The Value Equation

Chapter 1Free Enterprise and Wealth Creation

In the United States, businesses—large and small, public and private—create the beating heart of individual and national wealth creation. At the end of 2018, our nation boasted more than 32 million enterprises, of which just over 6 million had paid employees.¹ The latter equated to a business for every 55 Americans, or, better still, a business having paid employees for roughly every 30 Americans in the labor force.

Given those statistics, if one were to look at the total number of businesses, there would be a business for every five Americans in the labor force, which is astounding.

How has this been made possible?

The abundance of businesses in America owes itself to three factors: An educated workforce, a ready supply of capital, and a strong rule of law. The United States is not alone in this; in no small way, these contributors to business formation lie at the foundation of the economy of every highly developed nation.

In the Beginning Is the Idea

Most businesses start with an idea, which usually takes the form of a solution to a problem. The key question is how to build a profitable business model around the idea.

In 1995 Larry Page and Sergey Brin, who had met as graduate students at Stanford, saw that searching the internet for relevant information was a cumbersome process. Their idea was to make internet searches efficient, productive, and user-driven, applying the technology they created to drive a high level of search ...