What Kind of Entrepreneurial Future? Council of State Governments: Entrepreneurship Days in the Capitol Dane Stangler, Kauffman Foundation Phoenix, AZ, March 24, 2014 www.kauffman.org
Overview Entrepreneurial directions for United States o Boom o Drift Where Arizona stands What Arizona can do
New Business Creation, 1978-2011 900 600000 800 700 500000 600 500 400 300 400000 300000 200000 200 100 100000 0 0 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Startups/100,000 People Number of Startups Number of Startups (right axis) Per 100,000, Prime Age (left axis) Per 100,000, Working Age (left axis) Source: US Census Bureau
Possible Future: Entrepreneurial Boom Lower Barriers Technological Progress New Producer Society
Lower Barriers to Starting and Experimenting Reinventing Small Business
Technological Leaps
Low-volume customization New Producer Society Low-volume standardization High-volume standardization (e.g. Ford) High-volume customization (e.g. lean production) Mass personalization See Peter Marsh, New Industrial Revolution; Chris Anderson, Makers.
Possible Future: Entrepreneurial Drift Demographics Innovation Jobs? Labor Force
The Demographic Bulge Moves On 68 Working Age Population (15-64), Share of Total 66 64 62 60 58 56 Source: Census Bureau
Innovation Leads to Jobs? technological unemployment
Fate of Workers? Source: Jacobson and Occhino, FRB Cleveland; Wall Street Journal
Where Arizona Stands
Falling Entrepreneurship: Startups as % of Total Firms 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% Nevada Utah Arizona Colorado National New Mexico 4.00% 2.00% 0.00% Source: US Census Bureau
Post-Recession Rebound? Startup Funding Deals in Arizona 80 70 60 50 40 30 Total # deals (left axis) # deals 1+ firms (left axis) # deals startups (left axis) 20 10 0 2009 2010 2011 2012 2013 Source: Crunchbase
High-Growth Firms in Arizona 140 120 100 80 60 40 20 Arizona Total Phoenix-Mesa-Glendale, AZ Tucson, AZ Yuma, AZ Prescott, AZ Flagstaff, AZ Show Low, AZ Sierra Vista-Douglas, AZ Lake Havasu City-Kingman, AZ Not in an MSA Nogales, AZ 0 2007 2008 2009 2010 2011 2012 Source: Inc magazine, Inc.com.
Thumbtack Survey of Small Business Friendliness in Arizona Category Grade Overall friendliness C+ Ease of Starting a Business B- Regulations B Health and Safety B+ Employment, Labor, Hiring B- Tax code B Licensing B- Environmental B Zoning B Training and Networking Programs C+ Source: Thumbtack and Kauffman: http://www.thumbtack.com/az/#2013/state
What Arizona Can Do (and Is Doing) Entrepreneurial Experimentation Let Entrepreneurs In Let Entrepreneurs Compete Human Capital Pipeline
Entrepreneurial Experimentation in Arizona
Occupational and Professional Licensing: Promote Entry and Competition
Immigration and Entrepreneurship 0.70% Kauffman Index of Entrepreneurial Activity Rate of Entrepreneurial Activity 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% Native-Born Immigrant
High-Tech Immigrant Entrepreneurs, 2010 Source: Painter, et al, Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant Entrepreneurs, Kauffman Foundation, March 25, 2014.
Immigrant High-Tech Entrepreneurs, 2000-10 Source: Painter, et al, Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant Entrepreneurs, Kauffman Foundation, March 25, 2014.
High-tech Immigrant Entrepreneurs in Phoenix In 2011, Phoenix had: o Others: 7.3 high-tech immigrant entrepreneurs per 10,000 people o San Jose = 33.7 o Seattle = 12.2 o Austin = 9.8 o Houston = 9.6 o Denver = 7.0 o Philadelphia = 5.7 Growth, 2000-2011 o +3.0 In 2011, Phoenix had: o Others: 37.9 high-tech US-born entrepreneurs per 10,000 people o Austin = 64.6 o Denver = 62.0 o Seattle = 61.8 o San Jose = 50.7 o Philadelphia = 34.7 o Houston = 29.0 Growth, 2000-2011 o -5.7 Source: Gary Painter, et al, Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant Entrepreneurs, Kauffman Foundation, March 25, 2014.
Non-compete Agreements: Allow Entrepreneurs to be Entrepreneurs Most entrepreneurs, especially high-growth, have prior industry experience They leave a job to start their company