How Policy Could Help Drive Innovation
You might envy companies like Airbnb and Uber, but they've had to go to great lengths to ward off new regulations--making starting up similarly disruptive companies much less desirable.
Having to combat overly rigorous regulations is a perennial issue for businesses. Though governments love to point to successful new companies that create jobs, they're often quick to want to regulate them. The concern for entrepreneurs is that undue restrictions could serve to stifle innovation.
But what if you didn't need to worry about pesky rules and regulations? Could your business not just survive but thrive? These questions served as fodder for a lively debate yesterday at the World Economic Forum in Davos, Switzerland called "Regulating Innovation."
Below are just some of the prescriptions the panelists, who included IdeaLab's Bill Gross and Harvard University Professor Clayton Christensen, offered to lawmakers for helping entrepreneurs and small businesses.
Offer matching funds. Gross, a long-time entrepreneur who runs an incubator in Los Angeles, proposed that the government offer matching funds to fledgling startups. "Its probably easier to raise $1 million once you have clients and traction, than it is to raise $10 or $20k to just formulate an idea when you just have a napkin sketch."
Trim barriers. He'd also limit the number of barriers standing in the way of startups. "You want to give much more opportunity, so the fewer things that the government can put as barriers to get a company started the better," says Gross. "Startups are still risky, so you need lots of at bats. You need lots of shots on goal." He adds that the greatest innovations happen when the government doesn't require entrepreneurs to ask for permission--calling it "permission-less innovation."
Reform immigration laws. Panelists pointed out that 66 percent of engineers in Silicon Valley are foreign born. But Gross noted that since 9/11 the rules have grown stricter--causing a lack of available talent in the U.S. His suggestion? Reform immigration now. "We can have better immigration policies to allow us to bring in smart immigrants to participate in startups."
Offer tax incentives. Rather than place taxes on new companies that are creating jobs, panelists suggested that tax incentives may actually help spur innovation. Gross noted the example of New York State, which last year launched a program called Start-Up NY that gives startups a raft of tax breaks. "If you want to have startups, which are job creators in your area, you can't beat that."
DIANA RANSOM | Features Editor
Diana Ransom is features editor at Inc. She has been covering the never-dull world of small business and entrepreneurship for years at a variety of publications including The Wall Street Journal, SmartMoney.com, the New York Daily News, Fast Company magazine and Entrepreneur. She lives in Brooklyn, N.Y.