Entrepreneurial Ecosystem Nuances

There is a lot of focus on trying to create the right conditions for having self sustaining entrepreneurial ecosystems in cities and states across the country today. It’s the right thing to do. One of the reasons for this discussion is the desperate state of the economy. Obama has run it off a cliff and if we don’t get some sort of GDP growth quickly, we are doomed. Entrepreneurs know how to scale growth quickly with few resources. That’s tailor made for the type of environment we are in.

Most of the discussion centers on fifty thousand foot concepts. We talk about the kinds of start ups, where to locate them, infrastructure they will need, mentoring, pivoting, funding, and all the glamorous stuff that’s really fun to imagine and create. What’s forgotten is what really happens if an entrepreneurial ecosystem gets going.

If you get some successful start ups, those founders get rich. Some of their employees get rich. To couch this post into the lens of people that love class warfare; they become part of the 1%. But did you ever notice what happens around that 1%? All kinds of mom and pop businesses pop up. Low skilled labor jobs are created to support the entire entrepreneurial ecosystem. Restaurants, dry cleaners, gas stations, domestic help and other outlets of low skilled jobs pop up around the engineers and innovators.
We tend to forget those low skilled workers when we “plan” these ecosystems. But they are directly affected.

It’s not essential that we target them to try and make things better through subsidies or direct transfer payment. But it’s absolutely essential that governments configure their regulatory net to make them as simple, pain free and light as they can so these valuable workers can start to organize and set up support businesses of their own. For example, where I live in Chicago the rules and regulations are so arcane and deep it’s very expensive to set up a business. If government won’t get out of the way, how can these people even grab the first rung of the ladder?

If they do start a support business and begin to earn some income, it’s interesting what happens. They have a better quality of life, even though they work really hard. But it’s their children that are the beneficiaries. The parents are able to provide some stability, a foundation if you will that the kids can build off of. They might go a bit further in school, begin to think a little more creatively, build different types of support businesses of their own. The support ecosystem starts to energize and re-create itself just like the over riding entrepreneurial ecosystem.

Often, we don’t think about these niche benefits. Taken by themselves, they really don’t seem that important. That sandwich shop on the corner that provides a cheap lunch and gathering place for some worn out coders isn’t paramount in minds when we can talk about incubators/accelerators and funding companies. But the person behind that sandwich shop counter becomes entwined into the ecosystem too. They will creatively expand, adapt and fill in the cracks to allow the environment to build a firm, strong foundation.

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  • donw

    Great post !  Stay at the “old forge”  hammering away at this.  It’s absolutely essential.