3 Ways the U.S. Can Nurture Entrepreneurship — And 3 Ways We Can Screw It Up

June 6, 2013

Nurturing Entrepreneurship in the United States

The United States is far from the best at everything. Our students are not the most studious, our healthcare patients are not the healthiest, and our business sector is not growing the fastest.
But when it comes to starting a new business, you’d be hard pressed to find someone, American or not, who thinks US entrepreneurs aren’t among the most entrepreneurial in the entire world.
There are many reasons for this. Some are rooted deep in our collective culture and values. Some, however, are a more logical result of the laws and processes we have in place to govern entrepreneurs and the businesses they create.
As entrepreneurship laws attempt to control a sector that is by definition ever-changing, they too must adapt. The challenge is to simultaneously protect what we already have (a vibrant entrepreneurial economy), while still fostering new growth. It’s a balancing act, and it’s not easy.
To reach the proper balance, adjustments have to be continually made. Here are three things the US can do to strengthen its status as the global capital of entrepreneurship — and three things we can do to lose it:

3 Ways the U.S. Can Promote Entrepreneurship

1) Clarify and Update Internet and IP Law

Technology generally moves much faster than legislation. But there’s no reason a court case from 1991 is still the primary precedent guiding what you can and can’t copy on the internet.
The result of few formal laws governing the internet is that too many IP complaints end in massive, expensive litigation, which is a painful risk for a startup to take. Clearer laws more explicitly applied to the internet should partially alleviate the problem.

2) Reform Immigration

When you start seeing subway adds for software engineer job postings (I see at least one every morning), you know there’s a shortage of this brand of skilled labor in the US. Allowing more into the country is one way to stimulate entrepreneurship, and is a topic being championed by many prominent members of the technology community in an activist group, FWD.us.

3) Promote Entrepreneurship in Schools

Speaking of our dearth of engineering talent, it would be great to partially fix the problem with our own home-grown human capital. But to do that, you have to start earlier.
Conventional wisdom is that past age 10-12 it becomes dramatically harder to learn a new language — so why do public school kids only get an opportunity to learn a programming language when they get to college? And why aren’t high schools offering economics or business classes?
Developing these building blocks earlier would certainly give more people the skills to become entrepreneurs, but even more importantly, it would build their interest in these fields as kids start choosing their own direction in the second half of high school.

3 Ways the U.S. Can Screw It Up

1) Focus Too Much on Creating Jobs

Despite the virtual consensus among economists that “job accounting” is totally bogus, politicians will never stop judging the value of an initiative by the number of jobs it creates.
This type of thinking, on the whole, is terrible for entrepreneurship. That’s because entrepreneurs aren’t created en mass by the wave of a politician’s pen. They’re created one at a time, often by people who are sick of working in industries where jobs are conjured and erased by the thousand.
Allocating resources to projects that create jobs at the expense of programs that make it easier for people to create them organically is a huge mistake.

2) Harass Big Technology

Asking that big businesses play by the rules governing everyone else is one thing. But when Tim Cook was asked in May to defend Apple for being savvy enough to use the loopholes that congress themselves created — it’s not a good sign for entrepreneurship. Nor is the French culture minister’s blatantly protectionist criticism of Amazon as anti-competitive, months after personally attending their grand opening of a massive distribution center.
Legal uncertainty and business don’t mix — just ask any entrepreneur in a politically unstable or corrupt emerging market. When politicians routinely interfere with established processes it sets a bad precedent for every business owner, and may scare away the big technology businesses that have historically been a wellspring of skilled entrepreneurs.

3) Violate Private Contracts in the Name of Safety

I’m all for leveraging technology to help fight crime, but there’s a huge temptation for abuse on the part of law enforcement. One of the byproducts of the Web 2.0 movement has been the documentation of more and more of our personal lives. If people feel this documentation can be used against them, it ceases to be a convenience and threatens to become an Orwellian nightmare.
If the US wants to maintain its status as an entrepreneurial haven, we’d be wise to apply the same standards of privacy to electronic communication as has historically been applied to other modes, rather than binging on their new deluge of information.
What roadblocks do you see ahead for nurturing entrepreneurship in the US? What improvements can be made to encourage growth?

Behavioral Data Analyst

Nick is a Behavioral Data Analyst at <a href="https://www.betterment.com/">Betterment</a>. Previously he analyzed OpenView portfolio companies and their target markets to help them focus on opportunities for profitable growth.