All Commentary
Friday, August 26, 2016

Sleepless Nights and Public Service: The Real Lives of Entrepreneurs

One of the main themes I heard from every entrepreneur I spoke with was hard work. Much midnight oil had been burned and sleepless nights were still abundant.

Even though we enjoy an enviable democracy in America, I’ve always thought that one of the secrets behind American dynamism was the free market.

Now, I’m sure of it.

Last week, I had the pleasure of attending a consumer startups showcase. This was something I hadn’t done before, so I leapt at the chance to explore a unique ecosystem. The showcase was held in a renovated, historic building with a chic bar inside, lounge chairs and sofas near the entrance, and quasi-stadium seating made from exposed textured plywood.

For about an hour, several CEO’s introduced their fledgling companies and revealed their business niches to a crowd of roughly a hundred like-minded entrepreneurs. They talked about targeted marketing, how they would drive users to their respective apps (and monetize those apps); about plans for growth and expansion; and about how they would continue to provide stellar customer service as they grew.

In Awe of Private Producers

The showcase was a welcome reprieve from the academic conferences, binary political conversations, and trendy cultural critiques to which I’m usually exposed. But, most importantly, it reminded me that ordinary, hardworking Americans are the arbiters of the free market, not government. There was no hinting at utilizing imminent domain, lobbying, or anything other than sweat equity and grit.

One of the main themes I heard from every entrepreneur I spoke with was hard work. Much midnight oil had been burned and sleepless nights were still abundant. One gentleman, who gave a presentation on his lawn care start-up, sighed as he mused about the learning curve he had initially encountered. Assuming that the business would be maybe a three step process, in reality, he found out it was more like eighty-five steps—each one essential. But the key was resilience; he kept hammering away at his goals.

What made the showcase unique was what I didn’t hear, though. I heard no talk about pursuing federal grants. No one conjectured about leaning on local governments for an increase in taxation that might kick start their business. There was no hinting at utilizing imminent domain, lobbying, or anything other than sweat equity and grit.

I’m not suggesting that I was in a room full of saints, or libertarians, for that matter, but most had been bitten by the radioactive entrepreneurial bug. They were eagerly pursuing venture capital and the much sought after buy-out by a tech giant or some other industry leader. But overall, what was remarkable was the passion for individual pursuit and the competitiveness that swirled around the building.

Go-getters Want Regulators to Get Lost

While there wasn’t much chatter about leveraging the influence of government, several people decried pesky government interference. One start-up was heavily reliant on fantasy football for its revenue. This is one industry that has often found itself in the regulatory crosshairsThe real threat to this kind of drive is the tendency to project bureaucratic inertia onto people.

More general complaints about bureaucracy were also bandied about. And they had a familiar ring to them. While he isn’t one to harangue about taxes, Mark Cuban is one billionaire entrepreneur who often rails against the unnecessary constraints placed upon businesses—the complex regulations and legal red tape, which make it difficult and sometimes cost-prohibitive to start new ventures. According to a study by the National Federation of Independent Business, the main deterrent to starting a small business is regulation. The same study revealed that since 2008, the number of businesses describing regulation as a thorny issue has increased from 10 percent to 21 percent.

In a time when politicians want to goose the economy through taxes and regulation, we need to be reminded that people aren’t stagnant, that there are those among us who, of their own volition, wake up every day choosing to brave the uncertain regulatory waters, risk capital, and start new businesses that will hopefully leave consumers better off. The real threat to this kind of drive is the tendency to project bureaucratic inertia onto people, to assume that they need to be either prodded or micromanaged by elites.  

Spontaneous Correction

A recent story about bitcoin is useful here. Recently, the Hong Kong bitcoin exchange was hacked and the perpetrators made off with $68 million worth of the digital currency. To recoup the loss, the exchange spoke of using something called socialized loss. This means that bitcoin holders within the exchange itself could potentially be forced to swallow the losses in a kind of user bailout. Outrage has spread and lawsuits have been threatened, but this is a stark reminder that responsible and prudent people don’t like the notion of top-down imposition for some vaporous greater good. They prefer to manage and put to use their own assets, be it through block chain or cash transactions.

This is a principle that the American free market respects. In fact, the free market guards against the nirvana fallacy, which is a term Harold Demsetz uses to describe a lack of respect for the interplay of constraints and incentives in the real world economy. All too often, we see this fallacy crop up among those in the political arena. Rather than permit creative destruction in the marketplace, some try to concoct an unattainable, idealized market harmony that ends up stifling everyone.

The Possible Extinction of Entrepreneurship

Perhaps most alarming is that the ambitious innovators may be driven away from entrepreneurship. I can’t help but wonder what would happen to start-up clubs like the one I visited if more and more Americans begin to see government bureaucracy as the best way to grease the economic wheel. What kind of nation would we become?  Would entrepreneurs still feel compelled to meet and exchange ideas in incubators of creativity?  

I actually chatted with someone who sold a small startup to a large tech company for several million dollars. Remarkably, the seeds for that deal germinated in an innocuous startup club.

Perhaps most alarming is that the ambitious people who are busy innovating us through the twenty-first century may be driven away from entrepreneurship. The new microbrewery (another over-regulated industry) may never see the light of day. The app designed for people who want convenient and quality lawn service may never break out. The intuitive app for party planners might not make it to market. And that app for fantasy sports commissioners who prefer not to hoard their friends’ money under the mattresses might not be worth the time.

Maybe we should let entrepreneurs and consumers work as hard as they want without interference. And we should celebrate the fact that ordinary people fuel American progress every single day.

  • John L. Glenn is an Assistant Professor of English at Atlanta Metropolitan State College, and his writings have appeared in The Federalist, The Birmingham News, The Atlanta Journal-Constitution, Library Journal, and elsewhere.