TEXT OF INTERVIEW
Tess Vigeland: As we mull over an economic recovery in this country, we're all asking the same questions. When will that recovery start? And where will it come from? Paul Kedrosky is a senior fellow at the Kaufman Foundation. He argues that entrepreneurs are one ticket out of this economic mess. I asked him if that's really possible when we're in the middle of a credit crunch.
Paul Kedrosky: It's never easy to be an entrepreneur, and it's particularly hard whenever capital is scarce. But the reality is that the vast majority of those companies start with credit cards. They start with your own personal bank, which happens to be your credit cards. So those things aren't really going away. Maybe the total amount of credit you have is a little less than you had before, but the disappearance or the relative absence of the more high-profile sources of credit really shouldn't affect anything.
Vigeland: Well, let's talk a little bit about what else might stand in the way of entrepreneurship these days. And you argue that there's a certain about of prejudice about what makes an entrepreneur. Explain that for us.
KEDROSKY: Right, we have this made-in-Hollywood or maybe made-in-Silicon-Valley view of entrepreneurs which says that they're 22-year-old recent Stafford graduates in a garage somewhere in Palo Alto, which is a great story, and we all love to tell it, but the reality is outside of tech most entrepreneurs are over the age of 35. It's a pretty even cross section between men and women. It's a much, much more broad, less youth- centered focus. It just so happens that in technology it is younger folks in Silicon Valley. That's the wrong place to focus because coming out of this recession it's going to require entrepreneur activity in far more areas than Internet software.
Vigeland: So then you have these non-20 somethings who are opening up these businesses. What is standing in their way? You do talk about in the article about how health care is a really big issue.
KEDROSKY: Right. Exactly. One of the myths in entrepreneurship is this idea that the primary obstacle is the availability of capital when most entrepreneurs are ego-driven people who believe that they can manage technology risk, they can manage capital risk, what they can't manage is health risk.
Vigeland: So this an argument for universal health care, that will then allow people who are more worried about their health, and really need the insurance to go out and start their own businesses.
KEDROSKY: Right, and if you look at surveys of entrepreneurs who are outside of this, sorta of the 25-35 demographic, their concern is what happens if I get sick. And that prevents those people, many of those people from going out and being entrepreneurial. They're risk takers but they don't want to take risks in areas that they can't manage them, and health is one that they can't manage. So adequate health care is actually an incredibly important obstacle that we need to face down if we want more entrepreneurs outside the 20-something demographic.
Vigeland: So aside from health care, what are some of the other policy changes you think might be needed to help pave the way for these folks who want to start something new.
KEDROSKY: So health care aside, another example of an area where I think we could do a lot is in education. And not the obvious thing of saying let's create more entrepreneurship programs. A better example of what we could do using entrepreneurship as a lever, is to recognize something like a third of all tech startups on the West coast, to use that group again for a second, had immigrant founders. And we should make life easier for more such people, people who come to this country to do Master's and PhD-level education to go out then and start a new company. So my suggestion is, and I say this somewhat glibly, but I think it's a legitimate point, of attaching green cards to post-graduate diplomas in this country.
Vigeland: Literally attaching the green card to the diploma.
KEDROSKY: One, two, three go. It certainly beats the alternative where we give them this wonderful education, send them home, and say good luck starting some new companies that we'll then worry about later on. Why don't we try to take advantage, and build upon that success, rather than making it more difficult for ourselves.
Vigeland: Paul Kedrosky's article "The Next Frontier," talking about entrepreneurship in a recession is in the current issue of Washington Monthly. Thanks so much for your time.
KEDROSKY: Glad I could do it.