Not all small businesses create jobs. Obama needs to promote young startups.
Professor Josh Lerner of Harvard Business School has some advice for the Obama administration about jobs creation in his blog post Creating Small Business Jobs. His primary point is that while small businesses are often touted as job creators, not all small businesses are equally prolific. In fact, according to Lerner and others who have studied the issue, it is young businesses that are the real job growth engine, and these entrepreneurial startups are less likely to be helped by government’s traditional stimuli.
He proposes three principles for improving job growth by improving the environment for startups:
■Take the decisions on who to fund out of political hands. One of the most common fates of government programs to stimulate high-technology ventures is that funds end up getting distributed in ways that have more to do with political calculations rather than the actual needs of society. Successful programs, by contrast, have clear, well-defined investment processes. They limit the danger of political influence by establishing independent bodies to oversee the programs. In many cases, they have further reduced capture problems by passing the funds onto intermediaries such as venture capital funds, who make the real investment decisions. By keeping individual awards relatively modest, they limit efforts to misdirect these funds.
(left to right) Liu, Ramani, Fromm and Kanegi
Organizers look for companies on the cusp of success, but struggling with operational issues that seem insurmountable to their owners.
I previously introduced you to Skyler Kanegi, a sharp young entrepreneur and student who powers his way through 18 hour days to earn his degree, launch businesses, and support the arts. Wait till you hear what Kanegi and three of his student colleagues have been up to lately. I’ll count this as my holiday feel-good story of the year.
Kanegi joined up with Chang Liu, another business student, and engineering students Sameer Ramani and Robert Fromm from the Cockrell School, to take first place in the Undergraduate Consulting Competition sponsored by the Student Consulting Initiative (SCI). SCI was formed by McCombs undergraduate students to provide opportunities to use their consulting expertise outside the classroom, and give back to the community.
Organizers look for companies on the cusp of success, but struggling with operational issues that seem insurmountable to their owners. These are small private companies and nonprofits, many of them started on a dream and a prayer; and held together with baling wire and cookie jar money.
Enter a team of students such as Liu, Ramani, Fromm and Kanegi, who took on a project with Super Saver Shuttle, a local small business providing shuttle services, mostly to military personnel, from Kileen to Austin.