The Entrepreneur State: Safety Nets for Startups, Capitalism for Corporations

Here's a new framework for competitiveness: What if the law were biased, not toward the oil and gas industry or the cotton farmers, but to the creative, the self-employed, and the entrepreneurs?

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"If it's the economy, stupid, then it's the jobs stupid," Steve Case, the founder of AOL and the CEO of Revolution, recently told me at his Washington, D.C., office. "And if it's the jobs, stupid, then it's the entrepreneurs, stupid."

What would a government built around "It's the entrepreneurs, stupid" look like? Two weeks ago, the president sent to Congress an agenda, prepared by Case's group Startup America, which proposed expanding visas for immigrants, doubling deductions for small companies, and many more worthy ideas targeted to the problem of entrepreneurship.

Good ideas. We need to think even bigger. The broadest debate in Washington, and on the primary trail, is about whether government needs to step up to create jobs or step back to allow the market to work by itself. But what if we need both: A stronger safety net to lessen risk for wannabe-startups and purer free market approach for established corporations?

That's the big idea, but let's begin with a smaller story.


Here's a true story about my friend, Drew. Drew graduated from Brown University with a 3.98 GPA in economics. With three internships under his belt, he could have easily landed a job at a consulting firm like Bain, as three of our high school friends did, or at a big tech company, like more friends, or at a bank.

Instead, Drew went to work on his couch. To a stranger, he probably looked unemployed.  He wasn't. He chose to not accept any of the jobs he could have landed in order to do something unique in our circle of friends: to become an entrepreneur.

Given the option to work a regular job in exchange for tens of thousands of dollars a year, why did Drew decide to work in his living room? The first reason was probably personal: Drew doesn't like hierarchies. He always wanted to be his own boss. And the only way you can be your own boss at an entry-level age is to start something you can run.

The second reason was intellectual: Drew tended to see the world as problems that needed fixing. I've always been the one to say, "There must be an explanation for the way this works" (this is what journalists sound like) and he's always been the one to say, "There must be a better way to do this" (and this is what entrepreneurs sound like).

The third reason was community: Drew was fortunate to come from a wonderful and well-off family that could support him if everything fell apart. He was surrounded by friends who were eager to give start-up funding and hours of free advice. He had connections, through friends and parents of friends and friends of those parents, to an investment community. Being an entrepreneur is, paradoxically, a decision both to be alone and to be at the mercy of many people's generosity.

As a country, we can't really hope to change reasons one and two. We can and should hope to increase the pool of college graduates, but we can't engineer a generation that hates hierarchies and believes it has better ideas than the rest of the world -- even though both qualities are important for an entrepreneur to have. We can, however, strengthen the safety net for start ups.

Every year, millions of people try to start a company. In the last year, I've met dozens of them. The details differ, but the lessons rhyme. All entrepreneurs need a community of support. They need the advice and intuition of other entrepreneurs. And they need a safety net.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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