Tag: Entrepreneurship

Has America Really Lost Its Capitalist Mojo?


081116FTstartupsIf you’re worried America is no longer great — excluding US Olympic prowess, of course — the above chart might neatly encapsulate those concerns. Looks like the Startup Nation is in the midst of an entrepreneurial crisis. Since the late 1970s, startups as a share of all firms have fallen by more than half, while the share of workers employed at new firms has fallen by three fourths.

This seems troubling on two levels. First, entrepreneurship of all kinds can provide employment and upward mobility. Second, high-growth or “transformational” startups are big drivers of high-wage job creation, innovation, and competition. As the Financial Times (source of the above chart) recently put it: “The suggestion that the US has a problem in the entrepreneurship department has come as a jolt for a country that prides itself in the red-blooded capitalist spirit that spawned the likes of Henry Ford, Ray Kroc and Steve Jobs.”

Theories to explain this chart include (a) the rise of big box retailers in the 1980s and 1990s, (b) a growing cronyist, regulatory state that favors big incumbent firms, and (c) access to capital, whether due to tougher post-financial crisis lending standards, the decline in housing wealth, or 80% of venture capital being concentrated in just a few states.

Is the US Really Just the 41st Most Entrepreneurial Nation in the World?


twenty20_40983b68-a325-4347-8f9e-c3fb4cfa23ab_business_startup-e1465240993683Let’s say I was trying to cook up a talk about how terrible the US economy is. This could form the basis of a really good — and deceptive — one (via the World Economic Forum): “According to research by the UK-based business-networking group Approved Index, the US ranks 41st in the world for having the most entrepreneurs, who make up 4.3% of the adult population. Meanwhile, Britain ranks 37th with 4.6%.”

41st! Looks like an Entrepreneur Gap!

Even better (or worse, depending on how we look at it), the most entrepreneurial nation is Uganda, where 28% of the population are entrepreneurs. So not only is the US only 41st, we’re way behind very poor countries like Uganda, Cameron (4), Angola (6), and Botswana (8).

From Startups to Jobs, America’s Lopsided Economic Recovery


twenty20_0c8ba4f6-db4c-4006-b0f8-ec1a4aa7dc73_startups_office_work-e1464018155556A new report from the Economic Innovation Group, “The New Map of Economic Growth and Recovery,” examines America’s startup scarcity in the 2010s. As the report explains, “New businesses play a disproportionate role in commercializing innovations, stoking competition, and driving productivity growth. They also create the bulk of the nation’s net new jobs and provide the extra demand that is critical to achieving wage-boosting full employment.”

And the numbers are distressing. Looking at other recent recoveries, the EIG report notes the 1990s saw a net increase of nearly 421,000 business establishments, and 405,000 in the 2000s. By contrast, over the first five years of the 2010s recovery, the number of business establishments increased by only 166,500.

That’s means we’re missing more than 300,000 startups and presumably all the good stuff that would have come with them. So less growth, less dynamism, less opportunity. Policymakers need to think hard about creating a better ecology for both startups overall and the ability of entrepreneurial/transformational startups — ones with the aim of getting really big —  to scale.

Member Post


If there’s one thing I’ve neglected in my perpetually nose-to-the-grindstone life, it’s building alliances. It’s meeting and getting to know others outside my present work associations, cultivating relationships over shared interests, and laying the foundations to jointly pursue worthy goals. Isolation is easy, for those of us with a demanding vocation and/or a restless disposition […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

This Is the Attitude America Needs More of


twenty20_e53193ea-55f3-4b01-a34e-ed38b3f4f7fe_idea-e1457386612357Y Combinator’s The Macro blog has an interview with Jacob DeWitte, co-founder and CEO of nuclear technology startup Oklo, which is trying to develop “a new kind of nuclear reactor that’s small, portable, and waste- and carbon-negative.” Here is DeWitte on how he ended up in Silicon Valley:

Well to start, we were curious about what YC would be like, because they hadn’t done any energy projects yet. But it ended up being phenomenal. We didn’t really get to benefit from getting specific advice on technical stuff, like some of our peers did – we’re building a nuclear reactor, after all. But it was so helpful on the vision side, and on how to build a great business.

Also, the receptiveness to what we were doing was so different out in Silicon Valley than it was on the East Coast. On the East Coast, we’d often be met with skepticism, people asking, “Is that safe? How is that possible?” Out here, it was like, “How can I help?” The investor discussions were tremendously different. People were so interested in the potential, and the upside, and not getting stuck on the potential difficulties and the time scales. People interested in startups understand that there are always drawbacks, but they don’t have to be deal breaker.

Where Are the Startups? Maybe the GOP 2016ers Should Start Talking About this Chart


Perhaps the next Republican debate will finally have a lengthy, serious debate on economic policy. Really hasn’t happened yet as far as I am concerned. Let’s see the Final Five — Trump, Kasich, Cruz, Bush, Rubio — compare and contrast tax plans, higher-ed reform, fixing Medicare and Social Security, and how immigration can be made to better serve economic growth and worker incomes. I would also love to ask them all about flattish productivity growth since the Great Recession. Amazingly — given that —  there has been little or no talk about this apparent problem, via a handy NBER summary:

The number of start-up firms in the United States has been declining in recent decades. Prior to 2000, the employment effects of this decline were partly offset by the presence of a small number of high-growth young companies. That pattern seems to have changed.skewiness_growth_02112016
In Where Has All the Skewness Gone? The Decline in High-Growth (Young) Firms in the U.S.Ryan A. DeckerJohn HaltiwangerRon S. Jarmin, and Javier Miranda show that the general decline in new firms has been accompanied, since around 2000, by a corresponding decline in the number of high-growth start-ups.

Member Post


Commerce has the dubious distinction of being both glorified and vilified in the modern west. In countries like India where I grew up, trade can be a life line for a family. A poor vendor selling tea to office workers, a “Chai Boy”, can easily raise a family with no particular skills, education, connections or […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Why Tech Thrives


shutterstock_55125244A friend, an economist at a big-time university, sends along the following materials, asking, impishly, “Is there a pattern here?” First, from the United States, in “Conversations with Tyler”:

TYLER COWEN: Let’s start with some questions about stagnation, Peter. At any point, if you care to add other topics of your own, please do so. You’re well known for arguing, well, “they promised us flying cars and all we got is 140 characters”; “technological progress has slowed down.” How is it you think that we’re most likely to get out of the great stagnation, when that happens?

PETER THIEL: Yes, I think there are, those three separate things. There’s the question of stagnation, which I think has been a story of stagnation in the world of atoms, not bits. I think we’ve had a lot of innovation in computers, information technology, Internet, mobile Internet in the world of bits. Not so much in the world of atoms, supersonic travel, space travel, new forms of energy, new forms of medicine, new medical devices, etc. It’s sort of been this two-track area of innovation.

Is America’s Welfare State Suffocating US Entrepreneurs?


img-manlightbulbinnovationeconomyprosperityshutterstock_152308365121What’s the link between entrepreneurship and the welfare state? Dynamic societies certainly require strong, pro-work, fiscally sustainable safety nets. But is there a trade-off where expanding the welfare states reduces entrepreneurship? Or might it actually encourage entrepreneurship?

Over at The Atlantic, Walter Frick offers economic literature roundup that suggests the latter. A strong safety net encourages startups by making the effort seem less risky, he argues. For instance, a 2014 paper found the expansion of food stamps “in some states in the early 2000s increased the chance that newly eligible households would own an incorporated business by 16 percent.” Another paper by the same author found that “the  rate of incorporated business ownership for those eligible households just below the cutoff was 31 percent greater than for similarly situated families that could not rely on CHIP to care for their children if they needed it.”

Likewise, Frick argues, “Obamacare doubles as entrepreneurship policy by making it easier for individuals to gain health insurance without relying on an employer.” Yup, we’re talking about the “job lock” phenomenon. Then there is a 2010 RAND study that found “American men were more likely to start a business just after turning 65 and qualifying for Medicare than just before.” Finally, it appears that when “France lowered the barriers to receiving unemployment insurance, it actually increased the rate of entrepreneurship.”

The Critical Minority That Makes Us Great


shutterstock_94254988After a career in very large business ranging from big industrial work to Silicon Valley madness, I settled down in my second half of life — it used to be called “retirement” — to work with small businesses. After 10 years of advising, coaching, and salvaging many entrepreneurs I’ve come to two conclusions: 1) Starting and keeping a small business healthy is a crucible of pain and challenge to which few are suited; and 2) The large institutions of government, labor, and finance are antithetical to small business existence.

Despite these dire observations, the resilience of America has always been led by the critical few who move outside the established framework and go somewhere new. We once celebrated pioneers —not the famous ones, but the unnamed ones who slogged the Oregon Trail, farmed the plains, or dealt with the Dust Bowl. We saw an untamed, wide-open frontier called the Internet change our everyday lives, driven by thousands of individuals with the drive to try something new.

America provided the freedom to try. It allowed you to fail or prosper.

16 Ideas from Marc Andreessen For a More Dynamic US Economy


In a classic Marc Andreessen “tweetstorm,” the venture capitalist offers 16 “somewhat-less obvious ideas for how to expand the # of “unicorn” great tech startups over time.” (I have added a few links and a chart.)

Taken together, I think, Andreessen’s ideas point toward a more dynamic, competitively intense economy which (a) generates both more entrepreneurs and more creative and innovative workers with deep expertise, (b) provides easy and open access to ideas for entrepreneurs and low barriers to starting and growing their firms, (c) offers a safety net that encourages work and mobility and risk taking. In short, just the opposite of economic calcification. Andreessen:

If Washington Isn’t Behind the Decline in US Startups, Then What Is?



My (seemingly) never-ending mission to figure out what’s going on with the decline in American startup ventures — over the past three decades the annual entry rate of new firms fell approximately from 15% to 10% —  continues with research from George Mason University’s Nathan Goldschlag and Alex Tabarrok. They investigate whether federal regulations are to blame. Apparently not:

To investigate the extent to which the decline in entrepreneurship can be attributed to increasing regulation, we utilize a novel data source, RegData, which uses text analysis to measure the extent of regulation by industry. Our analysis suggests that Federal regulation is not a major cause of the decline in US business dynamism. … Contrary to expectation, there is a slight positive relationship; industries with greater regulatory stringency have higher startup rates. We find a similar relationship with job creation rates.

Member Post


I just finished watching “Rocket Singh, Salesman of the Year” through Netflix and recommend it highly to you. (I watch movies a little at a time during treadmill workouts.)  I started out wary, thinking how I don’t like to watch movies about losers, but the main character far exceeds my expectations. I thought of Ricochet, […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Cashing In…


Here is a tidbit from Ferguson, Missouri:

ST. LOUIS, MO (KTVI) – In a recent statement, Michael Brown’s mother asked that her son not be part of self-serving business or political actions as she pleaded that he be remembered for the good.  A reported assault and theft this past weekend may dramatically underscore that sentiment.

The Limits of Hipster Capitalism


Last year, my wife and I went to the New Hampshire Crafts Fair. We bought a couple of small things, but mostly spent our time ogling hand-crafted products — particularly wooden tables — that were both beautiful and well outside our budget.

Though most of the craftsmen were old boomers, there were a few our  age. One in particular was a bladesmith who had quit a financial services job in Boston to turn his hobby of knife-making into a full-time business. Zack now forges his own metal and handcrafts the blades and handles himself. I’m no expert in knives, but the quality was clearly amazing: perfectly balanced, razor sharp.  But, just as we had to pass on the handcrafted furniture for now, I had to resign myself to sticking with my CRKT knives for the time being — and praying that Zack is successful enough to be in business when I can afford his work.

Uber: Poster Child For Free Markets


Last night, my wife had a stomachache and asked if we could take a taxi home from work rather than the metro. I’ve had mixed experience with cabbies and — given the combination of high price and great unpredictability — I avoid taxis wherever I can. Still, I wasn’t the one with a stomachache, and a few extra dollars is a small price to pay for a happy and comfortable wife.

I was all ready to hail a cab when I remembered that I had a $20 credit toward my first ride with Uber, the online driver service/app, so I decided to give it a try. Result: I’m never taking a cab again.

Renewing Detroit, in Fits and Starts


“Can Detroit come back?” One can hardly have a conversation about Detroit without that question being asked. No longer a premiere destination, Detroit has come to be associated with blight and ruin. Detroiters, however, love their city, and are working to bringing it back. They are coming up with creative ways to engage members of the community to make a real difference and change lives in different ways with varying degrees of tangible results.

A good indicator of a city’s health is the real estate market and, in that area, things are looking up.  People of a variety of demographics are moving to Detroit and staying there. No longer just a city for young urban professionals, people are choosing to move into the neighborhoods when moving into a single family home rather than heading to the suburbs. Empty nesters are moving in when they’re ready for a change from the suburbs, too. Home values are going up and inventory is going down, leading to bidding wars in some areas of the city. Why is this? According to Austin Black of City Living Detroit, it’s because people are “confident in the city’s direction and want to be part of the revitalization.” This not only comes with living in Detroit, but working to make a real difference in local communities, which comes in many shapes and forms.