You probably didn’t know this, but yesterday (August 4) was the fourth annual Start-Up Day Across America. This event was started by a group of Congressional “New Democrats,” led by Rep. Jared Polis and has been embraced by the White House as well. While it may have Democratic origins, it’s been embraced by some Republicans too, and it now has the backing of 9 US Senators and dozens of Representatives. It’s a pretty simple concept—on this day, Members of Congress spend time in their districts with entrepreneurs, innovators, accelerator managers, and other entrepreneur advocates. It’s an opportunity to see what it really takes to be a successful entrepreneur, and to learn about how their actions can either help or hurt local entrepreneurs. Politicians regularly meet with big employers (and big contributors), yet they often fail to interact with new, emerging businesses in their constituencies. This simple event is one means to make that happen, and I hope that it continues to expand. If you like this idea, encourage your Representative and Senator to sign up for next year. Even better, consider creating a similar event for your state and local representatives who would benefit from such interactions with innovators too!
Here are few interesting entrepreneurship-related studies and projects that have crossed my in-box in recent weeks. They’re all worth a look.
- “Declining Entrepreneurship, Labor Mobility, and Business Dynamism: A Demand-Side Approach:” This interesting paper from the Roosevelt Institute examines the recent decline in US business dynamism, a topic often covered in this blog, too. The rate of US start-ups and their subsequent growth has been declining in recent years, and the typical explanations focus on excessive regulation, student debt burdens and other mobility barriers, and other factors as potential causes. This paper looks at demand side factors and argues that slackening labor demand is the prime culprit. Career ladders for workers have become more tenuous, creating a lock-in effect for many workers. As such, they lack the capacity and motivation to consider new job opportunities or the opportunity to advance their careers via entrepreneurship. I’m not sure that I’m yet convinced, but this is an interesting alternative take on this important issue.
- Unstacking the Deck: Toward Financial Resilience for African American Entrepreneurs in the South: Even in the “good old days” for entrepreneurs, African American entrepreneurs faced myriad challenges in accessing capital and building businesses. This CFED field scan digs deeper into these capital access challenges and finds a complex mix of factors at work, including the need to improve financial literacy resources and to help African American entrepreneurs get more closely engaged in networks focused on business development.
- Two new ranking studies are out and they contain some interesting findings. The 2015-2016 Global Entrepreneurship Monitor Report, released earlier this year, assesses conditions in 62 countries, and finds, not surprisingly, that entrepreneurial activity levels vary greatly across countries. Typically, developing (or factor driven) economies may see new business activity among 21% of the adult population. For developed (or innovation-driven) economies, an average of 8% of adults is involved in these activities. A deeper dive report assesses the global state of entrepreneurial finance, and finds that the ripple effects of the Great Recession are still with us. New business financing is always tough to access, but it’s even tougher today. The median global cost for a start-up was US$15,000—suggesting that new technologies are helping to reduce start-up costs. But, finding larger amounts in getting more challenging.
As regular readers of this blog know, I’m a big fan of the emerging 1099 (or “Gig” or “Freelance” or “On Demand”) Economy. I think these new ways of working have the potential to provide rewarding careers and lives, and also open up new economic opportunities for long distressed parts of our country. But, as is often the case, there is no free lunch. The freedom and choice of the 1099 Economy also means “freedom” from a basic social safety net of health care, retirement benefits and other social supports. So, if we want the 1099 Economy to work, we’ve also got to find a way to create new forms of the social safety net. We’re not there yet, but the necessary conversations appear to be starting. The latest evidence comes from the Aspen Institute, which has just released a valuable primer, A Portable Benefits Resource Guide. The guide takes a cold-eyed and realistic look at what it will take to produce “a flexible and stable safety net for a changing economy.” It discusses key principles for portable benefits that can be accessed regardless of one’s employment situation, and also looks at the essential tough questions such as who pays, who gets covered, and what needs to be regulated. It concludes with some cool ideas for getting the ball rolling on what will be a long pathway to a new kind of social safety net. These early ideas include concepts like a portable benefits innovation challenge to test new ideas or the creation of an independent work ombudsman in towns and cities. This guide and other ongoing work (check out this excellent study of self employment in the UK) suggest that we may be on the brink of some interesting new policy experiments. Even in today’s political climate, we can still hope!
You don’t hear much about the shale gas revolution these days—for good reason, as the historically low cost of oil and gas have hammered workers, companies, and communities that were enjoying the shale gas boom as recently as a couple of years ago. Nonetheless, most industry experts expect market conditions to improve, and we can expect that shale gas exploration and development will be return in the near future. When you have a lull in activity, it’s often a good time to take stock and look back on recent performance. That’s what the Pennsylvania-based Multi-State Shale Research Collaborative seeks to do with its new report card on state policies to help address the economic and environmental effects of Marcellus Shale activity in Ohio, Pennsylvania, and West Virginia. The Collaborative has not been a big industry booster, so it’s not surprise that the report card contains some tough grades. Generally, it finds that the three states are not doing enough to capture the full economic value arising from the development of the Marcellus Shale play in their region. The authors find that states could do more to generate tax revenue from these activities, provide job opportunities to local residents, and build sufficient infrastructure to weather the industry’s boom and bust cycles. Their grades are tough, with West Virginia receiving a C and Ohio and Pennsylvania getting incomplete grades. The researchers implore state governments to build better systems and policies so that they are better prepared for when drilling activity picks up in the future. They have also prepared a related guide to help local elected officials and community leaders address the economic, social, and environmental issues that accompany large-scale drilling activities. These guides offer useful tips to help community leaders generate real economic development and community benefits from these new industries.
GovTech is one of the more exciting, and underreported, business opportunities today. There is a ton of very interesting and innovative work underway in areas where government programs, big data, and other new information technologies are intersecting. Lots of investment is also flowing into this space, from new players like the DC-based 1776 accelerator and from large corporate players like Motorola and IBM. According to the Govtech Fund, the potential market for productions and technologies to improve government performance could be worth as much as $400 billion. The latest July/August 2016 issue of Government Technology offers a great introduction to the current state of play in the govtech sector, and it’s well worth your time. The issue profiles lots of cool projects and ideas. I was particularly intrigued with the ongoing Northern California Startup in Residence Program (STIR) which seeks to embed startups in key government agencies to help them deal with pressing problems like connecting homeless people to needed services, managing community volunteers, speeding up foster parent certification processes, or helping police report and analyze crime data in real time. STIR is run by San Francisco’s Office of Civic Innovation and has received federal funds from the Economic Development Administration. It’s a very exciting concept that takes the basic idea of the Small Business Innovation Research (SBIR) program—fund small business R&D to solve government challenges—and updates it for the needs of today. Instead of providing hands-off R&D dollars ala SBIR, STIR is hands-on and brings entrepreneurial thinking (and money too) into the day-to-day work of government agencies. This kind of idea can and should be replicated elsewhere across the country.
There have been a number of hard-nosed looks at the field of economic development lately, asking about the return on investment from traditional approaches like business incentives and other industry attraction strategies. I’m particularly impressed with the Center for Budget and Policy Priorities’ February 2016 report on state job creation policies. These reports present facts that sadly still represent new news to many elected officials, but that many of us toiling in the field have long taken for granted. Most US jobs are not very mobile, and only a small number of corporations and jobs—1% or less—make major relocations in a given year. Yet, until recently, the vast majority of economic development resources have been invested in tax incentives, infrastructure, and real estate efforts that are all designed to support business attraction and relocation. Now, a new study from Ball State University puts a new hard number on the business recruitment prospects for most US communities. It projects that a random US county has the capacity to attract a 500 employee factory once every 35 years. As these studies note, we need to rethink how we do economic development. Some well-endowed regions can continue to play the business attraction game, but most places need to think differently. They need to embrace strategies that nurture local entrepreneurs, attract and grow talent, and build healthy and prosperous communities. While it’s not as sexy as winning the next Mercedes or Tesla plant, it’s a smarter and more effective strategy for the long haul.
As friends and colleagues know, Maine is one of my favorite places to both work and play. But, like many largely rural places, Maine faces a number of economic challenges. Its population is aging, and it needs to grow. But, its relatively remote location and other factors make it challenging to attract major large corporations to locate in Maine. Maine does a good job of building on its assets, especially in areas like food, tourism, recreation, and in many technology sectors as well. Yet, the state still needs new ideas and initiatives to keep the economic momentum going. That’s why I’m so excited about today’s launch of Work in Place, a new group that is encouraging independent workers (the 1099 Economy) to consider locating in Maine. This is certainly not a new idea—I’ve been supporting similar concepts for years. But, the idea goes back even further to the Lone Eagle strategies of the 1980s and the 1990s, where lone eagles were successful high fliers who could operate their companies out of amenity-rich rural places. Nonetheless, I’m very excited to see this new effort underway. I believe that few places are as well situated as Maine to capitalize on the growth of independent workers. Maine is already home to a large independent workforce, and it has great amenities for others who hope to join in. Hopefully, a group like Work in Place can change the statewide conversations about economic development and help stimulate new economic opportunities in Maine. Even better, I hope that similar networks spring up in other states and regions. BTW, the Work in Place launch coincides with Maine Startup and Create Week, an excellent venue to learn about what’s happening across Maine. The events run through June 26.
Last night, I was able to attend the semifinals of the 1776 Challenge Cup. 1776 is a local business accelerator in the Washington DC area that is getting a lot of attention and building a bigger national and global footprint. Their Challenge Cup is a big part of this expansion—it’s a pitch competition that attracts a worldwide audience. I go to a lot of business plan competitions and I thoroughly enjoy them, but they can start to feel the same after I’ve heard my 101st pitch for a new app. But, this one is different and more exciting—mainly because of the diversity of the business teams. In just one hour, we heard pitches from Colombia, Great Britain, India, Kenya, Morocco, Pakistan, Poland, Thailand, and of course, the US. And, not surprisingly, there was a diverse set of cool business ideas—in this case, they were focused on opportunities in education, energy, food, health and transportation. The finals are tonight and finalists include My Peegu, an India–based technology firm that maps student behaviors, Oregon’s Noappfee, a lead generation tool for property management companies, and Brazil’s Shippify, a new platform for on-demand logistics. Efforts like the Challenge Cup make new start-ups think globally from the start. Consider participating in next year’s Challenge Cup or set up a global competition of your own! Good luck to all of the finalists who present their final pitches tonight.
Like many professions, economic development has its factions and schools of thought. Folks interested in innovation policy tend to love technology but don’t put too much stock into the aesthetics of place making. If you’ve ever been to a 1980s-era research park, you’ll know what I’m talking about. They will be beautifully landscaped, but pretty devoid of any human activity or buzz. Meanwhile, placemakers sometimes neglect the importance of technology and innovation. I like a coffee shop and independent bookstore as much as the next person, but many cool places would be more vibrant and prosperous with a dose of innovation too.
That’s why I’m excited about a new partnership between the Brookings Institution and the Partnership for Public Spaces: the Bass Initiative on Innovation Districts and Placemaking. This new effort builds on Brookings’ well-known research on innovation districts, but looks to inject a new focus on placemaking, equity and vibrant public space into the conversation. I’m looking forward to the work of this new collaborative. For the time being, they’ve done some initial work and PPS has published “8 Placemaking Principles for Innovation Districts” which is a very good start on making innovation districts more vibrant and creative and perhaps making cool creative places more innovative too.
The news media—and this blog too—spend a lot of time talking about the ongoing economic transition challenges in the America’s coal regions. But, sadly, coal regions are not alone in facing such challenges. The northern border regions of New England are also facing major dislocation as the wood and paper industries continue their steady decline. Small towns across Maine and elsewhere have been rocked by the shutdown of paper mills that long served as town symbols and the primary providers of good jobs and local tax revenue. The impacts are profound—nearly every county in the northern regions of Maine, New Hampshire, New York, and Vermont can now be classified as “distressed,” with high rates of poverty, unemployment and outmigration. The ripple effects are profound, hurting related industries and professional opportunities as well. Some great efforts to rebound are underway, and I’d recommend the work of the Orton Foundation and the Northern Forest Center, among others. As we rightly pay more attention to economic dislocation in coal country, let’s not forget other regions as well.