Tuesday's announcement by Facebook that it will offer $100 million in grants to 30,000 small businesses may well be the sort of watershed moment that's been needed to spur entrepreneurship and small business growth well into the future.
In an interview on CBS This Morning, Facebook COO Sheryl Sandberg said that what spurred Facebook to give out grants is that 140 million small businesses use its platform, and supporting those small businesses supports the health of the entire business ecosystem. In the maelstrom of big tech, it's important to remember this crucial fact.
What Facebook is doing is clearly driven by the current crisis, but what I find especially interesting about it is that it could set the bar for a new sort of social responsibility that brings more attention to the importance of supporting entrepreneurship in the long term. In many ways, this could be the cornerstone for a new sort of business ecosystem that acknowledges the critical importance of small business.
Having lived through the economic aftermath of 9/11 and the dot-com bust, I saw firsthand how a sudden economic downturn can have a devastating impact on the most vulnerable part of the economy: entrepreneurs and small business owners who often are running on slim (if any) margins and just as often carrying enormous debt. While what most often makes the headlines are unicorns getting truckloads of VC funding, the reality for many entrepreneurs is that financing comes from credit card debt, home equity loans, and family.
There's been much discussion in recent years about the rise of wealth disparity and the widening economic divide. That same lens can be a useful way to look at the growing gap between the small group of well-funded unicorns and the other 99.9 percent of startups.
When I look at the entrepreneurs I work with, and who I come across on a regular basis, relatively few fall into the .01 percent. The rest are bootstrapping their businesses. They are scrappy, driven, and far from wealthy. Yet, they are the fuel for economic innovation. It's exactly because of their creativity and hunger that they can be as driven as they are. When you don't have a safety net you learn fast, you dig deep into your creativity, and you have no choice but to be all-in.
Losing that element of the economy is like killing all the algae in an ocean: eventually, the entire food chain collapses.
What Facebook is doing should be a long-term role model for all the companies that have been incredibly successful over the past two decades of economic growth and prosperity. This means bridging the economic divide in ways that will have lasting impact for the development of new businesses, innovation, and the overall economy. Consider that tech giants Microsoft, Alphabet, Apple, Facebook, and Amazon are sitting on hundreds of billions of dollars in cash. Facebook just committed .02 percent of its cash reserves for these grants. If Apple, Alphabet, Microsoft, and Amazon did the same, that would amount to nearly $1 billion to fuel small business and entrepreneurial innovation.
If you're a small business owner, don't hesitate to sign up for updates on the Facebook grants. But also look into other programs offered by other large businesses. For example, Goldman Sachs has a program called 10,000 Small Businesses that provides access to capital and support services.
The bottom line is that large businesses should be doing more, and as a society we should be demanding more of them to help support small business and entrepreneurs. While current events may have been the wake-up call we needed to appreciate the importance of entrepreneurship and small business, the structure of the business ecosystem needs to change to better foster and support the risk that entrepreneurs are taking. If businesses seize that opportunity, this may be a turning point for decades to come.
Unprecedented times require unprecedented leadership. Kudos to Facebook for stepping up. Time for the rest of the corporate giants who have benefited from the last two decades of unprecedented growth to step up and help build the future.
Correction: A previous version of this column included an incorrect name for the Goldman Sachs 10,000 Small Businesses program.