Posts Tagged ‘entrepreneurship’

Richard Florida
by Richard Florida
Fri Dec 10th 2010 at 11:15am UTC

Cities, Brains, and Brawn

Friday, December 10th, 2010

Just as people with higher levels of education have fared better during the Great Recession, cities and regions with higher levels of human capital have experienced lower rates of unemployment and higher wages. But human capital, which takes into account only the level of a worker’s education, is a crude measure – some of the world’s greatest entrepreneurs, like Bill Gates and Steve Jobs, are college dropouts.

A while back, I wrote about research done by my colleagues at the Martin Prosperity Institute (MPI), that took data provided by the Bureau of Labor Statistics’ O*NET Project on actual skills (physical skills of the sort used in manufacturing, analytical or cognitive skills, and social intelligence skills like the ability to direct teams, form entrepreneurial new businesses and organizations, and mobilize people and resources behind common causes and objectives) and charted their relations to the economic performance of cities and regions. (more…)

Richard Florida
by Richard Florida
Thu Nov 25th 2010 at 11:00am UTC

The Social Advantage of Large Cities

Thursday, November 25th, 2010

From Silicon Valley to Shanghai, cities are increasingly seen as engines of economic progress. Cities bring together diverse groups of people and companies in ways that increase productivity and create the networks, clusters, and chance interactions that lead to the discovery of new innovations and the creations of new entrepreneurial businesses. Up until now, the economic performance of cities has been gauged in terms of the education or human capital level of residents or the kinds of work they do.

But new research by my colleagues at the Martin Prosperity Institute sheds lights on the relationship between cities and three underlying types of workforce skills – physical skills of the sort used in manufacturing, analytical or cognitive skills, and social intelligence skills like the ability to direct teams, form entrepreneurial new businesses and organizations, and mobilize both people and resources behind common causes and objectives. The chart below plots the distribution of these three sets of skills by city size. (more…)

Richard Florida
by Richard Florida
Fri Jul 30th 2010 at 4:30pm UTC

Internet Connectivity and Economic Development

Friday, July 30th, 2010

Across the world, two in 10 households have access to the Internet at home, according to a just released Gallup survey. Internet access at home was far greater in more economically advanced countries: Nearly eight in 10 people (78 percent) in countries where gross domestic product (GDP) is more than $25,000 have Internet access at home. Home Internet access drops off steeply in less affluent, less developed nations, according to the Gallup survey, especially in countries with less than $10,000 in per capita GDP. The survey is based on telephone and face-to-face interviews with approximately 1,000 adults, aged 15 and older in 116 countries, and was conducted in 2009.

The map above, by Zara Matheson of the Martin Prosperity Institute, shows the percentage of households with Internet connectivity, highlighting the top 10.

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Richard Florida
by Richard Florida
Sat May 22nd 2010 at 12:00pm UTC

Startups Surge in The Great Reset

Saturday, May 22nd, 2010

Economic crises like the current one have devastating economic and social costs, but they also give rise to major rounds of technological innovation. That’s why I call them Great Resets. There was a significant spike in patents in the wake of the Panic and Long Depression of 1873 – and subsequent decades saw the rise of major new innovations from the light bulb, phonograph, and telephones to systems innovations like electric power, telephone systems, and urban transit (i.e. street cars, cable cars, and subway systems). The Great Depression was far and away the most “technologically progressive decade of the 20th century,” according to the detailed research of economic historian Alexander Field, outpacing the high-tech boom of the late 20th century by a considerable margin.

Joseph Schumpeter long ago showed how economic crises give rise to the gales of creative destruction – as new entrepreneurial individuals and enterprises seize the opportunity to forge new business models, and new industries revolutionize and transform the economy. The British economist of innovation, Christopher Freeman, found evidence that innovations not only accelerate but bunch up during economic downturns only to be unleashed as the economy begins to recover, ushering in powerful new waves of technological change. (more…)

Richard Florida
by Richard Florida
Fri May 14th 2010 at 2:23pm UTC

Brains, Boulder and the 3Ts

Friday, May 14th, 2010

I have a new post over at BNET responding to Mike Mandel and a BNET piece earlier this week. The gist of my post is that when you look at real income levels and housing values, creative metros that score high on the 3T’s outperform others.

While we’re at it, The New York Times has a nice piece today on the rise of Boulder, Colorado, as a mecca for new high-tech startups. Here are some stats:

From 2007 to 2009, venture capitalists invested $1.9 billion in 275 Colorado start-ups, up from $1.6 billion in 247 companies from 2004 to 2006, according to the National Venture Capital Association. The money is coming from Colorado venture firms — including the Foundry Group, a prominent firm in Boulder — as well as from Silicon Valley and New York.

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Richard Florida
by Richard Florida
Sun May 2nd 2010 at 9:00am UTC

Talent Resets and Popular Culture

Sunday, May 2nd, 2010

Great Resets are also talent resets. America profited greatly from influxes of talented inventors like Nikola Tesla and entrepreneurs from Andrew Carnegie to Intel founder Andy Grove. And foreign-born entrepreneurs and technologists form the backbone of many high-tech fields and are the driving force behind one-third to one-half of Silicon Valley companies.

But talent resets also extend to arts and culture. In fact, America’s ability to attract foreign artistic and creative talent was central to its post-war rise as a major creative center. A new book by Dorothy L. Crawford (h/t Dan Silver) documents how European artistic and creative talent fled Nazism and took root not just in New York City but in Los Angeles, revolutionizing the creative climate there; the Nazi regime propelled a veritable slew of German musicians to emigrate to the L.A. region, where they set about revolutionizing modern classical music and film composition. This review by Lindsay Hansen shows the influence of Schoenberg:

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Zoltan Acs
by Zoltan Acs
Tue Feb 2nd 2010 at 8:38pm UTC

Entrepreneurship and the Economy

Tuesday, February 2nd, 2010

EconomyMoney

As one looks around the economic landscape I am struck by the devastation. One number stands out above all others. One in five males between the ages of 25 and 55 is out of work! That is a staggering number. The numbers are not going back to anything “normal” anytime soon according to the IMF. Financial crises followed by recessions do not return to normal levels of employment for over a decade. Why you might ask? The answer I guess is that the levels of debt need to be worked down. Everyone owes everyone money and none pay anyone. Second, the recession destroys real capital. In this situation it was housing. It will take years to work off the excesses of the housing crisis.

So what does entrepreneurship have to do with the recession? If we take what we know today, entrepreneurs and innovation play a vital role in the economy. But can they help us in the great recession? In other words, what policy should we be pursuing to move the unemployment rate below 10 percent and back into the neighborhood of 5 percent? We know that new firms are important. They create most of the net jobs.  However, only a small percent, perhaps 4 percent, create almost all of the jobs in any given four-year period. And this seems to hold up in different times, different countries, and different industries.

So how do we forge a policy? Two stories are told out there. First we know that age and size are important variables. And we know that age appears to be more important than size. In other words, we should target firms based on age not size. The two stories out there are one by Zoltan Acs and the other by Carl Schramm. In a highly influential study, Acs found that the average high impact firm was about 20 years old and came in all sizes, small, medium, and large. Schramm, on the other hand, using a Census Bureau study, found that firms less than five years old created almost all of the jobs independent of size.  They both cannot be right.

However, if we are interested in short-term policy solutions and not real economic growth, we should help stimulate solo self-employed. They have a start-up rate that is three times as large as firms with employees. They start easily but also go out of business quickly. So an effective policy would be to make it easier for them to stay in business longer.

A simple policy would be to cut the self-employment tax, not over 15 percent of all new solo self-employed firms to zero for three years. If they hired any employees we should cut the employer share 7.5 percent for three years also. This would greatly increase the survival rate for these new firms. Of course this is not a long-term solution because many of these firm will contribute very little to productivity, economies of scale, or wealth creation. But they will pull down the unemployment rate.

The impact on the deficit would not be great since many of these people would not have survived to pay payroll taxes anyway. Once the economy picks up the issue of long-run growth can be addressed. But in the short run, let’s get people working.

Peter Kageyama
by Peter Kageyama
Fri Nov 27th 2009 at 8:00am UTC

Florida Tourism – A Double-Edged Sword

Friday, November 27th, 2009

14th Street Lifeguard Tower

In her September 3 blog post, “Creative Florida”, Rana Florida asked for thoughts about Florida tourism. As a resident of St. Petersburg, Florida, I thought I should respond.

Tourism has long been the golden goose in Florida but it is also a double-edged sword. We have no state income tax in large part due to the sales tax revenue that tourism provides. When the tourists come, the coffers fill and all is well. When we have downturns in the economy or other disruptions (such as hurricanes or 9/11) our budgets shrink. This volatility prevents us from having a predictable revenue stream which in turn means less long-term planning.

For better or worse, tourism also defines Florida. For many it is great to have that identity but I know a lot of creative class entrepreneurs in high-tech who lament that they can’t attract talent or VC interest because no one takes Florida seriously as a business environment.

But to me the largest impact of tourism is that it has made us lazy (I say this with love, Florida!). Tourism is easy money and we have coasted on that for too long. When the tourists just arrive with bags of money, why innovate? Why invest in our schools or our infrastructure? Why make the hard tax choices when we can raise the bed tax on hotel rooms or local tax on car rentals? We need to rethink tourism and make it a higher value experience, one that leverages the service economy and makes it more creative and innovative.

Florida had a wake-up call last year when, for the first time since WW2, we had a net outflow of population. That is a seismic shift in the underpinnings of Florida’s economy and I hope that it forces us to look at diversifying our economy and making the harder choices of developing industries beyond the beach and theme park.

Robert Wuebker
by Robert Wuebker
Mon Oct 12th 2009 at 9:25am UTC

Revisiting Drucker’s Innovation and Entrepreneurship

Monday, October 12th, 2009

What, exactly, is entrepreneurial strategy, anyway?

I regularly teach classes on entrepreneurship and new venture development, and more than occasionally drop in to provide my perspective on topics of interest to those forming or funding technology-driven, high-growth companies. Since I have been spending a lot more time up in front of students (and, thus, getting peppered with great questions), I have been giving a lot of thought to what passes for “entrepreneurial strategy” courses (or sections of courses). To me, it seems that the bulk of entrepreneurship pedagogy has, in a relatively brutish way, simply ported over the issues relevant in a typical strategic management class and attempted to convert those topics into material appropriate to the new venture setting. The more I think about it, the less persuaded I am that this is helpful for students; and I continue to have my suspicions that this approach forwards the research frontier.

Why we have decided to believe that the theories and questions in strategic management – relevant to large, established firms – apply equally well to either nascent or newly established firms merits further consideration. What evidence do we have that the same proscriptive advice we give in the case of large-firm strategy applies to nascent or newly established firms? And does that advice apply equally well for both innovative, high-growth firms (the software startup) and replicative entrepreneurship (a neighborhood bakery)?

In Innovation and Entrepreneurship, Peter Drucker notes, “I have not come across any discussion of entrepreneurial strategies. Yet they are important, and they are distinct, and they are different.” Consider that the next time you are perusing your local bookstore seeking insight on how to build a business.

Zoltan Acs
by Zoltan Acs
Tue Jun 16th 2009 at 11:38am UTC

Are Recessions Good for Entrepreneurship?

Tuesday, June 16th, 2009

Entrepreneurship seems to be the cure all for almost everything including the common cold. In a recent paper, the Kauffman Foundation found that the number of Fortune 500 companies and Inc 500 companies were founded in bear markets. A bear market is when stock prices are more or less falling and a bull market is one in which they are rising. Now this seems counter-intuitive at first. Would you not start a business when times are good? In bad times, if other firms are having trouble selling goods and services, why would you start another one? However, there is another aspect to this. If you lose your job you might have to start a business (a necessity entrepreneurship). But I do not think many of these would grow up to be Fortune 500 companies.

So how do we explain the Kauffman finding? Well, a quick look at bear and bull markets reveals a very interesting finding. Over the whole of the 20th century we found about three bear markets (the market rising) and about three bull markets (the market falling). Each is about 15 years, give or take a little. Keep in mind that a bear market does not mean recession. Recessions are short, but bear markets can last a very long time. In fact, the current bear market stated about 2001 so we are about halfway through if you take the more or less 15-year average. So it is not surprising if about half of businesses are started in bear markets. In fact, a quick look at the statistics suggests that the start-up rate of new firms is not very sensitive to recessions. They are around eight percent. They never fall by 50 percent and never rise by 50 percent.

So what does this finding tell us? Nothing I am afraid. It is business as usual. In good times and bad times Americans will start businesses. I would suggest that the creative class start-up rate is also very steady in the recession. The regional variation of this might also be very interesting.