By John F. Di Leo
In the late Fifteenth Century, an Italian in a puffy shirt pitched a business plan. Again and again and again. Until finally somebody bit.
What’s remarkable was not that this Italian wore a puffy shirt; it was the style in those days. And there was nothing strange about his pitching his investment ideas at the royal houses of Portugal, or Venice, or his hometown of Genoa. It wasn’t even that odd that he pitched his business plan to the king of England, and finally to the king and queen of Spain.
All these monarchs heard investment ideas all the time. Just emerging from the feudal era, the royal houses were still where the really big money was situated, for the most part, and whether you’re a bank robber or a venture pitchman, as everyone knows… you go where the money is.
What’s remarkable is the nature of this particular business plan, and the fact that King Ferdinand and Queen Isabella did indeed bite. They agreed to back his proposed exploratory mission – to sail where (they thought) no one had ever sailed before – with a complex contract splitting it up into major Spanish government funding, minor private Italian funding, and a 10% share of the profits for the explorer himself. At long last, after seven years of pitching the plan, he was finally able to start putting his ships together.
Before you knew it, the ships were ready to sail, so the intrepid adventurer gathered up his crew, outfitted the three ships with supplies, and headed west across “The Ocean Sea” (the Atlantic) on August 3, 1492 A.D.
Yes, as we all know from the history books, Christopher Columbus sailed the ocean blue, and landed in the New World – on the island of Hispaniola, in the Caribbean Sea, to be precise – on October 12, 1492 A.D.
Beating the Competition
Columbus’ business plan suffered from the usual problems. There were already competitors in this marketplace; the Portuguese, Italians, and plenty of others routinely sailed around Africa to trade with the Far East. They were reasonably happy with this approach; they knew the route and had no risk of failure (unless your ship sunk, of course, but that particular risk appeared wherever you set sail).
The competitors were every other country in Europe; the competitors’ approach was the tried-and-true. But Columbus convinced Spain of the special rewards if his plan succeeded – a virtual monopoly for awhile until the competitors learned his route (not exactly as ironclad as patent protection, but it’s still something), the ability to cut the travel time significantly by eliminating that whole “sailing around Africa” problem (this was centuries before the Suez Canal provided a shorter way to avoid that continent. And of course, the fact that this merchant was promising not just trade, but conquest too… always a good way to sweeten a deal when a monarch’s ego needed stroking.
There was also psychological competition, in that the Columbus approach was a new idea. There is always market resistance to the new and different: the first car couldn’t possibly be as good and dependable as a horse… moving pictures couldn’t be as entertaining as a live stageshow…. talkies couldn’t be as entertaining as a silent with calliope music. Eventually, the public comes around, if the idea is a good one. And once the rest of Europe’s sailors learned that, yes indeed, there’s a short route available across the Atlantic, they too joined in (after Columbus had already claimed a good chunk of land for his investors).
Before you knew it, everybody was sailing to the Americas. Even though that cartographer Vespucci managed to name the continents after himself, Columbus rightly continued to get the credit for their discovery. Portugal, Holland, England and France quickly joined Spain in the business of American colonization. From ports came settlements, from colonies came nations, over the centuries to come. And the world was changed, all because one persistent entrepreneur kept trying to sell a dangerous and peculiar idea, never giving up the fight until he had proven his idea a success.
There’s no place new to discover. We’ve explored the earth, and if a place is worth settling, it’s been settled by now. We’ve visited outer space, but the trip is expensive and the destination isn’t worth it. So we stay here on earth, in lands we know, trying new things at home.
Thousands follow in Columbus’ footsteps today, as entrepreneurs, inventors, “idea men,” out to do things differently and better than they were ever done before.
Steve Jobs found better ways to make the computer be user-friendly. Bill Gates found a marketplace in standardizing software code. Stephen King found a way to make people happy by scaring them; Mel Brooks found new ways to make people laugh. Henry Ford figured out how to make luxury affordable through assembly lines; Ray Kroc found a way to apply the assembly line to the restaurant business.
The innovators make a difference – not just in the lives of those they touch directly, but in the lives of everyone, as they help the world become a richer place.
Even if the competition is severe, or the investors few, or the newness daunting, the world of today is an enormous marketplace, with plenty of investors willing to consider new ideas. No longer must the innovator limit himself to the feudal powers of a few monarchies; two hundred years of capitalism have broadened the field of “people with money to invest” to the point that its numbers cannot even be estimated.
There’s still no guarantee that anyone will back your odd idea today, but today one can certainly guarantee that, if you have the energy and the time, you’ll have an unlimited audience of worthy investors to meet with.
The Millstone Effect
Unfortunately, today’s Columbus would have a new problem, one that dwarfs his original problems: today, the government would be his impediment to success, yes, even if the government was his principle funding source too.
The Columbus of history had to campaign for years to get his precious backing, but once he had it, the Spanish government gave him both investment funds and plenty of support. With the royal family being the principle investors, the government was naturally heavily interested in seeing his project succeed.
Today, our government is again a major investor in every new American business, in some way. Its Federal Reserve lends money to banks to loan out; its FDIC guarantees the banks in which the entrepreneur deposits his investors’ money. Its Small Business Administration holds seminars and publishes brochures about operating a business, but then its OSHA and NLRB issue regulations restricting the new venture’s operating plan. Its Department of Energy writes rules limiting the products it manufactures… its EPA ensures that its fuel cost will be unnecessarily inflated… its Treasury Department manipulates the currency in which the businessman does business, while promulgating rules to ensure that he doesn’t bypass currency in favor of the convenience of barter. And no matter what he does, the IRS and FICA will move in to grab a cut before the ink is dry on any deal..
The government says it favors entrepreneurship, but the president demonizes such risk-takers in every speech. They know they need economic growth to fund their leviathan, but still they do everything they can to stifle that growth, from oppressive taxes to crippling regulations.
Five hundred years have passed since Christopher Columbus incorporated “New World Inc.” Five hundred years of celebrating his daring, his salesmanship, and his innovation in giving all of us this greatest nation on God’s green earth as a legacy.
But in those five hundred years, too… particularly in the last hundred, in fact, in the last fifty… we have watched our nation forget more and more of the lessons of Columbus. From the federal capitol all the way down to our local school boards and town halls, we have seen government grow in establishing impediments right in the paths of the creators of the world: those whom Ayn Rand fans admiringly call the John Galts.
If Columbus were to attempt his project today, from here in the twenty-first century United States, consider what challenges he would face: He’d see a commercial for government grants from Matthew Lesko’s infomercials, and get his money that way. He’d incorporate in Nevada or Delaware, and be on his way to a shipbuilder’s office.
But before he ever made it to the pier, his ships would be hit with a luxury surtax, or a sales tax, or a use tax. Depending on the state, his employees might have to operate under union work rules, and pay their union dues to the shop steward whether they’re members or not. He has to provide health insurance, or prepare to take the obamacare penalty to avoid it. He has to take care to track the origin of every bit of lumber his shipbuilder uses, to comply with the Lacey Act, to avoid a raid by the Fish and Wildlife bureau, as recently happened to Gibson Guitar.
He has to outfit the ships’ rest rooms with low flow toilets and low pressure showerheads. He must meet with every vendor, to ensure that any high strength metal alloy be checked for “conflict metals” – the social hogwash issue of the day, in which the mine from which fungible materials were obtained can be inspected by Washington’s Good Government types to ensure that the rarest industrial metals become even harder to obtain, however desperately they may be needed to produce a quality product.
Confronted with all this, our Italian sailor of long ago might well have given up, and put away his dreams on a shelf in his room, never to be realized. He may have decided that it’s infinitely easier to just sail on known routes, on someone else’s ship, or to captain a fishing vessel, and stay close to home in the lovely Mediterranean. Why not? The more daunting the alternative becomes, the more appealing it will be to abandon it.
Today and every day, we Americans should thank Heaven that Columbus did what he did, and when. Without him, surely someone else would have tried it, but maybe not until the next decade, or the next century, or maybe later still.
And every year, the effort would have become more and more of a challenge, until eventually it became impossible. Entrepreneurship today is so scary, an obstacle course run by our own government, that hundreds of thousands have ideas, only to abandon them in despair or exhaustion a moment later.
There is a solution, though. The quick repeal of the mass of outlandish regulations that stifle our economy.
If we ever want to escape this recession, to bring unemployment and debt under control, we must change course in Washington. Not just stop the generation of new red tape, but repeal existing red tape that always went too far, little by little, until there was nothing left that wasn’t tied completely in knots, leaving our choking economy immobile for four years now.
The Christopher Columbus of history was always a rare treasure, and we should be proud of his memory. Americans must now do whatever we can to ensure that the rare and precious creature he exemplifies – the entrepreneur – doesn’t soon become utterly extinct.
Copyright 2011 John F. Di Leo
John F. Di Leo is a Chicago-based Customs broker and international trade compliance lecturer. A former president of the Ethnic American Council, and a past county chairman of the Milwaukee County Republican Party, he has now been a recovering politician for over fourteen years.
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