“One of the findings of Kauffman research is that of the appx. 600,000
businesses that are started every year, less than a fraction of 1%
become high-growth “scale” businesses. These new firms, especially the
“scale” firms, have added all of the net incremental jobs to U.S.
economy since 1980 (about 40 million), and probably account for about
1/3 of GDP growth since then. So the key to boosting economic growth
is to increase the number of successful high-growth startups. After
all, the growth rate of our economy is nothing more than the
aggregation of the growth of our firms.
That is why Kauffman (which has a $2 billion endowment) is investing
heavily in an ambitious new program called Kauffman Labs. This aims
to dramatically increase the ability of small businesses to become big
businesses. The Labs program is built around a novel idea: that highly
motivated individuals with “scalable ideas” can be recruited to be
entrepreneurs and to be made successful, by surrounding them with a
network of other experienced entrepreneurs; sources of money; and
mentors. The goal is to educate entrepreneurs and surround them with a
As I mentioned in my last post on scaling microfinance institutions, we’re coming to pretty much the same conclusions at the Grameen Foundation’s Technology for Microfinance division. To really make a significant impact on poverty, we need social businesses that can scale, and scale quickly.