Book: Where The Jobs Are

A few weeks ago I had lunch with John Dearie to discuss a new non-profit he has started called The Center for American Entrepreneurship. Several friends and people I respect a lot are on the board, including Lucy Sanders (NCWIT), Troy Henikoff (Techstars Chicago), Bob Litan (Brookings Institute), Rebecca Lovell (Seattle’s Office of Economic Development), Monisha Merchant (formerly Senator Bennet’s Economic Advisor), Jonathan Ortmans (Global Entrepreneurship Network), Jason Seats (Techstars), Dane Stangler (Kauffman Foundation), and Vivek Wadhwa (Stanford).

When I know, work with, and respect more than 50% of the board of a new non-profit, I pay attention. I’m glad I did – the conversation with John was stimulating. He has a vision and the experience to create a non-partisan organization to engage and educate people, especially policymakers in government, regarding the critical importance of entrepreneurs and startups to innovation, economic growth, and job creation.

While that might sound like a mouthful, I’ve been railing against the limitations of the way our government thinks about entrepreneurship for a decade. I’ve had a number of meetings over the years with the Small Business Administration (SBA) whose name says it all. I’ve often encouraged them to rename themselves the High Growth Entrepreneurship Administration, or even to create a separate organization, or split the SBA in two, or, in a fit of libertarianism, eliminate the SBA altogether. But, I know that none of that is going to happen because of a number of factors, including the fundamental lack of understanding in government about the difference between small business and high growth entrepreneurial businesses. Oh, and inertia.

Over the last few years, I’ve been exploring the idea that we really have two types of small businesses: local businesses and startup businesses. Both are important, but they have very different needs and contribute to the fabric of our economy in very different ways. As John and I were talking, he slid his book, Where The Jobs Are: Entrepreneurship and the Soul of the American Economy, across the table to me. I turned the pages and then over the weekend I read it while laying on the couch after a run.

It’s a great book that every policy maker in government at any level should read. It’s the first book I’ve seen that lays out an effective set of policy recommendations, with substantiation, for the startup society that we are living in. Against the backdrop of total government confusion about economic growth dynamics, combined with endless shallow rhetoric about what to do, I found it to be refreshingly optimistic.

While The Center For American Entrepreneurship website has a series of pages describing the issues and solutions to them, I didn’t find a crisp summary of the book on the web. So I decided to create an outline of the policies and the recommendations. They follow. If you disagree with any, or have any to add, please toss them in the comments as I evolve this as a list of “ways government can help startup communities.”

“Not Enough People with the Skills We Need”

  • Incentivize STEM Education
  • Launch a Curriculum-Focused Dialogue Between Business and Education
  • Launch an Education Reform Dialogue Among America’s Educators
  • Incentivize Experienced Talent to Consider Joining Growing Startups

“Our Immigration Policies Are Insane”

  • Eliminate the Cap on H-1B Visas
  • Award “Graduation” Green Cards
  • Create a “High-Skill Immigrant” Green Card
  • Create a “Startup Visa”
  • Create CitizenCorps

“Not All Good Ideas Get Funded Anymore”

  • Make the SBA More Entrepreneur-Friendly
  • Incentivize the Formation and Commitment of Angel Capital
  • Fix Venture Capital by Fixing the IPO Market
  • Cultivate the Formation of Viable New Businesses
  • Increase Startups Access to Capital
  • Enhance the Science and Technology Capacity of the U.S. Workforce

“Regulations Are Killing Us”

  • Devise a Preferential Regulatory Framework for New Business
  • Require Third-Party Review of All Proposed Regulations
  • Create a Regulatory Improvement Commission
  • Rank States’ Regulatory Environment

“Tax Payments Can Be the Difference between Survival and Failure”

  • Establish a Preferential Tax Framework for New Businesses
  • Allow Cash Method of Accounting for the First Five Years
  • Allow 100 Percent Expensing of Business Investment for the First Five Years
  • Pass the Startup Innovation Credit Act

“There’s Too Much Uncertainty – and It’s Washington’s Fault

  • Gradually But Significantly Reduce the Federal Budget Deficit and National Debt
  • Enact Comprehensive Competitiveness-Enhancing Tax Reform
  • Increase the Research and Development Tax Credit – and Make It Permanent
  • Return Federal Funding of R&D to 2 Percent of GDP
  • Jump-Start America’s Trade Agenda
  • Negotiate a U.S.-China Free Trade Agreement
  • Combine and Modernize Unemployment Insurance and Trade Adjustment Assistance

Also published on Medium.

  • Chris Heivly

    Like in Startup Communities, you again have laid out a template from which others can build upon. Of course with John Dearie leading the way. Obviously this will be an instant purchase for any of us pushing this boulder up the hill. Every community (founders, mentors, investors, govt players, new companies, old companies, teachers, administrators) who strive to be relevant tomorrow requires this kind of thinking. Thanks to both of you for sharing.

  • Wow, what a list. Is that all? Here’s what I hear when I read this:we can’t find enough good people to hire, lets increase immigration for skilled workers mainly to fix that, the rules are too much of a burden, and of course, there isn’t enough money! Sounds a little whiny to me, just sayin. 🙂

    • I encourage you to think harder and more critically.

  • Doug Gibbs

    Instead of “Eliminate the Cap on H-1B Visas” take the advice from Cringley,

    Make the Visa salary based, so employers who want to recruit high value talent can get visas. This would be much better than having job shops apply for all the open slots, then try to fill them with the lowest cost employees.
    Increase the cap based on demand, but keep a cap to drive up wages.

    If you ask me, H1-B is one place reforms could have a real and immediate impact.

    • I agree that there is a lot more we can do around H1-B’s to improve the dynamics and use of them.

    • I have said this forever. Simple. We say we are capitalists. Simply say here is the cutoff salary for H1Bs.

  • Local business and startup business need to meet one another more. The mutual mentorship and mindshare potential there is rattling around in my brain a lot lately.

    Also in the muck of managing a sizable SBA loan at the moment. The surprises and burdens that continue to come with it (and this isn’t our first) can be disheartening.

  • If you have an Amen Corner, I want to be in it.

  • Agree with a lot of this. Best point, get rid of the SBA…our federal bureaucracy is a behemoth. It costs $2B to manage $5B in federal grants……

  • SeanGorman

    To make this politically sustainable I believe you need some targeted investment into citizens that feel disenfranchised by this approach. We count on the mobility of labor to balance out demand, but large parts of our population don’t want to leave for tech-poles. Immigration helps balance out demand, but also has the political negative externality of generating angst/anger. We generally feel labor should come to capital, but I think a lesson of Brexit and Trump is we need to shape policy that helps bring capital to labor. Otherwise we’ll have a really hard time addressing your “uncertainty bullet”. We can blame Washington but we can also point a finger at our own drive to aggregate capital and growth in just a few poles. Looking at the current political landscape it is arguably a market failure that could use some policy help/incentives. I think this goes hand-in-hand with immigration reform and the rest, but a critical aspect we neglect at our peril. I’m not sure what the right public/private solution or policy is, but we have a great community for getting started.

  • Robert Ross

    A couple of additions: 1. Eliminate minimum business taxes and fees for startups that are not yet generating revenues. 2. Incentivize growing startups to hire experienced talent…few are willing to hire people over 50.

  • Leslie Jump

    Brad — right on point. In addition to your note about incentives for Angel investors at the Federal level (some states have great policies), I’d also add something around the idea of accelerating the creation of alternative liquidity options for early stage investors. Experiments like the TSX in Canada or DFJ Esprit’s IPO should be cultivated, as we look for mechanisms to increase the options for liquidity in this asset class. Nasdaq’s acquisition of Second Market last year would seem to indicate they’re thinking in this direction, but we need more, faster to achieve real growth, particularly in markets outside the top tech hubs.

  • Kate Preston McAndrew

    To your points on education, check out what Design Tech High School is up to. Public charter focused around design thinking and self paced learning. Re-thinking public/private partnerships and scaling through open-sourcing curriculum and training teachers vs. building more brick & mortars.

  • False dichotomy. There is a continuum of businesses, from the solo guy who cuts your lawn or cleans your house to the 3 employee corner store, through the local restaurant chain with five store, the two-state supermarket, the regional legal firm, the East Coast bank, the European financial giant, Uber in a dozen countries, Amazon in dozens, Netflix in hundreds, and Google in all but four.

    The VCs focus on the startups that could be national and global. The SBA on the local companies. No one in the financial markets seems to care about or serve those in the middle of the list, at least not when they are young and growing.

  • Annelise Pitt

    Universal health insurance: I am sure that it is obvious to you all that the cost of health insurance is huge and must be a consideration for startup businesses — but not so obvious is how this perk influences attracting the best talent. An employee considering working for an exciting new venture may be willing to give up the company car, free commissary, and the lodge on Cape Cod (HP used to have that btw) – but giving up health insurance is a deal breaker. Universal health insurance levels the playing field. The ACA helps, but hasn’t completely removed the cost. (One could argue that, because it is cumbersome, it actually increases the cost.) Imagine a world with health insurance completely off the company’s books, and talent roaming freely.