04/02/2013 04:39 pm ET | Updated Jun 02, 2013

Myth-Busting Startups


The economic recovery remains a talking point in this country, and with good reason. The progress has been steady but slow, and plenty of sectors of the economy are still struggling to catch up to pre-recession levels. In some ways, this is unavoidable as business models change and new industries grow up to replace struggling ones. The symbol of this groundswell has become the oft-misunderstood startup.

The buzz around startups is unavoidable, even if you don't live in Silicon Valley or New York City. What might come to mind are hipsters with mid-century glasses and skinny ties (or humorous bacon t-shirts) doing business over locally roasted artisanal coffee. Or maybe bros playing ping pong and getting paid obscene amounts of money to lead the way to American prosperity by making (and playing) video games. You would be forgiven for thinking startups are the exclusive domain of overgrown boys (and girls) who refuse to play by the rules and do real work. This is the stereotypical image of startup culture. But like any stereotype, there are some myths to be busted here.

1. So? Startups don't affect me.
False. Startups are responsible for all net new jobs for the past 30 years. That means, without new firm formations, America would be bleeding jobs and we'd all be in even worse shape than many of us are in now. Healthy startup ecosystem = more jobs, less despair.

2. Startups are great -- for Silicon Valley.
Startups are everywhere. They aren't just for coastal hipsters and nerds anymore. In fact, there's probably a high-tech startup in your town, or the next one over. Data from Bay Area Council Economic Institute and Engine Advocacy shows there were high-tech startups in every single state in 2009, with growth projected to continue upwards.

3. This is just a phase. A bubble, you might say.
Whether or not you believe we're in a bubble, technology isn't going away. And entrepreneurs are always going to form new products and services that better harness the advances we make. The data shows that in America, high-tech startups continue to grow even as overall startup growth declines. Additionally, high-tech job employment has performed better than private sector employment as a whole since the dot-com bust.

4. Whatever. America will prevail because we're the most awesome.
Other countries, including our friends in Canada and our more distant neighbors in South America are recognizing the importance of fostering entrepreneurship and innovation and are incentivizing them with programs. Australia has pledged to bring high-speed Internet access to all citizens (even in rural areas) within the next decade. We're in real danger of falling behind countries that are investing in their local economies if we continue to play the offshore, 1 percent game.

5. Private sector startups can sort themselves out. Got bootstraps? Pull.
Everybody should at least have a pair of bootstraps to begin with. The largely untold story of the recession is the millions (by some estimates) of high-skilled jobs that remain unfilled due to a shortage of workers with the skills to undertake them. We're experiencing a skills gap, and we can't grow our economy unless we have the people we need to power it. That means investing in science, technology, engineering, and mathematics education so future generations pursue careers in these fields. It means closing the gap now by optimizing immigration policies for high-skilled workers and entrepreneurs. According to a recent study by the Partnership for a New American Economy, employing immigrant workers with advanced degrees in STEM (science, technology, engineering, and mathematics) fields has a positive impact on the employment rates of U.S. workers, both in STEM fields and in other sectors.

We need to advocate for policies that encourage rather than detract from the formation of startups and their continued ability to thrive and hire more Americans. Our jobs depend on it. Our entire economy depends on it.