Global Observer

Why the Spanish aren't entrepreneurs

Posting in Architecture

BARCELONA -- And why the Spanish youth aren't either. After all, 60 percent of those 30 and under are unemployed. Maybe it's just not in the Spanish blood.

Barcelona -- Generation Y in Spain isn't asking why, they're just floundering about. Sixty percent of the country's over-educated lost generation of university and master's graduates aged 30 and under aren't getting hired. With around 26 percent unemployment nationwide, these young adults are left to fight over unpaid internships and jobs beneath their experience levels, just to get something to put on their resume. According to the Organization for Economic Cooperation and Development (OECD,) 44 percent of the Spanish aged 25 to 29 that actually have jobs are working in ones that require lesser skills than they have. So with no families, no mortgages and little else to lose, why aren't more of them creating jobs for themselves?

Many say the Spanish are just lazy, but that's not it. There's something else, intangible, that's developed in the culture and history. The children of Spain aren't raised to follow their dreams. School has become, for the most part, just a place for passing exams, never for debate, discussion or critical thinking. Your curro, or job, is to endure from nine to nine, pushing buttons until the next break. A history of civil war and a 39-year dictatorship, followed by a construction boom and crash, to now, where it's taken for granted that politicians will be corrupt, has led to a nation that's devoutly proud of being Spanish, but that can't define what that even means.

Beyond the absurdly challenging bureaucracy and the fact that banks are hardly offering loans at all anymore, there's something stagnant about the government-controlled education system and the culture in general that is keeping the nation's most book-learned generation in history from reaching its potential. SmartPlanet sets out to re-open the discussion of why technically adept young adults are not looking to start their own businesses and why this resistance to altering the status quo has led Spain to be predicted as one of the slowest kids in the PIIGS (referring to Portugal, Ireland, Italy, Greece and Spain, those most hit by Eurozone crisis,) who will take the longest to climb out of its own economic free fall.

"Upon graduation, 70 percent of Spanish people want to work in large companies, while 70 percent of American graduates want to be their own bosses," writes Juan Angel Hernandez, in a recent op-ed for a Spanish financial magazine, advocating on behalf of start-ups, as a solution to the crisis. He writes about how the goals of recent grads are either to work for the government or one of Spain's top ten companies.

So instead of between 50 and 80 percent of recent grads studying for absurdly competitive government jobs, why aren't they creating their own opportunities? One of the EU's top MBA programs ESADE set out to explore that in their White Paper on Entrepreneurship in Spain. Since entrepreneurship still isn't commonly talked about in Spanish higher education, this paper from 2010 has the most current, in-depth findings. The researchers concluded that start-up values can best be instilled at a young age and the education system is not up to the task. It states that: "Entrepreneurship can be learnt at school and should be actively promoted so that young Spaniards can develop skills such as independence, self-confidence and decision-making in situations of risk." The researchers came to the conclusion that, "Young Spanish people don't feel they have been taught how to be entrepreneurs, which is why teachers need to have the relevant tools and materials to teach business acumen and initiative, whilst also fostering their students' interaction with local entrepreneurs."

Blaming the education system -- which only maybe changes when a new political party takes power every eight years -- isn't a new theme. This isn't a nation where kids are asked what they want to be when they grow up. "In high school and university, no one has ever asked them what their motivation is -- the most important part" of starting your own business, says Eva Snijders, entrepreneur and founder of Barcelona-based start-up Quimica Visual Storytelling, which helps companies internally innovate in times of crisis and transition. She says, "People here concentrate on whether it's difficult to build a business and why it takes time and money."

Rosaura Alastruey, founder of ProyectosTIC, hosts motivational workshops for both the employed and unemployed. She says, "Un emprendedor es un bicho raro," which translates to "an entrepreneur is a rare bug," or a freak or oddball. In Spain, "Jobs are to subsist," she told SP recently. There's no need to like what you do, you just need to have a job.

It seems that you only look to start a company when it's the last thing left to try. Alastruey says, "I have students: 'After a year or two years unemployed, now I want to open a business.' It's the last option." The ESADE white paper states that four out of ten Spanish entrepreneurs act out of necessity, which isn't exactly the sort of drive most VCs and business angels are looking for.

When asked where the youth of Spain is being directed away from entrepreneurship, Alastruey quickly repeats the mantra: "The schools."

Folks in their twenties and thirties make up the first generation after the dictatorship of General Franco. "This is the generation where the parents didn't have anything, so their kids have everything, not learning that everything has a cost." The sons and daughters of the post-Franco world aren't living to make ends meet, but are simply waiting for their ideal job or are opositando, the truly Spanish phenomenon of studying for the highly competitive civil service exams. Many, on their parents' dime, study nine hours a day, six days a week for these exams, for one to five years at a time, while some of these jobs-for-life can see 1,000 applicants for only three spots.

As one entrepreneur at a networking event recently said, "You're 23 years old with your whole life ahead of you and all you can dream of is to be a public servant?"

Last year, SP interviewed Complutense University's tiny MBA in Entrepreneurship, which was developed after realizing that the university was actually uninspiring their students. “We realized that the students’ entrepreneurial behavior was much higher when they started [their bachelor's] than when they finished,” said one of the program heads, during the SP interview. The students were “more likely to start a company when they started university. What we discovered was that the university was deterring them from starting their own business." Moreover, more than half of Complutense's graduates intended to study for the civil service exams.

The don't-take-risks mentality comes down from their parents, who, more often than not, hate their jobs, but continue to cling to them. Someone who has been working for the same company for 15 years will, if they lose their jobs, receive a tax-free lump-sum check for two years' pay. However, since last year's new labor reform act, the next generation of workers may not have the same access to these severance payouts. Plus, many companies are in the practice of paying part of the salary under the table, which means that is discounted from the total paid if the job is lost. In 2010, 19 percent more Spanish companies closed than were opened, giving everyone reason to be more nervous about their job stability.

Of course, even in times of economic boom, the Spanish, in particular, fear failure. Like Hawthorne's scarlet letter, in Spain, you get branded with an "X" if you fail, and you never try again. There is no culture of "if you fail, try, try again" or of learning from your mistakes. As Enrique Samper, founder of NIMGenetics, told SP last year, “There’s something in Spain that’s risk adverse,” Samper says. “We are not used to debating, having open discussions in general. This is all flipped in the entrepreneurial community."

In this country, a common cliche is "En el pais de los ciegos, el tuerto es el rey," which translates to "In the land of the blind, the one-eyed man is king." It may be a socialist society, but that hasn't fostered the idea of the united cause here. When politicians are corrupt, most of the people aren't up in arms, but tolerant, saying they'd do the same thing if they were in that situation. It's not about keeping up with the Joneses here, it's about getting more out of the government or any other situation than anyone else does.

Spanish history and culture don't teach the philosophy of success by hard work and risk-taking, but to have respect for those that have gained success through acting craftily and cunningly. Spain's most beloved book The Life of Lazarillo de Tormes and his Fortunes and Adversaries tells the story of an extremely poor child Lazaro who is hired as the servant of a cruel blind man. For the sake of survival, innocent Lazaro grows into a cunning young man who learns to cheat the cheaters.

In one tale, this Spanish literary hero is eating grapes with the blind man. They decide to share, each eating one at a time. Soon, the old man starts taking two. Lazaro then begins to eat them three at a time. When the grapes are finished, the old man calls him on being a cheater, to which Lazaro asks him why. The old man essentially says, "If I cheat and you don't say anything, I assume you're cheating too. We all try to fool each other."

Almost five hundred years later, Lazaro's tale still paints a perfect picture of Spanish society. On January 31, Spanish newspaper El Pais raised allegations of corruption against the top members of the ruling Popular Party, including Prime Minister Mariano Rajoy, for allegedly not declaring hundreds of thousands of euros in income. PP has yet to fully address the issue and there is no real talk of the party leaders stepping down any time soon. This drives home the point that Spain remains a pessimistic country that doesn't believe in opportunities, but accepts or even praises corruption and underhandedness.

The unemployed in Spain, with impossible-to-replace jobs like architects, aren't taking advantage of their opportunities either. Here, if you are receiving paro -- unemployment benefits -- you have the option of capitalizacion, which allows you to write a detailed business plan and, if approved, you may receive around 80 percent of your two years of benefits upfront to invest into your own small business. This is one of the few situations where the government is actually betting on start-ups, but the folks aren't buying.

Recently, SP attended a free class on how to start your own business, offered by the Community of Madrid, the province that is mostly made up of the capital. It was a full classroom of about 40 individuals, no one under 40, all looking to create clothing shops, convenience stores, or locutorios. Not a single person spoke of e-commerce, technology, or something unique. The only ideas that came up of financing those small businesses were the banks -- virtually impossible in Spain right now -- and family and inheritance. Up until the crisis, this country's real estate boom was based on parents co-signing their kids' zero-percent-down mortgages. Now, the banks are foreclosing on that kid's house, that parent's house, and still expecting the both to pay. No fiscal lessons are being learned from the crisis and certainly no one seems to be getting more creative because of it.

ESADE's white paper also includes the fact that, while five percent of the Spanish population are small business owners, less than half of these "independent companies" has two or more employees. Only a mere ten percent, or five out of every thousand small businesses, has ten or more employees. This goes to show how many of the Spanish do share a desire with most cultures to be their own bosses, but that it stops there. There are, of course, freelancers, particularly in the architecture industry and others impossibly hit by the crisis, who, following their two years of government-funded unemployment, try to outsource themselves to any job they can get. And there are the shopkeepers. But the majority of these people aren't Zara's Amancio Ortega, who went from owning one clothing shop 40 years ago to being one of the five richest men in the world, but rather they usually only open just one shop or bar, as part of creating a legacy to pass down to their children. They rarely think of opening an online store, which is a much lower-risk investment, and they don't consider whether that's what their children would like to do anyway.

In fact, according to the 2012 report by European Commission's Eurostat, Spanish SMBs score average or below average against other EU member states on their ten points of evaluating small businesses, with the exception of Spain doing above average on "Thinking small first." Spain scores well below the EU average on entrepreneurship, access to finance, state aid and public procurement, and internationalization. It just goes to show that Spain's small businesses may be good at thinking independently, but only if small and local.

To compound the country's economic problems even more, with fewer job prospects at lower salaries at home, Spanish university grads are looking off the peninsula, causing a brain drain that could be irreparable if and when their home economy bounces back. The Spanish National Statistics Institute revealed last year that twice as many of Spain's youth are currently emigrating than were in 2010. This creates a huge risk for the nation's future.

Castellanos are fond of saying poco a poco or little by little. In the meantime, SmartPlanet is happy to continue to highlight the technology and innovation of the few and the proud here in Spain, those still willing to fall on their asses as they go against the grain to start their own businesses.

Photos: La Colmena/ "Lazarillo de Tormes" by Goya, Wikipedia

Jennifer Riggins

Correspondent (Barcelona)

Jennifer Riggins is the content manager and community builder for two SaaS Quote Roller and PandaDoc, as well as she teaches sales, English, and public speaking for Spanish small business. She holds a degree from William Paterson University. She is based in Spain. Follow her on Twitter. Disclosure