Entrepreneurs Needed

There is a classic economists’ joke that goes:

Two economists are walking down a sidewalk.

First economist: “Is that a $20 bill on the sidewalk?”

Second economist: “Couldn’t be. Otherwise someone would have picked it up by now.”

They walk on.

Economists often puzzle why there is no market for X. The answer may be that no one thought of it before. Or the people who did think about it were not in a position to pursue the idea. Entrepreneurs are needed to get markets going. And sometimes a market can wait many years for that special person.

I came across an excellent example of this very phenomenon just this week. Monday was Halloween, and on that day people traditionally set out jack-o-lanterns, which are hallowed-out pumpkins with a design (usually a face) and a candle to make it glow. Here is my son’s jack-o-lantern.



It may be a bit difficult to make out exactly what the design is but it is done very well if you take a close look. It is a picture of two bats flying in front of the Moon. It is extremely detailed and no one would have attempted such a design 30 years ago. But new technology has made this a very nice art project for kids (with some help from parents).

What is the new technology? Well the old technology was basically a felt pen and a knife. The new technology is a pattern on paper that the child cuts out and a hand jigsaw. This new technology is not very high-tech. It could have existed 100 years ago. Admittedly, the cost of producing tools has come down dramatically over the century but there was little reason why this technology could not have existed 35 years ago when I was a kid (I’m dating myself here). Here is a picture of the kit (with a link to the company - a free advertisement I might add).

But this product required an entrepreneur. It seems easy to believe that this was an obvious winner now but there are always a lot of questions to answer before a person with an idea becomes an entrepreneur:

1. Is there a market here? In this case the market is extremely seasonal – this makes it risky.


2. Do I have the lowest cost technology? If a competitor can make hand jigsaws for one-half the cost your supplier charges, you will be out of business quickly.


3. Do I know how to market this product? Will supermarkets stock this item? You might produce a quality product that languishes in obscure shops for years until some bright fellow sees it, sees no patent, and makes a knock-off that he successfully markets in every supermarket.

So in this case, a nice product never came to market for a generation. The entrepreneur was needed. And maybe a million dollars was left on the sidewalk that no one bothered to pick up. It makes you wonder what money is left lying around us right now.