Since Colonial times, the spirit of entrepreneurship has been embedded into American culture and its economy. LAUNCHPAD REPUBLIC explores the institutional, political, and legal factors that have shaped the economy and addresses current concerns about the ever-increasing inequality of wealth, offering strategies to improve the system without abandoning the balancing act that has proved remarkably resilient. In this interview with TechBullion, co-author Howard Wolk, will be throwing more light into this new book and the current state of entrepreneurship in America.
Please tell us more about yourself.
My name is Howard Wolk. I am an entrepreneur and the son of an entrepreneur. I also have experience in the world of government (lawyer in the White House and on Wall Street) and in academia (senior fellow at Harvard’s Kennedy School of Government). I wrote this book with co-author John Landry, who is a business historian and former editor at Harvard Business Review, to understand entrepreneurship in America from a broad, multi-disciplinary perspective.
What is LAUNCHPAD REPUBLIC and what inspired the book?
Everybody knows about how startups can create new industries and challenge existing ones. But how entrepreneurship relates to politics and culture is little appreciated. We felt that more people needed to understand that entrepreneurship is really a disruptive, rebellious act, and that America is unique in allowing that to happen. We’ve allowed this disruption for more than 200 years, and in turn it has kept our economy and even our political system vibrant.
Tell us more about the current landscape for entrepreneurship in America; what is the market size and what is driving the industry?
People bemoan the power of Big Tech and worry about the health of small business, but in fact more than five million businesses were started during the pandemic. In the innovative sector of the economy, upstart firms backed by venture capital continue to grow, with record amounts of capital available to support new firms. That growth has slowed a bit in the past several months due to challenges in the macro economy. But entrepreneurship is still going strong.
What is it about America that has made it uniquely welcoming to entrepreneurs, from its foundations right up to today?
Most people talk about immigrants and the large domestic market, and those are important. But what is really unique is the culture and the supporting institutions which empower upstarts to challenge existing companies. We have a relatively free, democratic country where almost everybody has a chance to race ahead. Even Alexis de Tocqueville noticed that back in the 1830s.
How is entrepreneurship often an act of rebellion, fundamentally linked to the pioneering American mindset?
A lot of entrepreneurship is about conquering new frontiers. But over time, the real testimony to the power of entrepreneurship can be seen when vested interests are challenged. In the 1820s, a young Cornelius Vanderbilt challenged the patrician Livingston family’s monopoly on the ferry between New York and New Jersey…and won. Another example from just a few years ago is Elon Musk challenging the U.S. government to consider startup rocketmakers instead of just incumbents. In the vast majority of countries around the world, neither would have succeeded, even today. But that happens throughout American history into the present day. People say, “It’s a free country, and I can compete if I want to.”
In what specific ways can entrepreneurial dynamism address problems like slowing economic growth? Could you give us some examples from history as well as current events?
Many industries consolidate as they slow down, and the resulting incumbents tend become bureaucratic and focused on maintaining the status quo rather than overcoming rivals. Regulations and other vested interests also contribute to stagnation over time. We saw that with “stagflation” in the 1970s, when even Democratic leaders began deregulating the economy in order to boost growth. Entrepreneurs are essential for mobilizing capital to challenge lethargic established companies. It happened with airlines and trucking in the 1970s, and it is happening with electric vehicles today. The same burst of creativity and commercialization can help us address global warming as well.
Could you elaborate on your point that the US, while it enables high inequality, also has high churn rates: people can become extraordinarily wealthy here but have a more challenging time maintaining that across generations, resulting in fewer people with entrenched fortunes and social superiority?
Churn rate is often overlooked as an important indicator of renewal, and we think it is at least as critical as inequality. In many other countries, the same wealthy families, large corporations, big banks, government agencies and even labor unions control the economy. And they often block out upstarts and innovators. In the U.S., we have high churn rates among the wealthiest families and largest corporations, and it keeps everyone on their toes. While wealth may be passed on, the bar is high for maintaining it, and new industries led by ambitious entrepreneurs are the ones usually responsible. This dynamism spills into the political and social realm, which is why we have fewer dynastic families than in other countries.
Rather than resorting to aggressive antitrust, redistribution of wealth, or heavy regulation, we should encourage the post-pandemic flowering of entrepreneurship. What do you say about this?
American history is full of examples in which entrepreneurship proved far more effective in taming the power of big companies than government action. Companies such as Union Pacific, U.S. Steel, A&P, and even General Electric seemed unstoppable. While government tried to rein them in, the ultimate dragonslayers were entrepreneurs who brought new technologies to the market. That is evident today, as the average tenure of a S&P 500 company is shorter than ever, despite the government pulling back on antitrust activity in recent decades. The reason has been the power of new technologies combined with entrepreneurship and venture capital.
What are you currently working on and what do you have planned for the new year?
I am actually working on two startups – one in insurtech and one in proptech. My co-author is separately working on a case study of American economic development with some overlapping themes.
Do you have more information for our readers today?
As you understand the enablers of entrepreneurship – culture, balanced government, decentralized corporate and financial systems, and focus on the consumer, you will broaden your perspective on several contemporary issues, such as China, Big Tech, inequality, and sustainability. You can better appreciate what has made the U.S. into such an effective launchpad republic.