Business has a big role to play, too.
A century before the late co-founder of Apple, Steve Jobs, said, “A lot of times, people don’t know what they want until you show it to them,” another American business giant, Henry Ford, observed that, “If I had asked people what they wanted, they would have said faster horses.” This common thread from Jobs to Ford is part of America’s core DNA: we accept risk and pursue innovation, with the promise of a brighter future.
Unfortunately, entrepreneurship today in America is at a crossroads. The engine that has fueled the country’s nearly 250-year journey from startup nation to global powerhouse is sputtering. According to a recent report from the Kauffman Foundation, new firm formation remains in a long-term deficit, roughly half of where it was a generation ago. And without a serious course correction, America is poised to lose its entrepreneurial mojo.
We’re approaching an era in which products and services will require the Internet, even if the Internet doesn’t define them. I call this the Internet’s “Third Wave,” where the concept of the Internet of Things — of adding connected sensors to products — will be viewed as too limiting, because we’ll realize that what’s emerging is the much broader Internet of Everything.
With its emphasis on the transformational change of older economic sectors, the Third Wave will have far more in common with the companies that laid the groundwork for the Internet in the 1980s and 1990s (AOL, Cisco) than it will with the app-driven 2000s (Facebook, Twitter).
A new social app can—at least initially—garner hundreds of millions of users without ever bumping into a regulator. Today, entrepreneurs looking to disrupt many aspects of health care or financial services without engaging with the FDA or the SEC could end up out of business. Take Uber, for example. Someone always brings up Uber as an example of a company that didn’t partner or even work with government. And that’s partially right. Initially, Uber employed a strategy of “ask forgiveness, not permission.” But that didn’t— and couldn’t—last long. As Uber expanded, the company faced lawsuits in dozens of states and significant, often insurmountable regulatory hurdles, in overseas markets such as China and Europe.
However, the onus should not be on Third Wave entrepreneurs to fight through red tape on their own. To get economic growth, America needs to support growth. It is the government’s role to establish the conditions that allow our entrepreneurial community to flourish.
Rekindling a renewed sense of American entrepreneurship and a shared sense of prosperity will require collaboration across corporations, entrepreneurs and government. That’s why I’m backing a seven-part “R.E.S.T.A.R.T. America” agenda that includes a mixture of policy, business and community initiatives to reawaken the entrepreneurship needed to vastly increase the number of startups being launched—the single most powerful tool to combat joblessness and stalled economic growth.
The agenda: (R) Reform the Way DC Works with Startups; (E) Educate for the Third Wave; (S) Source Goods and Services from Startups; (T) Tax Incentives for Regional Entrepreneurship; (A) Attract and Retain Talent; (R) Rethink Capitalism; (T) Transform Local Ecosystems.
Washington’s role has to start with reforming complicated crowdfunding rules and the broader regulatory framework, which is intended to protect consumers, but sometimes has the unintended consequence of making it difficult for entrepreneurs to raise money and bring innovative ideas to market. As Third Wave technologies like drones, driverless cars, and artificial intelligence gain momentum, the government will need to carefully balance the desire to regulate with the need to let new and fragile innovations develop.
America’s education system has done a better job the past few years focusing on STEM subjects, coding in particular. But we need to teach more people how to do things that machines can’t do, including teaching entrepreneurship as a core skill and encouraging it as a career path. And to make it possible for more college graduates to pursue their startup dreams, we need to reform the federal student loan program to allow entrepreneurs to postpone repayment for at least two years; to give founders the opportunity to get their companies off the ground.
President Donald Trump and his team identified a large swath of the American population that feels left behind by globalization and technology, and ran a disruptive campaign to engage those people in the political process. As President Donald Trump approaches his first 100 days in office, it’s worth asking what the administration and Congress will do to address the problems of those that propelled Trump’s victory.
I’ve spent the better part of the last three years traveling through what people often refer to as “flyover country,” where entrepreneurs struggle to unlock local and regional capital. Borrowing inspiration from the Empowerment Zone program, a government initiative that financed economic development projects in distressed communities across the country, we need a program of tax incentives to drive capital towards job producing innovative startups. Passing the Investing In Opportunity Act, which defers capital gains for investments in Rise Of The Rest cities, would be a good start.
Big businesses can play a role, too, by sourcing goods and services from the startups in their neighborhoods. This early money is like yeast for small startups, with the large corporations benefiting in turn from a long-term pipeline of suppliers, partners, talent and ideas.
Business leaders must also engage in an honest conversation about capitalism and entrepreneurialism. Capitalism deserves a bulk of the credit for improving the human condition, but business leaders can’t let the short-term interests of transient shareholders push them to make decisions that will hurt them and their constituencies in the long run. That means that ‘we the people’ must demand companies put a greater focus on how their strategic plans affect society beyond the bottom line—including how technology affects future jobs.
Can we re-imagine capitalism and focus on both purpose and profit? Unleash a new, more diverse generation of entrepreneurs? Level the playing field and help the people and cities left behind rise again?
I believe we can and we must. To do otherwise won’t mean the end of America. But it could mean the end of American leadership.
Steve Case is the co-founder of AOL, the chairman and CEO of Revolution LLC, and the author of the recently updated and expanded best-selling book “The Third Wave: An Entrepreneur’s Vision of the Future.”