I am launching a series of articles called Apple Pie Economics to identify the obstacles that get in the way of the American entrepreneur. Apple Pie Economics was inspired by the stories I hear frequently about the games of high stakes Frogger that business starters have to play with the American economic system. Just to give you a flavor, I’d like to tell you about Laura.
I met Laura on New Year’s Day at a party. Laura told me she was glad to meet a business lawyer because she had some questions. I was deeply inspired by her story – here it is:
Five years before, Laura was a consultant at a big accounting firm married to an actor. Laura and her husband had two big professional problems: he couldn’t find steady, paid acting work; she, stuck in endless corporate meetings, was bored. Together, Laura and her husband decided to launch a business in Chicago to produce corporate meetings using actors as the facilitators. Although she was entering a crowded field, they planned to compete on quality and originality.
First, Laura created an environment of respect for the actors by treating them well and paying them better. Second, Laura hired an expert in industrial communications to contribute strategies and insights based on academic research into communications and learning patterns. Then, Laura applied her experiences in the corporate world to create novel, engaging programs. By honoring both the actors and the corporations who hired them, she coaxed better performances out of her actors and deeper participation from the corporate employees who attended the sessions.
From the beginning, her company was a smash. Her first client was a Fortune 50 company located in New York, who loved the work; good word of mouth brought more jobs.
“I expected my little business to go slowly and to take years to build, but it took off from the very beginning. I was overwhelmed, but I handled it and kept thinking ‘what a great problem to have’.”
The US needs more entrepreneurs like Laura to create jobs and create wealth. Most net new jobs get created by new ventures – so says the Kauffman Foundation, which looked at 40 years of census data to count the jobs created in America. (If you are interested, you can also take a look at the US Census Bureau’s analysis here, here and here. I plan to talk more about these numbers and what they mean in a later post.) Even though older companies create more jobs, they also cancel more jobs, which means that the new jobs created by startups are where we actually make employment gains. For instance, from 2007 to 2009, startups created 8,206,452 jobs. Existing companies did create 26,125,966 jobs during those three years, but they also canceled 35,347,539 existing jobs. That means that existing businesses terminated 9,221,573 more jobs than they made. But, startups almost made up for that deficit – almost. Here is a chart demonstrating the jobs created and jobs taken away.
In spite of the importance of startups to American employment, not only are there still doubters (e.g. this nuance-free, misleading post), our current commercial systems seem almost booby trapped to stop entrepreneurs in their tracks. Laura’s story highlights some of the mines.
After only six months, Laura had booked jobs across the country. Using her husband’s theater networks, she was able to produce meetings in different cities, using hometown actors, providing local flavor to her productions and jobs for communities of actors in and outside Chicago. After a mild dip in 2009, her business started to make real money and she felt creatively and intellectually fulfilled.
I expected Laura to ask me the standard business law questions about commercial insurance or negotiating. I didn’t expect her to ask me,
“What do I need to do to shut my company down?”
Laura had taken a new job with a big accounting firm; her first day was Monday. She is an employee again, and her employees are looking for jobs.
Apple Pie Economics will look at the obstacles in the path of the American entrepreneur. Some of those obstacles include:
Life without a net
A game “rigged for big”
Hidden laws and regulations
Can’t do attitude
Our American core is entrepreneurial but our American economy is rigged against entrepreneurs. I believe this because I’ve spent over a decade working with entrepreneurs and I’ve seen the struggles they have endured or lost trying to make their dream go. Businesses must adapt or die; but, there are forces and accidents that are getting in the way of us living up to our entrepreneurial potential. I want to examine this, to gather the tools and advantages in the American entrepreneurial arsenal. And, I want to expose and propose fixes for the obstacles.
Over the next few months, I’m going to write about real challenges faced by entrepreneurs, how government can propel startup activity (and how they fail trying) and how you and I can do our part to help entrepreneurs start businesses and create jobs. And, we’ll also get back to Laura and the forces that ultimately propelled a successful, creative entrepreneur back to regular employment.