“Competition Keeps Us All Sharp”: Q&A with Craig Hall

Patricia O’Connell

Lifelong entrepreneur Craig Hall, author of Boom: Bridging the Opportunity Gap to Reignite Startups, talks about the challenges facing aspiring entrepreneurs. He points to lack of access to capital, student loan debt, and over-regulation as some of the obstacles startups face.

According to a study from the World Bank, it’s easier to start a business in Russia than it is in the U.S. This surprises and troubles lifelong entrepreneur Craig Hall, who explores obstacles around entrepreneurship and potential solutions in his latest book, Boom: Bridging the Opportunity Gap to Reignite Startups.

Hall knows firsthand about the challenges startups face. He started the HALL Group while a student at the University of Michigan, buying a rooming house to rent to fellow students. Over 50 years, he has grown the HALL group into a multibillion-dollar enterprise that encompasses diversified financial services and real estate investment and development. His other ventures include forming one of Michigan’s first stock savings and loans, one of the first for-profit health-maintenance organizations in the U.S., and a Napa Valley winery, HALL Wines.

An avid supporter of entrepreneurship, he founded the Dallas Regional Office of the Network for Teaching Entrepreneurship, and with his wife, Kathryn, received Ernst & Young’s 2017 Master Entrepreneur of the Year award for the Southwest Region.

Are you optimistic about the future of entrepreneurship in this country?

You start to solve a problem by shining a light on it, which was my goal in writing the book. The opportunity gap was created inadvertently over the last two decades with legislation and other roadblocks. I think it’s solvable. That’s why the book is called Boom, not Doom. But first you need to understand the problem.

In Boom, you say it’s harder for entrepreneurs now than it was when you started out some 50 years ago. How is it harder today?

Access to capital. We can’t have total capitalism or total free enterprise without guardrails. But sometimes the guardrails create obstacles, and otherwise good policy can lead to unfortunate consequences.

For example, in my opinion, the Federal Reserve saved us from a much worse economic decline in 2008-2009 with lower interest rates and quantitative easing. But they made the disparities between the “haves” and “have-nots” bigger. People like myself and of course even bigger companies could access credit at a much lower rate and grow our businesses.

But if you’re just starting out, low interest rates don’t help you because you can’t borrow money in the first place. So bigger companies become even stronger and harder to compete against. We should look at programs and mechanisms that provide more opportunities to create startups. I’d rather see more startups, even if new companies are going to provide competition for me. Competition keeps us all sharp.

People in their 30s and younger have traditionally been active in starting businesses. But the number of people under 30 who own businesses has fallen by 65 percent since the 1980s and is now at a 25-year low. Why are we seeing the reversal with this age group?

There are more challenges for entrepreneurs than there were in my time. Student debt is a significant issue for a lot of people who would otherwise say, “I’m going to start a business.” If we as a country decided to suspend some debt or loosen the qualifications for those looking to borrow money, that would help encourage millennials with student debt and without home equity to start businesses.

It’s ironic, because on one hand, entrepreneurship has become more recognized and celebrated. Look at Shark Tank. And you have people like Steve Jobs and Mark Zuckerberg profiled in movies and popular culture. On the other hand, there are too many challenges for young people starting out. I’d like to think I would be successful if I started out today, but I’m not sure.

Is the solution in the private sector or the public sector?

A lot of good things are going on in the private sector that we should applaud and encourage. We have local governments and nonprofits that are trying to create ecosystems in different markets, but virtuous circles like Silicon Valley don’t get replicated overnight.

That’s why the public sector is the key lever that needs to be pulled. There’s plenty of money for Silicon Valley or New York or Boston; for big tech ideas and biotech. What you need to worry about is the rest of the U.S. and more traditional entrepreneurship. That’s why at a national level, we need a tax policy to encourage people to invest in startups for the types of businesses that don’t normally get investments. Providing tax benefits similar to what we do for real estate investment could be a huge game changer.

You also point out that we not only have a problem with starting businesses, but keeping them going. How can we improve small business viability?

Litigation is a huge threat to small businesses. It’s become embedded and accepted in our society and it’s very expensive to protect your property if you’re a small company. Even if truth and justice are on your side, sometimes it doesn’t matter. People get worn out by litigation or worn down by it financially.

How do we fix the litigation threat?

This situation has developed over many years and it is not going to be solved quickly. Part of what we need–not just to fix litigation but to address the bigger issue–is a dialogue about what kind of opportunity we want to create for middle-class Americans.

If we are going to become an elitist society, that is counter to the principles of the country that I grew up in and I don’t think that’s the legacy we want to leave to our children and grandchildren. I don’t mind a system where the rich get richer. I mind a system where they get richer at the expense of opportunities for others. I believe entrepreneurship is intertwined with personal freedom and the whole American experience. Keeping opportunity alive and well for a broader class of Americans is a vital and important thing for our society.