Upshifting

What will get Wisconsin out of last place in new business growth?

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When Zach Brandon asks people to think about the titans of Wisconsin’s economy, they usually rattle off names like Harley-Davidson, Kohler, SC Johnson, Johnson Controls, Miller, Leinenkugel, Kohl’s, Briggs & Stratton and Oshkosh Corporation.

“You go down this list and think about these companies, there’s a common thread — they’re either named after people or places,” says Brandon, president of the Greater Madison Chamber of Commerce. “That’s how you know that they grew this company from the ground up, you didn’t import it from somewhere else.”

But the list also reminds Brandon that times have changed. There’s no apparent wave of emerging companies in Wisconsin poised to be the titans of tomorrow.

As the Kauffman Foundation reported in May, for the third year in a row Wisconsin ranks last in the country in the number of companies that were formed — both among the 25 most populous states (which Wisconsin is among) and among all 50 states. The state’s rate for new entrepreneurs is .21 percent, meaning that for every 100,000 adults living here, 210 of them started businesses.

Minnesota, which has a slightly smaller population, saw 280 adults for every 100,000 start new businesses. And the national leader, California, had 420 new businesses for every 100,000 adults.

Nationally, the number of new startups has been growing for the past three years, although it remains lower than it was in the ‘80s, according to the Kauffman Foundation.

“A century ago, this was one of the dominant entrepreneurial states,” Brandon says. “What has changed?”

Brandon doesn’t pretend to have an answer and adds, “Anyone who tells you they know the answer, isn’t being honest with you.”

But he says it’s time the state made a concerted effort to figure out why it’s doing so poorly. He’s calling on the Legislature and Gov. Scott Walker to create a blue ribbon commission to investigate.

“Let’s put some smart people in a room from all over the state, and have them report back and say this is what’s broken, and here are some things we think would fix it,” he says.

The growth of new companies is important because they account for nearly all net job growth in the United States.

When the Kauffman report was released in May, Walker’s spokesperson, Tom Evenson, dismissed its significance, telling the Milwaukee Journal Sentinel, “Federal data shows that Wisconsin has one of the highest levels of business survivorship in the nation — we’re ranked in the top 10 for both six-year and 10-year survivorship rate.”

The chamber is in the early stages of championing its idea and is waiting for the Legislature to finish the budget before making a concerted lobbying effort in the Capitol. “It doesn’t require any financial outlay, so it doesn’t need to be in the budget,” Brandon says.

In the meantime, chamber officials are working on getting business groups around the state on board with the idea, which it hopes can be a bipartisan effort.

Troy Vosseller, co-founder and managing director of gener8tor Madison and Milwaukee, a startup accelerator, loves the idea. Vosseller hopes state government spearheads the effort, but adds: “I think we can do it without the state.”

He points to two business-led groups — Cincinnati’s Cintrifuse and Michigan’s Renaissance Venture Capital Fund — as ways that industry can take the lead.

Vosseller has some ideas for what could help startup companies here, including increasing venture capital funding and barring non-compete clauses, like California does.

Brandon says there’s likely to be many actions that can improve Wisconsin’s standing, but cautions getting fixated on any of them just yet.

“All too often, people run to the solution,” he says. “We certainly have ideas, but what we’re saying is let’s take a comprehensive, diversified approach and talk about why is it that we’re securely in a trend of being in last place?”

He adds, “We feel bullish about it because who is going to say this isn’t a problem?”