were five years old or younger. By 2015, that number had fallen to one-third.”
By Baird’s reckoning, only about a third of metro areas in the U.S. saw more firms born than die. Pause a minute and think about that. What is going on in the other two-thirds of America? And if small business represents the country’s economic engine, how might that explain in part the backlash against Silicon Valley that we are currently seeing on the political and economic landscape?
Baird’s beef is not so much with what the government is doing to stifle innovation, as with what it’s not doing. Government policy can actively seek to promote a founder-friendly environment, and allow those types of innovative companies to thrive in non-traditional places. Among the policies he advocates in “Blind Spot” include:
- Revamping the use of municipal bonds to finance sports stadiums. Even though such projects have not shown to create jobs and grow local economies, Baird writes, they might do so under different deal terms. For example, if a local government agrees to finance a stadium, for every $10 the government commits to the project, the private investors in the deal could be required to provide $1 to startup entrepreneurs who set up shop near it.
- A “Job Bond” that incentivizes private investors to provide the first capital to small businesses in their communities. Government economic development funds would pay back the private investors, but only if the new businesses create net new jobs.
- A “Small Business Repatriation Holiday” that allows companies a one-time tax amnesty on money they bring back to the United States from overseas accounts—provided that one-third of that expatriate tax revenue be used to create a investment fund that supported startups innovating in key national goals.
“Government can also play a proactive—and often underappreciated—role in driving innovation,” Baird writes. “In some ways government is the original venture capitalist.”
Building stronger support systems for early stage companies can help increase the numbers of the potential job-creating companies in the future, Baird says.
In the meantime, The Times’ Manjoo writes, startups essentially have to tailor their business models so that they are compatible with one of the large tech companies’ platforms in order to succeed. After all, can you think about being innovative in e-commerce or social media without connecting to
