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01/30/10 3:19 PM
Small Business: A Pioneer in Parity
As noted earlier, people often go into business for themselves, because they have to. For one reason or
another, many small business operators have found themselves out of a job, and by necessity become
entrepreneurs.
The small business world has a long bootstrap history: America's disenfranchised became
entrepreneurs because they were considered unemployable. In the Jim Crow Era, countless
African Americans created their own businesses, even their own version of Wall Street.
Women--who couldn't even vote until there was a Constitutional amendment--also thrived in small
business. One woman managed to rise up from the cotton fields of the South, to become the first self-
made woman millionaire. Today, many African Americans and women are in small business, but more
work is needed for what they call in Davos, parity.
Today, the talk of Davos was gender parity.
It's been assumed for a while now that the key to saving our economy will be the women in the
workforce and to that end, Davos for several years has produced the most trusted report on gender
parity.
The report (reasonably) assumes that a nation's well-being is related to the status of its women--if
women are at the bottom of society, without many rights, then it can be assumed that the nation in
question isn't one devoted to caring for its citizens. This year, Iceland is in first place, the United States
is at the 31st, with Yemen dead-last. For the United States, there is some disturbing news: The
Washington Post says, "The gap between the shares of women and men participating in the U.S. labor
force is fairly small, but census data indicate it has increased rather than shrunk, and that differential
has grown more in the United States than any other country."
Small business will still need to be the pioneer in parity, if we are to raise all boats.
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01/30/10 9:51 AM
Will the Small Business Entrepreneur Save Us?
In times past, the World Economic Forum has been the symbol of the unfettered free market and the
dream of globalization. It was the focal point of protests and was vilified by those who believed in
market regulation. Inside Davos, they were for the free market. Outside and protesting on the periphery,
many were against it.
Now, however, a new form of economic populism is having its day on the slopes. Even a European
central banker--someone as tied to the financial world as one could possibly be--privately remarked to a
reporter, "the financial system is too important to be left to the free market."
But one can't be sure if the regulatory mood will prevail outside of Davos. Washington is in political
flux, and the mood for banking regulations and various economic incentives is still unknown--and
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2. probably will remain so for the near future.
Complicating the picture, key Obama economic advisor, Larry Summers said at a panel that we are in
what he referred to as a "statistical recovery and a human recession." He went on to report that one in
five American men aged 25 to 54 is unemployed. Given a "reasonable recovery," that rate could improve
to one in seven or one in eight.
Such information will put pressure on Washington to help small business. After all, it's far and and
away the primary creator of jobs in the US. It's also known that during a downturn, many of
the unemployed come to open their own businesses. Out of necessity, many an entrepreneur is born.
At Davos, while they are whipping the banker, they are lifting up the entrepreneur. One group in
attendance at the forum is Network for Teaching Entrepreneurship (NFTE). This nonprofit has for
years been helping the young and disadvantaged to learn how to become entrepreneurs. In fact, the
group has helped 230,000 young people since its founding, and has programs in 22 states and 13
countries. Recently, Thomas Friedman in The New York Times, endorsed their efforts.
The entrepreneur/small businessperson may be the only way out of this mess we're in.
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01/29/10 12:03 PM
Find a Green Solution and Find Yourself Rich
It's gotten colder in Davos, but luckily South African president Jacob Zuma showed up to the forum with
enough red-white-green-yellow-black-yellow-green-white-and-blue-striped bobble hats and scarves, for
everyone to wear. The sight of everyone in South African regalia gives the forum a festive look, but also
makes one realize how international the forum has become; this grand event is no longer about Europe
and America. Obama has stated that he wants to expand opportunities for export--and such a thing may
become essential for small business if the U.S. economy is to fully recover, because
the opportunities are growing elsewhere. After all, India has not had a recession like we have in
America.
Much has been said of the accumulated brainpower at Davos, which is of course the WEF's intended
novelty. Conversations are off-hand and collegial, but still probing and intense. Some claim they can get
"eight months of work done" in the few days of the WEF.
Solutions won't come out of the forum in a monolithic way (it's a forum, not a governmental panel), but
many of those in attendance seem to be worried about towering governmental debt and the lack of a
solution. Barney Frank blamed the difficulties in the U.S. on our two wars. Another expert threw a pall
over the audience when she said millions of more jobs will be lost in the coming months.
Meanwhile, those entrepreneurs and small business people who can offer at least a partial solution (or a
workaround) to climate change will find themselves praised. But according to the forum, they'll find
more than that: they'll find themselves rich. Entrepreneurs who can devise a clever green solution to our
problems will discover that a good idea can be "even more lucrative and transformative than the Web."
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01/28/10 6:27 PM
The Small Business Tech Pioneers
The mood is much more somber at Davos than in years past, with the world's bankers (now referred to
as "the new tobacco") huddling in corners, and plotting a response to the lambasting they've been
getting at the conference and in the press worldwide. The bright lights at the WEF aren't celebrities such
as Angelina Jolie, Brad Pitt, and Bono anymore--those carefree days are gone, at least for now. But read
a few Tweets from Davos about someone who got to shake Bill Clinton's hand or have a drink with film
director James Cameron, and you'll fast-realize how much of the World Economic Forum is still about
celebrity sighting and socializing.
Nonprofits go there to gain influence or raise cash from the wealthy, while others try to discuss and
learn. Still more go to meet the entrepreneur with the latest, sexiest startup. The small business startups
that matter (at Davos, anyway) have something to do with climate change or "social entrepreneurship,"
which is the use of the Internet and the so-called wisdom of crowds for such things as loans to mom-
and-pop businesses in developing nations.
Davos is known for its freewheeling use of terms--in the case of finding a solution over the Internet for
the difficulties in Haiti and elsewhere, "crowdsourcing" is the term of choice. A new business that can
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3. take advantage of the combined resources of many will find themselves a success at Davos. Anything to
do with vaccines will also have a boost, thanks to Bill Gates' extraordinary announcement at Davos.
But probably the biggest recognition given to a company (the biggest given directly by the WEF itself
that is) is the Tech Pioneer Award. In years past, Google won the award (when Google was itself a small
business, a company few had heard of). The star of the awards this year? A maker of drywall, that stuff
your bedroom walls are made of. What's different about it? Making it doesn't damage the environment,
at least not nearly as much as conventional drywall does.
Meanwhile others pitch their ideas, on the slopes and in the lounges.
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01/28/10 2:58 PM
Will There be a "Many-Lateral" Sea Change?
Last night in Davos, everyone watched Obama rip at the banking industry in his State of the Union
speech. "We all hated the bank bailout," Obama said. Then he affirmed that he wants to put limits on
the size of the banking industry. He also wants to recirculate any money given back to the government
by the industry--as loans to small businesses across America.
In Davos (where it's been snowy and the traffic is snarled), Bill Clinton seems to think that's a good
idea to limit the size of banks. The heads of the Bank of England and the European Central Bank have
given the proposal their qualified support. George Soros loves it; in fact, he thinks it doesn't go far
enough. But Davos isn't about what's said on podiums; it's about what's promised in the hallways.
Banking industry types are on the defensive, and aren't going to give in too easily; they're in the meeting
rooms and everywhere else, working their angle: the world needs strong banks. Small business needs
them, too, especially if they can get a loan in the first place, so likely there will be a compromise of some
sort.
But for any major rule change to occur, must there also be a sea change throughout the world? At one
panel, a Harvard professor named Graham Allison said no. Most countries just need to agree on a
certain point of view. The rest of the world will go along with that rule change, over time. He called this
notion,"many-lateralism." Perhaps something "many-lateral" will happen to the banks? It may be worth
reminding the regulators that small business makes up more than 99.7% of all employers in the U.S.,
and that the credit crunch has many of those same businesses by their collective windpipe.
Meanwhile, in an official report, the WEF has called for the banking industry to be more "realistic"
about their goals and salaries. That same report, however, looked askance toward government-
supported banks, which some small businesses have been pushing for.
It appears much more wheeling, dealing, wheedling, and whining will need to occur before a solution is
found to this intricate problem. But at Davos, tomorrow is another day and another meeting with
another potential friend or opponent.
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01/28/10 9:37 AM
Are We Jammed in Traffic or Speeding down the
Highway?
Fast-moving cars and traffic jams are the analogies for Davos, according the New York Times blog.
Bankers say the road rules need to be helpful and clear for a speedy recovery. Others contend the
economy is like a speeding car, careening out of control. Either we need more super-highways without
speed regulations, or we need speed bumps and safety rails.
Small business, being more vulnerable because of lower capitalization, hates uncertainty. And while
macro discussions at Davos are the rage, WEF attendees aren't coming up with an overall viewpoint for
the recent economic crash-and-burn. According to rumor, top bankers are set to meet with regulators
secretly in Davos. They hope to hash out differences and come up with some regulations that both sides
can live with.
According to the WEF's Official Global Competiveness Report, access to financing is the number one
problem in the U.S. right now, with tax regulations coming in second. Both problems, being
intertwined, are difficult to untangle. That's what the Davos meetings, whether secret or not, will be all
about.
Meanwhile, other companies along that economic highway are prepping for pit stops: Visa International
4. announced at Davos that they're going to be spinning off divisions in Asia, the Middle East and Latin
America. FT quotes the CEO of the credit card company as saying, "As the business continues to grow we look
at our corporate form and ask, 'have we got it right?' "
All companies, whether they're large or small, have to assess their operations, but this particular move has small
business operators (the ones who accept credit cards) wondering: does the split have anything to do with
pending regulations over rates operators charge merchants? Way Too High, a site that contends the fees card
companies charge merchants is, well, way too high, says, Yes.
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01/27/10 3:35 PM
From Davos to Dayton: Time for TV
It could be argued that America's true National Pastime is watching TV. And tonight, despite plush
surroundings easily outclassing what everyday Americans could even imagine, attendees of the World
Economic Forum will be joining in with the rest of us at the Idiot Box.
During his constitutionally-mandated State of the Union speech tonight, President Obama will make
some rousing remarks, interrupted by partisan claps and groans. A few heroes in the balcony will be
asked to stand, and they'll get a rousing ovation. Cameras will catch a Congressional member or two
napping, or idly flipping through papers. And all sides will say they love small business (the government
even has a Letterman Top Ten list on why we should all love it). But aside from the usual kabuki (and
the comments on whatever Michelle Obama chooses to wear tonight), the real meat of tonight's speech
will directly affect everyone watching the box, whether they're working late on Main Street or glad-
handing on the Davos slopes.
The WEF in its report, Global Risks 2010 is hardly cheery about the future: We're in a weakened state,
and if there are further setbacks to come, we won't be able to fight them off. It also says in another
report, that consumers, investors, and small-business people will need to regain their trust in the
financial sector. The mood is gloomy--although strangely, coming into Davos, the major-company CEOs
are seemingly optimistic.
Tonight, Obama is supposedly going to fight the banking industry, so as to help ease the credit crunch--
something small business desperately needs fixed. But in a major editorial, The New York Times says
Obama is being the Opposite of Bold. According to the Times, the Obama administration needs to " . .
champion increased small business lending and direct creation of both skilled and low-skilled jobs. He
must embrace ways to pay for initiatives, such as redeploying money from the bank bailout or
endorsing a financial transactions tax on Wall Street."
Obama might eventually do that, but no doubt he won't be calling for what Davos attendee George Soros
just did: A radical breakup of Big Banks. Meanwhile, at Davos today, economists, politicians, and
bankers went head-to-head over what to do about it all. The Davos economists are meanwhile,
according to the WEF, having to rethink their business models and "accept a lower profit world." Just as
small business has been having to do all along.
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01/27/10 11:39 AM
Just Beyond those Swiss Ski Slopes: Main Street
What do a large number of politicians, CEOs, bankers, and professional do-gooders gathering at a
Swiss ski resort have to do with the problems of American small business? It turns out this year, quite
a lot. At the annual gathering of the World Economic Forum in Davos, Switzerland, the world's
decision makers are chastened; gone is their brassy, high-flying confidence, now replaced by a new
theme: Rethink, Redesign, Rebuild. The economies of the world are increasingly interconnected; our
working (or rather, nonworking) economic model needs rethinking. Our economists are unsure of how
to proceed, while at least one journalist looks to the common Snowman to explain it all. I'll be following
the concerns of Main Street as our world leaders grasp for a way out of this knotty, Gordian mess.
After all, small business is the bulwark of the American economy, and what happens on the ski slopes
affects what happens in our shops, offices, and warehouses. As small business thrives, so does the
world.
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