Why Daniel Isenberg Thinks Startups Are Bad For Policy

In a world where it seems like everyone wants a piece of the startup pie — from government to investors to universities — Daniel Isenberg is taking a different approach.

Isenberg is the author of Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value, published over 30 online and print articles on entrepreneurship in the Harvard Business Review, and has been featured in the Economist, Forbes, NPR, Bloomberg, Quartz, Wall Street Journal, Financial Times. He was a professor at the Harvard Business School, and was an entrepreneur and venture capitalist in Israel.

He is also a keynote speaker at DRIVE, our upcoming global conference with the Lazaridis Institute on scaleup ecosystems taking place in Waterloo, February 20-22.


Early-bird tickets for DRIVE are on sale until January 31st, so don’t miss out.


Looking at the startup ecosystem model, Isenberg saw a better way for businesses to grow, in a way that could benefit whole communities.

In 2010, Isenberg founded the Babson Entrepreneurship Ecosystem Project (BEEP) to create jobs outside of huge tech hubs like Silicon Valley, and focus on growth and entrepreneurship in smaller, second-tier cities.

The project operates out of Babson College in Wellesley, Massachusetts, where Isenberg is also a professor.

It launches and manages regional projects that focus both on enabling locally based companies to grow rapidly and on fostering an aligned ecosystem to systemize, sustain and scale that growth.

Instead of zeroing in on scaling tech startups as most accelerators tend to do, Isenberg's goal is to teach entrepreneurs at already established small businesses — no matter the industry — exactly how to scale.


“With finite public resources for economic development, leaders need to set priorities. Supporting companies that can quickly show new, incremental growth (in months) is a smart top priority because a lot of quick, visible growth events, even if they are small, can have powerful knock-on effects far beyond the specific companies themselves.

These rapid virtuous circles of growth are the real essence of an entrepreneurship ecosystem.

Startups are a less effective policy tool because, with their naturally high failure rates and long time horizons, it is almost impossible to set those virtuous circles in motion.” — Daniel Isenberg


Isenberg posits that focusing on small businesses that already have a proven business model makes the most sense when it comes to smart economic development for cities.


Rethinking the Growth Game

Over the last decade, BEEP has produced two successful long-term initiatives — Scale Up Milwaukee in Milwaukee, Wisconsin and Manizales-Mas in Manizales, Colombia.

Launched in 2010, Manizales-Mas features a six-month “Scalerator” program that includes peer-to-peer mentoring and interactions with ecosystem stakeholders.

When it was first launched, many in Manizales equated "entrepreneurship" with "startups."

However, Isenberg felt that fostering startups, particularly those founded by students, would take years and multiple failures before any economic benefits would be seen. Instead, he pushed hard for a scaleup approach.

Similarly, Scale Up Milwaukee, which was launched three years later, also includes a six-month program that provides a support system for more mature, small companies so they can increase sales and create jobs within the company.

The program offers workshops led by Babson professors on topics like sales management, operational financing as well as mentoring sessions.


Busting the Great Startup Myth

The reality is that despite tons of anecdotal evidence, there simply isn’t much systematic evidence to suggest that VC-backed startups actually produce jobs in a city. (Although it’s worth noting there is evidence that young companies across all industries tend to create jobs.)

At DRIVE, Isenberg will explore how a scaleup approach to growth is economically smarter for businesses, governments, investors and the general population.

His keynote will challenge widely-accepted notions around startups, and question whether funding from public spaces, including foundations and universities, is best spent on startups.

DRIVE will host thought-leaders from around the world — including Canada, the U.S., the Netherlands, Norway, Sweden, Denmark, Finland, Iceland, Nigeria, Kenya, France, Israel, Ireland, South Korea, and England.

It will be an opportunity to learn how exactly regional tech ecosystems around the world foster innovation and build thriving, liveable communities.




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