The Job Engine

January 15, 2010

All of the angst around the “how” of funding early stage companies would be as meaningless as the philosophical debate that spawned the name of this blog, if it weren’t for one essential outcome: job creation. I was reminded of that perhaps obvious point yesterday when a friend handed me a copy of “It’s Not as Bad as You Think: Why Capitalism Trumps Fear and the Economy Will Thrive”, by economist Brian S. Wesbury. Wesbury is a supply-sider and takes the long macro-economic view, but after a quick skim I got to thinking about how to repower our job engine. The answer was easy — startups.

A short while back I was sent a slide produced for the Kauffman Foundation’s president and CEO, Karl Schramm, for his participation in the President’s Job Summit last December. A summary and PDF are posted on their site. The most impressive bit is reproduced below, and shows that for the past 30+ years, job creation from startups has been the driver of job creation in both up and down economies. In fact, 1984 was the last year job creation from non-startups was anywhere near that of startups. I’ve suspected that in my gut, but it’s great to see the data.

The most disturbing part of the slide, however, is the trend in the blue bars. Or, should I say, the absence of a trend. With all the fervor over the potential for new, low-cost startup business models, we aren’t seeing a lot of additional jobs being created annually from startups. I suspect the numbers don’t count a lot of entrepreneurs who don’t technically “employ” themselves (and may not even pay themselves…), but this seems like a real opportunity.

Core to the formula: get these folks some funding. Still looking for the big ideas that ratchet up the volume to 11.