as my chair's initiative. it's designed to prid governors and other state policymakers with better policies to improve the economic environment in their states and more strategies designed to foster business growth. we put an emphasis on understanding on how a small business becomes a fast-growing firm in what policies support that transformation, high-growth businesses are one of the driving forces of the modern global economy, they are the primary source of the job creation, prosperity and economic competitiveness, new fast-growing firms evolve to become large employers. as governors we want to help the priefrtd sector grow, providing new job opportunities for our citizens. nationwide, firms in their first year of existence, add an average of 3 million new jobs per year. nearly 40% of these new start-up

firms don't survive the first three years. those that survive however, prosper and usually create more net jobs than all small start-ups do, the most important firms that survive are called gazelle, high-growth firms that expand employment by 10% or more annually for five or more consecutive years. such firms make up 5% of all businesses. but virtually all new net job creation. for any successful firm, the challenge is to stay ahead, go from good to great. and do it again and again by creating good products or by entering new markets. firms that maintain interp nurl, dow exactly that. we're opening the 2012 winter meeting with a discussion about

economic growth and job creation. my goal for growing state economies is to provide each and every governor with a state profile on their small business and economic environment and to produce action-oriented report on policy choices that have been shown to generate job growth and expanded exports. part of growing state economies is four regional economic development summits to provide governors and their senior economic advisers an opportunity to learn from local entrepreneurs, researchers and other experts on what works to create high growth innovative firms. in october, governor malloy hosted a firm, in november, a summit in nashville and governor

barbour joined us. last month, we were in seattle, in april, i will be hosting in meeting in omaha and i encourage as many of you can attend. finally, i want to take a moment to thank several organizations that have made important contributions to this initiate. bank of the west, general motors, intel, this cross-section of private sectors' support illustrates just how important our work in growing state economies is. we have support for companies engaged in advancement manufacturing. to cutting-edge technology. also i want to thank the kaufmann foundation for their financial and intellectual support. we're pleased to have this broad

support because it's indicative of our work that we need a partnership with the business community and others who are committed to job creation, prosperity and economic competitiveness. now, to kick this off, it's my less sure to introduce a good friend, jim clifton who says and i quote, what everyone in the world wants is a good job and in his last book, he described how this undenibble fact will affect all leadership decisions as countries rage war to produce the best jobs. he's served as ceo of gallup. his most recent innovation, the gallup world poll is designed to give the world's 6 billion citizens a voice in virtually all key global issues.

under his leadership, gallup has expanded from a predominantly u.s.-based company to a worldwide organization with 40 offices in 30 countries and regions. jim is also the creator of the gallup path, a metric-based economic model that establishes the linkaj among human being and business outcomes. . this model is used in performance management systems in more than 500 companies worldwide. please welcome gallup chairman and ceo, jim clifton. [ applause ] >> thank you very much, governor. it's a big highlight to be here and thank you for your partnership. by the way, i don't know if you

know this or not, dave, i was born in me brace can. i live here in. i have a in new york. a story that follows nebraskans on the east coast. it's not a joke, it's story. nebraska was playing oklahoma years ago, we used to have these big knockout, dragout games. the game was in lincoln, the abc announcer went over and interviewed one of our running backs he was sitting there and he had his football helmet, a nebraska football helmet is just white, with the letter "n." if the "n" on your helmet didn't s stand for nebraska what would it stand for he thought, he said

knowledge. that one follows you everywhere you go. i just changed some things to perfectly what i saw in the program, i don't know if this speech is going to work perfectly. let me hang some thoughts on you that we have found from our polling. and maybe they'll give you some ideas for the really important discussions that you're boeing to have. a good question -- i have had kind of the same job for my whole life. the founder of the company was more academic. anyway, he had a thing, he was real interested in democracy, he had a line where he said, democracy is about the will of the people, somebody should go out and find out what that will

is? if you don't know what the will is when you're making strategies for your states and the united states of america, if you have the wrong premises the more you lead the worst you make the place. his point was, let's write that will down. if you said what was -- as you look -- he started this thing 75 years ago, if you said to me, looking over those 75 years what's the single most profound poll that you have ever seen? i'll tell you. the dr. gallup called it the great american dream, he always wanted to write that down, what the great american dream has been for decades has been peace. then it became to have a family, pray to god that you want, freedom and a bunch of stuff like that, that has been the will of america.

here's what you need to know, though, almost nobody knows this, it will sound subtle when i tell you, it's just change the new will of america is to have a good job. it's a huge shift that changes everything. one thing it changes when you get married. you wait longer. or you don't get married at all. it changes how many kids you have. or maybe you don't have any at all. here's a big one, it changes my migration patterns. here's a real important one, it changes who we vote for. more than ever. it also changes for all of the people here in corporations, we were just talking about this, it

changes how you manage your work place. because now, a job is personal and it defines your relationship with your country, with your state, with your neighborhood, with your family and also with big you. i say, is that new? that's all new. if you want to know what it's used to be like, babe ruth hits and he has that funny run, look at in the ground, those are salary men. i'm sorry, women, it's all salary men. they have all on black suits on, all have the same hats on and a black tie, and it looks like to me they're all smoking cigarettes, too, but they're all the same people. excuse me, that's back when a job wasn't personal. those were salary people. so, that's what you need to know. so, right now, gallup tracks

nightly unemployment, we show about 20% unemployment. you got underemployed too. i mowed dave lawn, he pays $20, i worked one hour, i'm not unemployed. maybe i'm an engineer, i work one hour a week, i'm not unemployed. jim, are you unemployed, i say, yes, i don't count mowing his lawn for 20 bucks. the real unemployment number is 20%. when we asked the 20%, any of you, do you hope to get a job, 60% of them say, i don't have any hope to get a job, it wouldn't mattered to salary men, salary men don't care. it wasn't personal. but it wipes you out and you experience something that i'm going to call hopelessness. it's a brand-new state of mind here in the united states.

that gets you 18 million people. what i know about 18 million people from my business is that means, every single one of us in this room is one degree away from somebody who's hopelessly out of work. why is america in the current state of mind? it could be the relationship that we have with those 18 million. now, the reason that there's a book called the coming jobs war, there are 7 billion people on the face of the earth. and 5 billion adults. so, we have this world poll, across 160 country, what's the will, what are you up to in your country? the great american dream is now the will of the with whole world, the whole world wants a good job and a good job is 30-plus hours per week, and a

paycheck and a consistent work, that's just a good work. when we asked the world, the adults, how many of them wished they had that? 3 billion of them say, that's the most important thing in the world to me is to have a good job. here's the problem, there's only one 1.2 billion good jobs available right now. so, we have a global shortfall of somewhere between 1.5 billion and 1.8 billion jobs. with jobs going to china, all of that is going to grow multiple times bigger. so, as americans when we think about our future, about where the jobs are going to be, it's not just china, the whole world is going to be crushing for them. we have been watching this in the middle east. with our tracking there. it looks like arab spring to you.

maybe it's islamic winter. how about this? how about that's just a jobs war? you know, in egypt, they voted for the brotherhood, so the brotherhood came in and made a great, big move into leadership. guess why they voted for the brotherhood? you think because they want sharia law, they're pretty good business people. they think that brotherhood is likely to get the economy going. it's everywhere. okay -- i was watching -- you know, these numbers right now, this country's gdp is at about 15 trillion, right? china is at what? 5 trillion.

we have three times the gdp that china does. oddly when you ask on the gallup poll who has the big bigger economy? they say china. if china had a bigger gdp than we did, this would be a colossal bust, a huge mess. i went through a little -- i think this is important to note, i went through and took a bunch of economists, not gallup economists, outside economists, where will the economy be in 30 years? we'll have $30 trillion of new . so, where will china be? anybody know this number? between 60 to 80 trillion. they wipe us oute they will be leader of the free world and i think economics will be more

important than military. everybody talks about this. they'll have plenty of money for military. the economic might that the united states has had over the years has been incredible. so, another good question, what will the gdp of the whole world be? a current 60 trillion, that's where we are right now, remember the united states has 25% of the whole world's gdp, it's just colossal. there's only 300 million of us. it's going to go from 60 to 200. so, it means 140 trillion new stuff is coming in. so the god of jobs and customers and everything else is going to rain 120 trillion of new sales, stocks, money, customers, in jobs in the next 30 years. what's our job? what's your job?

is, we've got to get a disp disproportion share of it. or relationship changes. chinese -- 8.5% or 10%. 2% or 3% for us. unless something big happens, that's coming to a theater near us. and that one of the reasons why gallup put all of this stuff together. now, you're kind of quiet and depressed. that's why we did that research and i'll try to say something hopeful here. but, i was watching tv about a little over 30 years ago there was a panel of economists, i just turned 60, so, i lived through this, but the panel of economists, i'll never forget

watching it, just shocked, but they all sat there, both left-leaning and right-leaning, good americans, they said that japan and germany were going to overtake the economy in the next 30 years, that's right now. they said that because of superior manufacturing, japan would go to first, germany would go to second and the united states would go to third. they said, japan would be at about 5, they said germany would be about at 4. the united states, 3.5, 3.8. it's deja vu all over again. we're exactly in the same place that we were. remember what happened -- nobody saw it coming. the people that love america, our own economists said it's over and we bode clear up to $15

trillion. can you imagine -- i don't know why, i tell mba classes this, why didn't anybody write about this? somebody needs to write that down and say, how can we do that? of course, what happened was, we just had an unbelievable run of innovation and entrepreneur ship, by the way, if you want a big number, if you add the stubbs over 30 years over the projection, you see what i mean, add the stubbs over the regression line and the stubbs, that equals $100 trillion. now, you finally have a big number. that's how much money we had over those 30 years by outperforming where we were supposed to be. and that's also how we had this 25% of the total gdp of the whole world.

i just want to hit a couple of these points. i don't mean to make them sound reckless, but i think wreckless. i think we're making a big mistake betting all our money on innovation. just consider it. you're all big leaders. consider that. we pushed all of the big multicolored chips on to that one phenomenon of innovation. what if you're wrong? what if we're wrong? i notice that the president is just packing $150 billion into innovation. i didn't see a line for entrepreneurship. what if we've got it exactly backwards? but here's what i want you to consider. i worked on this research, no special interest groups, nobody

else. innovation has no value whatsoever until there's a customer standing next to it. there isn't a person in this town that knows that. but you see, when we're trying to create jobs and we just keep pi innovation, god, look at the saudis. they're building cities of innovation. have you ever been over there? there is nothing coming out of those valuable part is the business model and entrepreneur that can fire it. i'll tell you this real quick. it's such an unbelievable story. the internet probably saved this country and that g be are other. but that's a huge parte invent is just walking around here in right now. he built that over at darpa. i know him. he's a friend of mine. he told me this story.

i didn't hear it from somebody else. he had it do wking over. he heard about it. he said let me see that thing. he knew, you know, he got packets to fly across fiber optics. he had his own internet just sitting over there for a few years. guy came over from the u.s. senate and said let me see that. he went holy cow that, could be a hell of a thing. let's throw it out into commerce. he will tell you, he's told me, he said back to that u.s. senator, fine with me but i don't see what value businesses will have with it. my god, it was a conversation about the internet. by the way, do you know who the senator was? yeah, it was al gore. i don't even know him. sounds like -- a hell of a good thing. he should have got a nobel prize for that one, i think.

but see that internet just sat there until it went out into commerce. and then entrepreneurs got ahold of that and probably most of that $100 trillion that we had came out of just that moment. otherwise, all that innovation just sits there. i don't know what would happen. maybe we would still be spending more money on innovation. a woman here in town invited me -- it was 9. 306789. she said can you give a talk at the academy of sciences on constitution? i said, yeah. she said i need you in an hour and a half? did somebody cancel? she said, no, it's the people that head our best labs, you know, nasa and nih and mit and that kind of thing. i said what do you want me to say? i want you to tell them that you thin ovation is overrated. i said it's not overrated. we are the wrong expectation. so these are the people that run the biggest labs in the world. nobody has labs like we do. but i said to them before i started throwing tomatoes at me, how many of you have inventions in your labs that are ready to go and just need commercialized? every hand went up.

one guy said, i got an invention bigger than the internet. it just needs -- it just needs entrepreneurship. we might have the next big run. we don't have to chug along at 2.5%. we might have enough invention, we might have a huge oversupply of invention, that's what i think. but we haven't p same science to entrepreneurship that we have to -- that we have to innovation. i'm watching my clock here. i want to make one more point for you to consider. what the united states is the best in the world at is intellectual development. now you hear about we have bad schools. you have a bottom. the top schools are incredible. the economists just spriprinted best mba schools in the united states. none in middle east, china, india, nowhere else. we are masters of intellectual

development. if you put 1,000 kids out in front of educational psychologists in this country, they can rank order them one to 1,000 with iqs, sat scores and everybody will agree. we really know iq. and that's how we'll find people even in lower income or mississippi or western nebraska or whateverever it s they test . we give them a scholarship to go to the university of nebraska or mit or wherever it s it is so intentional that once they graduate from mit they go on to nasa. see how we do that? nobody in the world has mastered intellectual development like the united states of america. but i don't know what the example is. it's a hammer and nail when you hammer everything, you think everything is a nail. so we do that so well when we're in a big problem like we are now, we say billions and billions and billions on innovation. see if, you said to he had aindicational psychologists,

here are the 1,000 kids in phoenix or austin or somewhere. let's see and line them up by their abiment to create a customer, entrepreneurship, to enterprise. the united states of america fails, flufrpnks. we don't know who the best s but see if we could do that, then you might rise up and rise up and change everything. here's the two ideas i have for you then i think maybe you'll have some questions. this morning six million ceos got up. that's how many businesses there are in america. you'll read 26,000 are not. there are a bunch of them on paper. they have employees, there are six million. six million between one ploy and 100, between 100 and 500, there's only 80,000. see how fast that drops off? then between 500 and 10,000, there's only 18,000.

it just goes -- it goes -- more than 10,000. that is only 1,000 companies. so you have six million companies that are under 100 and only 100,000 that are bigger than that. so in the ecosystem, we really are a nation of small businesses. when those six million small businesses get up, not one of them is thinking about how they can hire an employee. you're all going to see the president? make sure you tell him that. nobody's trying to hire an employee. they're trying to cut them. by the way, if some of you run a company with ten people, hiring one person is like a merger. it's a huge decision. you have to talk to your banker or spouse and everything else. but what everybody is talking about is how they can create a customer. but this is really important. of the six million, 75% of them

aren't even trying to grow. you just have to know that or you'll make mistakes in your engineering. you say what are they doing as small ceos? what are they doing in that business? they do it only for the reason of freedom. they're like coyotes or something. nobody ever domesticated a coyote. no one will. they're not trying to grow. you see, if you put engineering systems in, you put policies in, all the way ths they grow, 75% don't know what you're talking about. they do it because they don't want anybody telling them what they do. nobody knows that. that is one of the places you find american freedom. those six million people, if you get into what they're thinking about, they're like from outer space. i'm kind of one of them. some of you around here are like them, too. but only 25% of them are really trying to become facebook and groupon and all those. but that's 1.5 million small

businesses. but those are the ones that we have to put some kind of everything nearing in place and support them because they will burst. but they could burst that, 1.5 million which -- there's about three trillion dollars of gdp in there. but they could burst up times, five times. that's some of the success that we're having with an experiment with dave. but that's the sweet spot in all this. the last one is we did a survey of fifth through 12th graders. it's hard to get a national random on these guys. we asked, will you invent something that changes the world? 45% of them said i'm going to do that. so it's a real high hope innovation question. the other one is i will start and run my own business.45%, to. so there's plenty of hope in the fifth through 12th graders. that's where you get startups. right now we only have 400,000 companies starting up right now. we need a million. so the second place where we've got to be is right there. here's t whether we ask them if the