Woman looking at stars and night sky
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In 2021, Rick Plympton and Mike Mandina reflected on the company they had built over the past 30 years. Since founding Optimax, the entrepreneurs had achieved tremendous success. Companies around the globe were using their high-end optical lenses, and, over the years, the company had generated about $500 million in revenue, with more than half of that – $250 million – paid out to employees in the form of paychecks, supporting the community the men loved, Rochester, N.Y.
They had founded Optimax after meeting as blue-collar workers on the production line at Kodak, and wanted to find an exit strategy for themselves that maintained their approach to business. “It’s frustrating that you can have a company where they pay their workers as little as possible, and the leaders take boatloads of money,” Plympton told me when I interviewed him for articles and for my new book, Capital Evolution: The New American Economy. “That’s a perversion of capitalism.”
Eventually, the co-founders found a model, called an Employee Ownership Trust. Popular in the United Kingdom (where there are tax incentives benefitting this structure) and in a few other countries, it remains relatively obscure in the United States. But it and other models of ownership – especially Employee Stock Ownership Plans (ESOPs), may become more common in the next few years, as society grapples with a disruption of jobs to a new engine of productivity, AI.
More policymakers and business leaders are pressing for ways to create more ownership, so that people’s incomes are not as reliant either on their labor in increasingly insecure labor markets, or on government programs.
Capital Evolution probes the near-term future. Based on it, here are a handful of predictions for the next few years for business leaders and entrepreneurs.
Predictions for 2026Entrepreneurs Will Share Ownership With Employees
Shared ownership is already common in Silicon Valley, and indeed helped the United States create world-dominating companies. When people are incentivized to work hard, it should be no surprise that many of them do.
Public market exists and mergers helped enabled this model by giving employees opportunities to liquidate their investments. Private equity – we wrote about KKR’s model in our book – has adopted the idea. Perhaps this is in part to counter the negative impact private equity owners can have on local economies, when they move to make locally owned companies more profitable, often by firing people.
Innovative small and privately held businesses are looking at ways to create new ownership models, especially as the Baby Boom generation and older Gen Xers seeks to retire.
Fintech and Financial Literacy Will Become Hot New Areas in Entrepreneurship
The increasing economic strain of the past few years means more people who previously felt secure will be seeking other ways to feel in control of their financial lives. That means more people, if they can, will become investors. We’d already seen this trend growing, as companies including Wealthfront (in which I own shares), Betterment and Robinhood have democratized investing.
More fintech companies will grow up to help people borrow money, spend over longer periods of time, and to help entrepreneurs find their own funding. Some will be good, some will be less than ethical, and some will succeed. Meanwhile, Americans’ increased responsibility for their own finances will mean a crop of financial literacy experts will also grow.
Deep Innovation Will Be Funded More by State Governments and by Corporate VC
Because the federal government is in full retreat – ways we probably haven’t even heard about – from supporting science and innovation, entrepreneurs will need to find sources of funding at the state level, from already stretched philanthropies, and from corporate venture capital.
Though the true cuts to the federal budget aren’t yet clear – the U.S. Congress remains unable to pass a new budget – the Trump Administration has proposed cutting all research by 22% and basic research by 34%, according to the American Association of American Universities.
The Information Technology and Innovation Foundation estimates a 20% cut in federal R&D funding will cost the American economy nearly $1.5 trillion. “Scientific breakthroughs require sustained funding and long-term orientation. Unlike the private sector, governments have the capacity, scale, and obligation to invest in knowledge, even if it takes years or decades to yield benefits,” according to the ITIF.
In the meantime, entrepreneurs will be wise to establish relationships with state governments and especially large companies investing in their areas.
American Entrepreneurs Will Find A Livelier Global Market To Compete In And Against
The United States, including USAID, has been a large supporter of entrepreneurial ecosystems in developing countries. The thinking behind this was two-fold: entrepreneurship is a tool for economic development, because companies create jobs and bring innovations to market. In addition, this ultimately helped the United States: Because the capital markets are largely U.S.-based, the investors in, and eventually the profits of, those foreign companies ended up in the American economy.
The demise of USAID meant that support dried up immediately. In the long run, this is hurting startup ecosystems abroad. In the long run, it may be a good thing.
That means American entrepreneurs, especially those in venture capital hotspots, will no longer have quite as much of an advantage, a straighter shot to capital than entrepreneurs elsewhere. They may end up looking abroad, to Europe and to the Middle East, for support for their ventures. Some may even relocate.
Entrepreneurs Will Face A Tougher Market for Top Talent
In the short-term, Trump Administration’s surprise $100,000 payment for new H-1B visa recipients is already slowing hiring and shrinking the talent pool, according to recruiters and entrepreneurs.
New talent pipelines may develop to U.S. universities and American-born employees, but in the meantime, the market for talent is being disrupted, according to the experts I interviewed for an article in CNBC:
Somak Chattopadhyay, founder of Armory Square Ventures, which runs a $60 million fund that invests in software companies and also serves on New York State’s Emerging Technology Advisory Board, said the fund’s startups have at times gone to international talent markets to find the top thinkers, and at least for now, there is no immediate alternative to where unique talent can be sourced. “For the highly specialized talent in the world of AI, there’s probably like 500 people in the country that understand how to build an LLM model from the ground up. We don’t have enough talent domestically to fill some of those roles,” he said. But he added that in the future, “What we need to do is to find ways to cast a wider net.”Business (And Entrepreneurs) Will Emerge As The Most Important Strategic Actors
Though there are signs of weakness in the economy, perhaps the most striking thing about the enormous turmoil in the U.S. government is what hasn’t happened: A collapse. Over the past 50 years, business has increasingly overtaken government in its power to shape Americans’ lives. Business leaders are now the most important strategic actors domestically and abroad. That trend is accelerating, and entrepreneurs will be at the forefront.