- Tessa Conroy is an economic
development specialist
and assistant professor at the
University of Wisconsin-Madison
at the Department of Agriculture
and Applied Economics and has
a joint appointment with UW-
Extension studying community
economic growth and development,
small business dynamics
and entrepreneurs.
She has a degree in
business administration
from Gonzaga University
and a PhD in economics
from Colorado State University.
She conducted postdoctoral
research at the UW-Madison
and currently holds
a research grant
from the United States
Economic Development Agency.
Her research includes interests
in applied microeconomics,
entrepreneurship, gender, firm
location, regional economics,
and economic growth.
She has written on the impact of
small business loans, business
location, the urban/rural
divide, and gender and business
ownership and entrepreneurism.
Let's welcome Tessa Conroy.
[applause]
- Thank you for the
nice introduction,
and thanks to all of you who
are watching and listening.
Tonight, I'm going to be talking
about entrepreneurship
and economic development.
So I'll be trying to give you
kind of a view of the forest
and think about how
entrepreneurship fits into
the bigger economic story of a lot of our towns and regions,
particularly in Wisconsin.

I'm starting with a
story about my hometown.
So this is downtown Goldendale,
Washington, and I'm starting
with this because this is kind
of about how I arrived at
studying entrepreneurship
and economic development.
As you can see, I think
that our downtown looks
a lot like some other downtowns.
It's old and cute but suffering. It's seen better days.
And a lot of that has happened
in the last 20 years
since our aluminum plant closed.
Our aluminum plant
employed upwards of 30%
of our population,
and since it's closed
we've kind of had to
reinvent ourselves.

This is the plant on the
Columbia River Gorge.
At its peak, it employed
close to 1300 people.
It opened in 1971 with the kind
of rise of manufacturing
in the United States.

At one point, it provided
almost $40 million in income
and almost $2 million in taxes.
So this is a really big or had
a really big economic impact
in a town of about 3500 people.
Ultimately, the plant began to
scale back in the late '90s
when energy prices
started to go up.
Aluminum plants used a lot
of energy, so being located
on the water near hydropower
was really important
for the aluminum plants.
There are about 10 other
aluminum plants spread out
across the Pacific Northwest.
But as energy prices
got more expensive,
aluminum prices also went down.
It became harder and harder
to become profitable.
We also started to face global
competition as new plants were
being built that were modern
and more efficient.
So, ultimately, there were
lobbying efforts at the local
and national level, trying to
get us maybe a better energy
price for example, but the plant
closed in the early 2000s.
It's since been raised,
and all that's left
is an industrial footprint.
So I think maybe some of you
have seen something like this.
I call them an industrial
graveyard, where something that
was, you know, really important
just isn't there anymore.

But before it closed, there
were some pretty heroic efforts
to try to get it to stay.
This is a picture of
a natural gas plant.
Also right outside my hometown.
People were really hopeful
that this natural gas plant
was going to save
the aluminum plant.
They thought this is going to
provide cheap power
and the aluminum plant
will stay open or reopen
and this will be kind
of the saving grace.
So we annexed land, we
tried to get tax incentives
to make this happen.
Interestingly, this linked my
hometown to Enron.
At a time when energy markets
were going a little bit crazy,
a subsidiary of Enron was
initially managing the building
of this new plant.
It opened briefly for about two
years and went bankrupt in 2004,
never employing more
than 20 people.
So it didn't have the effect
that a lot of us were
hoping it would.

So despite these lobbying
efforts, these local
and national efforts to save the
plant, despite our annexed land
and our tax incentives,
ultimately economic development
happened where we
weren't looking.
What you see here is a
scanning gold drone,
and in the background
you see a wind farm.
So here the wind tower
is in the far distance
of the upper picture as well.
So what happened is
we had a new company
that opened in the '90s, Insitu.
And they were developing drones
or unmanned aerial systems.
They only had a few
employees at that time.
In 2008, they sold to Boeing
with over 600 employees.
So a real success story.
Ultimately, it was our local
talent and our local
entrepreneurs that
generated new jobs for us.
Similarly, the wind farms were
first kind of coming to
fruition in the late '90s
and early 2000s.
We now have some of the largest
wind farms in the west.
So, ultimately, we had to invest
in a local asset, being wind,
and the energy infrastructure
that we have from
all the hydropower.
And those were the things
that generated economic
development in my hometown.

I want to kind of close this
story by pointing out that what
was happening in my hometown
was bigger than my hometown.
There were, like I said,
widespread plant closures.
So our plant closed in the
early 2000s, but by 2015
all nine or 10,
depending on what you count,
aluminum plants had closed
in the Pacific Northwest.
The plants closed
as profits fell and global competition increased.
So this had more to do with what
was going on in big energy
markets and around the world.
And all the time and resources
we used to try to save the
plant were unsuccessful.
And meanwhile, there may have
been missed opportunities to
support new and
local businesses.
So the question that I have as
an economist now and as a
researcher is, what might
have happened if we'd devoted
those resources even more
into our local talent,
even more into our entrepreneurs?
What might the town look like
if we had gone even further
with our efforts to
generate new businesses?

So now, as a researcher,
I think about things
a little bit differently.
I know that
entrepreneurship is linked
to several economic benefits.
I'm going to spend a lot
of time talking about how
entrepreneurship is
related to job creation.
But also we know that it's
linked to income growth,
poverty reduction
or alleviation,
innovation, and regional stability.

First, income growth
and poverty reduction.
Thinking kind of big picture,
we know that countries
with more entrepreneurship
have higher GDP.
So that means they're either
producing more and/or producing
more valuable goods
and services.
Locally, we know that within
the US entrepreneurship
is tied to rural and
urban income growth.
So that means more wealth
and higher incomes
within our communities.
We also know that
entrepreneurship
is linked to rural
poverty reduction.
The example I'm giving is
Appalachia because even in this
environment that seemingly lacks
the infrastructure to benefit
from entrepreneurship, poor,
poor part of the country,
even they have benefited
from self-employment
in terms of job growth
and income generation.
And then, at the micro or
individual level, we've also
seen how helping individuals
become self-employed can help
them out of poverty
and reduce the need
for our welfare programs.

This is one of my favorite
topics, is the economic
diversity and how
entrepreneurship helps with
kind of a portfolio approach
to economic development.
So over time, some
businesses will close,
others will do quite well.
We actually know that
dynamism is part of a
really healthy economy.
If you look at some of our most
vibrant and thriving economies,
they have really high
establishment death
rates or exit,
but there comes alongside a
high establishment birth
rate or a lot of entry.
So lots of dynamism in
our healthiest economies.
In Wisconsin, we see about,
I think it's around 10,000
businesses open and
close each year.
So that's between 25 and 30
businesses each day
kind of coming and going
from the market.
So relying on just one industry
can leave a region vulnerable,
and that's the story
of my hometown.
We had about, like I said, 20%,
30%, 35% of our employment
with one employer
in one industry.
So when that employer goes down,
or if it goes down,
there's nothing to offset it.
So having a diverse portfolio
of industries as an economic
developer can create
stability in your region.
So we call that a
portfolio approach
to economic development.
We kind of offset risks so we're
not too deeply invested in any
one industry, and at any given
time, hopefully, if something
goes down, there's
something else on the rise.
And this isn't limited
to industrial diversity.
We have also seen that places
that have more gender diversity in their business ownership
were more stable
during the recession.
So, counties that had more
women own businesses during
the recession had more stable
outcomes during the recession.
So, women tend to
manage the businesses
a little bit differently. Oftentimes more risk averse.
So some of these different
management patterns
actually create some
stability as well.

Entrepreneurship is also
linked to innovation.
So you might think of
entrepreneurs as innovators,
and that's not
necessarily incorrect.
A lot of our entrepreneurs
do innovate,
but oftentimes our
entrepreneurs are the people
who are delivering
innovations onto the market.
So they are bringing new goods
and services to consumers.
Those replace
existing technology
and ultimately
promote advancement.
They create new value
for our consumers.
So this is all part
of economic growth.
Ultimately, consumers benefit
from having many choices to
suit their needs.
So having kind of the latest
and greatest or maybe something
that you didn't even
know you wanted
is now available for
you to purchase.
This gives firms a
competitive advantage.
If they can be the ones that
create the good or service
that consumers want, then they
have an incentive to innovate,
that's their profit incentive.
So this process of
competition and innovation
and gaining a market share drives the economy forward
by creating advancement
value wealth.
In Wisconsin, and this is true
across most of the country,
or the whole country as far as I
know, businesses are responsible
for the majority
of R&D spending.

So this is a chart
kind of showing
the different shares
of R&D spending.
Here are sources
of R&D spending.
It's a little bit weird just
because we wanted to show you
the various shares and make sure
that everybody was visible.
But the blue share, above 85% in
most cases, is the share of R&D
spending that's coming
from private industry.
The orange is non-federal,
non-state.
So we would think of this
probably as nonprofits.
Maybe the Cancer
Research Association
or something to that effect.
And then the small gray sliver
is our state spending,
and then federal being the
small yellow share at the top.
So the overwhelming
majority of R&D spending
coming from businesses.

Entrepreneurship is
also linked to creating our local sense of community.
We create and support
local amenities.
So Wisconsin has a pretty
healthy tourism culture.
We need businesses to make
those amenities enjoyable for
consumers so that you can go out
on the lakes or go skiing
or something to that effect.
To enjoy being in the
outdoors in particular,
we need businesses to
support our amenities.
They also provide
specialty services
and sell culturally
specific goods.
I like to give the
example of New Glarus,
which has really leaned into their Swiss identity.
And they opened shops and they
sell those types of goods
and their restaurants sell that
kind of food and people go to
New Glarus expecting to see that
kind of cultural identity.
I think Wisconsin also has
kind of a meat and cheese
and beer identity.
And we see lots of places
offering those services.
So it's become part of our
culture and what makes us
unique, why people come
here to spend their money.
And it definitely gives
our communities
unique charm and character.

This is what I think is probably
the most important aspect
of entrepreneurship.
So many of our
policy conversations
when we talk about
economic development
we're actually really
talking about job creation.
How do we employ people?
How do we create new jobs?
That's especially been the story
coming out of the recession,
which has been a relatively
sluggish jobs recovery.
We haven't put jobs back into
the economy quite as quickly
as some would like,
particularly in rural areas.
But we've learned a lot over
time about kind of how this
works and where jobs come from.
So, historically, we thought
that job creation
was about business size.
In the 1980s, or
before the 1980s,
we thought that big
businesses create jobs.
So we were looking to kind of
our large employers and these
kind of monolithic companies
to give us new jobs.
In the 1980s, it was David Birch
at MIT who got his hands
on some really good
business data.
And he's the one who helped us
figure out that it was actually
small businesses
that generate jobs.
This actually came after the
Small Business Administration
was already established,
interestingly.
And this kind of verified maybe
what some of us already knew
on the ground, that small
businesses are really important
for job creation.
So this kind of brought
about a renewed emphasis
on our small businesses
and entrepreneurship.
But we've gotten even better at
understanding small businesses.
More recent work shows
that job creation
has more to do
with business age.
It's not necessarily small
businesses that create jobs.
It's new businesses
that create jobs.
And it is their newness
more than their smallness
that drives job creation.
New businesses often
happen to be small.
So that's part of kind of like
we're conflating these two
ideas, but when we can keep
track of business age,
we actually see that it's our
entrepreneurs, our newest
businesses that are
the job generators.
I'll show you what I mean.

So this is the share of
creation or of job creation
from businesses with
less than 500 employees.
That's the Small Business
Administration definition
of a small business.
A lot of us think of a
small business as something
much smaller than that.
And here we have Wisconsin as
well as some regional neighbors
in the United States kind of
here in the middle at 83%.
So, in Wisconsin, we have
nearly 90% of job creation
coming from small businesses.
So it's not wrong to say that
small businesses create jobs.
I would just argue
that it's more precise
to look at job creation
by business age.
So here we have five-year
age increments.
So businesses from zero to five,
six to 10, 11 to 15,
16 to 20,
and 21 to 25.
So, again, these are age
classes of businesses.
And you see that in Wisconsin
almost 44% of job creation,
almost 44% of job creation
comes from our new businesses
or our new and youngest
businesses under age five.
That's actually a little less
than the country on average.
Between 50% and maybe even
up to two-thirds of new jobs
come from our
youngest businesses.
In Wisconsin, we tend to have a
slightly less entrepreneurial
activity compared to
the rest of the country
and more large
legacy industries.

So what I've done here is break
apart that youngest category.
So I have age zero
businesses here,
one, two, three, four, and five.
And when we then kind of
disaggregate even further,
we see that over a
quarter of our new jobs
come from age zero businesses.
So over a quarter of jobs
coming from our brand new
establishments.
That's really substantial.
It's still a little bit less
of the rest of the country.
Typically about a third of jobs
come from our
youngest businesses.
But this hopefully is really
striking to you that almost a
quarter of jobs or more than a
quarter of jobs in Wisconsin are
coming from our entrepreneurs
and new businesses.
So I mentioned that Wisconsin is
a little bit below the national
average but it's still the case,
so, nationally, I do want to
point out about a third of new
jobs come from new businesses,
another third from that youngest
age group from one to five.
And then I have this statistic
or this figure here just because
I think it demonstrates how
important entrepreneurship is.
From 1980 to 2005, so over a
25-year period, annual net
employment growth in the US
would have been negative
without the job creation
from new ventures.
So we would have lost
jobs over this period
had it not been
for entrepreneurs,
all the while our population
and labor force are growing.
So we would have been
in quite the jobs hole
without our entrepreneurs.

So, I spent some time talking
about the benefits of
entrepreneurship, how
it's linked to growth,
poverty reduction, economic
diversity and stability,
the job creation benefits,
of course,
but I want to balance that
with some of the bad news.
Young businesses face
high failure rates.
Depending on the data you use,
usually we expect about 50%
of businesses to make it
past their fifth year.
So we lose about half
in those young stages.
So that means that after five
years, 40% of the jobs initially
created have been
eliminated by closure.
So that's an important part
of economic development.
Most people, when they take a
job, they want to know that that
job is going to be here nine
months from now or two years
from now or five years from now.
Some new jobs are not
high-quality jobs.
It's the case that our
older firms are likely to
offer better benefits.
So, young firms are far less
likely to healthcare
and retirement programs,
things like that.
So, from an economic development
perspective, I would say that
this speaks to the importance
of helping young firms survive
and get to that point where
they can really enhance
their employment offerings.
What's most concerning,
though, I would say,
is that entrepreneurship
is declining.

This is another figure that
I hope is really striking.
It starts in 1977 here
and ends in 2014,
the most recent data available.
And what we're seeing is the
start-up rate in Wisconsin.
So our start-up activity has
fallen by more than half over
the last one, two, three,
four, almost four decades.

So without the start-up
activity, we aren't seeing the
same amount of job creation.
You've seen it kind of tank here
with the recession and it
hasn't really come back.
Granted, we're missing about two
years of data just because it's
not yet available, but we're
not seeing the start-up rate come back quite like we'd hoped.
I think that that might
be part of the story as to why we've seen a slow jobs recovery.
If we don't have start-ups, then
we're not going to get those
jobs benefits that
I just described.

That can be, these kind
of negative aspects,
though, I think can
still be offset.
Firms that do survive
grow rapidly.
For the most part
with businesses
we observe an up
or out phenomenon.
So, you either exit the market
or you grow and do quite well.
We also know that failure
alongside openings is the sign
of a healthy dynamic economy.
So Colorado, for example, high
birth rate, high death rate.
So, lots of turn.
And we've known this for some
time, that turning dynamic
economies are doing quite well.
So even though firms are
exiting, it's still part of a
healthy economy, and we think
part of that is because of the
informational aspect
of entrepreneurship.
So even when an
entrepreneur fails,
they're still poking
the edges of the market.
They're still figuring out
what works and what doesn't.
They're still
generating information
about what consumers want.
And that's valuable to
subsequent entrepreneurs.
So you, I've heard the example
at least, that in Silicon Valley
entrepreneurs aren't taken
seriously until they've failed
three or four times. Right?
So there's just a lot of
information, a lot of knowledge
to be gained, and even a failed
enterprise helps us do that.
So there are long-term, and
we've shown this empirically,
there are long-term job benefits
of even the death rate
of new businesses.
One thing that I find also
hopeful in a time when rural
areas are kind of struggling
in terms of job creation
and their economic story
is that rural areas
are surprisingly entrepreneurial.
We see higher rates
of proprietorship
and higher rates
of business survival.

So a proprietorship is just a
tax status but it's indicative
of at least some
self-employment, of at least one
person who has
created a business.
He may or may not employ others.
So, here we have
non-metro counties
or the most rural counties
in Wisconsin in the top
and then move towards
the most urban.
And we see that in our rural
areas we have the most
proprietorships per 1,000
residents.
And this is based on, again,
the rural/urban continuum code,
but I've just lumped
them together
so we can see kind of easily from most rural to most urban
we actually have the
most proprietorships
or the most kind of
seedlings of new companies
in our rural settings.

Here we have rural
business survival.
And similarly,
I've arranged them
from most rural to more urban.
We've seen that business
survival is actually higher or
they're more likely to make it
to five years in rural settings.
So I think this is hopeful
for rural America.
There is some kind of
mixed explanations
as to why that might be.
One explanation is
the persistence
of rural entrepreneurs.
That maybe for some reason
they have a little bit more stick-with-it-ness.
On the other hand, this could be
a lack of competition
in rural areas.
Maybe they survived because
nobody's putting that
competitive pressure on them.
Nobody's forcing them out
of the market, essentially.
And it could be that rural
areas don't have as many wage and salary options.
They don't have competitive jobs
being offered, so people feel
the need to create a job for
themselves for lack of something
better already in
their community.
But even still, I think this
speaks to some self-initiative
and some persistence
in rural areas.

So, how do we go about
enhancing entrepreneurship?
So this speaks to shifting away
from attraction-based economic
development or recruitment.
A lot of dollars and energy have
historically been spent
on trying to get new firms
to come into an area
and create a bunch
of jobs all at once.
Supporting entrepreneurship
is a lower cost strategy
for job creation.
So rather than get one
business with 50 employees,
entrepreneurship is more about
maybe planting the seed for
25 businesses that will
each have two employees.
But those entrepreneurs
are going to be tied to
the community.
They're likely going to
have relationships there.
They're more likely to stay, and
they're willingness to stay
is going to have less to
do with the tax structure
or something like that.
So this is a long-term approach
to economic development.

So we can emphasize creating
and growing local entrepreneurs
and small businesses, and there
are several kind of strategies I'm going to talk about.
And these are what I considered
the latest in the research.
These are things that
I've been working on over the last three to five years.
These are what's coming out
from my colleagues as well.
So there are other probably more
obvious strategies in terms
of making sure you have retail
space, for example, but I'm just
going to speak to those that I
feel like I know the most about.

So the first one I want to make
is about changing demographics.
And the first is an
aging population.
The country is aging,
especially rural areas.
The average age in rural
areas, in general,
is higher than in
our urban areas.
But we also know that start-up
rates are higher for people age
55 to 64 than they are even for
people in their 20s and 30s.
So this is a particularly
entrepreneurial population.
It's kind of pre-retirement
or retirement age folks
who I think maybe are ready
to exit their traditional job
but not ready to stop
being productive.
They still have
something to contribute.
And they also have significant
amounts of experience
and financial capital.
So I think this is
a group of people
rich with entrepreneurial potential.
We've also been able to
show that rural areas
within migration in this age
group, net in migration,
these places have
higher start-up rates.
So I think oftentimes when we
think of entrepreneurship,
we might think of maybe a
young man in the tech center,
or tech sector, that's what
comes to mind first.
But I think we need to think
more broadly about who can be
entrepreneurs and make
sure they're included
in our outreach efforts.

Along those lines, I also
want to talk about women.
Women are a small but growing
number or share of businesses.
About three out of 10,
four out of 10 businesses
are women-owned.
At the same time, women make up
about half of the labor force.
And they make up more than
half of our college graduates,
right now.
So there's reason to think that
there's potential for women
to own about half
of our businesses.

We also know that the
businesses that we do have
tend to be out-performed by
male-owned businesses.
So, they don't have the same
sales, they don't have the
same employment as
male-owned businesses.
I've given the example here
that the typical male-owned
businesses, for every dollar
earned in the typical male-owned
business, a woman-owned business
is going to earn 27 cents.
So, compared to the wage gap,
that's really dramatic.
That's even more stark,
I would say.
So what's going on here,
and what can we do about it?

We know that when we kind of
talked to entrepreneurs about
why did you choose this form of
employment for yourself?
What made you decide
to start a business?
When we ask men, they say,
well, this is high growth
or this is my primary
source of income.
When we ask women, they're not
likely to say or not as likely
to say that this is their
primary source of income.
We do hear them say that they've
done it so that they can
increase the time
spent on childcare.
So this is a strategy
for dealing
with the demands of kind
of household production.
So we see them increase time
spent on child-rearing.
We also see modestly performing businesses, and you could argue
it's because they simply don't
have the time to do it all.
And I think this is certainly
not true of all women.
We have high growth
women entrepreneurs.
But at the mean it's more likely
that you're going to see this
from women than
you are from men.
So what happens when we
have adequate childcare?
So, high quality and
affordable childcare.
We tend to see kind of
a fork in the road.
Women either stay in high wage
salary jobs in the private
sector, so they're producing
more, they're contributing to
the economy, generating income,
or they're able to pursue their
high-growth entrepreneurship.
So, I say sometimes that good
entrepreneurship policy
doesn't always look like
entrepreneurship policy, and I
think this is an example of
that, where childcare can
actually be something
that lends itself to
a more entrepreneurial community.

I also want to talk
about networks.
So not just in relation to
women but in relation to other
entrepreneurs who maybe kind
of outside the mainstream.
So that's minorities, that's
veterans, that's maybe our older
populations that
I just mentioned.
Networks are really
important to entrepreneurs.
We know that entrepreneurs
are constantly learning
from each other about what
works and what doesn't.
We know that they're connecting
with lenders to find out about
feasible financing strategies.
They're connecting with
real estate agents
to learn about good locations.
They need to connect
with suppliers.
They need to learn
about their consumers.
So networks are
really important.
We see places that are more
entrepreneurial,
our entrepreneurs are more
networked in with each other,
they've established reciprocity
where they're kind of working
to benefit each other mutually.
So entrepreneurs, or excuse me,
networks are really important.
And it's not enough, say,
to have a women's business
association, I would argue.
That's a great start in that
women can learn from each other
and support one another, but we
actually need to make sure our
entrepreneurs are kind of
networked into the economic
center of our towns so that we
can all learn from each other
and benefit one another.
This is an example from a study
I've been reading, and it says,
"Irrespective of how shrewd or
clever the woman is, she will
"still not have access to the
well-kept information that is saved for the good old boys."
So I know we've all heard the
good old boys network and I know
it's easy to dismiss that it's
still around, but, anecdotally,
when I go around talking about
entrepreneurship, when I talk
about gender differences, this
is a story that I still hear,
that women are perceiving kind
of a certain, they're perceiving
that to some extent they're
outside the main information
exchanges that would
benefit their businesses.
So, thinking about how could
we create opportunities for
networking with our chamber of
commerce or with our business
associations and
things like that.

Lending is also important to
entrepreneurs, or financing.
I'm talking here specifically
about institutional finance.
So we know that small business
lending is linked to higher
start-up rates, especially
in rural areas.
And we also know that lenders
face information asymmetries
that can limit
credit availability.
So what do I mean by that?
When an entrepreneur goes to a
bank and needs to be evaluated
for a loan, that loan officer is
going to be trying to collect
as much information as they
can about that business
and how likely it is
to be successful.
When they don't have
good information,
it's like looking
into a black box.
You don't really
know what's there.
It looks risky.
It looks uncertain.
That loan candidate is less
likely to get approved.

When lenders have good
information, maybe because they
have a personal relationship
with the entrepreneur, you have
sort of an insider's perspective
or an informal connection to
that businessperson, you're
more likely to get a loan
because they have better
information that reduces
risk and uncertainty.
We see this a lot in
rural areas. We call it
relationship lending.
So to the extent that we can
encourage a healthy exchange of
information between lenders and
entrepreneurs, we would expect
easier access to financing
for entrepreneurs.
This is especially relevant,
again, to our women
and minority entrepreneurs
who might be less networked
than our other entrepreneurs.
I also want to connect here
and point out that most
entrepreneurs are financed
through personal savings
and credit cards.
We use the saying, "Friends,
family, and fools."
Only about 10% or 15% of
entrepreneurs are actually
going to go to the bank
and get a loan.
Most people are going to
use their own resources.
And oftentimes they're actually
getting a home equity loan.
So this is another way where
entrepreneurship policy or good
entrepreneurship policy
might not look like good
entrepreneurship policy because
having a healthy housing market
can actually lend itself to more
entrepreneurship in that people
have valuable homes that can get
them some access to capital.
So, coming out of the housing
crisis, the populations that
were hurt most by the housing
crisis likely has consequences
for their access to capital and
maybe explains that low rate
of start-up activity that
I showed a few slides ago.

The last point that I want to
make also comes out of the
networking studies
that I've been doing.
And it basically shows, we can
show that even if two places
were identical, their social
networks would evolve uniquely.
And I think that makes
intuitive sense to people.
But what that means from an
entrepreneurship or economic
development perspective is that
it's extremely difficult to
recreate Silicon Valley
or Austin, Texas.
And I think that that's a
story that we hear sometimes.
People go to the high growth
city or the splashy city
and they come back and they say
we're going to be the next
San Francisco, we're going to
be the next Austin, Texas,
but that's really
difficult to do.
Even if you could replicate the
industrial composition,
the education system,
the demographic profile,
it's still the case the those
entrepreneurial ecosystems
are going to form uniquely and
that's going to dictate, to some
extent, the entrepreneurial
outcomes in each city.
So I would argue that it's
more effective to invest
in local strengths.
Don't try to be
something you're not.
I give the example again, I want
to circle back to my hometown,
ultimately it was our wind,
our energy infrastructure,
our local entrepreneurs
that generated the kind
of economic development
that we were looking for.
And I'm new here, but I am
interested to hear kind of what
the local assets might
be in this area.

So just a few
concluding thoughts.
New firms are critical
to generating new jobs.
So, in terms of when towns have
to kind of reinvent themselves,
particularly after losing a
major industry, I would argue
that new firms are a
good place to look.
Fostering entrepreneurship is a
low-cost, long-term approach to
economic development, so kind of
thinking differently
about economic development,
moving away from that
attraction-based
recruitment strategy.
And fostering entrepreneurship
requires a mix of strategies that will vary by community.
There's not a silver bullet
when it comes to
entrepreneurship policy.
Every town is going to be a
little bit unique in terms of
thinking about what they can do
to develop their local assets.

A few more resources for you. Thank you for your time.
[applause]