Category Archives: Weird News

Entrepreneurship: Our Future.

What to do about entrepreneurship.

A lot of people agree that entrepreneurs and the resulting startups that they foster are the heart and soul of future economic and innovative growth in the United States and the world.

Here are the current administration’s efforts to spur entrepreneurship. Recognizing that startups are the engines of job creation, the Obama presidency has started a Startup America initiative and has come out strongly in support of the Crowdfunding component of the JOBS act. And it has acknowledged that “it is the entrepreneurs in clean energy, medicine, advanced manufacturing, information technology, and other innovative fields who will build the new industries of the 21st century, and solve some of our toughest global challenges.”

In January 2011, President Obama called on both the federal government and the private sector to dramatically increase the prevalence and success of entrepreneurs across the country. In the year since launch, the Obama Administration rolled out a set of entrepreneur-focused policy initiatives in five areas:

Unlocking access to capital to fuel startup growth

Connecting mentors and education to entrepreneurs

Reducing barriers and making government work for entrepreneurs

Accelerating innovation from “lab to market” for breakthrough technologies

Unleashing market opportunities in industries like healthcare, clean energy, and education

Have we not heard all of this drivel before? Does this sound like a commercial for your government at work or what? And, not only does this “initiative” NOT HAVE ANY LEGISLATIVE SUPPORT IN CONGRESS, but it has been handed off to the Small Business Administration and the Veterans Administration, two agencies that have elevated the fine art of bureaucracy to the Masters level. Just ask anyone who has applied for an SBA loan, or a returning veteran simply trying to get the benefits we contractually owe him. There’s really nothing more to say about this.

How about this one:

Leaders in the private sector launched the Startup America Partnership in 2011, an independent alliance of entrepreneurs, corporations, universities, foundations, and other leaders, joining together to fuel innovative, high-growth U.S. startups. Within just one year, the Partnership has mobilized to make over $1 billion in business services available to a national network that will serve as many as 100,000 startups over the next three years. This sounds ominously close to my plan to end the great recession, doesn’t it?

Their intent is to support the growth of startups in five key areas:

Expertise: Connect startups with training, mentors, advisors and accelerators

Services: Provide startups with access to critical services at reduced costs

Talent: Assist startups in recruiting, training and retaining the people that can help them grow

Customers: Help startups through acquisition of new customers and expansion into new markets

Capital: Highlight sources of capital available to startups in various regions and sectors

In addition to the product and service focused offerings, Startup America firms gain access to Connection Programs which provide unique opportunities to connect with thought leaders, major corporations (as partners or customers), customers, and more.

This sounds really good, but then why does it feel like a giant bureaucracy? Because it is.

Their sponsors are American Express, Microsoft, Dell, Intuit, American Airlines and the New York Stock Exchange. Does this sound like fleet of foot, startup incubators ready to make split decisions based on squiggles on the back of a napkin, just like they did to get started years ago? NOT.

Wouldn’t it be so much better if the sponsors were Twitter, Google, Facebook, eBay, Pinterist, LinkedIn, or even Salesforce?

And wouldn’t it be more promising if their “team” wasn’t composed of a CEO of a national staffing firm who sits on the boards of Comerica and Kohl’s? Or Fred Smith, the CEO of FedEx? Or Magic Johnson, an NBA basketball player, or Tory Burch, a fashion designer for Ralph Lauren who leveraged her relationships in the fashion industry and personal financial strength to become a leader in global lifestyle brands?

To be fair, they have Reid Hoffman, Reed Hastings, Michael Dell, Steve Case, Lynn Jurich and Kevin Plank on their team as well, but I think all of these guys have pretty demanding day jobs. Who actually runs the joint?

I think the Canadians might have a more realistic view: Their view is that entrepreneurs and small businesses are the backbone of the Canadian economy. There are more than 1 million small businesses that employ 48% of Canada’s total workforce, account for 25% of total exports, and provide 30% of their total GDP. Of those small businesses, only 4.7% are classified as high-growth enterprises, yet are responsible for 45% of new job creation in Canada.

The Canadians recognize that entrepreneurship is a powerful force for driving job creation, innovation, economic growth, and for fueling healthy and sustainable communities. Governments around the world are responding to shifts in global markets by strengthening the domestic climate for entrepreneurs as a way to ensure economic growth and prosperity. The launch of Startup America, Startup Britain and similar private-public-civil society initiatives in 2011 has contributed to entrepreneurial growth in more than a dozen countries worldwide.

In Canada, the local movement has only just begun:

  • The government of Canada declared 2011 as the ‘Year of the Entrepreneur’, recognizing the critical role of entrepreneurship in securing Canada’s ongoing economic recovery and prosperity;
  • The ‘Review of Federal Support to Research and Development’ Expert Panel Report, spearheaded by Tom Jenkins, Chief Strategy Officer of Open Text Corporation, called for action to unleash the potential of Canadian entrepreneurs through innovation;
  • Action Canada released ‘Fuelling Canada’s Economic Success: A National Strategy for High-Growth Entrepreneurship’, calling for the creation of a central enabling organization with the mandate to fuel high-growth entrepreneurship in Canada; and,
  • The Coalition for Action, C100, Startup Visa and other organizations in the innovation and entrepreneurship community, put forth proposals and recommendations for action to strengthen innovation and entrepreneurship in Canada.

While Canadians like to think of themselves as great collaborators, the Canadian entrepreneurship community hasn’t come together yet around a shared vision or purpose. Canadian entrepreneurs are struggling to navigate a complex and highly fragmented enterprise ecosystem, which creates challenges for entrepreneurs to identify and access support, build and leverage national and global networks, and limits the capacity to share knowledge and best practices. An absence of adequate risk capital, combined with a shortage of management and business skills normally fostered through startup failures and second- or third-attempts, contributes to Canada’s overall deficiency in “entrepreneurial culture”.

What is needed most urgently, as recommended by Action Canada, is a national strategy to bring together the collaborative efforts of the entire entrepreneurship community to create more favorable conditions for entrepreneurs to flourish. Without a strategy, Canada will continue to trail international competition and risk economic recovery and long-term prosperity. And so will the United States.

The solution begins with a grassroots, entrepreneur-led movement to bring together Canada’s national entrepreneurship community to create a clear vision and strategy that leads to real change and action. And, that is a blueprint for the United States as well.

We don’t need a presidential initiative that is not supported by Congressional legislative action, nor do we need the outcomes to be administered by the SBA, or God-forbid, the VA.

What we need is money, a National Initiative supported by an ACT OF CONGRESS, and the full time attention of successful entrepreneurs and venture capitalists (often the same thing) to insure that a working infrastructure gets created to support several hundred thousand entrepreneurs in the pursuit of innovation.

This working infrastructure needs to be regional, and centered around Universities with proven track records in fostering innovation. VCs jokingly tell anyone who will listen that the reason 80% of the country’s Venture Capital firms are located on Sand Hill Road in Menlo Park is because it is an easy commute from Woodside, Portola Valley, Palo Alto, Los Altos Hills and Atherton. Location matters. This means Stanford, UT Austin, UW in Seattle, NYU in New York, MIT in Boston, Carnegie-Mellon, Berkeley, etc.

All of the functions that entrepreneurs need to operate need to be in place. Human Resources, Payroll, Accounting, Payables, Receivables, Legal, PR, Advertising, Sales and Marketing Leadership, Engineering and prototype Manufacturing. Let the founders focus on their big idea and let the staff do what they do to keep the lights on, while capitalizing on economies of scale to reduce costs.

 

All of this infrastructure, as well as the seed capital will be provided by the Federal Reserve. If there was ever a better justification for creating money out of thin air, I don’t know what it was. Certainly not the $9 Trillion gift to the 6 biggest investment banks in the US in 2010. Nor the $800 Billion TARP bailout in 2008. No. This will actually create jobs, jack the economy, reduce unemployment below 5%, fund Medicare and social security for a hundred years and probably solve 5 of the world’s most pressing problems within 5 years.

 

Imagine a modern “Manhattan Project”:

Cheap, sustainable and renewable, non-carbon energy

Practical synthetic biology at the cell level

Cures for all forms of cancer

Automobile battery technology that enables 1,000 miles between charges

Complete bio-robotic drug delivery systems

YES!

One model that will work is to rotate VCs in and out of the board governance and mentoring responsibilities. These guys should be willing to volunteer as a matter of public service and they should also be allowed to invest in subsequent rounds. VCs don’t need orientation. You’ve sat on one board, you’ve sat on them all.

 

But, the real key is Congress. They need the courage and strength to enact laws that allow a small group of people to navigate around existing agencies and government infrastructure to create an initiative like this and to drive it through to formation and execution.

 And, if you care about this, you could help make it happen. Write your Congressperson. I know this sounds lame, but I know of no other way to start the sausage going. I have, and will continue to do so. The Crowdfunding bill got done the same way. Honest.

 

 

 


How to End the Great Recession.

And, dramatically reduce unemployment, create 4 million high paying jobs, eliminate the retirement savings crisis, solve the student loan bubble, create unprecedented innovation, stoke social security and Medicare, and do actual real good in the world. Sound incredible? It isn’t. Follow along.

I want you to think about 10 people you know who are under or un-employed and write down their names, and under each write down the first three skills that come to your mind, even if they don’t seem like skills (e.g. she’s patient, a nice person, and she treats people with respect). Then, think of the one thing that you have always wanted to do (could be anything, including hiking across the country, baking the best chocolate chip cookies, driving an 18 wheeler across Alaska, inventing 5 new cocktails, writing that book, opening that restaurant with your grandmother’s recipes, anything.).

Now, create 10 jobs for those people whose names you wrote down, and write down what each person’s role would be. Then, figure out how to monetize your dream. Write down the amount of money you think you can make each year starting with year one, and then do the same for year two and year three. Next, figure out how much money you will have to spend to get that done. If your spending rate is higher than the money you will make, cut the spending until you show a profit. There. Now, you have a business plan.

What? You can’t figure out how to make money hiking across the country? How about a theme? How about interesting cities? How about a camera? How about a diary? Do you think Ken Kesey had a plan? You don’t know who Ken Kesey is? That’s OK. I KNOW you can come up with a way to make money at whatever your dream might be. 

Maybe you think you are not worthy. We all have self-esteem issues. Especially people like Paul Allen, Bill Gates and Larry Ellison. As you probably know unless you are living under a rock somewhere, all three men dropped out of college. None of the three of them invented anything.

 

All three of them used someone else’s invention to start them on their path. All three of them became dirty, filthy, and ridiculously rich. Doing what? Doing what they loved. Gates played with very rudimentary computers. Computers that would make the Apple I look like a Fujitsu K by today’s standards. Allen loved writing software in BASIC, a language that is dumber than the firmware that connects your keyboard to your PC. Then, after hooking up with Gates and finding IBM in a stupid marketing pinch for its entry into the PC market without an Operating System, bought a product called Quick and Dirty Operating System (QDOS) from a random programmer in Seattle named Tim Paterson, for $50,000, sold licenses to IBM, and the rest is Microsoft. While working as a grunt at Ampex, Ellison ripped off a relational database scheme described in a paper written by Edgar Codd, and used it on a project for a database system for the CIA. That became Oracle. How’s your self-esteem doing now?

So, you have your business plan, and you have your future employees identified, and your self-esteem is a little jacked up. What do you do now?

Before I lay out my plan to End the Great Recession, I should mention that a similar (though tongue-in-cheek) plan was proposed in an article by Sheila Bair, the former head of the FDIC, which she called the “Get Rid of Employment and Education Directive.”  But, not to be confused with hers, my plan is anything BUT tongue-in-cheek and here’s how it goes:

1) The Fed agrees to loan $400 Billion to the “American Future Entrepreneur Growth Fund” (it has no corny acronym, so it might have trouble passing Congress), at an interest rate of .5%, the exact same rate it charged the 6 big banks it lent $9 Trillion to back in December of 2010. This amount by the way, is half of the TARP bailout that saved the biggest investment banks in the world with your tax dollars, back in 2008. Half.

2) The AFEGF is organized like a Venture incubator, and the first thing it does is hire 100,000 really good recruiters who are then tasked with finding the most promising 400,000 entrepreneurs in the US, with fungible business plans. This will take 6 months. The criteria are a track record of entrepreneurship in one form or another, successful or otherwise, a business plan that passes a few tests, and the passion to do something big.

3) Those entrepreneurs are each loaned $1,000,000 and are given a goal of 3 years to turn that loan into positive cash flow. They must immediately hire 10 people from their list and assign them roles. They are each assigned a mentor from the VC community who VOLUNTEER their services to guide these start-ups to success. VCs like Joe Rizzi, Val Vaden, Don Dixon and Vinod Khosla who are all about making really smart investments and guiding them to ridiculous profitability, while looking for ways to make a positive difference in the world.

They will also be assigned community mentors. People like Joy Amulya from Global Family Village, Shawn Ahmed of the Uncultured Project, Beth Kanter and Allison Fine of The Networked Nonprofit, and  Craig Kielburger of Free the Children, to help entrepreneurs focus on global community projects where their energy, capital and spirit can turn their entrepreneurship into real and lasting good.

The entrepreneurs are each assigned a regional incubation lab where they will work out and implement their plan. The incubation lab will be staffed by accountants, sales and marketing leaders, PR, Advertising and communication consultants, lawyers, human resource professionals, and prototype design and manufacturing engineers who will provide the back-office infrastructure for 100 separate entities. The entrepreneurs agree to quarterly board meetings where their mentors review progress and manage their growth track. At anytime along the way, the entrepreneurs can use Crowdfunding to raise additional capital, allowing a whole lot of ordinary people to get a piece of this amazing action, and to potentially create even greater wealth.

4) There will be NO RULES (operationally).

5) At the end of this 3 year period, the Fed will either be re-paid the loans with interest or optionally be able to take an equity stake in the most promising enterprises, equivalent to their loan amount, and over a 10 year period, will recoup all of the money lent to these enterprises as the result of a 1 in 20 success rate (for every 20 start-up who fail, there is one who becomes the next Google, Facebook, Adobe, Apple, Microsoft, etc. These are the odds that the VC have been gambling other people’s money with since the late 1960’s and history says it always works).

That’s it.

If these 400,000 start-ups fail and succeed at the historic rate of Silicon Valley start-ups, they will create over 5 million jobs. They will re-pay all of the debt several-fold to the Fed and they will have solved at least 5 significant world problems. Along the way, their employees will have fully funded Social Security and Medicare for the next hundred years and created more wealth and innovation than the world has ever seen. Including a sustainable, endless and ultra-cheap alternate energy source. Trust me. I’ve done the math.

After Gates sold QDOS to IBM, Big-blue hired Microsoft (13 random guys and girls) to build their next release operating system, OS/2 for their cool new PC. Gates, by this time, was smart enough not to transfer the copyrights for QDOS or the new OS/2 to IBM, believing that there would be other hardware manufacturers of the new PC in the immediate future. Then, due to design differences, the IBM/Microsoft partnership broke down allowing Microsoft to go off and become, well … Microsoft.

You can argue with and debate my plan, and I agree it has holes, and there are always tons of devils lurking in the details, but there are always holes and devils in every plan, and there is also the undisputed history of the Silicon Valley and Microsoft and Apple and Google, and the unfettered tenacity and passion of the American people. And, you can’t argue with that.