◼ ECONOMICS Bloomberg Businessweek June 29, 202030
ILLUSTRATIONBYCHARLOTTEPOLLET.*FORESTABLISHMENTSFLAGGEDASHAVINGAHIGHERPROPENSITYFORHIRING.DATA: U.S. CENSUS BUREAUwillbecomemoreamplifiedunlesssomething
changes,”saysWendyGuillies,presidentofthe
KauffmanFoundation.Shepointsoutthatthose
groupswiththehighestdeathratesfromCovid-19
(thepoor,peopleofcolor,ruralresidents)havealso
bornethebruntofitseconomiccosts.A paperpub-
lishedbytheNationalBureauofEconomicResearch
inJuneshowedthatwhilethenumberofactivebusi-
nessownersintheU.S.plunged22%fromFebruary
toApril(representing3.3millionlostbusinesses),
Black-ownedbusinessessawa muchsteeper41%
drop—anunprecedentedextinction-levelevent
whoseeffectswilllingerforgenerations.
That’sthebadnews,andmoreis suretocome.
Thesilverliningmaybethepandemic’sonce-in-a-
centuryopportunitytoreviveU.S.entrepreneur-
ship.Withanhistoric 21 millionAmericansoutof
workasofMay,manymaychoosetobecometheir
ownemployerwhetheroutofneed,opportunity,or,
morelikely,somemessymiddle.“Justbecauseit’s
outofnecessity,thatdoesn’tmeanit’sa badthing,”
Guilliessays.“Sometimesit takesmajordisruption
tohavea rebirth,andI thinkthisis anopportunity.”
But totruly makeentrepreneurship acces-
sible to all Americans, some fundamental
things must change. The first is education.
Entrepreneurshiphas beenone ofthefastest-
growing fields of study over the past four decades,expanding from a handful of courses in the 1980s
at scattered campuses to thousands available today
at colleges around the world. Many schools actively
promote Silicon Valley-style startups, funding incu-
bators and accelerators, seeding in-house invest-
ment funds, or forging partnerships with VC firms
that recruit student scouts on campuses to spot the
next billionaire lurking in a dorm room.
But a lot of this entrepreneurship education
relies too heavily on success stories from wealthy
guest lecturers—what a Bloomberg Businessweek
article in 2013 called “clapping for credit”—while
ignoring the majority of everyday businesses.
The obsession with venture-funded tech start-
ups has been wildly out of proportion to their
importance in the real world. A 2017 paper
reported that while VC investments and initial pub-
lic offerings are extremely rare events, affecting less
than 1% of companies in the U.S., these two sub-
jects were the focus of almost half of all papers pub-
lished in entrepreneurship journals. Imagine if half
of biologists published research only on elephants,
ignoring 99% of the creatures on the planet, says
Howard Aldrich, a professor of sociology and entre-
preneurship at the University of North Carolina at
Chapel Hill, one of the paper’s authors.
For the benefit of larger numbers of stu-
dents and those with more diverse backgrounds,Green Shoots
Applications to start businesses crashed with the lockdowns, but they’re rebounding
stronglyin somepartsofthecountry
-20% -1 0 201 40 60 States where the unemployment rate in May was
10 percentage points or more higher than a year agoOnly about half of
all new businesses
survive five years or
longer, according to
the U.S. Small Business
Administration. Only
about a third last at
least 10 years.While new businesses
are being born, many
are also dying. Closures
of businesses with
employees exceeded
openings in the three
years following the
2008 financial crisis.Georgia, Louisiana,
and Mississippi logged
the biggest jumps in
applications. These
states imposed shorter
lockdowns, though
rising infections
could affect the pace
of reopenings.Change in new-business applications from
week 24 in 2019 to week 24 in 2020*“I stopped
counting the
number of
times I got
rejected
by banks”