Tech Town, NC

Where are the jobs? That’s the refrain heard all around the country these days. So far no one has had the answer, but to hear Vivek Wadhwa tell it, all you need to do to solve the jobs problem is answer another question: Where are the startups?

In an excellent post Wadhwa looks at the research of Tim Kane of the Kaufmann Foundation into US job growth over the last few decades (full PDF report). I highly recommend reading the post and Kane’s report, but here’s the key takeaway:

From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.

That’s a staggering statistic. Certainly, the incumbents in various industries are extremely important. But it’s also true that Microsoft, Dell, and HP, when they’re not downsizing, grow headcount by single digit percentages, not multiples. But imagine several thousand startups doubling in size every couple months and you see what’s possible. Virtually every company that reaches global scale has major difficulties finding additional growth. Even Google has found that there may be a natural limit to how many cash cows can fit in one company, or at least on one SERP. And much of the growth these behemoths do find comes from, wait for it…international markets.

Some of Wadhwa’s recent articles are in response to assertions by Andy Grove about America’s loss of “scaling” ability. I don’t want to wade into the Grove v. Wadhwa debate too much, as both arguments have merits and both men are vastly more experienced than I. But if Wadhwa is right (or even if they’re both right) a lot of recent local developments bode very well for the Triangle and the area I think of as TechTown, NC.

The area has long benefited from RTP and companies spawned by our universities, which is why Durham was recently ranked as the 3rd best city in which to find a job. And of course, it just so happens that Durham is home to Duke, where Vivek Wadwha is an Executive in Residence. And just in the last few months we’ve seen a few new incubators open their doors and we’re seeing a real network of entrepreneurs making its presence felt more and more clearly. We’re still not out of the woods as a national economy, but there’s some comfort in knowing the Triangle is doing its part to get us back on the path to prosperity.