Kerry: Entrepreneurship combats extremism

MIT Professor Eric von Hippel publishes a free book online, Democratizing Innovation:
Web Link

One of the points he makes from research is that innovation is really a user-centric phenomenon, and that so-called "lead users" - people who have problems they anticipate benefits from solving and are willing to be the first to try - are the typical innovators. So, in other words, necessity really is the mother of invention.

So, with that in mind, I would like to share the following for California:

Make friendlier conditions for micro-business. If you want to encourage more women to be entrepreneurs, make conditions more conducive to women (and everyone) entering and learning the ropes. Women do tend to be problem solvers, and they also tend to be more risk averse. According to this article, they also tend to be less well-funded, if they are funded at all. Therefore, removing some of the major barriers to micro-business and organic growth would be extremely helpful to encouraging women entrepreneurs.

For example, Start Up in a Day is all well and good, but once you have the business in place, in California, there is no "inactive" status for businesses. You have to pay $800/year business tax, and still must file business taxes annually. There is no leeway to spend time learning, incorporate, then put the business in inactive status to break for life and pick things up 18months later and go from there. If you incorporate early, have to break or life, then you still owe the $800/year if you try to disband the business. Having the leeway to put a nascent business on hold could be extremely valuable to women and the disabled. Women are more likely to need to do things in a less traditional way because they still bear the greater responsibility for child-rearing. These barriers to that kind of freedom weed more women out at the start.

Yes, it's always possible to just have a non-incorporated business activity, but incorporating provides so many more tax advantages as well as liability protection. In failing to remove the barriers to micro-business and organic growth, we fail to provide the fundamental supports to more women than men who want to start a business.

Many women who are in child-rearing years wish to have home-based businesses in order to remain working while caring for children. But current state rules require a physical address from the business owner, in a public online database. If the business is not incorporated, the home-based-business owner still has to advertise the physical address where they are doing business. To women who might be considering trying an idea, who have home-based businesses and who are concerned about the security of their children, this is a serious barrier. (One has only to do some smart internet searching to find that many people have the same privacy concern, but it is of particular interest to women.) Again, the barrier is mainly to micro-business and to anyone wishing to learn and grow organically, which affects women at home more. Even the DMV no longer makes such personal records easily available, for security and safety reasons (which are of disproportionate concern for women). Anyone with more funding would be able to report an actual place of business rather than using a home address, so here again, those who can get funding don't have that problem, i.e., it disproportionately affects women. The main justification for the practice is that an address needs to be available if there is a lawsuit - but that is possible even without public disclosure of the address, just as it is possible to obtain DMV records when there is a need. That problem could be solved, if agencies concerned with fostering conditions for women entrepreneurs are willing to work with people who are struggling, on the ground.

In California, we could really use an initiative to overhaul business rules for the 21st century similar to the judicial overhaul that brought small claims court into existence in this country. In the past, it was impossible for anyone with a small claim to get justice, because superior court costs (including legal) made it impossible to get actual justice in practice. The people in the superior court system at the time, those for whom the system was working, were not the ones to come into contact with the lack of justice for people who had small claims and were not the ones with the knowledge to solve the problem. All stake holders in a situation like this must be involved, but commissions and focus groups aren't the solution. Where are the opportunities to incorporate feedback from those experiencing the barriers, or to support the lead users trying the break those barriers?

Personally, I've been in the position of serious offers for funding that I could not take advantage of because of systemic barriers that made it necessary for me to wait to even begin. Opportunities lost. Like the above examples (which I also learned from experience), the barriers weren't really necessary, they are just artifacts of the system we have, which has traditionally been less conducive to supporting women, the disabled, and minorities.