The US Startup Is Disappearing (qz.com)

Dan Kopf, writing for Quartz: Historically, startups have been the engine of US economy. By creating new jobs and surfacing new ideas, startups play an outsized role in making the economy grow. It's too bad they are a dying breed. While companies that were less than two years old made up about 13% of all companies in 1985, they only accounted for 8% in 2014. From around 1998 to 2010, the share of private sector workers in companies that were less than two years old plummeted from more than 9% to less than 5%. A new report from the Brookings Institution, finds that in nearly every industry, from agriculture to finance, the share of new companies is falling.

Comments

Risk vs reward

[DalM]

Start up risk is huge. That's the problem. It's massive. Sure there are some people that are successful and the risk pays dividends, but success is actually pretty rare. Most rational people look at the risk of starting your own company and shrug it off because simply being an employee is typically not that bad of a deal. In fact, it's really a pretty good deal. Your risk is greatly limited. Most people are perfectly ok with that.

Re:Risk vs reward

[alvinrod]

That's generally established and I think everyone knows that. The question being put forward is why the rate of people who are taking these risks is decreasing. Have people suddenly become much more risk averse? Is there some kind of economic interference that's resulting in this reduction? Is it just a small dip that happens from time to time for no real discernible reason? Are the number of startups still about the same, but what we're really seeing is a much more rapid failure in startups?

That few people start their own business is not surprising. What's interesting is that fewer people than usual are doing it.

Re:Risk vs reward

[DalM]

Honestly I think it's mostly that being a middle-class employee is generally becoming a better trade for the employee. If you have a salaried position (guaranteed reliable and regular pay), have general health benefits, and an IRA or 401K, why would you throw that away just to work harder and be responsible for entire company?

Being a lower-class employee is getting worse, but those people are less likely to have the ability to raise the funds necessary to start their own companies.

Re: Historical precedence

[DalM]

You know there are other sectors of the global economy besides tech, right?

Re:Over regulation

[cayenne8]

Over regulation, cost of entry, corporate cronies in government, high taxation, have all conspired to hurt small businesses.

It's a Democrat/Republican problem though. You cannot pick just one. They are all to blame. If you want a healthy functioning economy with light regulation and sensible government spending & taxation, then you cannot vote for anyone in those two parties.

Yep...and it is getting so bad, that ONLY the big guys can afford full time staff dedicated to the tax and paperwork....keeps the upstarts out.

The startups I see

[rsilvergun]

seem less like an attempt to build a real business and more like an attempt to build something with enough patents and/or engineers for a buyout. I can't say I blame them. Thanks to our weakly enforced anti-trust law if you don't get bought out the big guys can just bury you.

Re:Historical precedence

[angel'o'sphere]

Look at the recent GDPR laws in Europe as an example and ask yourself how much of a pain that would be to deal with if you're a small one or two person company.
Close to zero. While the GDPR is a big chunk of paper, it is for 99% of all companies irrelevant.
You simply only store as much information you need to perform the business with your customer, like billing address, and never share any information with anyone else. And that is the default for small companies. With whom for what purpose would I share any private data of any of my customers?

Re:Over regulation

[terrycarlino]

Would that be the Republicans, not one of which voted for it or had any say in the contents of the bill?

You can't have it both ways. If the ACA sucks it's because the Democrats passed it. If it's great its because Democrats passed it.

Anyone with a brain knew that if you make a business take on a large cost for employees who work more than 30 hrs a week all of a sudden there's going to be a lot more employees working 29 hours a week. So now instead of working 32-40 hours a week and not having benefits you get to work 29 hours a week and don't have benefits. So less money and still no benefits.