Do You Know The Importance Of Entrepreneurship To Employment?

Recently, two articles have touched my sore point in patent opinions, and I am very surprised at the differences.

Many entrepreneurs are in my position that software patents that hinder innovation should be abolished, while my friends in Microsoft, IBM and Google are very angry with me.

Executives at a big company point out that abolishing patents will damage innovation and hamper national economic growth.

(they believe that enterprises are the main body of creating jobs and encouraging innovation, and declare that if there is no patent, innovation will not be protected).

I am not sure that software patents can make Google more than Microsoft or YAHOO, and are not convinced that the IBM database will exceed oracle.

But I am sure that big companies are not the main actors that create job opportunities and trigger innovation and technological change.

So if I choose between the two, I will be more inclined to start businesses.

Start-ups create jobs.

"Who created employment?"

This is the question I recently asked Intel Andy Grove, co-founder of Intel, to discuss in BusinessWeek.

Grove wrote a meaningful article lamenting the loss of jobs in the American manufacturing industry.

I agree with his concern about the employment problem, but I do not agree with the proposal to implement trade protectionism in order to restore the competitiveness of the United States.

The proposal is based on imperfect premises, and the premise is that large companies such as Intel are created instead of start-ups.

At the same time, I also weighed this problem among GM, AIG, and Citibank, which are being rescued by enterprises and growing entrepreneurial companies.

Obviously, this problem is particularly important now.

The Kauffman Foundation (Kauffman Foundation) is already in operation.

By studying these data, we find that

From 1977 to 2005, the existing enterprises almost lost nearly 1 million jobs each year.

On the contrary, start-ups create an average of 3 million jobs in the first year.

(Fig. 1)

Through the analysis of the company's founding age, the result is even more alarming.

Between 1992 and 2005, the average number of new jobs created by start-ups averaged about 3000000 times a year, more than 4 times the number of jobs created at any other time.

However, the employment opportunities of existing companies are higher than that of start-ups.

(Fig. 2)

In fact, nearly half of the start-ups have died in 5 years, but on the whole, they are still the main force to increase their jobs.

The Kauffman Foundation's analysis of 5 years of entrepreneurial enterprises found that when the company was founded 5 years, the jobs created were about 80% of the jobs created when the company was founded.

For example, in 2000, the number of start-ups increased by more than 3 million 90 thousand, and by 2005, the number of jobs that could continue to survive had been reduced to 2 million 410 thousand, which is about 78% of the number of jobs created when the company was established.

Therefore, we can not expect Intel or Microsoft to create more job opportunities. What we need is start-ups.

For those countries or cities that want DELL, Google, Intel to local operation, these data also have profound reference significance.

Therefore, these areas should further encourage more start-ups, rather than already powerful technology companies.

Encourage innovation

Now let's talk about innovation again.

Apple can be said to be a model of technological innovation, and it continues to create products after another.

Of course, we encourage apple like technology innovation companies to encourage products such as IPOd, iTunes, iPhone and iPad to break the rules of the game.

Obviously, Google is not suitable because there are no other amazing developments outside the original search engine and advertising platform.

But Google did create a good mail system and map software, but this is only an additional innovation.

To this question, have IBM, HP, Microsoft, oracle bone and CISCO have innovative products in recent years? These big companies continue to acquire start-ups, and use their scale and channel advantages to expand the scale of innovative products they buy, so that venture enterprises can take risks to prove their business models.

This raises a very interesting question.

In short, if we need to save the economy from the groove, we need to put all our energies into entrepreneurial businesses.

Besides, we should not believe that too many redundant companies fail, and too clumsy companies fail to innovate.