This financial crisis is the crisis of intermediaries. Intermediaries that add little value but make most of the money. That had to burst.

The solution is to get back to basics. Working to create value and not speculating. Cut intermediaries and give back some efficiency to this world.

Check out http://GetYourMoneyBackInvestInAStartup.com and start changing the world, your way.

"Entrepreneurship" as a capitalist attitude may not be a bad thing, but in practice most actual entrepreneurs are people who found small firms with other people's insufficient capital following inane technology hype-cycle trends, with the intention of selling out as soon as possible to cash in on a company that has revenues with no profits, users without use-cases, and a business plan with no basis in reality.

Remember that most entrepreneurial firms fail as they are aggressive risk-takers, gamblers really. Even the few solid successful entrepreneurs that found legitimate businesses they intend to keep and operate for themselves are gamblers. That's fine for them, but not for the economy, which should be handled in a strongly risk-averse manner, as hundreds of millions of lives and livelihoods are at stake.

What we want for large-scale national and global economic resurrection is stolid boring managers who refuse to take risks, refuse to incur stupid needless debt, and who regard protection of capital as more important than creation of a foolish new bubble to replace the old one. In other words the opposite of entrepreneurs.

Lehman Brothers, AIG, et al. -- none of them would have had problems if they had pursued boring dull strategies that didn't involve aggressive risk-taking and investment in unreliable new debt instruments based on economic trends they didn't understand.

Of course we concede that some of the non-entrepreneurial managers of the economy appointed by the government -- Greenspan, et al. -- had no clue what was going on either.

So yes, we want dull plodding strategies -- but smart people in charge of them, just for a change.

"Entrepreneurs are exactly the wrong people to turn around a large-scale financial crisis."

Really? You think that it's the "plodding business" that we need more of? You mean like GM?

This country has the greatest economic system in the world (capitalism) and it was founded on entrepreneurship. Do you realize that the companies you adore - the ones that are boring and plodding - were originally start-ups created by one of those crazy, risky, gambling entrepreneurs?

Guess which companies are getting bailed out right now? Can you name for me ONE start-up that is getting bailed out?

What this country needs more of is that spirit of adventure and risk found only in those who are willing to lose it all in the pursuit of a life that is different from punching clocks and existing in cubicles.

What I don't think you realize is that capitalism and entrepreneurship didn't fail - it's just the opposite. They are not being allowed to work. Every entrepreneur and business owner realizes that every day involves risk. They are willing to make the sacrifices in order to achieve a dream. They do it with FULL awareness that they may fail. But in failing, they will learn, grow, retool, and try again with better insight than they had before.

What we've done with these bailouts is enabled people to make stupid mistakes and NOT get punished by the markets. That's not a failure in capitalism or entrepreneurship. That's simply a failure in government.

It's shocking to me that you believe entrepreneurs take down the economy when they fail at a particular business. Most jobs are created by small businesses and entrepreneurs. Have a look:

* Companies with fewer than 20 employees created 85 percent of the net new jobs from 1988 through 2002 that the Census Bureau has been slicing the data by company size.
* Companies with more than 500 employees eliminated more jobs than they created in five of the 14 years.
* The smallest firms created more jobs than either the mid-sized or large companies every year.
* In 12 of the 14 years, the smallest firms created more than 1 million jobs.
* Their worst performance was creating 550,000 new jobs in 1990-91.

Source: OC Register Online - http://jan.freedomblogging.com/2008/03/04/new-job-growth-comes-from-small-business/

Sramana Mitra is absolutely correct. This is the best time to start a new business. Find your inner "crazy gambler", pull him/her out of the cubicle, and get started. Innovation and entrepreneurship are what made this country great and will see us through these difficult times.

Cheers!

Travis Robertson
http://www.travisrobertson.com

I couldn't disagree more with what you say above. I think you are making a grave mistake in your assumption. A very small number of companies get founded with other people's money each year (less than 10,000, I believe). But each year, a very large number of companies get founded that are bootstrapped by their founders (more than 500,000).

Yes, there is a bit mortality rate in small businesses, and I agree with you, the place where a major improvement can be made is by pairing adequate mentoring, education, and resources, such that more firms are making fewer mistakes, and hence survive.

I also agree with you that small cash businesses - not swinging for the fences venture businesses - is where the more stable ecosystem will emerge from.

But you make these small entrepreneurs sound unimportant, and I celebrate them with all my heart and soul.

THEY are the need of the hour - small entrepreneurs who can build lots of small businesses, employing 5, 10, 15, 20 people ...

And just by law of nature, some of them will grow to become bigger and higher impact.

Sramana

But I am saying it's terrible to use that approach for guiding or managing an economy. The heading of your article is "We have to turn this crisis around." It's absolutely and categorically stupid to fix the US or world economic crises by using entrepreneurial approaches.

Suppose you have a 60% chance at making $100, 40% chance of losing $100. This is a great bet for most people, and every entrepreneur in the world would jump at it. Even if you are risk-neutral, the expected value is positive, so what the heck.

But as you increase the $100 in both winning and losing cases, ordinary people with sensible risk-averse biases to personal financial destruction start falling away, and when the numbers get big enough, you are left with risk-seekers like entrepreneurs.

Now turn that $100 into $10 trillion, and bet the entire economy on it. A very bad idea, indeed. That means you have a 40% chance of destroying millions and millions of lives and livelihoods.

That sort of bet is just the thing that the Lehman Brothers and AIGs of the world have been raked over on, and as it turns out, the bet didn't even have a favorable expected value, it was based on factors they didn't understand at all.

God save us from that kind of approach to economy management.

Entrepreneurs are needed because they create jobs.

People want to become entrepreneurs for a variety of reasons - to make money, to become independent, to have an impact.

As an entrepreneur, I can tell you this, that most entrepreneurs do not think like you.

And if we did, there would be no job creation, and hence, no economic development.

You are not an entrepreneur, that's fine.

Just don't go around bashing entrepreneurs.

Btw, go take a look at a book called Atlas Shrugged, written years ago by a woman called Ayn Rand. May teach you a thing or two.

I understand your sensitivity about "bashing entrepreneurs." But I think Miramon is trying to answer the question, "is entrepreneurship good for the ECONOMY AS A WHOLE?" And in answering that question, he is saying that entrepreneurship is basically a MORE RISKY USE OF CAPITAL than the alternative, which is choosing instead to allocate that capital to tried and true approaches of generating returns. And to an earlier commentor's question, I imagine he doesn't mean GM, since that (and the rest of the U.S. auto industry, and also the airline industry, and also the paper industry for that matter) is certainly not a TRIED AND TRUE APPROACH TO GENERATING RETURNS. He's probably talking about mature businesses that are unexciting but still good return-generating businesses, something like Wal-Mart. Now regarding the question, "WHAT IS RIGHT FOR THE INDIVIDUAL?" I think he agrees that the risk-return may indeed be better for a guy choosing to start a business than a guy choosing a boring cubicle job. And so your advice to people saying "YOU GUYS SHOULD GO START BUSINESSES" is probably a very good piece of advice - TO THE PERSON WHO IS TAKING IT. But whether it is good for the economy if 20% of people went out and quit their jobs to start businesses - that is an entirely different question. An individual can afford to take binary risks with binary outcomes. But an economy as a whole must be grounded disproportionately in the type of capital allocation decisions that are boring, mundane, but again, TIME-TESTED, and fundamentally risk-averse. Should that capital allocation be 100%? No, surely not, for that would eliminate competition, would allow monopolies, would stifle innovation. These things are important. And so in the end, to answer that fundamental question, we need to recognize we are walking in the midst of (shades of) gray.