Posted: June 27, 2011

More on building a rapid job-creation engine

We're either the servants of change or its masters

By Thomas Frey

(Editor's note: This is the second of two parts. Read Part 1.)

As automation and technology continues to eat away at our current job-base, the discussion will change from "Do we need to make a change?" to "How quickly can we make it happen?"

The risk of doing nothing will soon outweigh even the high risks of investing in startup businesses. So here are the last three parts of the four-part approach I would like to propose:

Part Two - Introducing the Seed Capitalist

People who are skilled in traditional forms of lending have very little understanding of how to size up and analyze the risks of an early stage startup. Bankers, mortgage brokers, commercial lenders, and even venture capitalists are woefully inadequate for the type of scrutiny and understanding needed to match the resourcefulness, drive, and passion of an individual to the obligations that come from an investment.

For this reason, a new profession is needed - the Seed Capitalist.

The Seed Capitalist will be a hands-on evaluator who works outside the traditional filling-out-forms mindset. They will be tasked with making personal visits to the homes and workplaces of the entrepreneurs and founders, ferreting out salient details of character and initiative that separate the "probables" from "likelies."

When it comes to resources, Seed Capitalists will have far more than purse strings at their disposal. If a prospect is not yet ready, they will have the ability to suggest and recommend new options, suppliers, and strategies for shoring up whatever deficiencies may currently exist.

Part Three - Funding Guarantees

On Tuesday I flew to the Washington, DC area to give a talk on the future of libraries, an institution I believe will weather the winds of change better than most if they make the necessary adjustments.

But Washington, DC is the home of the two twins that don't get along - the source of all problems and the source of all solutions. Early stage funding is a sloppy business and even those groomed for picking prime talent will be proven wrong somewhere along the way.

But in the coming world of hyper-change business environments, the need for rapid job-creation will take precedent over virtually all other systems. As a result, a new governmental structure will need to be put into place to guarantee the funds invested by the seed capitalists.

More specifically, this is a system that must remain autonomous and untouched by the SBA and all current bank lending systems. Without this autonomy the whole system will fail.

Part Four - Business Colonies

Startup businesses are becoming very fluid in how they operate, and the driving force behind this liquefaction is a digital network that connects the needs of a company with available talent in a quick and efficient manner. A business colony is a new kind of business structure serving as an organizational magnet for work projects and the free-agent talent needed to complete the work.

The operation will revolve around some combination of resident people based in a physical facility and a non-resident virtual workforce. Some will forgo the cost of the physical facility completely, opting instead to form around an entirely virtual communications structure. Most will be organized around a topical area best suited for the talent base of the core team. As an example, a team of photonics engineers will attract projects best suited for that kind of talent. Likewise, a working group of programmers specializing in computer gaming applications will serve as a magnet for new gaming projects.

In some instances, large corporations will launch their own business colonies as a way to expand capability without adding to their headcount. Staffed with a few project managers, the company will use the colony as a proving ground for experimental assignments best performed outside of the cultural bounds of existing workflow.

Colonies will develop their own standard operating procedures with consistent agreements, payment processes, legal structures, management software, and methods for resolving disputes. Over time they will be rated on their ability to complete tasks with specific ratings on efficiency, quality of work, and how well they treat the talent. More on business colonies here.

Putting it All Together

I find the interplay between this four-part approach intriguing. As a newly minted standard, the "minimal fundable enterprise" will give prospective entrepreneurs a reasonable target to hit. The seed capitalists will use it as part of their primary tool kit. With fund guarantees in place, the government will both set the stage for next generation entrepreneurship and benefit from its thriving new tax base. And the business colonies will serve as a boiling cauldron for ideas as aspiring startup founders build their networks and form alliances with talented people who will help build their future companies.

Currently, our governmental systems are evolving at speeds that are exponentially slower than the businesses that use them. With the rapid-fire demands and micro-second shifts in the way business operates today, that needs to change.

Is it actually possible to build a job-creation engine that can exceed the rate of job decay happening around the world?

All I can say with certainty is that the solutions that served us well in the past will most definitely not be the solutions that serve us well in the future. We can either be the servants of change or the masters of change. There is no middle ground.

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