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Do Startups Really Create Lots of Good Jobs – Harvard Business Review

Posted on Jun 15, 2016 in Articles, Authored, Harvard Business Review

Cross-posted from Harvard Business Review, June 6, 2016 Eskimos have 50 words for snow. Humans only use 10% of our brains. We hear these types of “facts” all the time — but are they true? Scientists are now saying, “Not so simple.” We have all seen how repetition of a particular statement or idea tends to lend it legitimacy – the so-called “truth effect.” This effect is likely strengthened when the assertion is made in a serious context by intelligent people with authority. Consider the idea, increasingly an assumption of fact, that “startups create jobs.” Since President Obama exhorted Americans to create startups, and the U.S. government, the Kauffman Foundation, and other partners launched the Startup America Partnership (which launch I attended), startups have been increasingly put forward as drivers of economic growth, in large part because it’s become accepted as fact that startups create jobs. But do they? Here are five significant challenges to this widely-accepted policy “fact”: What do you mean by “startup”? The word “startup” has become TV-worthy, with the popular shows Silicon Valley, Shark Tank, and Apprentice purveying passionately pitched startups. But if you probe further, you’ll find that different people mean radically different things when they use the term. Researchers define startups as newly registered firms, sometimes with at least one employee (often the...

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What Schumpeter Got Wrong About Innovation and Entrepreneurship

Posted on Jun 5, 2016 in Articles, Authored, LinkedIn

Which is entrepreneurial, and which is innovative: Venture A or Venture B (real but disguised)? Venture A, an eight-year old startup with patents, a vision to disrupt a large growing market (think big data in a basic industry), $3 million of revenues, a $20 million operating deficit funded by investors, and an implied valuation of $200 million? The founders have 40% of the equity. Venture B, the eight-year-old acquisition of a 35-year-old copycat business (think generic drugs), no patents, that has grown in eight years from $37 million of legacy revenues to $1 billion, $200 million of operating surplus, and an implied valuation of $2 billion? The team also has 40% of the equity. You can hardly say both because, except the equity stake, they are diametrically opposed. Most people confuse entrepreneurship and innovation. Entrepreneurship and innovation are distinct and need, in order to be useful, to remain distinct. There is a lot of innovation without entrepreneurship (think NASA, Manhattan Project) and lots of entrepreneurship without innovation (think copycat generic pharmaceuticals).  Some entrepreneurship leads to later innovation, and some innovation leads to later entrepreneurship. A good illustration of an investment in pure innovation, but not entrepreneurship, is the new $317 million MIT fabric and fiber innovation center, with involvement of government (DOD), private investors,...

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Fostering Scale Up™ Ecosystems For Growth

Posted on Mar 15, 2016 in Articles, Authored, Miscellaneous blogs, Other

If more and more companies grow more and more rapidly in your region, your economy will grow. Since 2010 we have been pioneering new methods for using entrepreneurship to drive regional economic growth. Rather than focusing on increasing the number of new firms, we are catalyzing local ecosystems which increase the firms with new growth – Scale Ups. Scale Ups are companies that enter into new, rapid growth trajectories. Our experience is that roughly 10-20% of existing businesses in...

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Fostering Scale Up™ Ecosystems For Growth – The cases of Manizales-Mas and Scale Up Milwaukee

Posted on Mar 15, 2016 in Articles, Authored, Miscellaneous blogs

Daniel Isenberg and Vincent Onyemah [1] To appear in MIT Innovations: Technology, Governance, Globalization March 8, 2016 The search for reliable and replicable strategies to stimulate regional economic prosperity is as old as the field of economic development itself. [2],[3] These strategies have included the encouragement of direct investment, business attraction and retention,[4] and sector-based cluster strategies.[5] More recently, the role of entrepreneurship has been explicitly recognized, descriptively and prescriptively. Glaeser et al. and others have shown that one...

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Launch a Scalerator™ for New Growth

Posted on Mar 15, 2016 in Articles

One of the core activities in our Scale Up™ economic development projects is our innovative, growth driven Scalerator™ business training program. The Scalerator™ demonstrates how a surprising number of “post-revenue” companies can experience tangible new growth in sales, cash flows and increased growth capacity in just a few months. Not only does this new growth ignite a virtuous circle, we use the Scalerator™ to systematically align the local stakeholders around supporting more rapid growth, the way growth really happens...

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