The phone rang unexpectedly earlier today.
I was home in my personal bubble hiding from the Coronavirus and was safe with my family and my loyal golden retriever, Augie, by my side. Mandated by CSUF, I have been teaching my Entrepreneurship classes remotely and coaching startups in our Incubator by video conference. The caller, a local public official bluntly asked, “Given the impact of COVID-19, what can policy makers in Orange County do reignite economic growth.”
Now, that was a heavy question.
I quickly replied that Orange County is just like the rest of the country. We are gridlocked in an economic stall like none of us have ever seen. Small businesses are teetering on bankruptcy. Unemployment is soaring. Fear is morphing into anger. People are isolated in their personal bunkers waiting for the all clear signal.
He said that he already knew new that.
Undeterred, I continued. I said that economic growth is defined as an increase in GDP (i.e. Gross Domestic Product) over time. Oh, the good old days I thought to myself. Has it been that long?
Economists will tell you that there are three major things that drive economic growth:
- Access to capital, which is the crude oil of a healthy economy.
- Increases in labor participation, such as the entrance of new skilled workers. Note that past economic booms have been buoyed by open borders and welcomed immigrants.
- And, technological advancement. In our new COVID-19 economy, this factor may be the biggest driver.
As for capital and labor, these factors are difficult boulders to move out of the way. Our state and federal representatives will need to duke that out. More comments on these factors in a minute.
But technological advancement is alive and well in OC. From my perspective, the opportunity resides with entrepreneurship and innovation, which are related but describe different activities by different people and organizations.
Entrepreneurship is all about invention. Creativity. Doing new things. This is the domain of startups which can disrupt or reinvent. Uber is a good example. The taxi industry was ripe for disruption and a simple software app is all that it took.
Innovation is about doing things differently and better. Usually this is the domain of existing companies. Innovation focuses on improving existing processes, methods or products. Starbucks is an example. Brewing coffee? No big deal you say? Yet, placing coffee shops on every major intersection around the globe with WIFI, elevator music, and overpriced scones did create a nearly $27Billion company. I call that innovative.
So, what can Orange County policy makers do to stimulate economic growth?
First, embrace entrepreneurship.
This includes supporting the local incubators like CSUF’s Startup Incubator. Think of an incubator as a support group for highly creative and incredibly obsessed inventors. Starting a business takes a village and smart startup founders quickly learn that they cannot do it alone.
Startup founders need capital: seed, Angel and VC money along credit lines and low interest loans. Orange County does have a great network of Angel money, but we are sadly lacking a VC community. We need to create a “herd mentality” amongst VC’s and attract them to OC instead of startups having to fly to Silicon Valley. Our banks are omnipresent but need to lend more freely to the early stage startups.
While a long-term solution, we need to support early childhood education in Entrepreneurship and STEM. We need to help our children retain their innate creativity rather than stifling it with boring educational aerobics; our youth need to be encouraged to experiment and to learn by doing. This includes failing, which is another way to define learning from an Entrepreneurship professor’s perspective.
Our downtown communities need to cluster like-minded entrepreneurial people in online groups; startup founders must share their ideas and meet new people. Also, budding entrepreneurs need access to bricks & mortar facilities. Think of it like subsidized housing for the startup wannabees. You want your downtown to grow new businesses? Then give the startups a place to get started.
And, we need to help get entrepreneurs’ stories told. Our media needs to tell the world about the startup Mecca that thrives in Orange County. Think about how the Hollywood sign declares LA as the entertainment capital of the world. We need a meme for Orange County startups.
Second, embrace innovation.
We need to offer low cost loans for small innovative companies; small businesses (SBA defines them as having up to 500 employees) create approximately 30% of our nation’s patents. This is why successful startups get acquired by the bigger firms.
Also, we should offer tax incentives for research and development at local firms regardless of firm size. Give our local companies a reason to form and stay in OC.
My conservative friends may cringe at this one, but we need to welcome the immigration of skilled workers. I don’t mean just hello. I mean recruit the foreign talent that we need to drive innovation: software developers, design engineers, digital marketing gurus, financial analysts, data scientists, and visionary leaders.
Long term economic growth will come back, but let’s accelerate it with our thoughts and actions now. Let’s embrace entrepreneurship and innovation.
The local public official on the phone said, “Got it” and then hung up. As for me, it’s time to jump on yet another video conference with a startup from my coronavirus free sanctuary.
John Bradley Jackson
P.S. The goofy photo is my latest mask for Covid-19. This one is a cloaking device, which allows the wearer to hide from the virus. Patent pending.
John Bradley Jackson is a Silicon Valley and Wall Street sales and marketing veteran who teaches Entrepreneurship at CSUF, directs the CSUF Startup Incubator and the CSUF Center for Entrepreneurship. He is the founder of Titan Angels LLC, a seed investment fund. He also advises numerous startups and is also the author of five books on Marketing and New Venture Creation. In his spare time, he hosts the podcast “Startup Talk.” He lives in Norco, California with wife and children on a small horse ranch.