Ethan Mollick, a professor at the Wharton business school, Tweets about a paper that causally links student loan debt with declining entrepreneurship in America (including in high-growth, high-tech activities). By exploiting two “exogenous shocks” to the student loan system (public policy changes that are unrelated to entrepreneurship), the authors demonstrate that student loan debt not only causes individuals to start fewer businesses (especially in the high-tech, high-growth segments), but when they do, they are (a) less likely to be successful, and (b) experience greater hardship from the (already more likely) business failures. These are not exactly the type of conditions that encourage people to start new ventures, particularly when competing in a harsh competitive environment of increasing market power, raising incumbency advantage, and expanding wage opportunities at larger companies.
Talent is to a knowledge-based economy what oil and steel were to an industrial-based one—it’s most important asset. And while agglomeration was important in the past too, it pales in comparison to the type of economic concentration we see playing out right now in major cities across the globe—talent wants to be around other talent. In fact it needs to be.
For decades, the United States has been the world’s biggest beneficiary of global talent flows by a long shot. But the United States risks squandering its long-held gift of global talent, due to changing economic conditions abroad and series of missteps at home. That’s the main message of an excellent new book from Bill Kerr of the Harvard Business School: The Gift of Global Talent: How Migration Shapes Business, Economy & Society.
I recently had the pleasure of meeting Nicolas Colin. I’ve been an admirer of his writing in the past, and we had a delightful conversation at one of my favorite breakfast spots in London. For those of you who don’t know, Nicolas is a co-founder of The Family, an early-stage investment firm started in Paris and now operating in London and Berlin.
He is also the author a new book Hedge: A Greater Safety Net for the Entrepreneurial Age, which I’m happy to have completed just this week. Hedge hits three important notes for me: it is meticulously researched (527 references! 😍), very well-written, and has a point of view that stands out from the others.
Will Generation Z, which has lived through the Iraq war, the financial crisis, police brutality, mass shootings, rising cost of education, and Donald Trump, be a generation of entrepreneurs? Will they use their creative instincts, technological savvy, and a distrust of the established order to bring radical change to our business and social sectors? These are the right conditions for creativity, innovation, and entrepreneurship to flourish.
Today, I have a new report out at the Brookings Institution titled "High-growth firms and cities in the US: An analysis of the Inc. 5000." The Center for American Entrepreneurship generously provided funding for the study and Inc. Magazine provided the data.You can read the entire report in more detail with the link above (it's a 15 minute read, max), but here are some takeaways.
Yesterday I wrote about the exponential growth in microbreweries during the last decade. The trend toward small business activity in the brewery industry is an interesting case study because the rest of the economy is moving in the opposite direction—with industry consolidation is on the rise and the rate of business formation near record lows. That got me to thinking: what other industries are experiencing a similar trend of substantial rises in small business activity over a short period of time? I crunched the numbers, and one industry noticeably stood out—distilleries
Mounting evidence of widespread industry consolidation has many worried about the future health of the American economy. Excessive industry concentration can have negative effects on innovation, job creation, wages, and productivity—hallmarks of competitive markets with many startup companies. But, there is at least one intriguing exception to this trend: microbreweries. I dug into Census Bureau data to find out the magnitude of this trend—looking at brewery industry business counts and employment by firm size.
Earlier this week I read Tech and the City: The Making of New York's Startup Community, by journalist Maria Teresa Cometto and venture capitalist Alessandro Piol. Among many other things, they describe how a preponderance of immigrant-run businesses is attractive to foreign-born high-tech entrepreneurs coming to the United States. Immigrant-owned businesses are one of my favorite things about New York—or any city really. That got me thinking, just how concentrated is New York with foreign-born business owners? What about other American cities? So, I dug into U.S. Census Bureau data to find out.
The Center for American Entrepreneurship, a non-partisan policy and advocacy organization, published a study today on the founders of America’s most valuable companies—those in the Fortune 500. The results are striking—43 percent of companies in the 2017 Fortune 500 were founded or co-founded by an immigrant or the child of an immigrant, and among the Top 35, that share is 57 percent.
Democrats want to withhold support for any spending bill that doesn’t establish the legal right of “DREAMers”—the 800,000 immigrants brought here illegally as children—to stay in the United States permanently. Economic history suggests that we may thank them for doing so.
In The Innovation Blind Spot: Why We Back the Wrong Ideas and What to Do About It, a book released just last week, social entrepreneur and venture capitalist Ross Baird discusses how our blind spots affect how, whether, and to what extent we support the ideas of tomorrow. In it, he describes how mental shortcuts, biases, and funding models prevent us from tackling our most pressing social and economic challenges, instead opting to solve problems that are familiar, and where investment returns are more predictable.
Last month, economist William Baumol passed away at the age of 95. His death was universally mourned by the economics community, many of whom shared the view that he had passed before receiving a much-deserved Nobel Prize. One of us had the great privilege of working with him, befriending him, and being able to regularly witness his economic wisdom, even in his later years.
Among his many contributions to economics, Baumol is most famously known for his “Cost Disease”, which explains why high-productivity industries raise costs and therefore prices in low-productivity industries. This insight is particularly relevant now, as economic activity has shifted into low-productivity services like healthcare and education, where price increases are devouring public and household budgets, and whose continued low productivity has weighed down U.S. productivity growth overall.
However, a lesser-known work of Baumol’s is equally relevant today, and may also help explain America’s productivity slump. Baumol’s writing raises the possibility that U.S. productivity is low because would-be entrepreneurs are focused on the wrong kind of work.
Much excitement has been building over what feels like the beginning of an era of immense technological advance, the central role that entrepreneurs will play in its development, and the potential for a wide range of regions to reap the rewards. But progress won’t come easy. Significant challenges are likely to follow as digital technologies expand into relatively untapped areas of the economy.
Two excellent books out in as many months—and a quick data analysis here—persuasively drive these points home.
Accelerators are playing an increasing role in startup communities throughout the United States and beyond. Early evidence demonstrates the significant potential of accelerators to improve startups’ outcomes, and for these benefits to spill over into the broader startup community. However, the measurable impact accelerators have on performance varies widely among programs — not all accelerators are created equally. Quality matters.
Although it's been out for nearly two years, I finally managed to read Creativity, Inc.—the first hand account of Ed Catmull, the genius behind Pixar, about his journey in building the company. While the book contains engaging stories behind some of the most commercially successful and entertaining animated films of all time, it's really a book about managing a fast-growing, innovation-driven, entrepreneurial, creative enterprise.
Last month, I published an analysis in the Harvard Business Review on the gig economy and employment in San Francisco. Yesterday, the folks at HBR were kind enough to post an interactive piece of the analysis.
Relative to other affluent countries, the United States devotes disproportionate resources to health care with disappointing results. Recognizing these problems, entrepreneurs are increasingly applying information technology to health care equipment, monitoring, treatment, and service delivery, creating a sector known as digital health. These technologies, once embedded and distributed around the country, hold the potential to substantially alter the efficiency and quality of health care through the better generation, processing, and use of information; the reduction of overhead costs; and the empowerment of patients. This analysis finds that digital health venture capital investment is a substantial and growing share of total venture capital, creating, even in its infancy, valuable returns for owners. Venture investments in digital health are more dispersed geographically than total venture capital, yet digital health entrepreneurship has no geographic relationship to the traditional health care sector. Rather, the presence of workers in advanced service industries strongly predicts digital health investment at the metropolitan scale.
I recently interviewed Brad Feld, a co-founder of TechStars--arguably one of the very best seed accelerator programs out there. Brad was kind enough to give me his thoughts on the accelerator phenomena, best practices, and things to avoid.
A number of reports in recent weeks have stressed that employment effects of the so-called gig economy—contract workers on software platforms such as Uber and AirBnB—have been overstated. At minimum, these reports indicate, any increase in gig economy employment hasn’t shown up in the aggregate statistics—at least not yet anyway.
But my analysis tells a different story, showing that the impacts can in fact be seen if you look more deeply at the data and in the right places.