Entrepreneurs Must Save America

The United States has no shortage of great ideas and innovations. What the country most needs right now are highly motivated entrepreneurs who can turn those ideas into great businesses -- and thus create millions of new jobs.

So says Gallup Chairman Jim Clifton in his book, The Coming Jobs War. Clifton is worried because America and much of the rest of the world are trying to boost innovation while entrepreneurs -- living, breathing, job-creating engines -- are neglected.

Clifton's book draws from Gallup's extensive analysis of U.S. and worldwide poll data, macroeconomic data on job creation, and trends in world economics. That analysis has uncovered astonishing and sometimes discomfiting facts. But a central finding of the book is that the will of the world has changed.

People used to desire love, money, food, shelter, safety, peace, and freedom more than anything else. Now, however, what everyone in the world wants is a good job. And as Clifton discusses below, by concentrating on innovators and neglecting entrepreneurs, we may be making it harder to create the jobs the world wants and needs.

Gallup Business Journal: In your book, you emphasize America's rivalry with China. How can the U.S. compete effectively with China in the war for good jobs?

Jim Clifton: The U.S. has to keep creating, as it has in the past, the next big things and selling them. Everybody's been talking about the late Steve Jobs. You see, Steve Jobs wasn't meeting needs; his company never met a need. Steve Jobs and his company created a need. I wish all of America could get an A on this pop quiz because it's so important: China fills needs; Steve Jobs created needs. Nobody knew they needed an iPhone. The same thing was true with the transistor and flight and Henry Ford's mass production of cars.

The country that invents the future wins the jobs war, and inventing the future is what great entrepreneurs do. But China's just meeting already-existing needs. They're filling orders. They don't create the future.

So you're saying that America needs to invent and engineer and design the things that the world doesn't know it needs yet?

Clifton: Yes -- and let China or somebody else manufacture it. I know that hurts, but we can adjust. It wasn't all that long ago that a whole lot of Americans were farmers, and our economy was mostly agricultural. We adjusted. Now, the real money is in creating the business, not manufacturing the thing.

Businesses like the one Steve Jobs created and businesses like Intel and Microsoft and Amazon and Groupon and Facebook and eBay -- nobody else sees that stuff coming. Nobody else says, "Hey, we need a site where we can post pictures from the weekend. We need a site that's basically a 24/7 garage sale." That wouldn't have market tested well. But look at Facebook and eBay -- they're multibillion-dollar companies that created jobs for thousands of people.

We've got to accelerate that. To imagine that we'll compete with China and those manufacturing jobs will come back is hallucination -- or at best, wishful thinking.

People say that America will beat China because the U.S. is full of innovators and China isn't. What do you think?

Clifton: For one thing, that's not true. China can innovate. But they don't have a culture that understands the power of engaged workers. Right now, they just out-low-cost-manufacture the world. But that won't last forever. Their wages will keep going up, and jobs will go to other places -- to Southeast Asia, to India, probably some to Africa, maybe some to parts of the Middle East.

But for now, it's safe to say they're winning the jobs war?

Clifton: Definitely. Yes, they've got the momentum right now.

Then why does it matter if China has engaged workers?

Clifton: Because engagement is a precondition for the state of mind that creates entrepreneurs. Miserable workgroups chase customers away. Miserable workforces don't create any economic energy, so those companies are always cutting jobs. America will not come back and win the world unless we have the most spirited workforce. Spirited workforces create new customers. New customers create new jobs.

In the book, you write that small and medium-sized businesses employ more people than big companies do -- and that very few Americans are aware of that. So what do we need to do to boost the number of those small and medium-sized businesses? And how would that affect the economy?

Clifton: Yes, very few people are aware of that. There are currently about 6 million official operating businesses in the United States with fewer than 500 employees. There are 90,000 companies with 100-500 employees, 18,000 with 500-10,000 workers, and 1,000 large companies with 10,000 employees or more.

Ideally, we need about a million startups. Of them, about 5% will shoot up because that's the nature of startups. Big business will be hiring and laying off at the same time, so they won't really create a net number of jobs. But they provide business to the 6 million small to medium-sized companies that do create job growth.

If you wanted to fix the American economy right now and make sure the country is well-positioned for the future, get a million startups going, and create a behavioral economic marker on the self-confidence of those organizations. Monitor that marker closely because small and medium-sized companies -- along with our schools' fifth- through 12^th-graders, who are your entrepreneurs of the future -- are key to job growth.

But how do you get something like job growth started? Does it start at the national level?

Clifton: No. The way you fix America, or any country, is at the city level. Thriving cities are essential to a country's success, and there's no way you can fix your cities without positive momentum among small organizations, as well as among fifth- through 12^th-graders. If you care about your city's future, go around and talk to the business and philanthropic leaders in town; roam the hills and get the stakeholders together and say, "I have these metrics, and here are these two constituencies -- small to medium-sized business and fifth- through 12^th-graders. Now what are you doing for them, Chamber of Commerce? How are you engaging and motivating them?"

It also helps to have a good university in your town. Universities are a huge asset, and our higher education system is one of the great strengths of our country. So many businesses trace themselves back to a university. Just look at Silicon Valley. Much of our tech industry can, to some degree, be traced back just to Berkeley and Stanford. Many other businesses have come out of MIT. America's university system is a national treasure.

Should universities be more aware of their role in job creation?

Clifton: If a college president says his mission and purpose is just to educate kids, he's wrong. If that's what he's building his strategies around, he should be fired. Given the state our country is in now, the only purpose of any university -- from MIT to Montana State -- should be job creation for its students. Everything should be about a job, not about graduation.

Which is more valuable to job creation -- entrepreneurs or inventors?

Clifton: Entrepreneurs. It's not even close.

Why?

Clifton: Because we know how to deal with innovation. We can develop intellectual strengths like crazy. And Americans are the best at it by far because we can find and develop innovators; we know how to find the top 1%, and when they go to MIT and Stanford, then professors find them and make them into amazing thinkers. We've nailed that intellectual engineering.

But what we're not good at is assessing people on their ability to create business models that work. Ask two educational psychologists how to identify someone with the ability to be a great entrepreneur, and you'll get a big fight. One will say you're either born with it or you're not. And the other will say, no, you can train entrepreneurship like you can train somebody to change their oil.

What do you think?

Clifton: Based on the entrepreneurs I know, I think there's definitely a gene. But their environment is critical too. Whatever the case, they're just absolutely crazy. Their demand for freedom is extraordinary. Everybody's been talking about Steve Jobs and his unbelievable mind. But please don't call him an inventor because that was Steve Wozniak. What Steve Jobs could do was imagine products. He would go to his teams and say, "Make this." And they'd bring it, and he'd say, "That sucks, take it back" over and over. I guess he was really a bear to work for. He demanded his own independence like very few Americans ever have. He demanded the freedom to do exactly what he wanted to do.

And entrepreneurs have incredible optimism -- they don't believe failing is failing. They know they may have huge losses, but that's the fight they want. Entrepreneurs want a mess. They actually want to come to work and have an impossible thing to figure out. If you ask a real entrepreneur if they'd rather run Coca-Cola or if they'd rather figure out some awful mess, the entrepreneur would say, "I wouldn't run Coca-Cola on the coldest day in hell. There's nothing for me to do."

So entrepreneurs want to forge into the wilderness every day and leave it tamed, then go find a new wilderness.

Clifton: And they definitely don't want to know what's coming. They move and adapt as new challenges come along.

How many people fit that category?

Clifton: My estimate is that three in a thousand have what it takes to be an entrepreneur. So we probably have 900,000 people roaming the hills here, coast to coast, who can do something unusual. Worldwide, we need to get everyone with the entrepreneur gene to the U.S. We need to make sure we keep attracting them here.

How do you do that?

Clifton: Do exactly what San Francisco did. If you write code in Bangalore, they'll tell you that you can write it in India now -- you don't have to go to the U.S. But if you really want to see how good you can be, you need to pick up and get to Silicon Valley, because you get to walk into a room with people who have the same rare talent for writing code that you do. Then you have fun, and you start making stuff and talking code-speak to each other, and you push yourself as far as you can go. But there's only one place in the world for world-class coders, and that's Silicon Valley. America has to be the beacon for coders -- and for entrepreneurs and innovators in every industry.

So a society that encourages people to go into a wilderness, then buys what they bring back . . .

Clifton: A society like that has a job-creation machine. But it starts in a city. I always tell people: Just look at the San Francisco area. Everything in this country and the world happens there first. The entrepreneurs there create businesses -- in that city and a few others -- and that's what creates jobs.

No one ever started a business because they wanted to give people jobs. They start businesses because they're obsessed with an idea. They don't want to go home at five, and they don't want to take a vacation. They want to bring their idea to life. The more that cities support that entrepreneurial obsession with the help of local leadership and universities, the more they'll create jobs. Period.

-- Interviewed by Jennifer Robison