What creates job growth… Geeked-out Sales Reps?

6nov09-wsj-kauffman-1In Wall Street Journal op-ed: New Business, Not Small Business, Is What Creates Jobs, Kauffman Foundation senior execs Carl Schramm, Robert Litan and Dane Stangler announce their latest report on small business job creation.

The report sorts out small business job growth fiction vs. reality.


Entrepreneurs = Recovery

It turns out that “nearly all net job creation since 1980 occurred in firms less than five years old.”

No wonder start-ups generate so much [intoxicating] fun. In fact, researchers report that “of the entire pool of new jobs added in 2007 (roughly 12 million), about two-thirds was  generated by these young companies.”

While the report is exceptionally well written (and filled with terrific graphs for anyone—like me—who sells to small business), their policy recommendations are off-target.

Here’s a copy of my response and a call to arms for Geeked-out Salespeople…

Carl, et al: Terrific insight… that *new and growing* businesses are the real fuel of economic growth (cf., small businesses in general). Thank you for that important clarification.

Your conclusions, though, leave out the most critical element.

While you present good suggestions (welcoming immigrants, unleashing professors, access to capital, sarbox exceptions), they will do little to break the enormous inertia preventing entrepreneurs and their breakthrough ideas, patents and processes from ever reaching the point at which their [start-up] companies are able to create jobs.

Having worked for and with hundreds of venture-level firms and each of their entrepreneurs, the single biggest contributing factor choking the conversion from entrepreneurial idea to commercialization (and jobs) is lack of customers. Pure and simple, if you can’t create a customer (or in the case of Twitter: a registered user), your idea dies.

Without customers (and the revenue they create) investors won’t invest, IPO’s won’t occur and patents become worthless (fyi: 60,000 patents expire each year… so we really don’t need more patents).

No doubt, the ability to create customers (a/k/a selling) is critical to any firm. But for startups, it is their literal lifeblood.

But given this linkage, it is exasperating to find so little sales training or formal education available. At which institutions do engineers (and for that matter, professors) learn how to sell? I cannot list 5 institutions in the US that provide the kind of bare-metal selling necessary for taking early-stage products (i.e., working prototypes) to market.

Perhaps you’d consider moving this to the top of your list at the Kauffman Foundation. It would be consistent with the realities of entrepreneurial growth and be money and time well-spent.

  • http://www.ic2.utexas.edu/global/india-program/len-denton-2.html Len Denton

    In Fortune 1000 companies or the smallest start-up, nothing good happens until someone sells something!

    This comment was originally posted on Growthology

  • Dustin

    The invisible hand is at work. Entrepreneurs have only in the past decade or so really claimed the celebrity-like status that they have. The dotcom boom created some of that. It’s now quite sexy to be an entrepreneur of any type. That will balance out. It will go from being a swear word, to a sex symbol, to just another respected career path and when it becomes the last, it will be formally taught in schools (better).

    This comment was originally posted on Growthology

  • http://www.chrometa.com Brett Owens

    Great response John!

    Couldn’t agree more. I often think what a waste to spend K-12, then 4+ years of college…that’s over 17 freaking years of school…without learning even an ounce of basic salesmanship!

    Nothing happens til you make a sale, as you say, and it’s too bad that not enough people grasp that point. And let’s not even get started on business school!

  • Terrance Fairley

    I would have to agree with you concerning this point. The fundamental truth is that no current or aspiring entreprenuer can be successful in business until he or she sells something. No income is generated, nor addition help hired, neither is equipment is bought until something is sold by the entreprenuer. Selling in my opinion should be the first course taught when considering going into entreprenuership.

    This comment was originally posted on Growthology

  • http://www.todayloan.co.uk/ Quick Loans

    I’m often of the opinion that some people you simply cannot teach sales too. It’s a natural instinct to a certain degree.

    This comment was originally posted on Growthology

  • Chris

    I would think that some of the reason why new start-up firms are the ones leading the way in job creation is because the need for money is in many ways decreasing do to the convenience of the internet. Granted, these online business are not inexpensive in most cases. However, the cost for marketing alone is much less expensive, as many entrepreneurs are learning the ropes and taking control of many more facets of a company than just one or two.

    Perhaps I am wrong here, but that would be my relatively inexperienced observation.