Illustration by Peter Hoey
Amid the recession’s doom-and-gloom news, Marcia Mellitz maintains an unexpectedly optimistic attitude: “Half of today’s Fortune 500 companies were started during a downturn in the market,” says the president and CEO of the Center for Emerging Technologies, a local business incubator. “Layoffs can spur new-company creation, because it’s very risky to start a new company, but if you’ve already been laid off from the secure job, you might be more willing to take a risk.”
Donn Rubin—executive director of the Coalition for Plant and Life Sciences, a group encouraging life-sciences business in St. Louis—concurs. “To some degree, these efforts are being helped by the recession,” he says. “People are being downsized from big corporations, and they go and start their own companies.”
Case in point: Confluence Life Sciences. After Pfizer closed its Chesterfield research office last year, a group of the unemployed scientists banded together to form Confluence. They found office space at BioGenerator Accelerator Labs, which opened October 13 in the Central West End. The 5,400-square-foot complex accommodates select researchers while they develop ideas from their earliest stages to viable, commercialized products.
At least one study supports the effort.
The Kauffman Foundation, a nonprofit based in Kansas City, released a report last year that found startups added an average of
3 million jobs in their first year, while older companies lost more than 1 million jobs annually from 1977 to 2005. And Fast Company recently made the case for St. Louis startups, citing the expanding tech community and the fact that Twitter’s Jack Dorsey is a St. Louis native.
Granted, funding—particularly for startups—isn’t easy to come by. Thomson Reuters and the National Venture Capital Association recently reported there’d been no new Missouri-based venture capital raised since fourth quarter 2008. Much of the funding that is available comes from out of town, though there are a few local angel groups. “We live in a state that frankly has not invested a lot in the development of entrepreneurial companies,” says Mellitz.
“There is a cultural aspect that we still run into on a frequent basis,” adds Rubin, “and that’s how St. Louis treats entrepreneurial failure. On the West Coast…we hear stories that when one fails, that’s just considered a valuable experience and they move on to their next project; someone will fail six or seven times before hitting it big. [Here], there’s a stigma attached to failure, and sometimes one doesn’t get a second chance.”
Saint Louis University economist Jack Strauss suggests investment and policy have followed the same logic. “St. Louis has been influenced by big business, and we haven’t helped the small businesses out,” he says. He uses the example of the proposed Midwest–China Hub. “First, it’s winner-take-all, and there are other cities competing. If we do get that, it’s going to benefit only certain companies that are going to export a lot to China,” he says. “It’s not going to help out the small entrepreneur.”
So what will help create jobs?
“It’s complicated to answer,” says Kathleen Osborn, the Regional Business Council’s executive director. The answer involves a mix of elements, she says: building infrastructure; creating supportive public policy; encouraging governments, businesses, and citizens to work together; emphasizing education…
“It isn’t always money you need to grow jobs,” she adds. “Many of the businesses that I work with did it the old-fashioned way: They put their minds to something, they had the skills, and they developed a very good business.”
