Monday, January 20, 2014

 

Incubators



Business incubators are fairly common among community colleges.  Typically they’re offsite locations that are open to new businesses on a reduced-rent basis, and they usually include some sort of structured mentoring program in which experienced businesspeople offer advice to help startups navigate common hurdles.

The idea behind incubators makes sense.  Startups are vulnerable economically, so reduced rent is helpful.  And the people who have breakthrough ideas on the next great gadget or app often don’t have much business experience.  Community colleges typically have some sort of ‘workforce development’ or ‘economic development’ charge in their mission, and the ‘mentoring’ part of incubators can easily be read as an extension of the educational mission.  To the extent that the hurdles faced by new businesses are common across sectors, having mentors on whom to draw can be helpful.

At the NACCE (National Association for Community College Entrepreneurship) conference, I heard quite a bit of talk about incubators, and quite a bit about whether/how entrepreneurship could be taught.  Several speakers asserted quite confidently that entrepreneurship should be a general education outcome, like effective writing or quantitative reasoning.  The idea is that the job market has changed, and that if the economy is going to thrive in the future, it will thrive through innovation.  Better to train students to hang out their own shingles than to train them for jobs that no longer exist.  And there is some truth to that.

Yet I can’t help but wonder if entrepreneurship is a messier category than that.  

The incubator model seems to assume that startups represent innovation.  I’m not sure that’s necessarily true.  Recent new small businesses in my area include a dry cleaner, a Tex- Mexican restaurant, and a cupcake shop that lasted about ten minutes.  The dry cleaner and restaurant are both good, and I wish them both well, but neither is terribly innovative.  They’re reasonably well-executed examples of well-established genres.  Neither would need an incubator, because both rely on in-place production.  In both cases, customers understand what to expect without anyone having to explain it to them beforehand.  (Tacos?  Yup.)  The people who run them are more interested in being their own bosses and making decent livings than in changing the world with revolutionary approaches to something.  That’s probably a much more common case than the next Zuckerberg.

From an educator’s perspective, the idea of entrepreneurship as a general education outcome is both tempting and unconvincing.  It’s tempting to the extent that it fits a big, hairy notion into a structure that we already use for other big, hairy notions.  And it implicitly recognizes -- correctly -- that entrepreneurship should not be confined to business majors.  Many great businesses don’t start because someone wanted to create a business; they start because someone falls in love with an idea, and wants to make a living with that idea.  Maintaining the atmosphere of creativity on a campus isn’t just some sort of vestigial habit or political concession; it’s necessary for the more straightforwardly economic mission to succeed.  One of HCC’s most famous and successful alums went on to start Yankee Candle, and later Kringle Candle, because he loved making candles.  I doubt very much that the local economic projections back then forecast great demand for candles.  He just fell in love with candles, and the business part followed.  That was possible because we taught such “soft” courses as Art.  

Nationally, I see some recognition of the confluence between innovation and the unpredictable in the movement to replace “STEM” with “STEAM.”  (The “A” is for “Art.”)  The larger political discourse around community colleges hasn’t quite caught up to that yet, but hope springs eternal.

At the NACCE conference, Tressie McMillan Cottom made the underappreciated point that there’s another category of entrepreneur that we tend to ignore.  In many cities, there’s a fairly active gray-market economy of low-income people running informal businesses out of their homes.  These can be childcare, hair care, car repair, catering, or any number of other things.  The people running these businesses often have limited capital and limited access to, or understand of, the rules of the aboveground economy.  Even if they’re reasonably successful, their potential growth is effectively capped by the need to remain below the radar.

Community colleges could, if they so chose, become engaged in the work of helping to bring the gray-market entrepreneurs who want to grow into the aboveground economy.  That wouldn’t involve incubator sites, because the businesses already exist and are often place-bound.  It may well involve mentoring, but the mentoring may need to be from a more diverse set of mentors who understand the realities of where they’re starting.  The issues to address here are very different than the ones to address with on-campus nineteen year olds.  There’s no need to try to kindle entrepreneurial zeal; in this case, that’s already present, and quite strong.  Instead, the contribution community colleges could make would be in helping to make legible the tangle of tax rules, licensing rules, employer-employee rules, and the like.  We could demystify the paths around the barriers to growth.  That may not be as romantic as envisioning the next genius plotting world conquest from a dorm room, but the impact on the local economy -- and on people’s real lives -- could be substantial.

The incubator model makes a certain kind of sense, but the world is messier than that.

Wise and worldly readers, have you seen a college make effective outreach to the incumbent gray-market entrepreneur population?

Comments:
"Instead, the contribution community colleges could make would be in helping to make legible the tangle of tax rules, licensing rules, employer-employee rules, and the like."

Depends on the meaning of "make legible," doesn't it? If it means "see so you can avoid," I can understand the benefit, but you'd soon run into trouble with the authorities. If it means "learn and obey all our government edicts" I don't see that as fostering growth or delivering much economic benefit. Maybe more tax revenue, but I doubt it. The grey economy is grey for a reason.

If you really want to help the people in the grey economy, you should work to eliminate those taxes, regulations and licensing requirements. See John Stossel for more on this subject.

I doubt that entrepreneurship can be taught. Supported, encouraged, but not taught.
 
The incubator model makes a certain kind of sense

I can't tell if incubators have, in general, made much of a difference for anyone. At least among tech startups, they seem to be resolute failures; in other industries I'm not so sure.

My own parents started a grant writing consulting firm twenty years ago, and they spent zero time in trying to find incubators or equivalents. The only other person I know who started a similar small business also didn't.

Anecdote is not evidence, though, and I'm genuinely curious about what anyone has done to examine the effectiveness (or lack thereof) of incubators in general.
 
Entrepreneurship cannot be taught. Writing a business plan, assessing risk, and, to a certain extent, increased comfort with ambiguity can be taught. I'd focus on the latter not the former.

If you want to reach out to your gray market folks to help them become legit, just start offering classes in navigating the approval process to get a license in (business idea). The idea of having mentors is brilliant. Your local workforce investment board should be able to help with identifying people who could use these services and would likely pay to help provide them if you were able to show that participating in your program led to an increase in income. Bilingual educators would be a major plus.

Our local WIB funds projects to help "underemployed" people get into jobs that pay more. I'd pitch this as a version of that - helping them increase their income.
 
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