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Guest post by: Paul Kedrosky Become an Author

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People are all stirred up by my suggestion that the Valley is on "tilt". Lest anyone think otherwise, I'm not convinced it's entirely a bad thing. The Valley takes its biggest risks and does some of its wildest work when there is this "Everyone into the water" feeling about the place. More is more: More startups, more risk-taking, more experiments, more money -- more of more. One of the puzzles my Kauffman colleague Dane Stangler and I have worried over in a few papers is why we're not seeing a significant increase in the rate of entrepreneurship in the U.S. Matter of fact, it has more or less flat-lined over the last few decades. Lowered barriers to company creation, more capital, and a broader understanding of the rewards -- personal and financial -- of starting companies has not led to a reset of the long-term rate at which such companies are created.

There are many reasons why this might be the case. It could be that the percentage of the working population interested in entrepreneurship and able to pursue it full-time is and will always be constrained. People have kids, families, mortgages, health issues, etc., and they aren't unable to change course to a career that makes all of those things more challenging. There is also the argument, one that Dane and I pursue in an upcoming paper, that other sectors have sucked entrepreneurial talent out of science, technology, and engineering and put it in other sectors where the societal benefits are much smaller, and arguably even negative.

Entrepreneurship is and should be irrational. You are taking on huge risks, showing immense ego, and trying something with an absurdly high failure rate. But it at these moments when it feels like you're nuts not to try being entrepreneurial -- the Valley being on "tilt" -- that we have an outside chance of resetting the base rate at which companies get created in this country. While I tease people about it on a regular basis, especially journalists-turned-entrepreneurs, I wouldn't have it any other way. Other than maybe the Harvard MBAs. (I kid. Mostly :-))

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