The United States and the rest of the world appear to be slowly emerging from the worst economic crisis since the Great Depression. Now comes the debate over what lessons we should take from the experience. In a series of reports over the next few weeks, NPR will be considering the future of capitalism itself.
Starting a new venture has never been easy, but the current economic climate presents some special challenges and, perhaps, some unique opportunities.
Astrophysicist Bryan Laubscher is passionate about something called the space elevator. It's not science fiction, but a serious proposal to get things into space without using a rocket. For the project to work, you need cable that is ultralight and extremely strong. Laubscher believes the answer lies in carbon nanotubes.
Working from the spare bedroom of his Seattle-area home, he is hoping to turn carbon-based material — so small you can't see it — into high-strength thread for industrial use.
"I am looking at these scientific curiosities and saying we can take that and make something people will actually buy," he says.
Laubscher the scientist has become Laubscher the entrepreneur.
While his idea is decidedly esoteric and perhaps overly ambitious, many of the challenges he is facing are common to nearly all new entrepreneurs. Their No. 1 problem is getting enough money.
Laubscher notes that it has often been hard to get money for startups. But now, he says, investors have "raised the bar on the risk they are willing to take."
"They want much more developed projects that are more sure before they put their money in," he says.
Laubscher had hoped to get hundreds of thousands of dollars for his venture. Now he's making do with about $40,000.
With fewer dollars coming from private investors, and less credit being offered to startups, entrepreneurs with big ideas will likely look to government spending priorities, stimulus funds and research grants. In short, they'll follow the money.
"There is nothing harder for an entrepreneur than to try to go against the wind," says Jim Phillips, an adviser to the U.S. Council on Competitiveness and the head of a venture capital fund. "You need the wind in your sails, and so any boost you can get, you need to take advantage of. There's billions and billions going into things like biomedical research and climate change and sustainability."
There will be money for things such as smart manufacturing and nanotechnology as well. Phillips adds that wherever federal dollars go, private investors are likely to follow.
Those investors will have startups on a shorter leash, and entrepreneurs will need laser-like focus to develop bankable ideas more quickly and with less capital than in the past. In these tight times, only the best ideas are likely to survive.
Still, there are factors working in favor of entrepreneurs, says Jerry Engel, executive director of the Lester Center for Entrepreneurship and Innovation at the University of California, Berkeley. "Now is a great time to start a venture," he says.
He is telling students not to take crazy risks, but to seize the moment while the economy is in disarray and many existing companies are hunkered down and not taking chances.
"There is space," Engel says. "There are those white spaces, we like to call them — those opportunities for people to step into."
In addition, because there are so many people unemployed and underemployed, there is a lot of available talent to hire.
"In times like this, there is something in some subset of Americans who say 'NOW is the time to do it,' " says Carl Schramm, chief executive officer of the Kauffman Foundation, which studies entrepreneurship. "It's also a time when people see differently in what could be done."
But that optimism isn't shared by everyone. When members of the National Federation of Independent Business were recently asked whether now is a good time to start a new business, only 5 percent said yes. That's the lowest figure in more than three decades, says William Dunkelberg, the federation's chief economist and a Temple University professor.
Beyond that, Dunkelberg worries that too many big-idea entrepreneurs are now looking to federal bureaucrats to get money. "They [the bureaucrats] don't have a great record of being creative or innovative or ingenious or running businesses very well," he says. And he worries that the bureaucrats will miss great ideas, which might go unfunded.
But entrepreneurs are in general an optimistic bunch, and historically, at least, they have found a way to get things done. Disney, McDonald's, Microsoft and Google were all founded in tough economic times.
"Something magical happens in times like this," Schramm says.