The Schumpeter article in the October 12-18 2013 issue of The Economist entitled Not Open for Business (it is here) speaks of widely known weaknesses in the U.S. (as seen by entrepreneurs) that slow us down: lack of adequately trained human capital; immigration laws that make it difficult or impossible for many people from other countries who have played a major role in entrepreneurship in the past to live here; government regulations and taxes; and difficulty of raising money, in light of the perceived increasingly risk-adverse nature of venture capitalists. As the article points out, start-ups created only 2.7 million new jobs in the 2012 financial year, as opposed to 4.7 million in 1999.
But an article in the October 14, 2013 New Yorker, entitled San Francisco Transforms the Country, Again (here), paints a different picture, and one to which I resonate because I work in the university. The article speaks of younger people (20’s, 30’s) who are well on their way of building an entrepreneurial culture based on small amounts of funding (thousands or tens of thousands instead of millions) from sources varying from crowd sourcing, to friends who are doing small scale angel investing based on successes they have had, to enterprises such as Y Combinator (here).
But the entrepreneurs discussed in this article are looking for life-style and individual freedom, rather than building great companies or manufacturing outstanding products. Nor are they thinking of fast growth and large profits. They are taking advantage of the low cost of developing software and the increasing business services available on the internet to help form and run a company and market a product. But how important of a product? An example of a particular person who is admired in the article for his rewarding life style is a member of Sidecar, a group who sell people rides around the city in their private cars. He lives in Tiberon (north of San Francisco), and drives to Palo Alto, (south of San Francisco) each day to play golf. As he passes through San Francisco he checks into Sidecar, picks up enough rides to pay for his trip and golf, and heads to the links. The person who admired the golfer during the interviews envisions the future as “everybody is a private contractor, snatching jobs out of the ether, working for one another as they please”. Entrepreneurial perhaps, but hardly creating large numbers of jobs and big profits.
People in their 20’s and 30’s (and teens) seem to be considering entrepreneurship because it is in and cool these days. But they do not have families or large expenses yet. When questioned about this, the San Francisco young entrepreneurs either have not thought about such things, or reply that they guess that they will eventually work for a large established company such as Google if they need to.
And although entrepreneurs do not think they will fail, the majority of them do. The San Francisco group seems to be willing to support those that do from their community, but even those start-ups that succeed, grow rapidly, and produce larger profits do not always offer the founder a wonderful life. A good read on that topic is entitled All's Fair in Love and Twitter in the New York Times Magazine of October 13, 2013, and is here.