Tonight, I am flying cross country and it's one of those rare opportunities to think. I have been trying to put down on paper for a few hours why I generally have a visceral negative reaction to the Jobs Act which got signed into law today. I hope I have got my message down, but that will be up to you to decide.
Today President Obama was joined by Republicans, Democrats and entrepreneurs (including several friends of mine) to sign the Jobs Act into law. The legislation makes it easier for entrepreneurs to raise money from everyday Americans, hopefully creating a whole new spigot of capital.
The President touted this legislation as a tool that might help the next Twitter or Facebook get off the ground. In his remarks, he expounded upon the myth of American entrepreneurship. Think big, get investors, shoot for the stars, and anyone can conquer the world.
This is the myth of entrepreneurship. Have a billion dollar idea. Write a business plan that will show you will have at least $100 million of revenue in three years. Get investors. Have rounds of capital. Go public. Make magic happen.
I think that this myth explains American’s fascination with the show Shark Tank where entrepreneurs go before a group of big name investors and try to sell their souls so that they will invest in their companies.
I think that my visceral negative reaction to the Jobs Act and Shark Tank is that we’re sending the wrong message to entrepreneurs and our young people. I would like to see just as much pride in starting a restaurant, your own franchise, or your own manufacturing or distribution business. These are just a few examples.
In my opinion, the last thing these main street entrepreneurs need is crowdfunding (passed in the Jobs Act today). The first thing an entrepreneur should do is try to figure out how to execute their business model without selling off shares to investors. After all, the investors never go away in their company.
We should be encouraging our entrepreneurs to bootstrap their ventures. We should be doing everything in our power to open up lines of credit and loans at reasonable prices to small business owners. We should be doubling down on efforts like SCORE and/or the SBDCs to provide mentorship. We should look for creative ways to improve the accounting and books of small business owners.
I would love to see our media tell the stories of main street business owners and what they’ve done to survive the recession. These should be our heroes, ahead of the founders of Twitter or Facebook.
Yesterday, I want to visit one of my favorite (and first) clients. She runs a day care center. We fought like hell for 11 months to get her an SBA loan (after she was declined by Citibank) and now she has deployed the funds to double the size of her facility. Kids were smiling, and about a dozen new jobs have been created. Together, we sat and debated her next expansion plans, where she will hopefully double in size again.
In my mind, the owner of this day care center, like tens of millions of other main street entrepreneurs, are American heroes. It is highly unlikely (in my opinion) that the Jobs Act and crowdfunding will do anything to help them. It’s the furthest thing from their minds.
The Jobs Act, like Shark Tank will likely do more to expand the myth of American entrepreneurship instead of focusing on the hard work of helping and encouraging main street small business owners. While it might all be good for Silicon Valley, I don’t think it will help Main Street. And that is disappointing to me.