This Again: Entrepreneurship

When Pop City announced that it would host a forum on entrepreneurship, I was skeptical that the event would offer anything new.

Turns out that I was right.  Just about all the talk was about the importance of creating an entrepreneurial culture, one that promotes risk-taking and accepts the idea of failure.  Where have I heard that before?

If Pop City and its panelists are re-hashing themes that have been on Pittsburgh's plate for years (years!), then clearly something is not right.

It turns out that a community can't create a new culture for itself just by wishing that it were so. 

It also turns out that a community can't create a new culture for itself by promoting its good ideas (Pittsburgh has lots of those) and matching those ideas with investment capital (Pittsburgh has lots of that).

A key variable usually missing from public conversations about entrepreneurship -- and something that either did not come up at the recent session or was spun in an unfortunately backwards way, judging from the PC report -- is the structure of labor markets, and labor mobility.

I mean the following, related things:

One -- All of the talk about persuading Pittsburgh's college grads and grad students to stay in Pittsburgh -- talk that apparently was repeated by the panel -- is misguided.  See earlier posts here, at Null Space, and at the Burgh Diaspora -- three of the wonkiest blogs you will ever read --  trying, apparently apparently unsuccessfully, to banish the concept of "Border Guard Bob" from the local lexicon.  The game plan has to be *attract* people to Pittsburgh. Attract their energy, their enthusiasm, their passion, their ideas, and their money.  Let the college grads go away.  Some of them will come back.  The rest become part of the Pittsburgh Diaspora.

Two -- Pursue public policy reform that frees people to change jobs.  Developing human capital is the route to Pittsburgh's future

Three -- If you're considering starting a new company, think hard about labor and employment complications *before* you get started.  The mythos of entrepreneurship is two people with an idea and a sketch of a business plan.  When I was a practicing lawyer, occasionally these people would wind up in my office.  My first questions were always these:  Who do you work for?  Are you students?  Do you work in a lab or as a research assistant for someone?  Are you employed in some other way?  Do you have a partnership agreement or other formalized business arrangement between the two of you?  No one can build a company on a new idea until you sort out whether someone has the legal right to do that.  The biggest complication is usually a potential claim that a university or a company or a friend, family member, or earlier investor has some claim on the idea.   The sooner those complications can get sorted out, the better off everyone will be. 

Comments

2 Responses to "This Again: Entrepreneurship"

Jonathan Potts said... 10/14/2010 1:33 PM

I wonder what percentage of graduates from the region's colleges and universities actually do leave. If you take Carnegie Mellon out of the equation, I suspect the majority of students are from the region, broadly defined, and a large number I suspect are staying. At RMU, where about 73 percent of all students are from the Pittsburgh region (defined as Allegheny, Westmoreland, Beaver, Butler and Washington counties), about 80 percent of our graduates get jobs here in the region.

If you count new freshman only, only about 60 percent of our students come from this region. (The number climbs when you throw in transfer students, since they tend to pick schools near their homes.) I suspect that there is more myth than reality in the college students are leaving narrative.

Mark Rauterkus said... 10/18/2010 2:26 PM

I bet Pitt is far more like CMU than RMU in terms of students' hometowns and Pgh's vicinity.

But, where they go from here would be nice to know and document too.

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Pittsblog 2.0 is written by Mike Madison, a law professor at the University of Pittsburgh. Send email to michael.j.madison[at]gmail.com. Mike also blogs at Madisonian.net, on law and technology. Chris Briem of Null Space drops by from time to time.

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