Monday, April 16, 2012

We Are Not the Passionate Job Creators, We Are the Proud Engine of Creative Destruction

In the face of high unemployment in the rest of the economy and around the Western world, the startup world has become increasingly vocal about our role as job creators. A series of emails and Facebook messages I received recently from my friends at Entrepreneur Week claimed that "We are the passionate job creators" [1]. I'm starting to feel like we doth protest too much. Let's be honest with ourselves: we may be creating a lot of jobs, but we're destroying a lot as well.

The most frequently cited statistic by those who support the job-creation narrative is that 2/3 of net new jobs in the past 15 years have come from startups. Indeed, startups are hiring like mad at a time that the rest of the country has little to no job security, which is one reason I tell anyone who is looking for a job to go work for a startup.

Those who take issue with the startup job creation myth are more likely to cite the statistic that General Motors employed 10 times as many people when it was the largest company in the US than Apple does now. Agree with that analysis or not, it's hard to ignore the fact that companies like Google and Facebook employ far less people than the traditional media companies they displaced. This is the result of the process Marc Andreessen in his op-ed on how "Software is eating the world."

We like to see ourselves as disruptors, and rightfully so. Yet what do we think happens to the people working at the companies we disrupt? That they'll all learn how to code and cash in on the developer goldrush? Or that they'll become social media consultants, or app designers?

Our disruptive power is as much about destruction as creation. To innovate and create better ways of doing things entails sweeping away existing systems, or else entrenched interests will block any change that is against their interest. In the process it is inevitable that many people will lose their jobs and go through painful upheaval, and I believe that we in the startup world are big enough and mature enough to recognize this and embrace our responsibility for it.

I truly believe that startups and entrepreneurship are a force for progress and good, perhaps even the force, but let's stop portraying ourselves as altruists who are doing it for the societal benefit. We are not the "passionate job creators." We are the proud engine of creative destruction [2].

[2] offers a great review of the concept of creative destruction as coined by Schumpeter.

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