it could safely be outsourced to entrepreneurs and venture capitalists. Democrats could reserve money for social programs. The newly libertarian Republicans could argue for across‐the‐board budget cuts or a shift in power to the states. And both could take advantage of a new, romantic, politically expedient American hero. An updated version of the lone cowboy: the risk‐takers; the entrepreneurs.vi
The word entrepreneur came to take on a new meaning, a high‐tech meaning. And the companies that were important in this new age of entrepreneurship were high‐tech companies that often seemed to have one overriding purpose: to deliver returns to investors. They needed to look as if they can be very profitable at a considerable size. They needed to, in the language of the Valley, “scale.”
Today, America is home to many big companies, many of them technology businesses that grew out of the Silicon Valley machine. They dominate our country's headlines, mindshare, and financial markets. And the very word entrepreneurship has been seemingly co‐opted by this tech elite. We no longer think of the corner shop owner, restaurateur, or tailor as an entrepreneur, as they once were considered. This shifted our thinking about who really drives our economy and who deserves our support. The success of high‐tech entrepreneurs hides both the truth and some of the alarming trends taking shape at the small end of the American economy.vii
One of the reasons that high‐tech entrepreneurship has taken such a hold on our imaginations is that its rise is entwined with the idea that free markets produce the greatest benefit for the most people. Now, the consequences of libertarianism are becoming clearer in the first decades of the twenty‐first century, including the negative economic consequences of a society without a safety net. If the underlying assumption is wrong we should question what innovations and founders are being ignored because of a mistaken idea that today's big businesses are the product solely of the private sector and unfettered free markets.
Because, as we discovered when we went out to find and talk to New Builders, the real story of American business is about small. Some of the most important businesses stay that way and become part of a collective whole that is far greater than its individual parts. Other businesses grow and create success on a different scale, sometimes measured in terms of profit or sales, and sometimes in other ways, like employment, technological advancement, or influence – but it's very difficult, if not impossible to predict which companies will grow. An environment that supports small businesses, not just a subset of them, is necessary for the economic vitality of the American economy. This is not to take anything away from tech companies, or successful larger businesses from across the business landscape and the convenience they bring to our lives. But it is worth taking a step back to consider what happens to society if the balance between big and small business gets too far out of kilter – if, in our search for convenience and lower prices, we fail to recognize what we're losing when we give up on small businesses and the unique relationship those businesses have to our communities and to our society as a whole. It will take some work to bring our economy back into better balance. It will also take a realignment in our thinking about entrepreneurship and about the role of small business in our economy.
To start, it will require a new understanding of who the next generation of American entrepreneurs actually are, and how critical it is to support them.
Notes
1 i Quotes from Danaris are from six interviews conducted between May 2019 and December 2020. Elizabeth visited in person in summer 2019, a visit that included a lunch in a lively Dominican restaurant.
2 ii This is actually an area of emerging research. The Kauffman Foundation, in particular, has started to look more closely at those who have business ideas but don't end up starting companies. You can find a link to their initial report on this subject in the endnotes.
3 iii This point can't be emphasized enough. Over and over again we were taken back by just how optimistic the New Builders we met in researching this book are. It's an infectious optimism that clearly rubbed off on us as well. While it would be easy to look at some of the trends and feel a sense of dread, we feel exactly the opposite. We've seen firsthand the power grassroots entrepreneurship can have on a community. And it has left us feeling hopeful about our future.
4 iv Women have always started businesses across every economic sector imaginable, especially so in today's economy.
5 v Reagan was governor of California from 1967 to 1975 and had witnessed first‐hand the early rise of what became known as Silicon Valley.
6 vi These ideas were developed in conversations in Spring 2020 with historian Margaret O'Mara and Robert Atkinson, founder of the Information Technology and Innovation Foundation.
7 vii Both Seth and Elizabeth know the world of technology startups well. Seth is the co‐founder of a venture capital firm, Foundry Group, that has been an investor in many successful technology companies. Elizabeth is a long‐time business journalist. We celebrate the innovation that comes out of this world at the same time sounding the alarm that our conception of entrepreneurship has been overtaken by it in a way that is counterproductive to our overall economy and hides fundamental truths about the state of our broader entrepreneurial ecosystem.
Endnotes
1 1. “Facts & Data on Small Business and Entrepreneurship,” SBE Council, copyright © 2018, https://sbecouncil.org/about-us/facts-and-data/
2 2. Arti Grover Goswami, Denis Medvedev, and Ellen Olafsen, High‐Growth Firms: Facts, Fiction, and Policy Options for Emerging Economies (Washington, DC: World Bank, 2019), https://openknowledge.worldbank.org/handle/10986/30800. License: CC BY 3.0 IGO
3 3. Diana Farrell, “For Small Businesses, Cash Is King,” JPMorgan Chase & Co., September 2016, www.jpmorganchase.com/institute/research/small-business/insight-cash-is-king.htm; Alexander W. Bartik, Marianne Bertrand, Zoe Cullen et al. (2020), “Impact of COVID‐19 on Outcomes and Expectations,” Proceedings of the National Academy of Sciences 117, no. 30 (2020): 17656–17666, www.pnas.org/content/117/30/17656
4 4. Sameeksha Desai and Travis Howe, “Who Doesn't Start a Business in America? A Look at Pre‐Entrepreneurship Leavers,” Ewing Marion Kauffman Foundation, December 3, 2020, https://www.kauffman.org/entrepreneurship/reports/pre-entrepreneurship-leavers-in-america/?utm_source=newsletter&utm_medium=email&utm_campaign=currents-newsletter12_08_2020
5 5. “The US Startup Is Disappearing,” Quartz, 2018, https://qz.com/1309824/the-us-startup-company-is-disappearing-and-thats-bad-for-the-economy/