Obama, Romney, And The Forgotten Entrepreneurial Class

Election rhetoric focused on struggling small businesses completely ignores the tidal wave of creative, innovative startups sweeping the country. Fast Company's editor-in-chief bears witness to the groundswell.

Are the presidential candidates living in the same America that I am? Apparently not.

I don’t know what statistics Obama and Romney look at when they are assessing the state of small business in America—and I really don’t care—because they are missing something. And it is big.

For all the concerns they cite about the plight of small business, from tax burdens to health care costs and so on, what pols of all stripes are missing is that America is experiencing a wave of entrepreneurialism unlike anything we’ve ever had before.

Inspired by the likes of Mark Zuckerberg at Facebook, by the incredible success of Steve Jobs and Apple, by nimble new industrial designers, by the myriad app-makers and startups populating Silicon Valley, Silicon Alley, and every place in between, a generation of people—young and old—are enthusiastically and optimistically setting out to build new businesses and to invent new ways of doing business. Some of them tap into new platforms like Kickstarter, Etsy, and Indiegogo. Some tap into incubators like TechStars and Y Combinator. Sometimes these entrepreneurs are moonlighting, sometimes they work within huge corporations, and sometimes, yes, they are in a garage or a coffee house or a co-working space.

But that doesn’t make this phenomenon any less real.

The presidential candidates are fond of recalling a store owner that they met in Topeka or a mechanic from Wappinger Falls. Let me share some folks that I’ve met recently: Clara Shih, 29, is a first-generation American who came out of the Chicago public schools and has built her own 90-person social-media firm, Hearsay. Aaron Levie is a college dropout who became obsessed with file-sharing and built a cloud storage business called Box that now employs hundreds of people. I’ve heard the entire class of incoming MBA students at the University of Michigan cheer each others’ ideas for startups that could revive Detroit. I’ve attended a hipster confab called Summit Series, started by a twentysomething named Elliot Bisnow, that brought together enthusiastic new-enterprise creators of all ages. I’ve met with a former general who has started his own consultancy, and an established entertainment exec who has injected high-octane risk-taking into cable-TV blandness. I’ve listened to government officials—including those within the White House—assert that innovation is rising in their sphere, and I’ve heard education officials explain how they are remaking the student experience. Rachel Shectman runs a store in New York City that completely changes what it sells at regular intervals; Cyrus Massoumi runs a business called ZocDoc that is revolutionizing how patients book appointments.

The examples are everywhere, from inner cities to rural locales. Their spirit is contagious, and rising. And they are the future of this country and of our global economy.

I’ve called this group Generation Flux (and in a week, we’ll come out with a new installment in that coverage). But to talk about the state of the American economy and not acknowledge and recognize and extoll this dynamic movement is to simply have your head in the political sand. Whatever today’s numbers show, we all know that there is a groundswell of creativity surging through our country.

I wish our candidates would recognize this group, cheer them on, and focus on encouraging their success and the success of others like them. Small business, when discussed in our political realm, seems to have been narrowed to a small-bore niche. Meanwhile, entrepreneurs and innovators are thriving. The political leaders who embrace this reality and align themselves and their policies with making these efforts the foundation of our future economy will be on the right side of history—and, ultimately, on the right side of the ballot tallies as well.

[Illlustrations: Flickr user Don Relyea]

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  • Midmarket Institute

    We have always excelled at starting
    companies and building
    some of the largest and most successful multinational firms.  However, the fact remains that the fatality
    rate among startups is very high; and, most small businesses start small, stay
    small and die young. Sure, the startups create jobs and big companies create
    fewer jobs (than they make noise about).


    But, do not forget the segment of the
    economy that has the greatest potential to create sustainable jobs (ones that
    will be around for years and pays on a W-2) for Americans is the midmarket - the
    “grownup startups”.  They have ‘survived’
    past the startup stage, have much room to grow and need scaling help (and lots
    of employees to help them grow!).  Most
    of them are not household names and have annual revenues between $10
    million and $1 billion. It is comprised of midsize
    companies that are in the “second stage” of growth.  They tend to be privately owned and operate
    in geographical or industry niches. 


    are about 195,000 of these midsize companies. 
    They comprise just 3.2% of all companies (with
    employees) in the country yet provide 34% of the non-government jobs and 31% of
    the revenues according to the last census. The midmarket created an impressive 44%
    of the net new jobs in
    the same census period.  The
    American midmarket generates as much annual revenues as the total GDP of
    Germany and Mexico combined.  


    The 3% (at the top of the heap of small
    businesses) that Romney and Obama debated – the companies they want to tax more
    – is the midmarket.  This is the segment
    that creates the most NET jobs.  They were
    ignored all these years and now it pops up in one debate as a great segment to
    tax!  Neither presidential candidates did
    his homework nor had their facts right. 
    We have written to both candidates to draw their attention to the importance
    of the midmarket - http://media.midmarket.org/Con...
    and http://media.midmarket.org/Con....


    If all the data shows that midsize
    companies are the true jobs champions of the economy, then why is the midmarket
    a political orphan?  These midsize
    companies are not organized and do not have the lobbying muscle of big business
    or the voting muscle of small business. 
    We are working to change that.

    Ram V. Iyer

    The Midmarket Institute, Princeton



  • Jeffw

    This is an interesting point, but I think the majority is more on the candidates' side. Lots of small businesses struggle when the economy is down because both consumers don't want to pay the extra dollars for the small biz experience and big business can better afford to lower prices. 

    I don't think they are ignoring the examples you gave- Obama mentioned Google in the last debate as an example. It would seem out of touch to most people for them to give examples like the above, since those are pretty exceptional. I don't know the exact stats but don't most start-ups fail?

    I do understand that this is Fast Co. (and I even work for a startup) but I respectfully disagree that what your suggesting would be a wise move for either candidate on a large scale.

  • Robert

    Living in the Atlanta area and tied to the tech community, I see and meet hundreds of entrepreneurs of all age ranges. The common factor... they all have the testicular fortitude to take a chance and are not afraid of failing. 

  • OriginalVetInBiz

    Check out the Syracuse University Institute for Veterans and Military Families work with disabled and other vets/families entrepreneurs.  Leading the way to re acquaint America with investing in yeowomen and men vets. 

  • Bill Fotsch

    Great to hear a positive article about entrepreneurs and business.  As to the presidential candidates, it seems pretty clear that both candidates will benefit from the entrepreneurial businesses.  However, it seems that Mr. Obama sees most of the answers coming from government, and Mr. Romney sees most of the answers coming from the American people and small businesses.  I think Mr. Romney's approach would provide a much more fertile environment for entrepreneurs...

  • Jack Melito

    There are 3 cost drivers that need to be faced: drug prices, cost of services, and the insurers (and their fee for service model). Recent studies show patients in the U.S. are similar to those in Canada, Germany and Britain in so far as number, length and type of visits for health needs. A key difference between us and them is simply that Pharma charges Americans more as do health service providers...why? Because they can!ealthcare costs may rise not because of Obamacare, but in spite of it. Don't forget that employer provided healthcare was in place long before, and the costs had been trending up for many years. Some aspects of Obamacare may ameliorate some costs by broadening the base while reducing payments to insurers, and by saving on pharmaceuticals by eliminating the Bush-era prohibition on the Govt. using its purchasing power to elicit volume discounts.

  • DonJ

    We, as one of those start-ups with few employees and several contractors, agree that the state of entrepreneurism is exciting and that neither candidate fully understands it.  However, we also talk to other entrepreneurs constantly who are extremely anxious about *hiring* a W-2 employee and creating an open-ended, potentially huge obligation on benefits under ACA (also known as "Obamacare").  Healthcare insurances rates ARE going up for everyone and more derivative effects (fewer doctors, actuarial risk changes from new regs, MUCH more paperwork & bureaucracy, etc) will make it even worse.  If these threats and uncertainties didn't exist, we would hire more people.

  • Robert Safian

    Thanks, Dan. The excitement is there but, you're certainly right, the challenges of entrepreneurs remain intense. (Though we wouldn't have it any other way, right?) On health care, without taking a position on Obamacare, the reality is that costs have been going up for years, and all indications are that they will continue to. It's something any business has to take into account. Of course, one of the joys of being entrepreneur is not just providing for your own livelihood but watching as your enterprise also supports and elevates the lives and dreams of those who work alongside you. 

  • DonJ

    Robert, there are indeed several reasons that the cost of healthcare has been rising for many years.  CMS, the gov agency that runs Medicare and Medicaid, has been injecting an enormous amount of increased administrative burden on hospitals and *that* is now peaking with HITECH/Meaningful Use, ICD-10, ACO etc, etc.  These programs are driving, and will continue to drive, doctors out of practice and hospitals out of business.  Given the time length of this ramp-up, certainly Ds and Rs have played a part, BUT if you really look at all the regs precipitating from ACA (this *is* our industry) that ramp-up is dialed up significantly.  So one must now ask, even if this is largely a factor of big gov more than partisan issues, who is more likely to tackle a major issue of big gov cost ?

  • Jim

    Good article. I think the President is afraid to recognize the growth in small businesses as noted in the article because he will be lambasted as out of touch by the Republicans if he does. Likewise, Gov Romney has to make the small business environment appear to be hurting, over-taxed, and over-regulated to appease his base. My view is that if someone has a great business idea, they will not be discouraged by high taxes as Republicans constantly preach. Rather, they will be glad to pay taxes once they see success.