Victor Hwang is the Founder and CEO of Right to Start, which is organizing a movement that seeks to open doors for more people to become entrepreneurs and create an ecosystem in America that supports entrepreneurial activity. After many years leading entrepreneurship efforts at the Kauffman Foundation in Kansas City, Victor started his own organization built around the belief that becoming an entrepreneur is a fundamental right that anyone can exercise.
In this episode, we talk about the four-decade decline in entrepreneurial activity in the US, how the pandemic has caused a spike in new businesses and why it can be a good time to get started. He also talks about a policy proposal that 5% of economic development funds, which usually go to support large companies, be instead redirected to supporting entrepreneurs. America — and the world — needs more people who try, who experiment, who start something that didn’t already exist.
Transcript
Victor: America was born as a startup nation. And this idea that we’re a super entrepreneurial nation was being challenged if you actually look at the numbers. But last year, there was a spike. The pandemic really changed a lot of things. And so what we don’t know right now is where that spike is going to go.
A lot of people started new businesses. A lot of them did it out of desperation, but a lot of them did it because they wanted to change their lives and saw some opportunities to take advantage of. And we’re not sure how that’s going to shake out, but it is going to be interesting to see. It was the first spike we’ve seen like that in over four decades. So it’s a really powerful moment for entrepreneurship.
Dale: Welcome to Make:Cast. I’m Dale Dougherty.
My guest for this episode is Victor Hwang, who organized the right to start movement that seeks to open doors for more people to become entrepreneurs and create an ecosystem in America that supports entrepreneurial activity.
Unfortunately, the word entrepreneur has become so closely tied to tech company founders, that it seems like it’s something rare and exceptional, but entrepreneurs run small businesses that employ one to ten people. In Victor’s view, it’s about improving the chances that more people can succeed as entrepreneurs and that ordinary people of all backgrounds have a chance of getting started.
Victor believes entrepreneurship is a fundamental right for everyone, not just the few and the pandemic might be causing some people to break away and start something new. Some of them could be makers, many of whom have the energy and the ingenuity that entrepreneurship requires.
One of the policy proposals that we talk about is that cities and their economic development agencies should allocate 5% of the funding that goes to supporting large companies and redirect it to benefit a broader and more diverse set of entrepreneurs who are trying to do something which is hard, but extremely valuable –to create a new business, to make something that doesn’t exist, to experiment and try something that large companies just don’t seem able to do.
I’m delighted to talk to Victor Wang of the right to start movement. Victor, I know you worked at the Kauffman Foundation and you’re in Kansas City, but give us a little bit of background on yourself.
Victor: Sure. So I’m a child of entrepreneurs and immigrant entrepreneurs. My parents came to the U S and my grandfather was an entrepreneur in Taiwan, so my parents came and they were educators.
When I was fortunate enough as a teenager to get into Harvard, my parents obviously wanted to send me, but we couldn’t afford it. And so they had to take out a second mortgage on their house for one. But then they also had to start a business and that business was able to make enough money to send me to college.
So entrepreneurship means a lot to me at a personal level because I know how it can transform lives and open up doors for people. But over the course of my life, I’ve ended up really taking on this challenge of how do you help out entrepreneurs and innovators at scale? How do you actually transform societies so that communities and cities and even countries can lift up entrepreneurs because entrepreneurs are actually the source of so many good things in society. And I can, we can go a bit into that a little bit more, but so my background for over two decades now, I’ve been involved in fighting for entrepreneurs, whether as an entrepreneur, myself, as an investor but also working in running organizations that mentor entrepreneurs, non-profits working with government agencies.
Up until a little over a year ago, I was the head of entrepreneurship at the Kauffman Foundation. And for those that aren’t familiar with it the Kauffman Foundation, for several decades now has been viewed as the preeminent philanthropy in entrepreneurship. I ran the entrepreneurship work there and had a great privilege of doing so but then a year ago I announced the launch of this new organization, Right to Start. Basically it’s an advocacy campaign to lift up entrepreneurship as a fundamental right and a public priority. So right now we actually don’t pay a lot of attention to entrepreneurship in our public life. It’s hardly mentioned in the news, hardly mentioned in the policy discussions that affect our lives, but it really should be. It actually is a really important issue. It’s actually an a crisis moment and, but also a huge moment of opportunity as well.
Dale: So historically we’ve seen a decline in entrepreneurship, is that right?
Victor: Since the mid-seventies, since the census has been tracking it, entrepreneurship has actually been in a pretty big decline in the country. Just up through last year, we were at about half the rate of entrepreneurial activity, we were in before in the country from four plus decades ago. And that decline has actually been really quite powerful because now we were barely making enough new companies to make up for the companies that were closing down. So company closures were actually about the same rate as company openings, which was different.
Dale: The changes historically are more like social, economic or personal that we have fewer entrepreneurs, or those forces, even in combination are changing the kind of opportunity for entrepreneurs.
Victor: Yeah, the question is why was entrepreneurship falling for so precipitously for several decades? And and if you look at the data shows, it’s not one problem. It’s a bunch of issues. It’s taxes, it’s regulation, but it’s also healthcare. It’s debt loads student debt loads. It’s the way we do education. K to 12. It’s the way university education’s done. Community colleges, workforce training, economic development, patent policy, the way we do R and D all of it kind of factors into this. An analogy that a friend used for me is it’s like pebbles in a stream.
Every pebble seems insignificant in a stream, but when you throw in enough pebbles, it dams up the flow of the stream. And I think what’s happened is in entrepreneurship, we’ve dammed up the stream. Enough of these issues start to get in the way that it actually slows down the flow. And it’s not just policy issues and regulatory issues.
It’s social issues as well. As fewer and fewer people start businesses and become entrepreneurs, fewer and fewer people are able to mentor the next generation. And so it starts to become this rarer and rarer craft. The data shows that fewer and fewer people actually know a lot of entrepreneurs that actually show them the path on how to start a business and grow it.
And we also know that social fragmentation is happening. We have different social groups tend to cluster more together than they use. And we find that it’s harder to break across social networks to try to find people that can help you. There used to be more leveling platforms in American society than there are now. And so all these things add up where it’s harder to be an entrepreneur.
And we don’t pay attention. We ignore it because we get a lot of media stories about the high flyers. And you hear about Facebook and Google and these companies that are these amazing American success stories. But that’s really just the skimming off the top. If you look deeper in the stack of the American workforce, fewer and fewer people can take those types of leaps and build those types of lives and those types of companies,
Dale: There are many different types and different routes to becoming an entrepreneur. Talk a little bit about that. Sometimes our perception is that there’s just a few out there that have been massively successful and then nobody else.
Victor: I think that’s been a big part of the landscape for the few decades has been a real focus of our attention on the high-flying tech entrepreneurs that have really dominated the landscape and they’ve done remarkably well. And it’s had a lot of benefits and challenges for society as a result of that. But what’s missing a lot from that story are the entrepreneurs that are not in that elite set, that people that haven’t been so lucky, which are the people just trying to build businesses.
Some are businesses of one to ten people. Others are businesses of 20 to a hundred people, but that’s harder and harder. And the system actually shows that fewer people doing that. And it’s harder to actually sustain that. And the burdens actually are harder and costlier to do that kind of work.
It’s not where we need to go as a society. And the maker movement actually been a part of that and showing that look you can make stuff. You can create things that didn’t exist and they can solve problems in your house, in your neighborhood, in your community, or on the broader global markets.
It’s within everyone’s power to create and make stuff. And I think what’s happened is the internet has really changed everything because what was exclusively a tech business is– really the definitions of what a tech businesses have really blurred. So every business today is a tech business.
You cannot possibly exist in business without adopting technology and using it to be better and more efficient and to scale and grow. So what we need to do is actually rethink what it means to be a business and an entrepreneur in this day. It’s not that you have to be designing the latest, greatest technologies, but you can be using those technologies and applying them into all sorts of other businesses.
Steve Case, the founder of AOL, talks about this, which is this next wave of internet is around transforming old traditional industries but doing it in ways that actually are going to be very different than the old style tech businesses. When you’re a pure tech business and you’re just designing software and hardware, that’s breaking some of those old boundaries, you can just focus on, a certain very niche audience or a niche segment. But when you’re trying to move into traditional industries, you have to engage with those traditional industries. So you look at some of the great businesses built just in the last few years, they transformed the airline industry, the hotel industry, the taxi industry, and we’re just getting started. You think about all these old industries that need to be revamped.
It really shows that entrepreneurship or entrepreneurial-ism should be a tool set that gets woven throughout all aspects of business now. And that means it’s democratized. It should be democratized. We should all be able to have access to those tools and look at the problems around us and feel like we can use those new digital tools to take on any kind of industry.
Dale: I’ve read different things over the years, are entrepreneurs born or made ? Is it something that you have to have a certain kind of personality to be effective as an entrepreneur and certainly some people may have certain advantages that others don’t, but is it really democratized, given these tools and access to things like, lots of different kinds of people can do it?
Victor: The answer is both. There’s partly, certain people are born a certain way to be more risk-taking and, or creative or whatever. There’s actually research on this, they actually, I wish I’d remember the exact percent, but there’s an exact percent of which it’s genetic versus environmental.
And not be surprising. The majority of entrepreneurship, the majority of people start businesses actually do it because of their environment, not because it’s genetics. Genetics are, it’s less than 50% of it. But then environment is more than 50% of it. So how, the environment is who you’re surrounded with, the skills you’re taught, how you’re thinking, the connections and the access you have. The peer learning, you have access to looking at role models around you. All of these things are part of the 360 environment. And I think that’s the shift that’s happening now is realizing that entrepreneurial skills are really a 360 immersive thing. It’s not just a narrow band of specific– it’s not a specific profession in a sense. It’s really a way of looking at the world, a way of engaging with the world. And that has broad applicability.
Dale: And believing you can change it. You can do something about it. I liked the word immersive because I thought one of the qualities that I saw in makers was not so much like innate entrepreneurial-ism, but that they would dive into a passion, like 3d printing.
And as they were in there they go, like, why doesn’t this work better? Or why doesn’t something, why isn’t it easier for most people to use and they would try to solve that problem. And eventually I think if they got somewhere with that, that led them to thinking this is something other people need. How do I get it to them? And sometimes they lack business skills, but either through associates or through their own learning, they could try to ramp up and be able to start a business doing that.
Victor: Yeah, I think that’s right. I think the maker movement has always attracted me because it was entrepreneurial-ism broadly writ.
It was the idea that you can dive in. If you see a need or you see a space to create something that you could dive in, that any individual had the means to dive in and try to fill that space with something better. And I think that’s just a beautiful way of looking at the world. And it’s very counter to, I think what we’ve seen over the last several decades, which is wait for someone to package something up for you, or wait for someone to tell you what to do. Which is a lot of, I think what’s contributed to the decline in entrepreneurship. It’s the anti-make philosophy, which is just wait and follow the instructions as opposed to the maker movement, which is dive right in and fix it yourself. .
Dale: If you were just an observer, watching other people use 3d printing, you might see something, but when you’re in the middle of it, when you’re trying to solve those problems, you see it very differently. People that are almost willing to do anything to solve a problem. It’s not someone else’s problem, it’s their problem. And all the elements, even if it means emptying the trash, you have to do it because it’s all about making it work. I think to be an entrepreneur, you have to be comfortable going outside of that. You might not know marketing or digital marketing, but you have to try, you have to get in there and you might not, you might be.
Eventually be able to hire someone who’s really good at it, but you can’t afford to do that in the beginning. And it’s actually really useful for you to understand the mechanics of it so that when you hire someone, if they’re able to do a really good job or not.
Victor: Absolutely. The amount of understanding you get from trying something is so important. 3d printing is a great example. We have a 3d printer in our home and to watch someone do it’s one thing, but to think about the types of filament you’re using and the way that filament lays down and the way it sticks to the plate, or doesn’t stick to the plate, or, the type of viscosity of the filament, all those things shape the kind of things you can make.
They’re not just technical questions. They actually are questions that actually affect the output and that same type of questioning and understanding that goes into 3d printing goes into almost everything around us. I think we’re so used to having things packaged up for us right now, in a way where we don’t understand what went into it, which means it’s harder for us to innovate.
And it’s harder for people to feel active, like they’re active participants in creating the world around them.
Dale: Another quality we get from entrepreneurs is sort of experiments. The experimentalism, if you will, of people trying different things to see if you know what works and what catches on.
And sometimes big companies are not really that good at trying new things. And it’s not important. It’s not big enough.It’s not feasible for them to do it. And, a team of two or three people come along and if they’re really focused on it, they might be able to achieve that.
Victor: I think that’s right. That’s not what big companies are supposed to do. Big companies are not inherently the great experimenters. They’re stewards and they’re scalers, but they’re not experimenters. And I think it’s incumbent on the rest of us to realize we have our job to do as not to rely on big companies to do that. We ourselves are the experimenters and the builders of new ideas and innovations. And I loved the Maker Faire in its day, which was you could go in and just be immersed in a universe of experimenters, everyone trying something out in their own quirky, weird way. And there was a beauty in watching that happen. I think that really speaks to the spirit of the maker movement as a whole.
Dale: Talk a little bit about what all levels of government can do to create this Right to Start. Because it does feel from a certain perspective that one of the things that’s happened over the years is that companies have been really good lobbyists for themselves. And sometimes that excludes competition that excludes it changes it, it creates a game that you have to be pretty wealthy to play at. And that excludes a lot of startups .
Victor: Look, entrepreneurs for the most part, don’t have much time and don’t have much money to spare. And so they’re not out there talking to policymakers and advocating for a society that kind of tilts in their favor. And so what happens is it tilts in the other direction? It actually ends up favoring the people that have the means to engage in the policy-making process. And that tends to be the large corporations. And so entrepreneurs have really been voiceless.
Some people might say that can’t be true, but it is. Cause I spend a lot of time in this world and you just don’t see the entrepreneur’s perspective and voice get into the way we do policymaking in this country. And so Right to Start was birthed out of the idea that entrepreneurs are not just for a single issue here and there, we’re not just for, a targeted tax credit.
We’re not just for a specific program to help a few startups there. We’re really looking at entrepreneurship and entrepreneurial opportunities, as a fundamental right? Just like you have a right to speech, you have a right to worship, even right to assemble. You’ve got a right to start a right, to be entrepreneurial, right to take that chance to dig in, to build something. And the role of society should be to support it. It should be to protect it and nurture it and give it a chance. And so what that means is it’s a broad lens by which you view all aspects of policymaking. So just in the last couple of months in the state of Missouri, we were able to help support the passage of the first ever Right to Start act to the Missouri House of Representatives. It still has to get through the Senate, which we’re getting ready to do in the next cycle, but we actually were able to get the most comprehensive pro- entrepreneur bill ever passed in a chamber of any legislature in the country. And it tackled a broad range of issues from government contracting, to taxation to non-compete restrictions, to capital access, to getting an office of entrepreneurship in the state of Missouri, the Governor’s office.
And it struck me how interesting it is that there was such an appetite for this bill and it was bi-partisan, across every part of the state, across every demographic. It was really interesting how people supported this. But yeah. It hasn’t been done before and that’s actually, I think the great tragedy is across all these other states, across all these cities, across the country, no one has ever advanced a pro- entrepreneur bill that’s broad-based before, at least in decades, as far as we can remember.
And I’ve been doing this work for over two decades now, and no one’s really advanced this before, so it just speaks to the need and it speaks to the lack of momentum behind it in the past, but also the opportunity we have right now, which is to basically say, look, entrepreneur opportunities are a fundamental right.
We should fight for it. We need to lift it up. And as a result, we need to have these ideas and these issues put forward and people can vote for them and support them.
Dale: It seems like a great opportunity in America, for small towns and cities to really be thinking about this. They sometimes give lip service to it.
But where I would look at it is it’s as much as growing a culture of experimentation, entrepreneurship, whatever we want to call it here of which could be fostered through a maker-space and other programs. But can you talk a little bit about what you might recommend to a Midwestern town that says, we’d like to keep more of our talent. We’d like to develop opportunities here. We’d like to build back some of our own businesses that can thrive here.
Victor: The first step is actually really easy and this is, I think what gets me is how this happens so rarely is this first step, which is just to get the people that are entrepreneurs or people thinking of being entrepreneurs in discussion talking with their leaders because surprisingly these leaders hardly hear from entrepreneurs. And so just that level of engagement. I’ve heard policymakers say to me, if no one asks us about it, we’re not gonna make policies around it.
So if no one’s talking about it, then nothing’s going to happen. I just heard a story from a major city in the United States where the mayor of a city created a task force. I think I can think of say, I can say the name of the city of Dallas. So the mayor of Dallas created a task force on entrepreneurship and innovation and the impetus for it was an entrepreneur asking the mayor: what are you doing to help us? Because it’s really hard to do it. And the mayor realized they needed a task force to solve that problem. And so they created a task force and they’ve launched all these proposals coming out of it to help entrepreneurs, but it just took an entrepreneur actually in discussion, in conversation, asking the question, how are you helping us out? Because we could use it.
So one is so that’s the easiest step is just to get those stories out there. And so we launched an initiative. For instance, in Northwest Arkansas where we have entrepreneurs actually engaging with civic leaders and policymakers, just telling their stories. We’re not even saying you have to believe in this set of ideas or ideologies.
We’re just saying, just get the entrepreneurs out in front and talking to people that actually can make a difference from a policy side. One of the ideas that has been catching a lot of traction, and we’ve seen this in Missouri with the Right to Start act that went through the house, what we call 5% to start, which is the simplest concept around entrepreneurship support that we can think of, which is just take about all the resources that are currently dedicated to supporting large corporations in our communities. And if we can just shift 5% of that over from the large corporations to the entrepreneurs what a difference it would make?
So it’s just 5%. It’s you know, 95% of it can stay with the large corporations. It’s not going to shut the big companies down. We’re just saying, just shift a tiny bit of it over to the entrepreneurs. And we know cities love this. This is similar to what cities do with the arts.
They have 1% for the arts, which is a big movement across the country where lots of cities dedicate 1% of their budgets for public arts. 5% to start would be saying, how about the entrepreneurs that are actually creating the jobs and the products and services that lift your community higher and make them wealthier. Can we just shift 5%? What that 5% would mean would be in workforce training, which is over $30 billion a year of which $12 billion is federal flowing down to the state and local level. That would be a 5% of that would be over one to $2 billion dollars. Economic development, which is over $30 billion a year.
If just 5% of that would be one and a half billion dollars across the country, most of that goes to large companies for tax incentives and subsidies, and then 5% of government contracts. So 5% of government contracts to the new little businesses that can’t get in the door because they can’t break it down, cause they don’t know the right way to navigate the government contracting process, or they don’t have the right program officers, et cetera. So 5% to start is a simple way to create some real deep change in a community.
Dale: Economic development agencies, which larger cities have, always seemed to me focused on bringing large businesses to town because they represented a lot of jobs and they didn’t focus enough on growing small businesses in that area that, over time can provide meaningful jobs, good jobs for people. Is there any effort to shift their mindset?
Victor: Yeah. This has been an effort I’ve been involved with for the past over a decade now, which is shifting the way economic development is done. And I’m really pleased to say that it is really starting to bear fruit and make some real work.
So what happened is recently the international economic development council, which is the certifying body for professionals in the field of economic development. And they have thousands of members all across the country, and the world who work in cities and counties and states and doing economic development. They just launched the first ever professional certification program for entrepreneurship led economic development.
So you can actually now officially get certified using entrepreneurship as a tool to grow an economy. Believe it or not until a few months ago, that was not even a thing. And so this effort we helped support it when I was at the Kauffman foundation. We’ve been I’ve been pushing on this work for a long time now and now it’s becoming legit.
It’s becoming a serious way to do it to actually grow jobs and wealth in the community. And so that’s exciting to see. It’s one thing to certify professionals for it. It’s another to actually implement those projects downstream in the communities, which is where the work is going to shift towards now, which is what do you do?
So you can get people trained up in it and certified in it. What’s the action we’re taking and how are we actually shifting the system as a whole? And I think that’s the opportunity right now is to be part of that and provide the tools to people on the ground, in their communities to do the real work.
Dale: As you mentioned earlier, discovery is a big first step of finding the entrepreneurs in that community, connecting them together and then connecting them to leadership. So that there’s some communication. Some of the things that, I’ve seen over the years, just the kind of startup meetups. When they began just organizing informal meetings. What I thought was really cool, it was in the Bay Area, there was a hardware startup meetup, they would just have to give people a a minute or two to individually stand up. And they’d often just say, this is the problem I’m having. I’d love some advice on this or I need to find a person who’s really good at this thing. And in, in the group, it was a matchmaking in a way of just sometimes complimentary skills in the community that are available and go untapped if you can’t make those connections.
Victor: Totally. It wasn’t that how the apple one was first debuted, and Steve Jobs and Steve Wozniak got to show it off at the Stanford meetup for Computing. And I think so much of the value was based on that peer interaction where people just shared what they’re working on and look for help almost like show and tell from elementary school, but it’s something grownups do.
And I think there’s something around growing up that makes people stop doing that, which becomes a problem. It actually harms the innovation process. What we’re trying to do with Right to Start is actually start encouraging people to host will be called start parties, which are like this.
It’s do your own meetup. So if you’re going to launch something or you’re thinking of launching something whether it’s a new business or a new product, or even just, a Kickstarter campaign, host your own meetup, bring your network together. Share what you’re working on. And the only job people have to bring is their willingness to help you out.
And we started doing this, I posted one myself and it’s just fun. People just want to help out everyone. People love to contribute to innovators. It’s just part of human nature. And I think what we’re trying to say is that’s okay. And in fact, we should encourage that and do more of it.
Dale: I wanted to ask of efforts to address inequity in entrepreneurship.
When we look at different ethnic and racial communities, how do we foster a sense of entrepreneurship there and the sense of opportunity for them to start businesses and to get involved as, as much as in other communities,
Victor: It’s a real issue. The demographic inequalities of the system are quite deep. And the data shows that the data bears it out. Businesses started by women and people of color start smaller and grow slower. So women start businesses with usually half the money of men and the businesses grow about half as fast.
Businesses started by black entrepreneurs, for instance, start with one third of the money to start with and grow to one tenth of the revenue of white businesses and on. There’s a lot of data that just shows how hard it is, and even the factors that it takes to actually build the business become discriminatory like in bank lending. For instance, there are studies that show that black male entrepreneurs get rejected by bank loans by three times the rate, even if you hold all other factors the same. So it’s just harder to build businesses for certain people. And I think being really conscious of that in redesigning these systems and policies is really important.
So we have to find ways to level that. When we start thinking about government contracting, for instance, is a great example of it. When we start bringing entrepreneurs. And if we want to say 5% to start, 5% of government contracts should go to new entrepreneurs. The key then is all right, who are those 5% of entrepreneurs that we want to let in the door and how do we start reaching out to them?
Are we opening that door and bringing entrepreneurs who’ve been left out to the table. So they have a shot at this because how you design these programs makes a difference. Down to where do you put the office that’s working with bringing in entrepreneurs for government contracts, to who’s staffing the offices, to how do you write the materials so you welcome people on board. And this is something people in the entrepreneurship sector notice is if you’re building a co-working space, what what side of the street you put it on matters, who’s running it matters, who’s staff, who’s at the front door matters. The way you make the look and feel matters. It makes certain people feel welcome and others feel unwelcome. All that matters. So the how is just as important as the what in this work. If you want democratized entrepreneurial access, you’ve got to create an inclusive front end to the system.
Dale: You mentioned Be in a moment where there’s a new opportunity. I’ve remarked to you that I was, just seeing the headlines on the number of people quitting their job the changes in the workforce because of the pandemic people working at home, maybe not wanting to go back to an office, maybe not wanting to work that way any longer is causing some changes, whether they’re ended up being good for entrepreneurialism. We don’t know, but I think it, it might be. One of the things that I see in times like this is people get a level of control over their lives. And they want that. They see that as a really important feature, that they often lose in large companies. And so one of the attractions of starting your own business or finding something new to do is being to set your own rules. And gain control over that part of your life.
Victor: If it’s always struck me. I don’t know if you’ve thought about this Dale, but the tools for individual empowerment, the creative empowerment are better today than any point in human history.
Dale: Absolutely.
Victor: The tips of your fingers on your phone or your laptop, whatever you have. You have the power to gather almost any information in the world, to design almost anything that’s never been invented before to prototype it and then to produce it and then to sell it to your customers.
All those tools exist today. What’s up. It always struck me as funny that more people didn’t realize that and do that. And that we didn’t have systems that empower people to do it. And I feel like the pandemic really just was like the earthquake that came after years of tension building in the tectonic plates where suddenly people realized, oh, I actually have this power.
I didn’t know I had this power. And a lot of people realize, I can actually work anywhere and do anything and build stuff and create something and control my life. And I think by just being nudged into it, or almost forced into it with the pandemic, it actually has opened up it’s –I think it’s opened up people’s ways of seeing as much as it’s probably opened up them, economically or financially, which I think was part of it too. But people just got, they got shoved out the door. It’s like when the grown-up birds shoved their fledglings out of the nest. I feel like the pandemic was like that for a lot of folks; it shoved them out of the nest.
But it’s going to be interesting. And the question that hardly gets asked is what are we doing as a society to help them. Would people just assume they’re going to be fine on their own, let the fledglings out. And the fledglings are gonna do great. But you don’t know that and we should be helping out these fledglings.
It’s not such a clear binary break-off point in society. .
Dale: Starts will fail. It’s very difficult to succeed in this, and it’s been my experience talking to makers who’ve, have gone through that process of, oh, I could solve this problem and I could prototype it and then I can make a product out of it. It takes a while. And it’s very hard but it’s possible. And certainly I’d like to see more people just be willing to try and, knowing that they can recover if it does fail and they’ll have learned quite a bit in doing so. And that will be valuable to them as well.
Victor: I think that’s right. It is very hard. That’s the thing is it’s entrepreneurship is death by a million cuts and it’s coming at you all the time and all this kind of ways that are unexpected. And so our job should be to help them and to make sure that we’re giving them all the support they can and clearing out the barriers for them along the way. Because it is so hard. And the thing is, the great thing about, I think these tools that we have now is it doesn’t have to be all or nothing anymore. You can actually work from home and do multiple things and you can have a side gig here or even two or three of them, or you can launch Kickstarter on your weekends and see if it works out.
And if it takes off, then you could make it your full-time job later. There are so many businesses get started like that. And I think what happens is people get scared because they think it’s all or nothing. And I think the ability now with that flexibility, with the tools we have, where you can live almost anywhere and do almost anything is very empowering. And you can test stuff out that you couldn’t test out before at low risk.
Dale: I recall a story I read in the New Yorker maybe in February. It was about. Entrepreneurs in Chengdu and how they figure it out how to both create products. China has a good obviously manufacturing capacity, but they had really, in a sense hacked Amazon to be able to sell directly to the American public.
And I thought, boy, they have their own like business manual that’s different than the business manual we have here. Like we should maybe learn from them. Some of these were slogans on t-shirts, and there wasn’t really complex products, but they were testing the wind, this slogan is hot and this one isn’t anymore and they would switch and they would get it.
And, one of them said, ah, we could really tell when the second stimulus payments hit.Americans were spending money. In the past you often had to say create a product and then figure out distribution to a Walmart. And, they only had so many companies that they wanted to work with, but it’s really opened up in ways that I don’t think we realize that you can use whether it’s Amazon or other systems out there to really market and sell a product directly. It certainly helps as a multiplier effect to have other people take it on.
But when you’re starting small, it’s actually a bad thing to have too much product out in the market that might not sell. I think Kickstarter and others have provided some tools almost for presale of a product to test demand, and then to figure out how to scale up. Americans– we keep coming back to the problem though that we have trouble making things here.
It would be nice to see more American manufacturers in this space particular for what we sometimes call small batch manufacturing to do hundreds of a thing, rather than millions of things.
Victor: Totally. I think the tools are there whether it’s Kickstarter or Etsy or even Amazon and eBay or there’s an endless list of ways to get products out there.
And I, but I still think it’s very interesting a year ago when the pandemic first hit, there was such a demand for face masks and protective gowns, all the PPE. Within about a month or so, China had scaled up mass manufacturing of PPE that was sufficient for the entire country. In the U S, a half-year later, we were still struggling to meet that supply.
And it says something about our ability to make things. And what I did notice, and you were part of this was small batch manufacturers stepped up. So if you went on Etsy, you’d see people making face masks and hand-sewn face masks and everything. There was a huge movement of small scale manufacturing, which did not get captured in the numbers.
But I actually think that’s actually what carried us through in the early phases of PPE manufacturing was actually small-scale manufacturing, but because those people on Etsy don’t report numbers to the Department of Labor, no one was able to fully capture that and appreciate how the small-scale makers actually kept us alive.
Dale: I see efforts in the Biden administration to look at manufacturing as a national capacity. But I haven’t really seen whether they’re thinking in terms of small scale manufacturing, it’s one thing to take a big company and put a plan out and, semiconductor plant outside of Phoenix. I really think they need to be thinking about how do we have a more flexible manufacturing capacity that is widely distributed. I think one of the real secrets here was the fact that the maker tool set was replicated in so many towns and cities. And they had people who knew how to do these things.
They weren’t working in the medical device field, but when they needed to adapt what they were able to do, they figured it out. And there’s just some different ways of thinking about this, that that I hope at a government level, that they might pay attention to it and not just listen to what some of the large companies need.
Victor: That’s that, that’s why Right to Start exists. And that’s why we’ve got to make this an issue. And it’s not just one administration or the other. I think the way we do policy has focused on innovation top-down innovation in abstraction, manufacturing in abstraction, as opposed to who’s really doing the work? Who is actually innovating? Who’s actually making stuff? Yeah. And you realize it’s a bottom up phenomenon. It’s the small scale people who are building new ways of doing stuff and giving them a chance to grow and fill that.
Dale: Just think about things like your 5% is a great example, if you were to look at business failures and say, you could eliminate 10% of those failures because of this thing or that thing, that would be really worth doing, because you’re not, it’s not just that business people employed by that small business.
I hope we can figure out some good things. It is creating an ecosystem though. I think one of the things we can reflect on from the maker movement is almost a renewed interest in the local side of the problem, not just the national side. It’s like, how do you have healthy cities?
And you’ve worked with some specific cities, haven’t you? Can you give us an example? Oh yeah.
Victor: Worked with a lot of cities. One good example. I’ve been doing work in over the years with Albuquerque New Mexico. So they actually built a rainforest center. There’s actually a building there called the rainforest building, which is the center for the university’s engagement with the entrepreneurs and the research community and the innovation community.
And and what they found is it really is a three-sixty problem. If you can use a university historically has been an ivory tower on a hill mentality, but by bringing a facility, which is actually an open door to other people in the community, it’s where students live, it’s where researchers can convene. It’s where a university is spinning out new companies, where they’re able to bring in people to host events and gatherings. It becomes a convening spot for that middle ground. And I’ve seen a lot of communities around the country doing different versions of that type of convening spot, a third place in the middle between where the entrepreneurs might hang out and where the corporations and investors or the innovators, researchers might hang out, but a place where there can be interaction between people from different parts of society and really causing that type of collision to happen.
People tend to keep to themselves and keep to their own clusters. And if you can intentionally design spaces where there’s that crossover, it makes a difference. So we’ve seen that kind of crossover happen whether it’s in Cedar rapids or Chattanooga or Minneapolis or Sacramento or Northwest Arkansas or Phoenix or wherever you can you name a place, there’s some kind of thing happening like that.
And I think this is the opportunity. That entrepreneurial ecosystem mindset around economic development, how you build communities is actually spreading and you’d be hard pressed now, I think to find a community that doesn’t have some kind of embedded entrepreneurial ecosystem thinking now into its economic model, or starting to think about how to tackle. The challenge now is a lot of them aren’t quite sure what to do. And so we have to provide them the information and the tools and the examples to keep doing that.
Dale: I’ve always been interested in what’s locally made and if you pretty much go into any city, you’ll usually see a reasonably healthy food and beverage as a category of lots of things that are locally made. And then you have the success of farmer’s markets. And I just feel like people could be thinking more about what other categories, could be locally made? How do we support them? How do we make them competitive. Something like furniture, for instance, I always thought that if cities had a requirement on certain new buildings or public buildings, they use 10% of locally made furniture, you would have furniture makers that could supply that. You could train more people to do that, but you don’t have a market for them to succeed in yet. So it’s a, two sides of the coin kind of problem.
Victor: Yeah. That’s interesting. I think you’re right.
Food has gotten a lot of attention probably because I’m just guessing consumers like the backstory.. So when you go to a restaurant or the smoothie shop, knowing the story of how that thing came to be is very appealing because it becomes part of the experience of being a customer of that place like that.
And I think when we saw that too, I think in the past year with people making face masks and the stories behind these businesses that had to transform and adapt became part of the reason you became a customer of it too.
Dale: Victor, thank you for talking to me today about entrepreneurs. It’s an important alternative for a lot of people to, to know about, to have and. I’ve seen in our community people don’t necessarily grow up thinking of themselves as entrepreneurs, but given the right conditions they might. And their life goes in a different way as a result. I love the example of your parents as educators. And I think that sometimes in the community, people like firemen and educators that have one job often develop a second job or a second interest. And it takes a long time, but they, because they have the teacher job they can do this other job and allow it to grow slowly. It helps if you’re not betting the farm on the new thing, but let me ask what was your parents’ entrepreneurial idea?
Victor: My father was a mathematician, a PhD in math. And so you either became a math professor, or he went into computers in the seventies, and so he ended up going to computers. But then come into the 1990s and they actually started a software consulting business. This was when large corporations and governments were using old legacy software systems, like in Fortran and COBOL, the databases, and they needed to revamp them.
And so my parents realized, you could actually start to organize software programmers to help people update these these old legacy systems. So that’s what they did. They ended up grouping together software programmers to keep the world’s databases from falling apart in the 1990s.
Dale: Keep COBOL going?
Victor: Which is still used by the way, in the Social Security system because of the floating point decimals.
Dale: Amazing. Victor, thank you very much. We’ll check in again and I really support what you’re doing and love to have more communities benefit from it and especially the maker community.
Victor: Thanks, Dale. I’m such a fan of you and the maker community and the maker movement, whatever I can do to help you guys.
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