Those Who Fail to Learn From History are Condemned to Repeat It

Historians may argue about what year the beginning of the industrial revolution took place, but one thing is sure: There is a continuation of the industrial revolution in the form of a startup revolution.

The startup revolution is not only in Vermont, but across the United States and the world. The fifty hottest startup areas in the United States are at the forefront of innovation. The good, the bad, and the ugly of the industrial revolution is repeating itself in our modern startup revolution.

Dwindling forests in late 1600s Britain and a growing need for energy created the first large-scale industry, coal mining. Coal miners dug so deep to get vital ore out that it created flooding in the mines. In 1712, Thomas Newcomen invented an atmospheric steam-powered engine to pump out the mines. By the end of the century, James Watt’s improved steam-powered engine had transformed manufacturing, sparking the industrial revolution.

Due to the industrial revolution, Britain’s government changed radically and quickly from its centuries-old economic and political systems. Britain embraced and supported entrepreneurship, breaking many of the class archetypes that dictated English culture. During this time an innovator could come up with an idea and find an investor.

During the same period, France was holding tight to its traditional social, economic, and political systems. While Britain was prospering with new growth and wealth, France was festering under its own fear of change and its resistance to social growth, leading to revolution.

Before the industrial revolution, empires exercised the theory that there was a finite amount of wealth in the world, and to increase their market share they would take it from someone else. With all the ideas fomenting due to the industrial revolution and a free-thinking society, Britain demonstrated that there is unlimited wealth in the world.

Now, the division in the industrial revolution, between those who blocked change to maintain an antiquated social, economic, and political system and those who embraced change, is repeating in each startup hot spot across the United States.

The largest division is between traditional lending institutions such as banks, and new funding opportunities for startup ventures such as venture capitalists, angel investors, and crowdfunding.
As in France during the industrial revolution, America’s traditional lending institutions are maintaining their outdated lending practices and are being left behind in the startup revolution.

Even though banks were given more power and wealth after the Great Recession of 2008, most tend to use the money to lend it to other banks to make more money from nothing, rather than lend it to high-risk startups that may revitalize a community.

State and local government funding practices, such as grants and tax credits, are often mired in red tape. Government funding practices do not fit well with the needs of the new startup business environment.

Funding of new farming startups is an excellent example of obsolescent governmental funding and tax systems. Many large dairies, mono-class, and traditional farming ventures across the U.S. are suffering from the global economy. There is a fear in this country that conventional farming is failing, and when a nation cannot feed itself there is much to be concerned about.

Parallel with the advent of mega-farming, a new agrarian culture is taking root in America with diversification of farming, such as community-supported agriculture, agri-hoods, agri-tourism, digital agriculture, vertical farming, and much more.

The challenge is that banks and state and local governments are not catching up with modern needs of new farming startups, as they are not meeting the needs of new tech and other non-traditional startups. They are trying to fit new startup ideas into old and outdated policies.

In the early years of the industrial revolution, workers migrated from rural areas to the cities for a better life working in factories. It may be hard to believe that working sixteen hours a day, six days a week in an industrial environment would be considered a better life, but many people lived in dire poverty, beyond our white-collar scope.

A hundred years from now our descendants may look back on our time with a sea of people working in cubicles at an insurance company or hipsters spending hundreds of hours coding in front of computers, and think, “How could they live like that?”.

Like most economic, social, and political systems, the industrial revolution in Britain went through a process whereby corruption seeped into the system and the system became rotten.

Social unrest began to brew in Britain when manufacturing plants that once dominated the nation started to close. As the United States came out of the manufacturing doldrums of the Civil War, it became the industrial powerhouse of the world, replacing Great Britain.

The startup revolution is creating a similar dynamic across the United States. After the demise of the Soviet Union in 1989, Silicon Valley went through a recession, because most of the technology companies in the valley were working on large government contracts to fight the Cold War. With the rise of the internet in the early 1990s, Silicon Valley was reborn with new startup companies making billions of dollars.

Over the last twenty years, the survivors of the dotcom bubble and startups like Facebook, Google, and LinkedIn have become some of the largest and most profitable companies in the world, supporting the concept that Britain discovered two hundred years ago: Wealth is infinite. The idea of a trillion-dollar company was only a dream until Apple made it real.

Another parallel the startup revolution has to the industrial revolution is the growing division between rich and poor. Mammoth tech companies have made it impossible for the average person to afford to live in most of coastal California. Silicon Valley was, for a moment, the epicenter of small startups, but it is now a place where only the wealthiest can own a home.

Los Angeles, Silicon Valley, and San Francisco have thousands of middle-income working people living out of their vehicles, and a vast population of homeless with mental and addiction issues living on the streets.

This transition of wealth paralleled what happened in the late 1800s in Britain. Factories moved to other less-expensive countries and, where there was once prosperity, dire poverty became the norm for the workers but not for the ruling class.

The startup hot spots emerging throughout the United States are attracting the best and brightest, not only because of the business or job opportunities but because of the area's culture.

Transitional urban areas, like the nation's startup hot spots, seem to have an innovative formula, or even an algorithm, for success. The most critical factor for success is having local and state government inventively supportive of innovation and diversity of culture. This was liberal thinking during the height of the industrial revolution in Britain.

The patterns between the startup revolution and the industrial revolution are strikingly similar and there is much we can learn from the successes and failures from the early years of the industrial revolution.

One of the most positive aspects of the early industrial revolution in England was that the startup industries broke the monopolies that controlled Britain enterprises since the dark ages. The startups brought new life to commercial systems that the ancient guild system could not stop.

The United States just came out of a terrible recession in which companies and banks were too big to let fail. We have allowed institutions to become more important than the ideal of individuality our nation was built on. The startup revolution holds an important hope that power will be given back to the average person, because, just like the industrial revolution in Britain, the modern-day startup revolution is only the beginning of a flood that is washing away antediluvian ideas and beliefs.