In the latest installment of our occasional conversation series, Victor Hwang, founder and CEO of Right to Start, spoke with business reporter Seth Bodine about the state of entrepreneurship. Hwang gave a keynote speech on Nov. 16 for Global Entrepreneurship Week in Fort Worth.
This conversation has been edited for length and clarity.
Seth Bodine: So, what is the state of entrepreneurship?
Victor Hwang: Well, the state of entrepreneurship in America is in some senses, good, and in other senses bad. It’s good, in some sense, because there were a lot of people over the pandemic that decided to take a look at starting and doing something different. And you saw that show up in the numbers.
There was a surge in people leaving old jobs starting new companies, people looking at trying to build something on the side, whether it’s in their side hustles in their basement, or their kitchen table, or their bedroom offices. There were a lot of people trying out new types of enterprises. And this is important because American entrepreneurship has been in decline since the late 70s. As far back as the census tracks it, there was about half the rate of entrepreneur activity today, in America, as we were in the late 70s.
Global Entrepreneurship Week events
Global Entrepreneurship Week is from Nov. 13-20. A list of events can be found here. A few events include:
- Fort Worth Networking event 6 p.m. Nov. 17 at Ensemble Coworking
- Breaking down barriers to business panel at 9 am. Nov. 17 at 550 Bailey Ave.
- Techstars Startup Weekend 6 p.m. Nov. 18-20 at the Tarrant County College Trinity River Campus
- Global Entrepreneurship Week Wrap Party 6 p.m. Nov. 20 at TCC Trinity River Campus
And so the bad news is, the long-term cycle is still there. So even though there are a lot of people trying to start their businesses, it’s the same system that got us in the hole. Just because people are trying things out doesn’t mean it’s actually easier, that we actually make it easier for them to do it. And so the larger story is, it’s actually really tough. It’s harder today to start and grow a business.
We took a poll recently. And we found that on the good side, 94% of Americans say that a fair chance to start and grow a business is important to the future of America. But we found that only 18% of people knew that it was new businesses that create almost all net job growth in the economy.
So we tend to think about big companies as the ones that grow businesses that grow jobs, or established companies as the ones that grow jobs, but it’s actually new companies that grow those jobs. And we also found that a high number of people, the vast majority of people, said it was either difficult or very difficult to start a business in this current environment. And so we know that the challenges are there. And it can be a lot easier. But we’ve put up so many barriers in the way for people.
Bodine: What are some of the root factors into why business numbers are lower? What are the difficulties of starting a business?
Hwang: There are so many things that go into starting a business, it’s not like you can say there’s one thing. A great analogy to think about is pebbles in the stream. So if you throw a pebble in the stream, the stream continues to flow, it doesn’t really stop, it just kind of goes around the pebble. If you throw 10 pebbles in the stream, the stream continues to flow, you start throwing hundreds or even thousands of pebbles in the stream. Eventually the stream dams up, and it slows down. And so that’s what’s happened in this country is we’ve actually just been throwing pebbles in the stream of entrepreneurial activity for decades now. And each one is a pebble. So each one seems not insurmountable. But if you add them all up, it actually takes a toll. And those pebbles include things like the difficulty of getting access to capital, the imbalance of financial incentives where governments give a lot more money to incentivize large corporations than people building their own companies.
The educational system that doesn’t actually teach real world applied entrepreneurial skills. The difficulty of new companies getting government contracts that tend to go toward larger incumbent established players. The tax code makes it easier for large companies to find loopholes and ways to evade it and little companies have to pay more just because they don’t have the sophisticated tax lawyers to take advantage of the system. Economic development programs that support a lot more job skills training for larger companies than young companies. And on and on, I mean, there’s so many different aspects to the system that you can point to.
You can actually point to all these pebbles in the stream that taken together have a big effect on entrepreneur activity in the country. And that’s what’s happened: We’ve neglected entrepreneurship and the means for people to start and grow their own thing as a viable course of life for people. And, by neglecting it, we let these pebbles accumulate, and the streams have dammed up.
Bodine: Everything that you’ve said about entrepreneurship so far as it seems like the state of it is pretty challenged right now. Is there anything that is giving you hope?
Hwang: I recently took a road trip across the country. So, in fact, when I launched Right to Start, two and a half years ago, I actually wanted to start it with a road trip. But two and a half years ago, of course, the pandemic happened and road trips weren’t really a thing. And so I finally got around to doing it this fall a couple of months ago. And in the back of my mind, I was kind of worried. I was thinking, you know, is this country really fundamentally broken?
What I found really rejuvenated my hope, and faith in this country, and, at the very core, if you go into the communities, you talk to real people doing real stuff. This country is rebooting itself. You can actually see it in the communities. I visited the entrepreneurs, who are building new enterprises, the people in the communities who are helping the entrepreneurs out, and making that happen. It’s quite remarkable and inspiring.
And, and you see the shift, you see, the way that people are thinking about entrepreneurship is shifting from something that used to be, you know, oh, you know, if someone’s starting a business, they’re on their own – good luck to them, we’ll see if they make it – to a shift of every business that starts is tied to our prosperity as a community as a society of the country’s economy. You see that shift happening right now. And it’s a rethink of the importance of entrepreneurship to everybody.
Bodine: Have you visited Fort Worth before? And what are your thoughts on the business environment in Texas?
Hwang: Well, I grew up in Austin. So I’m a graduate of Westlake High School in Austin. And I remember the Texas entrepreneurial spirit runs very deep. It’s kind of a fusion of at least in Austin a bit of the cowboy and hippies combined with people who think really big combined with great science and research. It all comes together with that spirit of it, you see the spirit of innovation and willingness to take risk in the Texas culture. And so it’s very deep. In fact, my sister lives in the Dallas Fort Worth area. And so and I’ve been to Fort Worth a number of times. I was actually out here last year and got to spend time with the people here. And I just think very highly of what’s happening here in the Fort Worth area. I think you’ve got a great opportunity here to to be at the front of the pack in what’s happening across the country. You’ve got a community that cares, you’ve got great leaders in the community, you’ve got a culture that prizes entrepreneurship and innovation. And you’ve got a lot of great assets here. So I’m really bullish on Fort Worth.
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at email@example.com and follow on Twitter at @sbodine120.