The New Builders: Face to Face with the True Future of Business

Despite popular belief to the contrary, entrepreneurship in the United States is dying. It has been since the Great Recession of 2008 and, while it's too early to understand the full impact of the Covid-19 induced financial crisis, the negative trend in American entrepreneurship will almost certainly be accelerated by the pandemic. New firms are being started at a slower rate, are employing fewer workers and are being formed disproportionately in just a few major cities in the United States. At the same time, large chains are opening more and more locations and companies such as Amazon with their "deliver everything and anything" to your front door service are quietly displacing Main Street businesses. And that was before the Covid-19 crisis.

In The New Builders, we argue for the future of American entrepreneurship. But it lies in some surprising places - and will in particular rely on the success of women, black and brown entrepreneurs. Our country hasn't yet even recognized the identities of the new American entrepreneurs, let alone developed strategies to support them. Meanwhile the pressure on them is being compounded by the current economic crisis in ways that we haven't even begun to wrap our heads around.

Our misunderstanding is driven by a core misperception of entrepreneurship in the United States. Consider for a moment a "typical" American entrepreneur. Think about the entrepreneur who appears in the news or on TV, the business leader making headlines during the pandemic. Think of the type of businesses she or he is building, the college or business school they attended, the place they grew up.

The image you probably conjured up is that of a young, white male starting a technology business. He's likely located in Silicon Valley. Possibly in New York or Boston. He's probably self-confident, versed in the ins and outs of business funding and has an extensive (Ivy League?) network of peers and mentors eager to help his business thrive, grow and make millions, if not billions.

You might also feel America is teeming with these "typical" entrepreneurs, young, ambitious and ready to take on the risks of starting a business. You may feel, based on what you read in the press - particularly the business and tech press - that entrepreneurship is thriving in the United States, and helping the United States maintain its economic power.

You'd be almost completely wrong.

The dominant image of an entrepreneur as a young white man starting a tech business on the coasts isn't correct at all. Today's American entrepreneurs, the people who we'll need to help us dig out of the current economic recession and help rebuild our economy, are more likely to be female and non-white. In fact, the number of women-owned businesses has increased 31 times between 1972 and 2018 according to the Kauffman Foundation (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%). Meanwhile, the fastest-growing group female entrepreneurs are women of color, who are responsible for 64% of the new women-owned businesses being created.

In a few years, women will make up more than half of the entrepreneurs in America.

The age of the average American entrepreneur also belies conventional wisdom: It's 42. The average age of the most successful entrepreneurs -- those in the top .01% in terms of their company's growth in the first five years -- is 45.

These are the New Builders. Women, people of color, immigrants and people over 40.

But we're failing them. And by doing so are failing ourselves.

If we don't reverse this trend, America will lose the economic edge that has set us apart from other economies in the world. The New Builders will show how entrepreneurship has been intertwined with the history and economy of the United States -- and how its decline is part of the story of the divisiveness of our times, and the loss of hope in our country.

The COVID crisis is making clear how vulnerable entrepreneursare. Relief money authorized by Congress is failing to reach New Builders and is highlighting structural issues with the way we support entrepreneurship. For example, women and minority owned businesses are not accessing the key aid packages. The rules require businesses to have relationships with certain approved SBA lenders, which women and minority owned businesses are less likely to have. Big banks favored larger customers at the expense of smaller and more Main Street businesses.

And the program itself - based on W2 payroll -- failed to address the kinds of businesses most likely to be started by New Builders and the ways in which those businesses are organized (women and minority owned businesses make greater use of contract employees, for example, who were excluded from the loan calculations). The COVID crisis laid bare how we're falling short in supporting this most critical segment of our economy and the foundation of our economic future.

The New Builders is a vital book now because in ways that have not been recognized, even by the experts, the entrepreneurs of America are in trouble. And we need them - they are the bedrock of the economy, the soul of our country and account for nearly all of the job growth in America. And now, more than ever, their resolve - and ours - will be tested. As our country reacts to the Covid-19 crisis, our economy goes into free fall, and our elected officials struggle to figure out what to do in response, the time to tell the real stories of American entrepreneurship has never been more important. The New Builders will be a vehicle for sharing these stories and for talking in depth about the work that needs to be done to revitalize the economy that they support and in