Evolution, Complexity, and the Third Way of Entrepreneurship: A Capstone Conversation with Victor Hwang

This print conversation accompanies a This View of Life Podcast episode. Listen: Spotify - Google - Apple - Stitcher

This series of conversations is centered on entrepreneurship but also applies to all forms of positive social change. The scope has been panoramic: The history of pragmatism in America, governance at the national scale, economics and public policy across the political spectrum, the smart cities movement, development efforts, the Nordic model, systems engineering, and even world history stretching back to our origin as a species.

In every case, the broad conclusion has been that positive change requires neither laissez-faire nor centralized planning, but the wise management of all three ingredients of an evolutionary process—the target of selection, variation oriented around the target, and the identification and replication of best practices—at the scale of whole systems. Since this is the only thing that can work, it is the only thing that ever has worked.

In concluding the series, it is only fitting to return to the core topic of entrepreneurship and for Victor Hwang to be our guide. I first encountered Victor through his book with Greg Horowitt The Rainforest: The Secret of Building the Next Silicon Valley, published in 2012.  I discovered that they were fellow travelers who had absorbed the importance of evolutionary and complex systems science on their own. When Victor became Vice President of Entrepreneurship at the Ewing Marion Kauffmann Foundation in 2016, he added the capacity of a major private foundation to his own extensive experience as an entrepreneurial ecosystem consultant. Upon going back into private practice in 2020, he wrote:

A few years ago, people would talk about supporting entrepreneurs as if they were disconnected individuals…helping one entrepreneur at a time or maybe a group of entrepreneurs at a time. Today, when people talk about helping entrepreneurs across the entire country, they talk about ‘How do you help them thrive in these connected ecosystems? How do you help surround them with the right access to the relationships and resources they need?

In other words, entrepreneurship needs to follow the Third Way and Victor has played a prominent role in making that happen.

David Sloan Wilson: Greetings, Victor! We’ve been down quite a long road together. In the spirit of full disclosure, I received the Kauffman Foundation grant that has funded this series of conversations while you were VP, although I worked primarily with Sameeksha (Samee) Desai, Director of Knowledge Creation and Research. Please introduce yourself to our audience, realizing that only some will already know about you. How did you acquire your evolutionary and ecosystem perspective and how did you apply it to entrepreneurship prior to joining the Kauffman Foundation? We will cover what you have accomplished at Kauffman later in the conversation.

Victor Hwang: David, it’s so great to talk with you.  Yes, we’ve been down a long road together!  As you remember, we first got connected over the ideas of social scientist Elinor Ostrom.¹ You did groundbreaking work with her at the intersection of economic and biological systems. And I’m forever grateful you were kind enough to invite me to an inspiring workshop on Science and Narrative back in 2012, which was powerful in shaping my thinking.

My work has taken many incarnations over the years – entrepreneur, investor, economic development, consulting, nonprofits, corporate lawyer, politics, and more recently working in philanthropy.  For lack of a better description, I now call myself an economic growth expert, but at heart, I’m just an entrepreneur who tackles hard questions.

I was first introduced to evolutionary biology by Edward O. Wilson, my college professor at Harvard who started explaining the connection between biology and the social sciences back in the 1970s. He blew my mind. I got him to autograph my copy of On Human Nature in 1990. He inspired me to think about how branches of knowledge fit together, that human beings are fundamentally biological creatures.

DSW: Ed Wilson has also played a large role in my life. He sponsored my first article on group selection in the Proceedings of the National Academy of Sciences in 1975,² the same year that his epic book Sociobiology: The New Synthesis was published. Then I was honored to work with him on our co-authored 2007 article titled “Rethinking the Theoretical Foundation of Sociobiology."³

VH:  It’s fascinating that the paradigm shift we’re seeing now had its intellectual roots many decades ago. It’s clear that, despite so many things in the world changing faster, big ideas still take time to percolate. Things happen slowly – then suddenly – as they say.

As my career progressed, and I got more involved in entrepreneurial businesses and economic development, I realized that our society’s fundamental assumptions about the economy are simply wrong, or at least dangerously incomplete.  The economy is neither a mechanically planned system, nor is it just randomness. But those are the two public policy choices we are usually given.

In reality, the economy is, as you say, a Third Way – it’s a complex system, like a natural rainforest.  A natural rainforest thrives because the interactions of the plants and animals create a rich, sustainable biodiversity.  Human systems are similar – the ways in which people interact affects the flow of our basic resources of talent, ideas, and capital.  In short, culture drives entrepreneurial innovation drives economic prosperity.  So culture creates wealth.  That’s a radical thing to say to most economists and policymakers, but it makes sense to most people who’ve ever tried to create direct economic value in the world.

After working in Silicon Valley growing and investing in startup companies for several years, and realizing how the Valley functioned as a system, I co-wrote a book about it called The Rainforest.  It is shocking to me that Silicon Valley is the world’s greatest economic engine of the past half-century, but it is a phenomenon that economists still can’t explain.  That’s a huge failure by economists that doesn’t get called out enough.  I felt it was necessary for someone to explain the underlying mechanisms of entrepreneurial innovation in the Valley as a structured model and relate it to economic growth in general.

But ideas don’t go anywhere on their own. You have to connect, communicate, persuade, and convert ideas into policies and practices.  So I started advocating for the idea that we can grow economies by cultivating “rainforests” in human ecosystems, and that by doing so we create more sustainable, broadly shared prosperity for everyone. I started writing a lot, speaking publicly, starting conferences, and sharing these ideas anywhere I could.

One analogy I think about is the ancient story of David and Goliath. Economic development is dominated by the “Goliath approach.” Communities, say, try to import growth by recruiting a big corporation, or try to subsidize results by investing directly into select companies.  But there’s a better way – communities can build with what they already have, from the bottom up.  A lone David is weak compared to a Goliath.  But one thousand Davids are more powerful than any Goliath. So we want to help communities activate their own army of Davids – their creators, innovators, entrepreneurs, makers, and starters across all segments of society. The evidence keeps mounting that the “one thousand Davids” approach works.  Entrepreneurial innovation is critical to human thriving, and economies can be intentionally built to nourish that.

DSW: This is inspiring and we will return to it, but I’d like to spend some time with you on ecosystems and rainforests (which are exceptionally diverse ecosystems) as metaphors for entrepreneurial communities. The idea that nature left to itself achieves some kind of harmonious balance is actually quite problematic from a scientific perspective. It is even similar to the metaphor of the invisible hand in economics, which falsely assumes that the pursuit of self-interest, left to itself, benefits the common good. In reality, many single-species animal societies and multi-species ecosystems are nothing like what we would want for ourselves.^4,5 Here is a passage from Michael Lewis’s book Flash Boys: A Wall Street Revolt, which describes Wall Street in the view of one of the protagonists named Don.⁶

Don wasn’t shocked or even all that disturbed by what had happened, or, if he was, he disguised his feelings. The facts of Wall Street life were inherently brutal, in his view. There was nothing he couldn’t imagine someone on Wall Street doing. He was fully aware that the high-frequency traders were preying on investors, and that the exchanges and brokers were being paid to help them to do it. He refused to feel morally outraged or self-righteous about any of it. “I would ask the question, ‘On the savannah, are the hyenas and the vultures the bad guys?’ “ he said.   “We have a boom in carcasses on the savannah.  So what? It’s not their fault. The opportunity is there.”  To Don’s way of thinking, you were never going to change human nature—though you might alter the environment in which it expressed itself.

So, here is an invocation of the ecosystem metaphor that is very different from your own. It’s not as if all biological ecosystems are this bleak. Consider our microbiomes, for example. Each one of us serves as a planet for a microbial ecosystem consisting of thousands of species and trillions of individuals. Not only are these ecosystems usually benign to their hosts, but they have been coevolving with the genes of their hosts for hundreds of millions of years, all the way back to the origin of multicellular organisms.⁷ In fact, when you consider that nucleated cells originated as miniature ecosystems of bacterial cells (the symbiotic cell theory of Lynn Margulis),⁸ then we can push the idea of mutualistic ecosystems back even further. Nevertheless, for ecosystems to evolve in a mutualistic direction, as opposed to a brutal exploitative direction, special conditions are required. Specifically, the ecosystem must be a unit of selection and disruptive selection within the ecosystem must be suppressed. This extends the thesis of the Third Way into the biological realm in a way that remains highly relevant to human affairs, such as microbiome research and practical applications.

Returning to our topic of entrepreneurship, all human communities are cultural ecosystems of agents that interact with each other. Some are dominated by Goliaths. Others are inhabited only by Davids, but even these can work well or poorly at the community level, depending upon how their interactions are structured. I’m aware that all metaphors are partial. When I say “My love is a rose”, I don’t mean that she is green and thorny. So, what attributes are you trying to highlight with your own metaphorical invocation of ecosystems and rainforests?

VH:  You raise several crucial points. Many people interpret the invisible hand concept as saying, we should just take our hands off the steering wheel like there’s nothing we should do.  I don’t agree with that. Humans aren’t designed to accept the world as is, so to just say “whatever” is denying what makes us thrive as a species. More than any other creature on Earth, we have the capacity to envision a better future and make it a reality. We are askers of the question, “What kind of world do we want?” And perhaps even more importantly, we can ask the follow-up question, “How do we build that?”

That gets to your point about mutualism. Culture can be either mutualistic or predatory – that's our choice as a society. Any business person will tell you that culture is critical to business. But the particular culture varies greatly in different business contexts. For instance, entrepreneurial innovation thrives in a very different culture from Wall Street. Unlike Wall Street – which is largely a predatory zero-sum or negative-sum game – entrepreneurial innovation requires independent players to engage in a mutualistic positive-sum game. I’m not talking about the media stereotypes of Silicon Valley in its twisted, corporate aspects. When companies get large they act differently as institutions. Instead, I think about the countless invisible acts of innovation happening every day as individuals solve problems together, build teams, and grow products and services the world needs.  The new neighborhood restaurant. The Kickstarter project launched by your friends. The kids selling lemonade on the corner. We may not see those headlines, but every day there are millions of silent moonshots happening around the world as people organize in the ambitious act of creation.

So, we can design our ecosystems by choice. Life doesn’t have to be nasty, brutish, and short, as reflected in your quote about Wall Street. We also don’t need to wait for millennia to get lucky, as Nature does in evolving a natural rainforest. Instead, we can look at what works well in Nature and intentionally apply those principles to make our lives better.  We can choose to create societies that prioritize what we consider good.

For example, we know that the most vibrant ecosystems in Nature maintain a robust flow of energy. We also know that, to maintain that high flow of energy, biotic factors (the interactions of flora and fauna) are as important as, if not more important than, abiotic factors (like sunlight, water, nutrients). So what are the equivalents in human ecosystems? And what are the factors that facilitate faster flows of our human energies?

I’d argue that human ecosystems have equivalents of biotic and abiotic factors.  Our abiotic factors – ideas, talent, capital, and physical assets – are the raw resources we use to create things.  They’re akin to what economists call the factors of production.  Our biotic factor is culture – that is, patterns of human behavior where we take those resources and combine them to make better things.  Culture affects how efficiently people organize together to direct the flows of those energies.  And we shape culture all the time.

DSW: I agree! And Nina Witoszek makes the same point in my conversation with her and Atle Midttun on the Nordic model. Culture is a crucial overlooked factor in economics and political science. While we’re on the topic of metaphors, let’s touch upon some others that are commonly used to describe human communities, economic and otherwise: Machine, Garden, and Superorganism. The machine metaphor is usually invoked negatively, as something that we don’t want to emulate. At the beginning of this conversation, you said that an economy is “not a mechanically planned system” and some of my previous conversation partners in this series have objected to my use of the word “manage” in describing the Third Way as too mechanical and controlling. The garden metaphor is usually invoked positively. I prefer it over the ecosystem metaphor because with a garden it is obvious that you must do something to prevent it from being overtaken by weeds. As someone who keeps a garden, I know how much work is required to plan and maintain it! But isn’t that a form of management? What is the important difference between the garden metaphor and the machine metaphor? Also, the garden metaphor includes a big power asymmetry between the gardener and the garden, which goes against the spirit of co-production (many Davids) that we are reaching for.

Finally, the metaphor of society as a superorganism has a venerable history, stretching back to Hobbes and Aristotle and embodied by words and phrases such as “corporation” and “body politic”. It too is loaded with positive and negative meanings. It’s great to be part of something larger than oneself but nobody wants to be mindless and expendable, like a skin cell or a worker ant. What are your thoughts about these metaphors?

VH: To be honest, metaphors like “manage” and “garden” don't work for me. Those are words of control, uniformity, and predictability – where you know exactly the outcome you want to achieve in advance.  I prefer words like “design” or “architect” or “curate” or “guide.” Those words evoke the middle ground between control and chaos, between management and randomness, while allowing space for the organic creative process.

Let me explain further. There’s a great talk by the urban designer James Corner, who led the design of New York’s High Line elevated sidewalk. He talks about how – when they design projects like the High Line or Chicago’s Navy Pier -- they apply the metaphor of a lattice for growing plants.  With a lattice, you create a structure that allows plants to grow in a favorable way, but you don’t dictate exactly how plants will do so. That’s how architects and urban designers think about people. They create physical structures – like skyscrapers and city blocks – that shape the behavior of people moving within them. But they don’t tell people what to do.  Instead, they leave room for people to naturally seek serendipity and innovation and change.  That’s also similar to what product designers do when they create physical objects. Think about the interface on an iPhone or the driver’s console in a car. They don't tell you where to go or who to call, but they are tools that empower you to achieve the ends you want. Architects and designers don’t design things from an abstract distance. They have to get dirt under their fingernails and closely observe what makes people tick, what their unspoken needs are, how they might respond to something new.  When you hear the phrase “human-centered design,” that’s what they mean.

The notion of “design” has been applied formally to products, buildings, and cities. What we haven’t done – at least not much yet – is to apply design principles to human ecosystems, such as creating new enterprises or growing entire economies. There is a fascinating talk by Stanford researcher Ade Mabogunje at PARC about what that could look like. He examines what makes people cooperate effectively in creative processes. There are distinct patterns of behavior that emerge at the smallest level of observation – that is, people simply sitting around a table talking about how to solve a problem together. Think about entrepreneurs sitting in a coffee shop and making sketches on a napkin. One of those meetings became Tesla, or the dialysis filter saving your life, or the souvenir on your bookshelf. That process of creation is the fractal equation hiding at the heart of what makes the human race special, and we’re just starting to crack that nut. As of now, we know more about the surface of Mars than the process of human innovation. We need to change that.

DSW: That’s very helpful and close to what I and my colleagues are trying to accomplish with ProSocial World. Now it’s time to go beyond metaphors! The thesis of the Third Way is not metaphorical but is meant to be taken literally as a scientific hypothesis. For human society to function for the benefit of all, it must be selected with that goal explicitly in mind and this requires attending (note my avoidance of the word manage!) to all three ingredients of an evolutionary process: selection, variation, and replication. Please comment on the basic thesis of the Third Way for the topic of entrepreneurship. Knowing your thinking as well as I do, I suspect that you will agree with it, but would you like to amend it in any way?

VH: When it comes to our economic and governance systems, the public is typically offered a false choice. One choice says society does best when leaders do nothing and simply get out of the way. The other says we must plan and control exactly the results we want. Both are authoritarian models that stifle individual creativity, community growth, entrepreneurial innovation, and human flourishing.

The latter choice – centralized planning – has failed many times in history and caused hundreds of millions of people to suffer or die. My mother was a refugee from Communist China in 1949, and she lost extended family members to that regime. It’s disappointing how the lessons from failures of the Soviet Union and China of the last century have been so quickly forgotten by newer generations.

The former choice – laissez-faire – becomes de facto authoritarianism over time. Left on their own, complex systems can lead to aggregation. The big get bigger, the rich get richer, things get more rigid and hierarchical. The economic result we see is rising inequality, increasing concentration of power, decreasing mobility, and falling dynamism. Our economic system today has defaulted to corporatism – a political system driven by the interests of our largest companies. What’s best for the S&P 500 is best for America.

So, this Third Way initiative is important. It shows that our society isn’t stuck with a binary choice between two forms of authoritarianism. There is an alternative path to achieve the good life.

DSW: Wonderful! I couldn’t put it better myself and my conversation with Geoff Hodgson adds detail to what you said about nations that are excessively socialist and capitalist.  Now let’s unpack the elements of the thesis in turn: The problems associated with laissez-faire, the problems associated with centralized planning, and a managed process of cultural evolution as the only thing that can and ever has worked. In your statement that I quoted above, you imply that entrepreneurship often suffers from being too laissez-faire. Please elaborate.

VH: In a way, laissez-faire is an illusion. We are always making choices, whether consciously or not, and those choices shape the way markets function. Because of this illusion of laissez-faire, entrepreneurship suffers from neglect.

One way to think of it is through the metaphor of sports.  Businesses are like the teams on the field, competing against each other to the best of their abilities.  Entrepreneurs are people who create better ways to organize their teams, so the sport improves. The economy is like a sports league, such as the NFL or the NBA, that sets the rules of the game. But what happens in a sport where there is no league?  It would be chaos, the teams would constantly fight about the rules, scheduling would be a mess, and the fans would be dissatisfied. You need leagues to make fair rules and support the health of the sport. That’s why independent teams joined up to create leagues in the first place.

DSW: Right! I often use the sports league metaphor myself to emphasize how competition can be a benign force, as long as it if highly refereed with certain outcomes in mind.

VH: We face a problem today in that our economy is like a sports league where pronouncements are made from on-high, but is increasingly detached from the real needs of the players. In sports, the league must care about how well the players play.  But in our economy, it’s the rare policymaker who dives below the level of ideological abstraction to address the practical needs faced by entrepreneurs, the players trying to create value and improve things on a day-to-day basis. Our economy is the equivalent of a dysfunctional sports league that believes whatever is good for the Yankees is good for the entire sport. You can’t create a healthy sport without thinking about the players, not just its biggest teams.

The result is an economic system tilted in favor of large, incumbent corporations. Anyone who starts a business will tell you how hard it is. It’s already challenging enough to start something new.  It’s even harder when the system is tilted against you. 66% of entrepreneurs say the system favors large corporations over them, based on a survey at the Kauffman Foundation.

We do better by empowering the value creators. As Ade Mabogunje says, “Humans didn’t create the sun, Earth, moon, and stars. But everything else is manmade and was designed by humans.” If we can design institutions as intricate as sports leagues, we can design economies to better empower entrepreneurs.

DSW: I agree and would go even further. The unfair advantage of large corporations is only part of the problem. Even if this problem was solved, more “rules of the game” would be needed for the creative talents of entrepreneurs to become oriented toward the common good. Does entrepreneurship also sometimes suffer from excessive centralized planning?

VH: It’s ironic – entrepreneurship tends to get either overly neglected or overly planned. Governments mostly ignore their entrepreneurs, but when they do try to help entrepreneurs, they often take an overly-planned approach that usually fails.

What do I mean? Governments can and do invest billions into building institutions, capital funds, and programs to help entrepreneurs. But these programs are usually forced to generate linear results – they have to measure success by counting the number of entrepreneurs they’ve helped. That is like turning a manual hand crank when we should be building a flywheel. Would we consider an elementary school successful by the number of students enrolled? That sounds ridiculous, but it’s the equivalent of most governmental approaches to entrepreneur support programs. Counting butts in seats, as some put it. There simply isn’t enough money and expertise available to create enough quality programs to “seat the butt” of every potential entrepreneur. People aren’t like crops you can farm.

DSW: Allow me to reinforce the crucial point you have just made. A managed process of cultural evolution requires the measurement of best practices so that they can be replicated. But if proxies are measured that do not correspond to best practices, then nothing but dysfunction can result. Examples could be listed without end, starting with the stock market and economic indicators. Please continue.

VH: So what’s the alternative? We have to think of Entrepreneurship as more than just a narrow business issue. Instead, it cuts across multiple aspects of society.  It’s a function of taxes, regulations, capital access, banking, intellectual property law, healthcare systems, primary and secondary education, higher education, community colleges, student debt, economic development, financial markets, labor laws, workforce training, community development, social networks, structural biases, and culture, just to name a few. Entrepreneurial opportunity is the sum of all those parts.

Ultimately, entrepreneurship thrives when people are able to connect and collaborate, with fewer barriers, to solve problems faster and more effectively. That requires thinking about entrepreneurship like an ecosystem. Looking at policies through an ecosystem lens changes perspectives. For example, let’s tackle the issue of workforce training. How can $34 billion in workforce training spent by federal, state, and local governments be shifted away from merely teaching people skills to take jobs in large corporations (which is what happens now) versus creating their own jobs as entrepreneurs? That’s just one possibility.

Similar entrepreneur-centric questions could be asked across other policy domains too. Another example is capital access, where changes in the economy and financial industry have left over 83% of entrepreneurs without services from what we might call the institutional capital markets. But the national policy debate about banking reform never touches the impact on the impact on millions of people trying to start businesses who have such a hard time finding the right capital services. The consequences are invisible but colossal – lost jobs, lost wealth, lost products and services for the rest of us. We can’t think of entrepreneurship as a siloed issue. It should be a lens that frames our entire notion of what an economy is intended to achieve, one that asks, “How do we design an economy that empowers all of us to solve problems and make things better?”

DSW: Again, I agree and would go even further. One point you are stressing is the need to involve everyone creatively in the process. The people who are supposed to be the beneficiaries of the system need to co-create the system. But when you say that they should be assisted in creating their own jobs as entrepreneurs, this doesn’t go far enough for me. How would that address the multiple aspects of society that you listed two paragraphs above? The Third Way requires both a strong bottom-up and top-down component, in which the top-down component is not centralized planning but rather an infrastructure that manages the cultural evolutionary process.

In my Vision Statement for this series, I describe some enlightened corporate practices as models that need to be emulated more widely. In the legendary example of Toyota, assembly-line workers are essential partners in identifying problems and brainstorming solutions with the help of management. Candidate solutions are implemented experimentally and their consequences for the whole system are assessed before they are adopted. Thanks to this combination of bottom-up and the right kind of top-down, the assembly plant is capable of the continuous improvement for which Toyota is famous. The point I make in my vision statement is that while there is much less control over an entrepreneurial ecosystem than an automobile assembly plant, the problem is not different in kind. We must combine the bottom-up vibrancy of empowering everyone to become entrepreneurs with the top-down infrastructure that enables us to assess and promote their creative ideas on the basis of whole-system consequences.

Let’s focus on success stories with these considerations in mind, starting with your perceptive analysis of Silicon Valley and other innovation “oases”. To set the stage in cultural evolutionary terms, it is a remarkable fact that nearly every polity, from cities to nations, wants to be a vibrant innovation zone but very few actually succeed. The most famous examples, such as Silicon Valley and Israel as an “innovation nation” seem to arise spontaneously and to work without anyone knowing how or why they work—until someone like you comes along to explain it.

VH:  Silicon Valley and Israel get plenty of attention. But most people don’t realize that Israel’s venture capital industry – which provides the financial rocket fuel for its tech startups – was catalyzed by public intervention almost three decades ago. The Yosma Fund was the critical anchor investor in almost all of Israel’s major venture capital funds, and it was designed specifically to grow the capital ecosystem by focusing on the gaps faced by investors and entrepreneurs. And many great companies birthed from Silicon Valley benefited from early-stage risk capital invested by the federal government through the SBIR and STTR programs, which are focused on proof-of-concept and prototyping for innovative technologies.

DSW: Great! There is your combination of bottom-up and the right kind of top-down.

VH: The key is that those programs were truly “designed” in the purest sense of the word. The SBIR and STTR programs were established as phases that match the human creative process. That was not an accident, as the people who created it were highly attuned to ecosystem thinking, which at that time was manifested in ideas from thinkers like W. Edwards Deming. They knew that policy could be structured like a lattice – allowing creativity to flourish, without prescribing its specific outcomes – but that also provided clear transitions to the wilderness of the unsubsidized private sector that are necessary for scaling products and services to the world.

If you look at smaller scale impact, there are other examples of entrepreneurship transforming mid-sized cities. For example, places like Cedar Rapids and Chattanooga put entrepreneurship as a top economic priority to revive their communities. Those cities have been revitalized with entrepreneurs of all types leading the way – however, I’m sure the pandemic is having a terrible negative impact. You can find similar energy in Austin, Kansas City, Boulder/Denver, Portland, Miami, Tulsa, and many other places.

There are even small towns that have been transformed. I visited the rural town of Columbus Junction, Iowa a few years ago – population 1,900 – where immigrants have started more new restaurants per capita than there are in San Francisco. They attract food tourists from an hour-and-a-half away. The Burmese and Latin food I ate in Columbus Junction blew my taste buds off!

DSW: Awesome! I’d like to finish our conversation by having you describe the two most recent phases of your career; your stint as Vice President of Entrepreneurship at the Kaufmann Foundation and your new advocacy campaign that you call Right to Start. What did you hope to accomplish at Kauffman and what made you want to move on?

VH: I left Silicon Valley and came to Kansas City to lead the Kauffman Foundation’s work in entrepreneurship. It was the reverse of the pioneer trail in the 1800s – in fact, the old California Trail passes a couple of blocks from my home today. In many ways, I think the economy is making its own “reverse trail” today. It was becoming clear to me that the needs of our economy were shifting – from hyper-growth for a lucky few, to entrepreneurial opportunity for all – and that the lessons of what I saw in Silicon Valley had much wider applicability. And that a major philanthropy like Kauffman had a profound role to play in guiding that shift. So in my four years there, we drove several things. Among them, we introduced the concept of ecosystem-building to over 200 communities and 1,200 champions and helped them implement programs and policies through tools, learnings, peer networks, metrics, and data. We helped birth the creation of a new financial class of investment funds – over 100 so far – by organizing, tracking, and investing early capital in revenue-based and profit-sharing models that fill the vast market gaps left behind by venture capital and banking. We launched the most comprehensive and detailed policy roadmap ever developed for federal, state, and local officials, called America’s New Business Plan, and those ideas are now appearing in many official policy positions and economic plans. We also co-founded a network of over 60 philanthropic funders to amplify their work supporting entrepreneurs, called the Entrepreneurship Funders Network. We built an amazing team at Kauffman, and I’m proud of what we accomplished. But I’m fundamentally an entrepreneur at heart and am always seeking to tackle the next hardest problem. That’s what led me to found my next effort, Right to Start.

DSW: What are your aspirations with Right to Start?

VH: There’s a hole in the American discourse where hope should be. The headlines of our nation are highly polarized. But we don’t see much forward-thinking about how we tackle the economic future that’s coming at us fast. One big thing missing is the issue of entrepreneurial opportunity. If you polled Americans on the issues that matter most, I bet entrepreneurship wouldn’t appear in the top thirty. Meanwhile, we know that new enterprises create almost all job growth, lead to almost all productivity, correlate with higher lifetime incomes and community-wide wealth, and are a leading indicator of GDP. But the trendlines are terrible – entrepreneurship is half what it was about four decades ago, economic dynamism is at an all-time low, wages have been stagnant for decades, and mobility is way down. I’ve seen communities dying, but for their entrepreneurs bringing things back to life.  Entrepreneurial opportunity should be at the top of the American agenda, but it’s not yet even a faint blip on the radar. I’ve written a manifesto about these points called We Are All Starters, including research citations, and it’s available under Creative Commons for free download.

Right to Start is an advocacy campaign to provide entrepreneurial opportunity for everyone, regardless of race, place, gender, background, heredity, or circumstance. That means we have to mobilize and organize a groundswell of Americans to help build grassroots activism, improve policymaking, and transform communities. Other issues already have advocacy infrastructure in place – like the NRA for gun rights or the ACLU for civil liberties. Right to Start is building a similar type of advocacy infrastructure for everyone’s right to be entrepreneurial, in whatever form that might take.

We believe entrepreneurial opportunity is a fundamental right, just like our better-recognized rights to speech, worship, and assembly. Human beings are natural creators, inventors, makers, starters. That’s what sets us apart from other animals. The entrepreneurial instinct is an innately human trait but has simply not been articulated as a political right before. I view this issue as the next step in the Rainforest work, where we translate complex systems frameworks into everyday language that public leaders and everyday citizens can understand and act on. People may not understand complexity, but they do understand their rights. Entrepreneurial opportunity has been neglected, taken for granted, and it’s withered in our economy. It’s time to be intentional about lifting it up again. That’s the spirit behind Right to Start.

DSW: Thanks for providing the capstone conversation for the Third Way series. Isn’t it amazing that Ed Wilson, who mentored us in our youth, is still alive and active? I would like to think that he is proud of us both and will be sure to bring our conversation to his attention.

VH:  Professor Wilson graciously accepted my invitation to be interviewed a couple of years ago on how biological ecosystem concepts could be applied to economics and business. A piece of that interview was recently published. He also invited me to join his research team for lunch afterward, which was a huge honor for me.  

Thank you for inviting me to this conversation, David, and more importantly for our decade-long collaboration so far.  I am greatly inspired by your intrepid work in translating these hugely important scientific concepts for a broader audience.  I was just reading about how the germ-theory of medicine took two centuries to be accepted by medical practitioners.  Think of the lives lost because of that.  We can’t wait that long for our work to succeed.  It’s too important and touches too many people.

DSW: Fortunately, there is such a thing as catalysis, which can take place for cultural in addition to chemical change. Here’s to positive cultural evolution taking place much faster in the future than in the past!

References:

[1] Wilson, D. S., Ostrom, E., & Cox, M. E. (2013). Generalizing the core design principles for the efficacy of groups. Journal of Economic Behavior & Organization, 90, S21–S32. https://doi.org/10.1016/j.jebo.2012.12.010

[2] Wilson, D. S. (1975). A general theory of group selection. Proc. Natl. Acad. Sci., 72, 143–146.

[3] Wilson, D. S., & Wilson, E. O. (2007). Rethinking the theoretical foundation of sociobiology. Quarterly Review of Biology, 82, 327–348.

[4] For more on primate societies, listen to my podcast with the primatologist and behavioral evolutionary ecologist Joan Silk.

[5] For more on the nature of ecosystems, listen to my podcast with the ecosystem ecology Thomas Whitham.

[6] See my online essay titled “Fighting Wall Street Predators with Game Theory for more: https://evonomics.com/fighting-wall-street-predators-with-game-theory/

[7] Yong, E. (2006). I contain multitudes : the microbes within us and a grander view of life. Ecco

[8] Margulis, L. (1970). Origin of Eukaryotic cells. New Haven: Yale University Press.