State of Entrepreneurship Address @NASDAQ

Presented by: The SBA Administrator MARIA CONTRERAS-SWEET
Speech Date: Friday, February 12, 2016
Speech Location: New York, NY

Good morning, what a special opportunity to be here at NASDAQ. For many entrepreneurs, this is the Promised Land. It represents the dream that, someday, they might stand here, ring the bell, take their company public, and join the titans of American innovation.

Today, after seven hard years of recuperation and rebuilding, the conditions to start or grow a business have substantially improved. The recession has receded. Unemployment is down; job creation is up. Job lock is down; health coverage is up. Even though IPO proceeds are down; VC investment is way, way up. Barriers to entry are coming down; women and minority ownership rates are climbing up. Complacency is down; disruption is up. While we still have a few hills to climb, we’ve come an awful long way in a very short time. From Main Street to Wall Street, the state of entrepreneurship is strong.

But without our serious attention, it won’t stay that way. In ways large and small, America is changing. You can feel the tectonic plates shifting beneath our feet:  Our demographics are changing rapidly. There’s an increased focus on gender equity, which is long overdue. The clean energy revolution is real and gaining momentum. The new gig economy has people working in ways we’d never dreamed of and is disrupting entrenched economic interests.

At the same time and, in part, because of some of these changes, too many families are working harder and harder and finding it tough to hold on, let alone move up the social ladder. This shift is playing out at kitchen tables as families sit down to pay their bills, and it’s playing out in political races all around the country. You see the tension all around us, if you just look. Within blocks of here, there are billionaires from around the globe buying condos for north of a hundred million dollars.  A new report found that 62 people control half of the world's personal wealth. In the shadows of those luxury buildings, you have independent small businesses struggling with skyrocketing rents and barely hanging on. And all over this city, men and women – often as a second or third source of income – are driving passengers around the city in their own personal cars or renting out rooms in their apartments. That’s the world right outside the doors. 

Change is here. It’s upon us. I see it as I travel all across the country. The tough part, the challenge for us, is figuring out what it all means and how to harness all this change to broaden opportunity instead of constricting it. There’s no simple fix.  It’s not enough to find a few success stories, proclaim the American Dream alive and well, and move on. We talk so much about the American Dream, but I sometimes worry we’re taking it for granted. 

Look, I’m the product of American opportunity. I was born in Mexico, raised by a single mother in Los Angeles, worked in the private sector, started three businesses including a bank, and now I’m a member of the President’s Cabinet.  You bet I believe in the Dream.  But it’s not our birthright.  It could disappear in the blink of an eye if we don’t nurture it.  Each generation must rekindle it.  We have to make sure it’s there for those who come after us. But how do we do that? I believe expanding entrepreneurship is an answer, maybe the best answer. Entrepreneurship alone may not be sufficient, but it’s absolutely necessary. 

Income inequality has exposed fissures and racial tensions in our cities. Expanding entrepreneurship can provide new economic pathways with the potential to lift whole communities. We educate the best and brightest at our universities and our broken immigration system sends them back home to compete against us. Expanding entrepreneurship can empower talent in our own backyard to create good jobs here at home. Automation and cheap foreign labor are upending job roles and job stability. Expanding entrepreneurship can help us create new businesses and new industries.

Sometimes, in periods of anxiety, I know there’s a reflexive flight to safety. And anyone who’s ever started a business knows that entrepreneurship is anything but safe. It’s full of risk. But sometimes, taking a risk is the safest thing we can do. We must expand the middle class and leave a healthier country to our children and theirs. I believe we need to encourage risk takers – our entrepreneurs – in communities all across the country.  The choices they make to strike out on their own won’t just impact their families or their communities. They’ll impact all of us by creating the jobs we need now and the companies that will trade on NASDAQ in the future.

But there’s no way we can meet this challenge by only looking to businesses in the same places led by the same people doing the same things. That’s “entrepreneurtia,” and it’s a recipe for decline. In our American story, especially our economic story, change is the only constant.

Just look at Detroit.  Fifty years ago, it was the center of American innovation. There are some great things happening in the city now, but past performance is no guarantee of future success. It’s going to take Washington and Wall Street working together to avoid the trap of entrepreneurtia.  We’ve got to search out and empower new entrepreneurs with enthusiastic intentions, not simply double down on yesterday’s winners.

Entrepreneurship is in our DNA. America was settled by traders, merchants and explorers determined to pioneer new frontiers. Centuries later, we’re one of the few countries that reserves a seat in the President’s cabinet for the entrepreneur. As a banker, entrepreneur, and government official, I come to NASDAQ in the spirit of collaboration, because capitalism requires our cooperation. Markets work best with transparency, liquidity and efficient and effective regulation, and America works best with robust economic opportunity, forged by capital flowing freely to all segments of our society.

Now, I know the stock market has had a tough run the last couple of months, but the market isn’t always the bellwether for the economy that some believe. The economist Paul Samuelson once joked that Wall Street predicted nine out of the last five recessions. A more durable indicator of our economic health is the state of small business. If our small business sector were a country, our output would rank No. 3, above Germany and Japan. Small firms employ half of the private sector. They’re creating 2 out of 3 net, new jobs. The middle market is our most powerful path to create broadly shared growth.

A new report says 62 people control half of the world's personal wealth, but even some of them say it’s time to engage in a discussion about wealth formation trends. The way we’ll make progress is by expanding access to capital to America’s most promising entrepreneurs who’ve yet to be discovered. They’re in the rural heartland and in our mid-size, urban cities. They’re graduating from our historically Black colleges and Hispanic serving institutions. They have insights and connections to their communities and novel ideas and products to serve them.

Last year, more venture capital was injected into our economy than any time since the 1990s. The Small Business Administration provides Wall Street and Washington a platform to work together to empower a new wave of diverse innovators – men and women who are constrained not by the power of their ideas, but by their limited capacity to commercialize them.  Some on Wall Street see dark clouds gathering, but diversification can serve as our umbrella. I believe we can steer around future storms if we embrace true diversity in our portfolio and harmonize the three pillars of our ecosystem: our institutions, investors and innovators.

Tags: Florida Small Business