Is it just me or does this look like a massive advertisement for Steve Blank's books and program? That's not to say that the books and programs aren't necessarily good, but still.

It seems to me that the industries most kinds of 99% businesses enter is zero-sum, which means helping new businesses only hurts the profit of other new businesses or incumbents. Ergo I question what value from an overall economic perspective helping individual entrants to the 99% market holds.

(Here I use as examples the industries defined from the article: construction, retail, health care, lodging, food services)

For instance, if 10 businesses are started, and there is only room in the market for 3, then 7 will inevitably fail. It is possible to improve each's individual odds of success, but to what end? Unless the market these businesses are in grows, any successfully-started new business only increases competition for the others. So lets say that we improve the odds for these new entrepreneurs by educating them. We will also assume incumbents have access to the same knowledge and benefit equally. If the new competitors all enter the market together, all we have done is raise the competitiveness level in the industry, and the odds of failing are still the same.

This is what Peter Thiel discusses in his "perfect competition" argument. (If you haven't read his CS183 notes yet, please do so. They're insightful).

Peter Thiel likens competition to athletes or soldiers beating each other up. They compete to win and that is what they know how to do. But in the end there is only one victor. The rest are losers. And if you improve the competitiveness level of these athletes, all you have done is make the competition fiercer. Now that could be a good thing as it could provide better value for consumers. But the businesses themselves don't benefit from that!

All this program is doing is making more perfect competitors, although what will probably happen is not all will benefit the same amount, as certain businesses will learn and apply these lessons better than others. But from a birds eye perspective, the result is stil the same: the same number of failing businesses. Even if these new businesses you help succeed do in fact "make it", they don't increase the size of the industry (barring technological breakthroughs). They only add more players to a limited pie.

People by nature care more about themselves. Thus they care more about entrepreneurship rather than innovation per se. Entrepreneurship without innovation is about beating up the other guy, simply outcompeting him through energy or maneuvering. Innovation is about doing something better, freeing up time or resources to do other things, which grows the pie for all.

In summary:

Sure a new business may add value by providing a better service than the competitor it beats, but the overall wealth pie of this nation doesn't increase. Encouraging just entrepreneurship without technological innovation is not that useful from a macro perspective. What we need are new entrants who change the game via technological or process breakthroughs. These are precisely the kind of companies that Peter Thiel seems most interested in, according to his CS183 lectures. And I submit that these are the kinds of businesses startups should focus on. Not the other 99% which only increase competition for everyone else.

This is why R&D and innovation are the key to growing the economy. Simply calling for more entrepreneurs, without a corresponding emphasis on innovation, is a flawed long-term strategy.

In a certain practical sense, aren't "the 99%", i.e. people without any significant cash cushion, precisely the ones who can't as easily take this non-VC, lifestyle-business route? If you need to pay rent and buy individual health insurance, it's a lot easier to do that if an angel or VC is fronting enough money to pay you at least a modest salary.

I welcome efforts to help small business owners, but we shouldn't pretend that small business in general drives the economy. The huge jobs and productivity growth that we associate with startups comes from a very small % of disruptive companies, mostly in high tech. (I wrote a bit more about this here: http://bostinno.com/2012/02/17/bailouts-for-startups-tough-l...)

He forgot to mention that 90% of all startups produce waste (leveraging VC's money), while 99% of small businesses produce real value simply because they don't have a choice.

The Lean Methodology is what small businesses have been doing since companies were created. I assumed that they took it and adapted it to tech business.

Great thoughts! But I still want to be an entertainer...