The late David Thomson argued that fast-growth companies are the key to job creation.
Thomson, a former McKinsey consultant, was the author of Blueprint to a Billion, a well-received strategy manual for growth-company leaders. His most recent work found that of the roughly 11,000 U.S. companies that went public from 1980 to 2010, a mere 410 from this set (4%) accounted for 63% of the jobs, 64% of the market value, and 69% of total revenue created. The trick was to help grow a small company into a big, job-creating one.
To stimulate the anemic IPO market, the JOBS Act lightens Sarbanes-Oxley compliance burdens for smaller public companies. The law also makes it easier for small companies to raise money using increasingly popular online crowd-sourcing platforms -- Kickstarter, Indiegogo -- that open private-placement offerings to ordinary investors. And the law increases the total number of shareholders that private companies may enlist without having to disclose the number to the SEC.
All this deregulation makes investor-protection advocates cringe. In Senate testimony, former SEC chief accountant Lynn Turner described the JOBS Act as a "dangerous and risky experiment with the U.S. capital markets, and with the savings of over 100 million Americans who depend on those markets." He has a point: Three years after a failure of financial markets does seem like an odd time to weaken regulations.
Thomson begged to differ: The JOBS Act, he said, will catalyze more fast-growth firms. "We need 12 million jobs to reach full employment. The real impact comes from transforming a small business into a billion-dollar one."
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