Breaking poverty’s lock on Milwaukee

Milwaukee is America’s fourth-poorest city, and the primary reason is because our city continues to lag cities all over the country in its ability to create jobs.

In looking for solutions, the biggest focus has been looking for the next highgrowth, high-tech start-up that could create thousands of jobs, such as Epic Systems of Madison.

Money has been poured into early-stage funds to support this focus, as well as state and city funding for our local clusters such as water and energy, all in hopes of generating thousands of new jobs through disruptive technology.

But should that be the prime focus for our region? Critics believe otherwise.

Morra Aarons-Mele claims that asking people to come up with the “next big thing” creates unrealistic expectations that they can be the next Mark Zuckerberg or Steve Jobs. The fact is that the overwhelming majority of these kinds of entrepreneurs will fail.

He says: “The entrepreneur myth is about innovation and disruption. But what does that boil down to in reality these days? Another consumer Internet play. Another app for your phone. Another social -media tool.”

Ask it another way: What do these companies all have in common?

Snapchat, Twitter, Zynga, Instagram, Zillow and Square?

Not one of them has been profitable, and yet they have burned through millions of investor cash.

Dan Lyons the author of “Disrupted: My Misadventure in the Startup Bubble“argues that the purpose of most of the startups today is to “grow fast, lose money, go public.” Zynga racked up annual losses totaling nearly $1 billion, and Twitter reported annual losses that add up to more than $1.5 billion, according to filings with the Securities and Exchange Commission. Does this make any sense? George Mosher, a very successful local angel investor and founder of a great company indicates we may be placing “too much emphasis disruptive products.”

Let’s take a serious look at our economy and where most jobs exist.

According to the U.S. Labor Department, 75% of all employees are working for family-owned businesses that have fewer than 20 employees. Sometimes they’re derisively called “mom-and-pop businesses.”

Mosher said, “We tend to forget that most of our money is spent for the same things people were buying 50 years ago, although in different amounts for different categories. Food, shelter, clothing, transportation and entertainment still represent the bulk of consumer spending.

He said, “We should be investing in people who just want to do a better job of satisfying consumer wants.”

So what can Milwaukee’s political and business leaders do to accelerate these kinds of businesses?

We need to have a battle plan focused on businesses that will keep our community vibrant such as barbershops, small restaurants, boutiques, small construction companies, tailor shops, small hardware stores and computer repair stores.

I call them “deer” as compared to “gazelles,” which refers to the potential highgrowth companies.

We do not have to reinvent the wheel. One of the most famous examples is what happened in the small town of Littleton, Colo, west of Denver.

After losing a large number of jobs because of the oil industry slowdown, it pursued a concept known as economic gardening.

This meant that the city fathers work with local resources to provide a wide range of help to any individual willing to explore starting a business. That model has now become famous as they were able to create thousands of new jobs.

Here are just a few ideas from the economic gardening model that could be tailored to our area:

Mayor Tom Barrett should appoint a new business czar for the City of Milwaukee and house that individual within the Department of City Development. That czar would be focused primarily on reaching out to the community to determine what the city can be doing to facilitate the starting of new companies. He or she would help identify resources to help entrepreneurs get started. If, for example, an entrepreneur wanted to start a coffee shop, then students of the business schools of our major universities could be tapped to supply market research for a given area.

Start mini “Shark Tanks” (call them walleye tanks because this is Wisconsin) in the distressed ZIP Codes of the city and invite local entrepreneurs to get feedback from smart savvy business leaders. BizStarts already is doing this with great success.

Create a grant fund that requires the entrepreneur to repay the funds lent if successful; if not, the grant is forgiven. Tom Shannon created Brightstars a 501(c) (3) that deploys capital to high-growth companies. There’s no reason a similar model could not be created for those smaller businesses that are the lifeblood of the American economy.

Ask industry leaders in the area, such as Home Depot, to partner with hardware stores to offer workshops for local contractors starting businesses. If those businesses succeed, the owners would be buying their products.

The city should reduce the number of regulations that control business creation. In New Zealand, it takes a half day to start a business. The United States is ranked 20th in the world, and it takes on average five to six days.

This community needs a task force to create a battle plan if it is going to break the lock that poverty has on this city, and we all need to think creatively about new solutions.