The two faces of necessity-based entrepreneurship

When companies like Uber move into an area, some people there are less likely to start businesses of their own. The falloff may reflect a decline in “necessity-based entrepreneurship” by unemployed or underemployed people. If they have no job opportunities, “they’re more likely to act on what’s potentially a lower-quality startup idea” that doesn’t get much support on Kickstarter.

Tech companies laid off at least 160,000 workers in 2022, according to?Layoffs.fyi, a site that tracks job losses in the industry. The cutting has continued into 2023, with more than 100,000 additional people losing their jobs. In the blink of an eye, the largest and most lucrative tech companies known for high salaries and lavish perks seem like a riskier choice. Kirk is among a cohort of workers trying something new—instead of seeking other positions inside giant companies whose hiring sprees have flipped to a payroll purge, they’re opting to become their own bosses. For many, healthy severance payments provide ample cover to work up their own ideas. And the layoffs give them space to finally work on a passion project.

Columbia Business School professor Angela Lee told Entrepreneur that the reason could be the "unprecedented number of layoffs from big tech companies in the last several years, resulting in a large pool of talent freed up to pursue entrepreneurship."

The pandemic was supposed to be an extinction-level event for entrepreneurs. It ended up being a boom time, according to a new report from the Economic Innovation Group. The think tank found that the U.S. now has 7% more physical business locations than it did before the start of the pandemic, with 74% of counties adding business establishments over the two years through September 2021. That growth was powered by government subsidies and stimulus payments, which gave entrepreneurs the cash they needed to launch new ventures and expand operations.

Latin American immigrants are starting businesses at more than twice the rate of the U.S. population as a whole.?

The jump in Latino entrepreneurship has driven up the overall share of new businesses owned by immigrants, who accounted for 36% of launches last year compared with 25% in 2019, according to a new analysis of Census Bureau data. New-business creation by white and native-born Americans has slowed in the past two years, following a broad surge early in the pandemic.???

About half of Uber drivers have college degrees. What is the lost entrepreneurial cost?

More and more doctors are getting interested in entrepreneurship i.e. the pursuit of opportunity under conditions of uncertainty with the goal of creating user defined value through the deployment of innovation using a VAST business model .Some are doing it because they think they have to given threats to their incomes, change fatigue and fear. While those factors can be strong entrepreneurial motivators, there are also pitfalls:

1. Getting involved without a clear understanding of the entrepreneurial knowledge, skills, abilities and competencies required to add value.
2. Making decisions based on reflexive emotions instead of reflective decision making
3. Taking short cuts
4. Undervaluing your worth to get a side gig
5. Participating in ventures that have a low chance of success
6. Quitting your day job before you should
7. Putting too many eggs in one basket
8. Over promising and under delivering
9. Making bad investment decisions
10. Making burnout worse by losing even more control

While there are encouraging signs of reimbursement falling in step with the move towards a more value-based healthcare?system, what is needed now to?further encourage healthcare innovators is to properly rationalize approval processes imposed by the FDA and CMS.

Like Janus, necessity-based entrepreneurship has two faces. While it is said that necessity is the mother of invention, it leaves many ideas, inventions and discoveries as orphans as well.

A nationwide drop off in telemedicine visits is forcing providers who raced to ramp up virtual care in the face of the pandemic to quickly recalibrate their offerings as more patients turn back to in-person appointments.

Telemedicine visits accounted for just 21% of total encounters by the middle of July, down from 69% at the early peak of the public health crisis in April, according to?national data from Epic, the electronic health record company.

Which face you show should be something that is by design, not by necessity. So here’s to financial stress and deadline pressure, even if few of us can be Marx or Dickens. To paraphrase Tiny Tim, God bless ‘em, every one.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack