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Stop Blaming Lean Startups for Unemployment

Creating jobs isn’t the primary function of innovative technology companies.
October 12, 2012

Politicians love tech startups, but not because of an innate curiosity or even a passion for innovation. No, they mostly love them for the jobs they create. All that rhetoric about small businesses and jobs? It’s really a small number of high-growth startups that end up doing the hiring.

And so you can imagine some heads turning in Washington at the New York Times’ headline last week “When Job Creation Engines Stop at Just One.“ The topic? Lean startups. Here’s the gist:

For more than a decade, start-ups have been getting leaner and meaner … The lean model bodes well for companies like Leap2 that hope to become power players with much less manpower … But the implications for the American work force are worrisome, and may help explain why economic output is growing much faster than employers are adding jobs.

It’s a good article, and author Catherine Rampell touches on a number of relevant points. But despite all that, I fear some readers might come away from it thinking the social value of startups is based purely on the jobs they create. It’s not. At best, that’s a small part.

In an era of prolonged unemployment, jobs are understandably on the minds of politicians and the public alike. But all the arguing over which policies, industries, and companies do or don’t create jobs misses the primary function of innovative technology companies: to create new, useful products that make us better off.

The primary reason to invent an airplane isn’t to hire pilots; it’s to enable humans to travel and ship farther and faster. If a startup can build a useful product with less labor, that is generally a good thing. This premise is particularly relevant to the software space, where in some cases a handful of developers can create an application that improves the lives of millions of users.

The basic lesson of the lean startup movement—that we can do more faster and with less—is actually more relevant than ever in our current economic climate.

None of that is to say we shouldn’t care about jobs; we should. It’s a legitimate goal of public policy to ensure that an adequate number of jobs exist, that citizens have the skills to get them, and that they’re reasonably protected if they’re let go.

But the last thing we need is a culture that blames software startups for not employing huge swaths of people. Blame the politicians if you want, but don’t blame lean startups.