The Rise of the Entrepreneurial Class

Recently I wrote an essay arguing the case for an Entrepreneurs Union. If my goal was to provoke awareness of an issue then I guess it was a roaring success. If my goal is to change the priorities of the current government; then the jury is still out and likely to remain so for some time.

The case I make is simple:

Young businesses, not small businesses, account for most of the economic growth of developed nations. They do so in two ways: first they create most of the new jobs. A telling report published in the US by the National Bureau of Economic Research conclusively showed that the size of a business had no correlation with its ability to create jobs. Old, small businesses create no more new jobs than old, large businesses. Young businesses, by contrast, whether small or large, created nearly all of the new jobs.

Of course, most young businesses are small businesses. But that is not the point. The point is that new business formation and the early years of volatility are what matter because those are the choke points for young businesses.

Second, and equal in importance, is that just as much of any new economic growth is going to come from innovation based increases in productivity. The recent OECD report on Innovation said it all, “[G]rowth must ... come from ... productivity growth [and] innovation holds the key to boosting productivity”

And most innovation comes from the creatively destructive efforts of start-ups. In short, we are looking to one set of companies for both of the key engines of growth. And one set of individuals to set it alight: Entrepreneurs.

What caused comment was my choice of the word “Union”. People to the left of me accused me of stealing the language of Labour. Between my Entrepreneurs Manifesto and my call for an Entrepreneurs Union, I was apparently making a mockery of all the Union efforts of workers. I disagree.

My language is intentional and correct. What I am proposing is for individuals, workers of a very particular sort, to have a collective voice, where there voice as individuals would be lost. Second, they are, as individuals relatively powerless against a monolithic authority that dictates every element of their working life. Merely because they are entrepreneurs and the monolith is the government rather than workers on an assembly line up against the weight of a global corporation, should make no difference in their right or effort to collectivize.

People to the right of me thought that I was trying to ‘herd cats’ in getting entrepreneurs to work together. After all, entrepreneurs value their independence more than anything apparently. Maybe we do. But we are adept at networking and partnerships and working together is the key to making a young company grow.

My essay also caught the attention of the media. Rachel Bridge (@rachelbridge100) in her Sunday Times column last week, and this week again, addressed the issue of whether entrepreneurs, as the people behind young businesses, are adequately represented.

Because the Times is firewalled I cannot link you directly to her piece but to quote;

“The union already has the support of more than 60 successful entrepreneurs, including Wilfred Emmanuel-Jones, founder of Black Farmer Sausages, and Lara Morgan, who sold Pacific Direct, her hotel toiletries firm, for £20m.

At first glance, the idea of a union for entrepreneurs — who are by definition independent people — might seem paradoxical. However, Richard said it will be a union with a difference. There will be no membership fee and it will be established as an online social network. Anyone interested can register at www.entrepreneursunion.com from tomorrow.

Richard will foot the bill to create the website and social network, and he expects to secure private funding to cover other costs.

He wants to persuade the government to take a cross-departmental approach to helping entrepreneurs, rather than through just the Department for Business, Innovation and Skills (BIS). Under his proposal, departments including the Department for Work and Pensions, the Treasury and BIS will meet union officials every few months to discuss issues and concerns relevant to entrepreneurs. The meetings would be filmed and made available online.

Richard will put his ideas to Mark Prisk, the small business minister, at a meeting next month. He is also keen for the union to widen the debate about economic growth, emphasising the importance of investment.”

This week, apparently because of the response to last week’s column, she followed up.“There is a huge difference between entrepreneurs and established small businesses and they have very different needs in terms of how they should be supported and represented, say Sunday Times readers.

Our article last week about the creation of the Entrepreneurs’ Union and the Institute of Entrepreneurs clearly hit a nerve, with dozens writing in to share their views”

I feel vindicated by the response and equally aware that next steps have to be taken. Also other initiatives are taking place. Luke Johnson, one of this country’s most adept entrepreneurs has announced the formation of an organization with complementary aims, The Institute of Entrepreneurs. I look forward to seeing how we can work together.

So stay tuned. There is a movement afoot.