Technology and Entrepreneurship

"With the rise of new products and platforms that support small businesses and solopreneurs, the rebirth of the American Dream is underway—driven by the digital economy."

Is America's business landscape getting stale? Does the dynamic entrepreneurial culture that made our country so great still have legs? Everywhere you look, there are numbers and data to support one particular side of the story or the other - from rising business starts during the pandemic to declining numbers of IPOs, the answer to the question isn't crystal clear.

What is clear, however, is that there has never been a greater need for more entrepreneurs, and there has never been as much technology dedicated to helping small businesses succeed in a digital-first world.

In our partnerships with "boring" businesses we've learned that technology is never a panacea, but nearly every business can up its game by applying newer technology to current operations. This week, we read a great piece from Bessemer Venture Partners laying out a road map for how technology platforms can help their customers (small, entrepreneurial businesses) scale. In the article, BVP mentions three categories of businesses that 'enable entrepreneurship' and gives several examples:

Vertical platforms dedicated to a specific industry or space (Shopify, Teachable, Podia, and Substack)

Platforms that help small businesses gain an audience and monetize in easily customizable ways (Wix, Tribe, Patreon, Mailchimp, and Anchor)

Platforms that partially or fully automate back-office functions for small businesses (Square, TaxJar, Karat, LegalZoom, Oxygen, and Mainstreet)

We have seen first-hand the shift in technology companies enabling small business (Shopify) instead of eating its lunch (Amazon). While competition is a fundamental part of the capitalist system, the trend of 'arming the rebels' is one that will continue to be a powerful tailwind for entrepreneurs who are able to leverage these new platforms. Indeed, the way technology companies are moving from competition to cooperation may be one of the biggest paradigm shifts for entrepreneurship in America today.

"A new wave of entrepreneurship is about to crest. The technologies and tools that support every facet of small businesses and solopreneurship will fuel economic growth and opportunity."

The roadmap to enabling entrepreneurship (Bessemer Ventures)
+ "Contrary to popular belief, starting a business has never been harder. Although startup culture sometimes feels more like pop culture in mainstream media, the number of new businesses formed each year is decreasing. Over the past 30 years, new business creation has declined almost 50%. As small businesses dwindle, large enterprises capture market share. This trend has only become more severe in the wake of the pandemic as the data reveals a disproportionate decline in survival rates and job opportunities at small businesses. Ironically, today’s entrepreneurial drought persists despite—or perhaps because of—advancements in Internet and cloud technology that promise to democratize access and lower upfront startup costs."

2020 trends in entrepreneurship report (University of North Carolina, Chapel Hill)
+ "There is another school of thought that disagrees with the doom and gloom forecast that entrepreneurship is in decline, contending the decline of business dynamism is overstated. As Guzman and Stern (2019) note, “simply put, alternative definitions of entrepreneurship suggest different assessments of the state of American entrepreneurship.” Using quality-adjusted measurements, the researchers find that business dynamism follows a cyclical pattern that is sensitive to economic and capital market conditions. The authors also note that even though the number of high-growth firms has declined since the dot-com bust of the early 2000s, since 2010 there has been an upswing in the expected number successful startups formed and the accumulation of entrepreneurial potential for growth. Therefore, they argue we cannot solely consider the quantity of firms, but rather should take into consideration their overall quality."

Businesses for sale market during COVID-19: a paradox of unique opportunity and uncertainty (BizBuySell)
+ "While opportunistic buyers may be expecting deals, the most sought-after businesses are "essential", meaning pandemic proof, performing well and unlikely to come at a discount. Due to increased popularity of these businesses, the median sale price of businesses sold in the 3rd quarter grew 20% versus a year ago as stronger businesses cross the finish line. According to Lana Hout and Adrianna Smith, Managing Brokers at First Choice Business Brokers in Los Angeles, while discounts are driving interest, it’s these businesses that are driving sales. "The market over the past three months has been extremely busy, particularly due to essential businesses being in such high demand. Despite what’s going on, these businesses continue to thrive," says Hout."

The economics of Christmas trees (The Hustle)
+ "Today, 98% of all real Christmas trees on the market come from tree farms. According to the USDA, there are 15k of these farms in the US, ranging in size from 2 acres to 9k acres. Though the market is largely stratified, the 434 largest farms control ~75% of the total supply. At any given time, there are 350m Christmas trees growing on these farms in various stages of development — and in a typical year, ~25m will be harvested for sale."

Investors circle largest corporate cash hoard ever (Wall Street Journal)
+ "Cash holdings at nonfinancial companies grew to a record $2.1 trillion at the end of June, according to a report from Moody’s Investors Service. That is up 30% from that time last year and higher than the previous peak of nearly $2 trillion in 2017. Among the biggest hoarders: AT&T Inc. and Delta Air Lines Inc., which each held more than $15 billion at the end of June."

Why did renewables become so cheap so fast? And what can we do to use this global opportunity for green growth? (Our World in Data)
+”The fundamental driver of this change is that renewable energy technologies follow learning curves, which means that with each doubling of the cumulative installed capacity their price declines by the same fraction. The price of electricity from fossil fuel sources however does not follow learning curves so that we should expect that the price difference between expensive fossil fuels and cheap renewables will become even larger in the future."

Supporting small, saving big, and shopping early: Amazon customers make the 2020 holiday season our biggest yet (Amazon)
+"Independent businesses selling on Amazon—nearly all of which are small- and medium-sized businesses—surpassed $4.8 billion in worldwide sales from Black Friday through Cyber Monday, an increase of over 60% from last year. More than 71,000 small- and medium-sized businesses worldwide have surpassed $100,000 in sales this holiday season to date. American small- and medium-sized businesses have sold an average of 9,500 products per minute this holiday season to date."

The state of fashion 2021 report: finding promise in perilous times (McKinsey)
+”For the fashion industry, 2020 was the year in which everything changed. As the coronavirus pandemic sent shockwaves around the world, the industry suffered its worst year on record with almost three quarters of listed companies losing money. Consumer behaviour shifted, supply chains were disrupted and the year approached its end with many regions in the grip of a second wave of infections. A turbulent and worrying year has left us all looking for silver linings — both in life and in business — knowing full well that we will need to make the most of them in the year ahead. Indeed, according to McKinsey Global Fashion Index analysis, fashion companies will post approximately a 90 percent decline in economic profit in 2020, after a 4 percent rise in 2019."

The art of building the impossible (The New Yorker)
+ "“I can’t do the calculus on this, either,” he added, shrugging. “But I can build it.” Ellison is a carpenter—the best carpenter in New York, by some accounts, though that hardly covers it. Depending on the job, Ellison is also a welder, a sculptor, a contractor, a cabinetmaker, an inventor, and an industrial designer. He’s a carpenter the way Filippo Brunelleschi, the architect of the great dome of the Florence Cathedral, was an engineer. He’s a man who gets hired to build impossible things."

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