Here's something President Barack Obama and Mitt Romney have in common: They both understand that successful entrepreneurs don't build their businesses in a vacuum.

You've certainly heard by now about Obama's recent speech, in which he talked about the degree to which entrepreneurs benefit from those who have come before them, those who have taught them, and even from the government's investment in infrastructure.

Since then, the Romney camp has seized on a single jagged sentence from Obama's speech. It's a poignant effort (albeit a dishonest one) to suggest that Obama doesn't understand entrepreneurship or the American character.

Ironically, it's also an attack on the very entrepreneurial phenomenon responsible for Romney's business success.

The Thing About "That"

Here's what Obama said, according to the official White House transcript. And here's a link to the original video, so you can judge for yourself whether the transcript (or Obama's opponents' creative interpretation of such) is accurate:


Opponents, of course, are focusing on just 14 words from that speech, while stripping the context and changing the punctuation to make their point. That way, the "that" in Obama's quote no longer refers to the "unbelievable American system," and "roads and bridges," but instead to the "business" itself that the entrepreneur built: If you've got a business, you didn't build that.  Somebody else made that happen.

From there, Romney's supporters and surrogates suggest that this twisted version of what Obama said is in fact evidence that he's un-American. Rush Limbaugh called it proof that Obama, "hates this country," and ex-New Hampshire Governor John Sununu said it shows that Obama "has absolutely no idea how the American economy functions. ...  I wish this president would learn how to be an American." (Heck, on Tuesday morning, Fox News Channel asked a pair of 7-year-olds running a lemonade stand for comment on the quote. No, I'm not kidding.)

The Foundations of Entrepreneurship

In truth, of course, all entrepreneurs build on what has come before them. The smart ones set out to solve customer problems without regard to the resources they control (at least at the outset). That means those resources have to come from somewhere.  As Adam Gopnik wrote in The New Yorker online:

What President Obama was saying was perfectly clear: the "that" in his statement refers to the bridges and roads and "this unbelievable American system." He wasn't, despite what one may have heard from Mitt Romney, saying that you didn't build your own business. He was saying that your neighbors and ancestors helped. We drive on roads built for each by all.

More than "that," Obama's point isn't exactly a radical one. As Gopnik continues, "It's the premise at the very heart of all free-market theory as Adam Smith--the guy whose profile is on every libertarian tie--conceived it."

 Smith [believed] in public goods: his state has an obligation to build roads and schools, establish an army, build bridges and highways, and do all the other things necessary for a sane polity in which the market can function naturally. Everyone should pay for them, and the rich should always pay more than others. "The rich should contribute to the public expense not only in proportion to their revenue," Smith writes, "but something more than in that proportion."

Staples, Bain, and Harvard Business School

Romney, of course, knows all of this. It's a similar point to what he made when he was the head of the Salt Lake City Olympics committee, and he reminded athletes in a speech that, "you didn't get here solely on your own power."

Likewise, Romney didn't build Bain Capital on his own, nor did the founders of the companies in which Bain Capital invested build their businesses purely on their own. They all stood on the shoulders of giants, benefiting from the work of those before them--including government investment.

For example, take Staples, the office-supply superstore that was one of Bain Capital's huge early successful investments. Romney's firm invested in Staples in 1986.

Among the major government-funded innovations that made giant supermarkets and office supply stores such as Staples possible, of course, is the Interstate highway system. (How else could you manage inventory on such a huge scale?) Of course, the company's early, successful website required the government-funded development of the Internet.

More than that, as Jeffrey Cruikshank wrote in a quasi-official Harvard Business School book on its alumni and entrepreneurship, the story of Staples and its cofounder, Tom Stemberg, "is a story of the HBS network in full gear: with advice, innovative ideas, and precious resources moving the venture forward."

Romney graduated from Harvard Business School in 1974; a year behind Tom Stemberg, HBS class of 1973 (and a year before future President George W. Bush, class of 1975). Harvard, in turn, is a huge recepient of federal research money and grants, and it has by far the largest endowment of any American university: $32 billion--which is in turn made possible by the preferential tax treatment it receives as a 501(c)(3) nonprofit.

And, to take things one step further, even Bain Capital itself owed its existence in part to the largess of government and other institutions before it. Romney was offered the chance to launch Bain Capital in 1984, at the urging of William Bain, who founded the consulting company, Bain & Company.

Where did Bain learn about the consulting industry to begin with? It was his experience at Boston Consulting Group, founded by Bruce Henderson in 1963, after he attended Harvard Business School.

None of this takes anything away from Romney, Bain, Stemberg, or any of the millions of entrepreneurs who are the engine powering America's progress. It's just that there's no shame in recognizing that we each benefit from the experience of those before us.

In fact, as an innovator and an infrastructure-builder yourself, you should take pride in that fact. Later entrepreneurs will build on what you have built, as well.