Inventive Billion Dollar Firms: A Faster Way to Grow

Abstract

One of the questions or challenges we constantly wrestle with at Kauffman is “how could annual U.S. economic growth be increased by one additional percentage point?” It is not an idle question. If, for example, the economy grew at 4 percent annually rather than 3 percent, GDP would double six years faster (eighteen years versus twenty-four years). Given the magic of compounding, this extra one percent would cumulate over a century to produce roughly three times the level of GDP than would otherwise exist.Such a world would be a far more comfortable one than many of us may be able to imagine. It would mean a dramatically lower level of poverty, while the average American would have a living standard that is three times as comfortable as one that he or she would otherwise enjoy (imagine today, for example, the average family income being roughly $135,000 rather than its current level of about $45,000). A richer society also would have more resources to address the public challenges - upgrading our infrastructure, doing more to clean the environment, and so on - that would make life in America even more comfortable for all our citizens.America’s great challenge is to scale the successful ecosystems and to create others to bring about a substantial increase in the numbers of highly successful new companies (whether or not they reach a billion dollars in sales). Nothing less than the future welfare of America and its citizens is at stake.