Jobs (the lack of) + Jobs (Steven P.) = The Resurgence of Entrepreneurism in America
As has been the case over time, changes in the nature of our economic institutions typically require cataclysmic events to alter the conventional wisdom, the rate of change and the most basic aspirations and expectations of the workforce – particularly amongst the younger population entering the workforce from academia. The U.S. has always been considered the world’s leading innovation/entrepreneurial factory.
In the post-Industrial Revolution of the late 19th and early 20th centuries, the career paths of those entering the workforce were limited – railroads, shop floor manufacturing, government/public service, auto industry, public utilities and a handful of other emerging industries were the targets of the new workforce. The mantra was – get a job at a company with stability, benefits, growth potential and a steady, predictable income - in essence, become a ‘salaryman.’ Invention, innovation and entrepreneurism were the bastions of the highly intellectual, well-educated (and somewhat eccentric) scientists whose passion for breakthrough inventions carried them through years of trial and error, false starts and near starvation. Some – think Thomas Edison amongst others – transformed their brilliance, passion and creativity into breakthroughs that have totally reshaped the planet and all of its inhabitants. The large majority of the others remain nameless to history.
As the U.S. industrial economy boomed during the mid to late 1900’s, the aspirations of those entering the workforce (as well as those already gainfully employed in the workforce) focused even more extensively on the corporate environment. Eager graduates from all disciplines of study were absorbed into the exploding U.S. economy – with many having their choice of multiple job offers before leaving the comforts of the college campus. The lure of a competitive salary, benefits, in-house training programs and internships combined with an early sense of financial security became the bragging rights of the baby boomer generation and continued through the GenX and early GenY eras. America’s peacetime economy provided a comfortable landing for the ‘salaryman’ grads regardless of their areas of study. Recessions were mild and brief causing little or no serious dislocations amongst the workforce and all was right with the world – until now.
The recession beginning in 2008, already considered to be the largest and longest recession in U.S. history since the Great Depression of the 1930’s, was the first cataclysmic event to change the landscape of American business. Attempts by government to spend our way out of this crisis have failed and unemployment is now ‘nominally’ listed at about 9% - though much higher when counting the hard core unemployed and underemployed. College grads who previously expected that the sheepskin alone would be the key to a good job, a new car, repayment of college tuition debt, etc. have found themselves frustrated at every turn. Many have decided that if there are no jobs with existing companies, the solution is to become entrepreneurs and start one themselves! This same phenomenon is at work with the more experienced GenX and GenY’ers – finding themselves with no jobs but lots of valuable skills and experience, they are hanging out their owns shingles and offering products and services that result directly from their own work product. While new business formation may not have moved the unemployment needle significantly (yet), one has to believe that the 9% unemployment number would be higher without the benefit of these ‘newcos’. As the Kauffman Foundation has reported time and again, all net new job creation in the U.S. results directly from newly formed (5 years or less) small enterprises. So, the new economic formula for success is Systemic Unemployment + Entrepreneurship = New Job Creation.
The second cataclysmic effect was the recent passing of Steve Jobs, Chairman and CEO of Apple Computer. While his death was a loss to his company and to the global technology industry, it also seems to have suddenly legitimized entrepreneurship, creativity and innovation as worthy and respectable career paths for the next generation of Edisons. Jobs’ life story is now being played out in every publication on the planet and for many global iCitizens he is worshiped and deified as a role model to be emulated. There have been similar stories of individuals, many who were college dropouts or underachievers in academia, who have reshaped industries (and in some cases society as a whole) after beginning their careers in the iconic ‘garage workshop’ and have gone on to build some of the largest and most valuable enterprises in history (Microsoft or Hewlett-Packard among the most notable). But it was the passing of Steve Jobs at this critical moment in U.S. economic history that may have the most profound effect on the current generation.
As policy makers and economic gurus come to grips with the reality that new job creation has and will continue to be the domain of the new (or nearly new) small company, we can only hope that the constraints, regulations and antiquated rules established by 1933 legislation governing the funding of early stage companies will be changed to stimulate investment in the startups led by emerging 21st Century Edisons. The current mantra from Washington appears to be more politically expedient than constructive or helpful. We are told that government "Can't Wait" to help entrepreneurs – but when one looks beyond the hyperbole, what they mean is more direct government involvement, more websites to nowhere, more attempts to foster ‘public-to-private' connections, guidelines for complying with (overcoming!) the regulatory hurdles, and more bureaucrats simply getting in the way of the free market system. A more effective solution may be for government to simply get out of the way by bringing the 1933 legislation into the 21st Century world of collaborative innovation, startup/showdowns, public solicitation for funding, etc. The recent House bill and Senate debate are encouraging signs for the early-stage entrepreneurs who view today’s startup creation environment as climbing Mt. Everest. By freeing the market of these antiquated and burdensome regulations, government can do more in one single act than with any combination of new federal initiatives to stimulate the Edison’s among us to fulfill their destinies. The Venture Capital community, angel investors, family offices, institutions and foundations are more ready than ever to provide the needed funding – particularly when considering the huge valuations awarded the most recent social/digital IPO’s.