

Do Startups Create Jobs or Destroy Them - jonbot
http://www.betabeat.com/2011/11/03/do-startups-create-jobs-or-destroy-them/

======
justin_vanw
Without having read the article, the answer seems quite apparent to me. They
create jobs in one place and destroy them somewhere else.

Startups are really just businesses. So, when people say "I'm going to do a
startup", why don't they just say "I'm going to start a business". Well,
partly because if you said "I'm going to start a startup" it would sound
redundant.

But why don't we say "business" instead of "startup"? The just-so story I am
drawn to is that startups must be disruptive. A business can be opening a
chain of car washes, or a McDonald's franchise. Nobody is going to use the
word 'startup' there. However, what if I started a business, and my goal was
to develop a paint that never required washing. That would almost certainly be
considered a 'startup'.

Now, when you disrupt, you are disrupting commerce that is happening. It's
real money changing hands, people's jobs and so on. For the 'no wash paint'
startup, success means putting all the car washes out of business, eventually
anyway.

Finally, should we care? No. Nearly every business would fire all of it's
employees if it could. The carwash you are putting under? If it could do the
same quality of washing with half as many employees, it would fire half of
them. If it could do the same job with no employees, it would fire all of
them. The point is that there is no moral issue here, merely an issue of who
is going to collect the money. And of course the money not going to carwashes
will go to something else blah blah blah saddle makers blah blah blah Model T.

Now, there is a Player Piano scenario to worry about. What happens when,
inevitably, we automate all the mindless tasks we currently pay people to do?
Sure, lawns will look great, cars will be clean, shelves will be stocked,
houses will be immaculate, and you'll never see peeling paint again, and ipods
will be fully assembled by robots. What are all the mindless people going to
do? I don't honestly know. We need to figure this out.

~~~
cienrak
I think the Vonnegut reference is an apt one. But there is also a simpler
question at hand. When we romanticize startups, do we actually undermine the
larger, perhaps less interesting companies who are better at generating
employment and economic growth.

In the same way that the American dream of home ownership came back to bite
us, perhaps the cult of entrepreneurship could use a hard look.

~~~
justin_vanw
You don't increase wealth by being inefficient. The cult of startups leads to
more startups, but it doesn't make them more successful.

There are some exceptions, but the market can always be irrational for a
little while. LinkedIn and GroupOn aren't real businesses and eventually the
stock price will reflect this. However, in the short run they are able to pump
the stock price by having a microscopic float and getting listed on things
like Russel 2000.

Oracle, Cisco, Intel, HP are all startups, they are just very old and
established. They employ tons of people. They aren't doing us any favors if
they barely survive, however. Inefficiency makes us all poorer, even if in the
shortrun it makes some people better off because of a paycheck (HP employee
for example).

------
cienrak
Let's take an example - Etsy has grown to 80 engineers in the last year. If 50
of these workers had decided they wanted to go their own way and create a
startup, how many jobs would have been created and how many of those people
would be out of work?

Easy money at the seed stage means a lot of companies that are small ideas
trying their hand at building a business.

------
cienrak
Startups have different goals. Some want to stay lean and disrupt old
industries. Others, like Groupon, are inventing new kinds of comapanies and
hiring like mad.

Whatever the net-net is in terms of jobs created or killed by startups, the US
is better off for having a class of creative people in the technology space
trying to create new business models.

------
wccrawford
I'm always surprised that people claim things steal jobs. If you look at the
record of the unemployment rate, it's pretty obvious that it stays the same
over time. There are ups and downs, but they are not caused by inventions or
efficiency increases.

------
elias
When you automate a process to scale, you reduce the need for people. In that
sense, startups destroy jobs.

But when you create new ways in doing things like unlocking value (like how
Facebook has done with connecting the world), jobs are created.

