The New Builders

Face to Face With the True Future of Business

Seth Levine, Elizabeth MacBride

• Publisher: Wiley
• Year: 2021
• ISBN:
  9781119797371
• Edition: 1
• Topic: Commerce
• Subtopic: Activité entrepreneuriale

Despite popular belief to the contrary, entrepreneurship in the United States is dying. It has been since before the Great Recession of 2008, and the negative trend in American entrepreneurship has been accelerated by the Covid pandemic. New firms are being started at a slower rate, are employing fewer workers, and are being formed disproportionately in just a few major cities in the U.S. At the same time, large chains are opening more locations. Companies such as Amazon with their "deliver everything and anything" are rapidly displacing Main Street businesses.

In The New Builders, we tell the stories of the next generation of entrepreneurs -- and argue for the future of American entrepreneurship. That future lies in surprising places -- and will in particular rely on the success of women, black and brown entrepreneurs. Our country hasn't yet even recognized the identities of the New Builders, let alone developed strategies to support them.

Our misunderstanding is driven by a core misperception. Consider a "typical" American entrepreneur. Think about the entrepreneur who appears on TV, the business leader making headlines during the pandemic. Think of the type of businesses she or he is building, the college or business school they attended, the place they grew up.

The image you probably conjured is that of a young, white male starting a technology business. He's likely in Silicon Valley. Possibly New York or Boston. He's self-confident, versed in the ins and outs of business funding and has an extensive (Ivy League?) network of peers and mentors eager to help his business thrive, grow and make millions, if not billions.

You'd think entrepreneurship is thriving, and helping the United States maintain its economic power.

You'd be almost completely wrong.

The dominant image of an entrepreneur as a young white man starting a tech business on the coasts isn't correct at all. Today's American entrepreneurs, the people who drive critical parts of our economy, are more likely to be female and non-white. In fact, the number of women-owned businesses has increased 31 times between 1972 and 2018 according to the Kauffman Foundation (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%). The fastest-growing group of female entrepreneurs are women of color, who are responsible for 64% of new women-owned businesses being created.

In a few years, we believe women will make up more than half of the entrepreneurs in America.

The age of the average American entrepreneur also belies conventional wisdom: It's 42. The average age of the most successful entrepreneurs -- those in the top.01% in terms of their company's growth in the first five years -- is 45.

These are the New Builders. Women, people of color, immigrants and people over 40.

We're failing them. And by doing so, we are failing ourselves.

In this book, you'll learn:

• How the definition of business success in America today has grown corporate and around the concepts of growth, size, and consumption.
• Why and how our collective understanding of "entrepreneurship" has dangerously narrowed. Once a broad term including people starting businesses of all types, entrepreneurship has come to describe only the brash technology founders on the way to becoming big.
• Who are the fastest growing groups of entrepreneurs? What are they working on? What drives them?
• The real engine that drove Silicon Valley's entrepreneurs. The government had a much bigger role than is widely known
• The extent to which entrepreneurs and small businesses are woven through our history, and the ways we have forgotten women and people of color who owned small businesses in the past.
• How we're increasingly afraid to fail
• The role small businesses are playing saving the wilderness, small towns and redlined communities

What we can do to turn the decline in entrepreneurship around, especially be supporting the people who are courageously starting small companies today.

PART I
Who are the New Builders?

“This is not just a grab‐bag candy game.”

Toni Morrison

CHAPTER ONE
A New Generation

Danaris Mazara opened the door at Sweet Grace Heavenly Cakes the day after the governor lifted the Covid pandemic lockdown on “nonessential” businesses in late May 2020.

“Thank God,” she said. Her 12‐year‐old bakery, which had been conceived of when she was lying on her couch staring at the ceiling with $37 to her name, was back in business.ⁱ

Eight women were already back at work on Essex Street in Lawrence, Massachusetts, making cakes in the back of the shop. The Sweet Grace bakers turned out cakes, from five silver‐festooned tiers for a wedding to two‐layered dreamy dark and milk chocolate affairs. On any given day, a cake as grand as a two‐foot‐tall Noah's Ark birthday cake, complete with a giraffe peeking over the top, might hold pride of place in the window.

It was a parade of life events, decked out in butter and sugar, for the Dominican community that Sweet Grace served.

Twelve orders came in the day before. But a week usually brought more than 100 orders. Danaris worried whether sales would be strong enough to make the payroll, the mortgage, or payments on the loan she had taken to expand late last year. She recalled what the space looked like before she remodeled it. Its transformation mirrored her own, from bankrupt and nearly out of money to business owner and community leader. The space had been dim and cluttered, with abandoned fixtures and trash left by the hair salon that was its previous occupant. Now it looked like it smelled – soft, sweet, and full of energy. But not as busy as it was before the pandemic and economic crisis hit.

“I think it's normal to be afraid,” she said. “You don't know what's going to happen in the future. I'm trying very hard to…” she trailed off. “Just wait and keep working,” she finished.

Around the corner, the family‐owned Italian bakery also opened its doors that morning. But unlike Sweet Grace Heavenly Cakes, it had been able to stay in business through the Covid‐19 shutdown because of a historical relic: it baked bread. Somewhere, somebody in the state's bureaucracy had decided that bread was essential. But not cake.

That's not how Danaris saw it. For people who love to dance and sing, and who live for their families and communities, cake is essential. Now, she wondered if everything she had built – for her family, her community, for her workers, and their families – would survive.

Danaris and her husband had arrived in Lawrence in 2002 from Puerto Rico. Born in the Dominican Republic, her mother had moved the family to Puerto Rico when Danaris was a young girl. There she had grown up and met her husband, Andres. Moving to the mainland after they were married, Danaris and Andres started their life in Lawrence, in her brother's attic. The room had no air‐conditioning, which meant it was sweltering in the summer, and had little insulation, leaving them to huddle together in the winter. But there were jobs in the factories in and around Lawrence, and the opportunity for a better life.

At the factory where she first found work, Danaris tried, tentatively, to speak a few words of English. “I didn't know that when people eat American chicken, they start speaking English,” mocked the assistant manager on the production line.

She was so humiliated she couldn't bring herself to go back the next day. Instead, she found a language school. The lessons paid off and when she eventually found another job, they were impressed enough to quickly promote her to assistant manager. Right before her daughter, Grace, was born, the Great Recession of 2008–2009 hit. Her husband was laid off from his job at Haverhill Paperboard, a local manufacturer that had been operating for over 100 years. The layoff cost 174 people their jobs and livelihood.

“I was very depressed because I had a newborn baby, something I was waiting to have for many, many years. But I couldn't stay at home to take care of her. I didn't know what I was supposed to do,” she told us.

Sweet Grace Heavenly Cakes was born in that moment of desperation, from the mind of a woman who, typical of today's entrepreneurs, had little in the way of resources, or even a well‐resourced network, to help. The bakery succeeded in the early days because of the help of an unlikely trio of benefactors: an Indian‐born billionaire, a Harvard‐educated tech executive, and a banker from Brazil. They were all engaged in programs to help Lawrence, a city of old and new immigrants, come back to life. In 2018, they had pulled together to help the city recover from a gas line explosion that destroyed 40 homes and caused the immediate evacuation of 30,000 people (from a city of 80,000). Now, as the Covid‐19 pandemic dragged on, Danaris wondered: if things were really bad, could she turn to them for help?

In better times, before the pandemic hit, Sweet Grace's reputation was so good, people lined up to pay $2 just for a cup of the crumbs. Even the Immigration and Customs Enforcement (ICE) agents, whose office was menacingly outside the back door, sometimes stopped in for a cup.

“We have many customers coming from far, far away to get our cakes,” she said. “Dominican people, you have to know us. We are always celebrating.”

Danaris made it through seven weeks of pandemic closure by using her personal savings to pay both the mortgage on her house and the payments on her building renovation loan. She paid her employees – four of whom were women with children still back in the Dominican Republic – for a week. But she was stretched thin, both financially and emotionally.

She had been right before to trust in her ability to build a business. Her prayers had worked in the past. Now, she trusted they would again.

The New Builders

Danaris is a New Builder. She is one of the next generation of entrepreneurs defining the future of American business. These entrepreneurs are increasingly Black, brown, and female. Many are older than entrepreneurs of previous generations and, as a result, today's entrepreneurs are older than many people realize. They are talented innovators and businesspeople with an extra dose of grit. They're passionate about what they do, and their motivations are often more complex than our current definition of entrepreneur allows. They're apt to be driven by the idea of contributing to their community as much as by the idea of profit, though they often believe they can do both.

The entrepreneurs of today are a much broader group than the entrepreneurs that dominated our old mindset, the high‐tech founders of Silicon Valley and Boston. Very few New Builders have businesses that fit the idealized Silicon Valley model of fast‐growth, highly profitable (or at least highly valued) enterprises – but out of their ranks, we will find winners in the post‐pandemic recovery. You'll find them in places as varied as Main Streets, redlined communities, and technology parks everywhere. And they come up with ideas for their businesses not tinkering in the fabled garages of Silicon Valley but in teenagers' bedrooms and around kitchen tables. Some are building technology businesses with the goal of hyper growth. Most are not. If we want them to win in greater numbers, we need to understand better who they are and how to support them. Our idea of entrepreneurship has been overtaken by a particular myth – that important entrepreneurs are White, male, and Ivy League–educated, and that the only truly worthwhile businesses are software‐driven companies with the potential to grow into huge businesses. That image doesn't reflect the reality of entrepreneurship across America, or the fact that small businesses are not just a sentimental cause – they are critical part of our economy. It's time to take back the idea of entrepreneurship to include the incredibly rich and wide variety of businesses that are being started in America today. By not seeing New Builders, not supporting them and helping them thrive, we risk letting go of the entrepreneurial edge that has long set America apart from other countries.

The New Builders are out there. They're an invisible army, working to further themselves and their communities as they turn their business ideas into reality.

Entrepreneurs Are Everywhere

Danaris, like many New Builders, didn't come to start and build a business from a whiteboard or as part of a class exercise. It was her lived experience, combined with the kind of motivation that comes from the knowledge that you're not going to succeed any other way – at least, not on the terms you want. Quiet but forceful, and fiercely proud of her culture, Danaris spent years putting other people before herself, including her husband and her children. Like the mother who inspired her, she knows how to carry on through tears. But in the company of people from cultures where tears are a sign of weakness, she also knows how to hold them back. If you passed her on the street, you might not give her a second look. You almost certainly wouldn't think this Dominican woman was a community leader and small business owner.

In today's economy, an estimated 60 million people are entrepreneurial in some way. There were 5.6 million employer firms in the United States in 2016, the last year for which complet...