in 6 Charts
During the Great Resignation, a record 80 million Americans quit their jobs from 2020 - 2023. But they didn’t just leave work and then sit on the beach. If you keep the camera running and follow those who left their jobs a new, next phase of workforce transformation starts to emerge: The Entrepreneur Exodus - the startups that were launched by people who used to work in the Fortune 500. The most famous member of this founder demographic is Sam Altman, who used to work for Google, before founding OPEN AI.
With growing momentum, these are the most successful founders of our time, and they are reconfiguring the future of work, entrepreneurship, and the economy as a whole.
Here are six charts which illustrate this massive shift in the American labor force.
It all started with the Great Resignation
Almost 6% of all leisure and hospitality workers quit their jobs, followed by professional services. These quit rates declined in the first quarter of 2023, but have been starting to rise again. This increase is especially true in companies with more than 5,000 employees which saw quit rates shoot up nearly 25% to 49,000 in a single month from May to June of 2023. This is illustrated in the next chart.
The People who quit launched a record number of new businesses
The people who left their jobs during the Great Resignation launched a record 5.5 million high propensity businesses. New business formations have continued to rise, even as quit rates have subsided. (Important note: The US Census Bureau defines a ‘high propensity’ new business as one that is well capitalized and is expected to have multiple full-time employees within a year of launch. We chose to only include these businesses in our analysis. If we included all total new business launches, the figure would have more than **tripled** to 18.9 million(!). We didn’t use this figure because we didn’t want to inflate the numbers. Just being fully transparent)
The Entrepreneur Exodus Is Responsible For 39% of 2023 Unicorn Startups
The people who left their jobs are redefining who makes a good entrepreneur. 39% of the 656 Unicorn Startups in the US are founded by people who used to work in the Fortune 500. Preliminary data indicates that this is double the concentration of ex-corporate founders among startups worth over $1bn. (The data takes time to collect, we’re getting there.) The average valuation of unicorns startups founded by The Entrepreneur Exodus is $3.91bn(!) vs. $3.21 billion for founders with no experience in a large corporation.
The Entrepreneur Exodus is Reconfiguring Google and Twitter (Now X)
The data becomes more difficult at the company level, but our analysis of OpenAI, and Twitter shows the impact of the Entrepreneur Exodus at individual entitites. Almost all of Open AI’s executive leadership came from Google. When Elon Musk took over Twitter (now X) 130 of the 430 people who left went on to launch new ventures.
Why are people leaving?
The stories of the entrepreneurs who leave are incredible. I’ve talked about many of them here, here, and here. The risks they take when they leave, and how they rebuild their lives and careers afterward are inspiring.
Here are a few reasons they leave and start new ventures:
1. “It’s hard to be a technologist in a non-tech company.” Great technologists become order takers not order makers when they work inside a non-tech industry. Someone else develops the strategy and then tells them to build technology around it. This becomes stifling, and eventually they leave.
2. The Little Italy Effect - People leave when someone they know left first, made more money, and fell back in love with their job. Like immigrants who migrate to the United States after hearing of a cousin who’s doing great. As the Entrepreneur Exodus grows, the Little Italy Effect becomes stronger.
3. The Alumnipreneur - Many companies are supportive and encouraging toward the people who leave and launch new ventures. They become investors or early customers. There is mutual understanding that the person building a new venture will solve an expensive problem better, faster, and cheaper than the company can.
I also want to be fully transparent about how much work there is still to do. On the company level, it is extremely difficult to get usable data about how many people leave and where they go next. We’ve started down that path, but it is a heavy lift. My dream is that we can start publishing quarterly reports on the key departures and next moves on an industry and company-specific basis.
Y’all are my heroes,
Greg
Founder, CEO, Punks & Pinstripes
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