Reaganomics: You start a business in your parents' garage. Obamanomics: You move into your parents' garage.—
Ted Cruz (@tedcruz) July 20, 2013
Oh, come on, Ted Cruz!
It’s a snarky enough Tweet — and it would even produce a smile from me — if it weren’t so inaccurate, historically.
Businesses starting in garages?
It’s too early to tell, but the past five years probably haven’t been great for garage startups. Not for lack of Obama’s trying, mind you. But there’s no demand.
On the other hand, Reagan didn’t do anything to push garage startups, either.
The two most famous garage startups are probably Hewlett Packard, and Apple. H-P got started in 1939 — FDR’s administration (how’s that for being 180 degrees wrong, Ted?) Apple got going late in 1976, in the last months of the Ford administration. It did well enough in the Carter years to be a player by 1980, the year before Reagan took office.
So Reagan had nothing to do with those two.
An odd little site ambitiously titled Retire @21 lists ten garage startups — both Apple, and H-P, and eight others; as listed at that site, in alphabetical order:
- Amazon — Jeff Bezos founded Amazon in his garage in Bellevue, Washington, in 1994, the Clinton administration.
- Apple — 1976 founding in Los Altos, California, by Steve Wozniak and Steve Jobs — Ford and Carter administrations.
- Disney — 1923 in Los Angeles by Walt and Roy Disney; Warren G. Harding was president until his death on August 2, 1923; he was succeeded by his Vice President, Calvin Coolidge.
- Google — “As Stanford Graduate students, Larry Page and Sergey Brin started what’s now known as Google from Susan Wojcicki’s garage in September 1998.” Clinton administration.
- Harley-Davidson — Founded in a garage in north Milwaukee, Wisconsin, in 1903, by William S. Harley and Arthur Davidson — Teddy Roosevelt’s first term.
- Hewlett-Packard — “In 1939, Bill Hewlett and Dave Packard founded HP in Packard’s garage with an initial investment of $538. Their first product was an audio oscillator and one of their first customers was Walt Disney, who purchased eight oscillators to develop the sound system for the movie Fantasia.” Franklin Roosevelt’s second term.
- Lotus Cars — “In 1948, at the age of 20, Anthony Colin Bruce Chapman started Lotus Cars by building the first Lotus racing car in stables behind The Railway Hotel in Hornsey, North London. Chapman used a 1930s Austin Seven and a power drill to build the Lotus Mark I.” In London — Truman in the U.S., but more rationally, Clement Attlee was Prime Minister in England, the Labour Party’s standard bearer.
- Maglite — Tony Maglica, a Croation who emigrated to the U.S. in 1950, made precision metal machines parts in Los Angeles, incorporated Mag Instrument in 1974 and released his first, signature flashlight in 1979. Nixon and Ford were presidents in 1974; Jimmy Carter was president in 1979.
- Mattel — Harold “Matt” Matson and Elliot Handler incorporated in 1945, selling picture frames out of a garage somewhere in Southern California. They used scraps from the frames to make doll houses, and found a whole new business. FDR was president until April 12, 1945; Harry Truman succeeded to the office when FDR died.
- Yankee Candle Company — Michael Kittredge started making candles in his mother’s garage in South Hadley, Massachusetts, before he graduated from high school, in 1969, during the Nixon administration. He moved out sometime in 1974.
Ten of the most famous garage startups — none of them starting in the Reagan administration. Can Ted Cruz name a garage entrepreneur who started out in the Reagan years? I doubt it.
Maybe more to the point, can he describe what the Reagan administration did that would have made the climate better for entrepreneurs? Reagan’s administration was particularly lackadaisical about small business and entrepreneurs, on the best days, and outright hostile on the worst. When Reagan’s first head of the Small Business Administration announced he was resigning and moving on, SBA staff held a massive going away party, without inviting the guy — he was that much disliked by the small business advocates.
I imagine these past five years have not been happy ones for small business startups. Banks aren’t lending money, and investors want bigger ponds to fish in. But there’s absolutely no accuracy to the comparison Cruz made in his Tweet. Especially on the Ronald Reagan side, the Reagan years were good for General Dynamics and Lockheed Martin, and other defense contractors, but not particularly good for garage entrepreneurial startups, as the list of the top such startups show. They weren’t Reagan-era miracles.
Cruz probably doesn’t remember. He was ten years old when Ronald Reagan assumed office.
Please don’t forget it was Ronald Reagan who tried to kill ARPANET, and was stopped by young Congressman Al Gore, who argued it could someday be an “information superhighway.” Cruz wasn’t out of high school, then. Al Gore sneezes better business ideas and better support for business startups than Ted Cruz ever will.
Starting out in a garage to build a giant company is a great concept, the later-20th century Horatio Alger story — but unrealistic, as Watts Martin explained at Coyote Tracks:
The romantic notion is the unknown garage startup, the Apple of 1977, but garage startups only succeed in industries that are garage-sized when they start. Once they do succeed, they’re not going to be mad enough to bet everything on futuristic visions—after all, now they have something to lose. You wouldn’t have caught HP or Dell or Microsoft announcing the iPad. After it was announced, Apple was roundly mocked in the press for it.
And the fact is, Republicans especially in this current Congress — including Ted Cruz — have been hostile to almost anything that would help a garage startup in a new field. Bad economies do not produce a plethora of entrepreneurial success. Only the tough survive.
For example, Cruz has voted against almost every bill with a beneficial small business impact to come before the Senate since he was sworn in. He’s voted against student loan relief — startups have relied on highly-educated and technically educated new graduates for years. Cruz voted against confirmation of small business advocate Chuck Hagel to be Secretary of Defense. Cruz voted to sustain the money sequestering that cut Small Business Administration loans and other aid to small businesses across the government. Cruz voted against the Agriculture bill, with aid to small farmers. Yeah, I know — he’s against regulation. Can you name any garage startup that’s been stopped by the Dodd-Frank Act, or any EPA regulation? No, they don’t exist.
The Tweet? Not only does Cruz get the history dead wrong, it suggests he supports small business — and there’s no evidence of that on the record. It’s a toss-away punch line for a stump speech — but in less than 140 characters it gets history wrong at both ends, and makes a mockery of small business and entrepreneur support from the federal government.
Ronald Reagan’s presidency wasn’t all that good for small, entrepreneurial startups; Obama’s hasn’t been that bad, especially if we subtract the anti-business actions of the GOP (odd as that is). Cruz doesn’t remember, probably never knew, and he’s no big friend of entrepreneurs, either.
- Ted Cruz: Ineffective and proud of it (dailykos.com)
- Cruz has it wrong, again (washingtonpost.com)
- Watts Martin’s piece on entrepreneurs is pretty good, at Coyote Tracks, “Glorious madness”
- Ted Cruz Rewrites Decades of Electoral History (crooksandliars.com)
- Twitchy loved Cruz’s Tweet, which is pretty strong condemnation.