Entrepreneurial

Why governments don’t get startups

– Steve Blank is a serial entrepreneur. He teaches at Stanford University, U.C. Berkeley’s Haas Business School and at Columbia. He is the author of “The Four Steps to the Epiphany” and “Not All Those Who Wander Are Lost”. This article originally appeared here. The views expressed are his own. –

Not understanding and agreeing what “Entrepreneur” and “Startup” mean can sink an entire country’s entrepreneurial ecosystem.

I’m getting ready to go overseas to teach, and I’ve spent the last week reviewing several countries’ ambitious attempts to kick-start entrepreneurship. After poring through stacks of reports, white papers and position papers, I’ve come to a couple of conclusions.

1) They sure killed a ton of trees

2) With one noticeable exception, governmental entrepreneurship policies and initiatives appear to be less than optimal, with capital deployed inefficiently (read “They would have done better throwing the money in the street.”) Why? Because they haven’t defined the basics:

What’s a startup? Who’s an entrepreneur? How do the ecosystems differ for each one? What’s the role of public versus private funding?

Six Types of Startups – Pick One

The coming brick wall in venture capital

Mark Suster

Jul 20, 2011 06:00 EDT

– Mark Suster is a former serial entrepreneur and a partner at Los Angeles-based venture capital firm GRP Partners. This article originally appeared on Suster’s blog “Both Sides of the Table”. The views expressed are his own. –

This is the final part of a three-part series on the major changes in the structure of the software and the venture capital industries. Read Part One and Part Two.

Or the Cliff Note’s version:

• Open source and cloud computing (led by Amazon) drove down tech startup costs by 90 percent
• The result was a massive increase in startups and a whole group of new funding sources: both angels and “micro VCs”
• With more competition in early-stage many VCs are investing smaller amounts at earlier stages. Some are going later stage to not miss out on hot deals. I call this “stage drift.”
• The opportunities for tech startups today are more immense than they’ve ever been with billions of people now connected to the Internet nearly all the time.

But …

Downsizing Venture Capital

The venture capital business itself is going through an even more fundamental change than just the entry of a new category at the earliest stage. The industry is shrinking back to a mid-90′s level in terms of both dollars and numbers of firms.

Mobile app helps diagnose Parkinson’s

Deborah L. Cohen

Jun 16, 2011 11:12 EDT

Can smartphones help diagnose disease? Yes, according to Konrad Körding, one of the developers of an Android app being used to track the movement of Parkinson’s patients.

The app uses the phone’s sensory capabilities to evaluate a user’s patterns of movement, such as if walking is unstable or if a fall occurs.

“Most patients already carry a phone with them,” said Körding, a researcher who holds academic posts at both Northwestern University’s Feinberg School of Medicine and the Rehabilitation Institute of Chicago. “It’s known that you can detect disease based on movement.”

The unnamed app is still in beta, said Körding, noting commercialization is in the very early stages. The technology works by sending diagnostic data from the phone to a server, where it is analyzed.

“It’s very, very precise,” said Körding. “Making sense of the data at that moment means that we are able to find out exactly what people do. We know if they walk, if they stand, if they hold the phone.”

Eventually Körding hopes many people – including those with no current signs of disease – will have a copy of his movement app downloaded on their phone.

Beyond Parkinson’s disease, he sees the application’s uses ranging from orthopedics to sports medicine, even determining whether overweight patients are getting the recommended amount of daily exercise.

Senate kills federal innovation research program

– Robin Enos is a contributor to FindLaw’s Free Enterprise blog. FindLaw is a Thomson Reuters publication. This article originally appeared here. –

The U.S. Senate voted this week to kill a bill to reauthorize the popular SBIR (Small Business Innovation Research) program, according to the New York Times.

SBIR, a program to encourage small businesses to explore commercialization of technology, reserves 2.5 percent of federal research and development (R&D) funds for small businesses. Thus, said the SBA, SBIR enables small businesses to compete for federal R&D funds with larger enterprises.

In an example of legislative perversity, the bill’s author, Sen. Olympia Snowe (R-Maine), flipped her vote this week to oppose cutting off debate. Thus she voted to kill her own bill, reports the Times.

So why does a senator administer a poison pill to her own bill? Especially a bill that passed Sen. Snowe’s own Senate committee by a vote of 18-1?

Depends on who you talk to. And when.

Snowe herself spoke in favor of the SBIR program in March of this year, reports the Times. But then, when Senate Majority Leader Harry Reid (D-Nevada) made a list of bill amendments to vote on, he left off a favorite amendment penned by Sen. Snowe.

Innovation is how we make our living: Is China buying?

– Tom Lyon is the director of the Erb Institute for Global Sustainable Enterprise, and Peter Adriaens is a professor of entrepreneurship at the Zell Lurie Institute of Entrepreneurial Studies, both at the University of Michigan. The views expressed are their own. –

President Barack Obama, in his State of the Union speech, called for America to “out-innovate, out-educate, and out-build the rest of the world.” But who is the competition, exactly? Who is presenting “our generation’s Sputnik moment”? Who are we racing against to put a million electric vehicles on the road? The president’s answer: China.

Encouraging American innovation is a major piece of the president’s strategy to win the future. And a global leadership position in innovation is ours to lose.

During another era of innovation, the dot-com boom of the 1990s, the U.S. was perhaps the best market in the world for the launch of the Internet. Now, China is arguably the best market today for deployment of clean technology. China is adding energy production capacity, cars on the road, and new cities faster than any other country in the world. Plus, it has the financial and political power to direct the market to move away from cheaper, legacy technologies.

So how can U.S. researchers, inventors and entrepreneurs profit from the market in China while preserving innovation leadership? That’s a question we first explored during the University of Michigan’s Clean Tech Symposium this past December. In our view, the overwhelming message of the symposium was that the U.S. and China are well matched in bringing together the supply and demand for cleantech innovation.

Keynote speakers Peggy Liu of the Joint U.S.-China Collaboration on Clean Energy (JUCCCE), and Professor C.S. Kiang of Beijing University described a cash-rich China hungry to address ballooning energy demand and rampant environmental degradation. At the same time, they said, a shift is occurring in China towards greater acceptance of foreign innovation.

Can VCs serve the medical device market?

– John Lonergan is the managing member of Mach Ventures. This article previously appeared on PE Hub. The views expressed are his own. –

Traditional venture capital firms are struggling to remain relevant to new company formation, the development of new technologies, and the capability of bringing new medical device technologies to market. Although my comments are specific to medical device venture investing, my friends in Silicon Valley will agree, if even only in a quiet moment of reflection, that the same applies in biotechnology and general technology investing.

There are four reasons the traditional venture capital model has failed with regard to backing medical device companies.

With a permanently closed IPO window for devices, buyouts are the way to go. The big companies readily admit they can’t invent their own products, and look to acquisition as the way to fill their needs. They complain, however, venture-backed pickings are not attractive. Targets are too expensive, and it is too difficult to incorporate bloated venture-backed companies into their own infrastructure. They want products, not companies.

Also, larger funds reward partners more through management fees than carry. A $500 million fund returns $100 million to its few partners over 10 years. Nice living. There is no need to actually deliver successful products, which is why returns remain low.

Larger funds must make bigger investments; corporate buyers are unwilling to pay double-digit multiples for the resulting investments. Larger investments both reduce the chances of success and extend the amount of time it takes to deliver a product—something VCs are increasingly averse to as they look to prove returns to fidgety LPs. Fewer than five acquisitions per year are greater than $100 million, while 150-190 acquisitions per year take place, typically at $10 million to $90 million. Unfortunately, most VC’s cannot make “skinny” investments – blame their fund structure and partnership incentives.

None of us knows what the future of medicine will look like – all claims to the contrary notwithstanding. We make our major advances by accident. Shooting for small ‘wins’ results in major wins. Shooting for major wins results, for the most part, in failure.

Baby boomer inventions that changed the world

– Patrick J. Kiger is the co-author of two books, “Poplorica: A Popular History of the Fads, Mavericks, Inventions and Lore that Shaped Modern America” and “Oops: 20 Life Lessons From the Fiascoes That Shaped America“. This article originally appeared on Second Act. The views expressed are his own. –

Try this free-association exercise. When you hear the word inventor, what names pop into your head? Chances are, you’ll think of some long-dead genius from the 19th or early 20th century, such as Thomas Edison, creator of the phonograph, motion pictures and the first practical light bulb, or Alexander Graham Bell, inventor of the telephone.

Or maybe, if you’re a little more knowledgeable about the history of technology, you’ll summon up Nikola Tesla, inventor of the alternating current mode of power generation, whose brainchild flows through the outlet that lights your home and illuminates the computer screen upon which you are reading this. Or you might think of Guglielmo Marconi, the early 20th century tinkerer credited with inventing the wireless communication technology that led to everything from garage door openers to the smartphone clipped to your belt.

The inventors of the baby boom generation, in contrast, mostly have labored in comparative obscurity, putting the lie to 19th century philosopher Ralph Waldo Emerson’s observation that the world would beat a path to a person’s door if he or she built a better mousetrap.

You might recognize 64-year-old Robert Jarvik, the inventor of the artificial heart, and 53-year-old Ajay Bhatt, a co-inventor of the USB port, but only because they’ve been plucked out of the lab and featured in TV commercials. (In Bhatt’s case, his employer, Intel, reportedly had to hire an actor to portray him because he was too busy actually working.) You also might recognize Dean Kamen, the 59-year-old inventor of the Segway Personal Transporter, but probably without realizing that Kamen — the boomer generation’s equivalent of Thomas Edison — also is responsible for hundreds of other inventions, including the implantable insulin pump and the portable dialysis machine.

But ask the average person to name who dreamed up the Web, DNA fingerprinting or the lithium-ion battery, and most likely you’ll draw a blank stare. That anonymity is deceptive. Boomers’ inventions — ranging from the now-ubiquitous World Wide Web to the synthetic cell and the nanoscale motor — promise to reshape the world of the 21st century as surely as Edison’s and Tesla’s set the stage for the 20th.

Entrepreneurship void felt in Jackson Hole

Jeff Bussgang

Sep 9, 2010 17:27 EDT

– Jeff Bussgang is a general partner at Flybridge Capital Partners and an Entrepreneur-in-Residence at Harvard Business School. He is the author of “Mastering the VC Game” and writes the blog “Seeing Both Sides”. The following is an abridged version of a blog that originally appeared on PE Hub. The views expressed are his own. –

I love Jackson Hole, Wyoming. It’s one of the most extraordinarily beautiful settings in the world. One cannot help being in a good mood when observing the breathtaking wildlife, open sky and the awe-inspiring Grand Tetons.

Thus, reading the reports from last weekend’s annual economist confab in Jackson Hole could not have been more depressing. If the practitioners of the dismal science sound this pessimistic amidst such an uplifting setting, what will their attitude be when they trade in their cowboy boots for green shades and return to their drab offices to stare at spreadsheets? A usually staid Allen Sinai sounded positively hyperbolic, yet apparently spoke for many at the conference, when he told the New York Times, “I’m more worried than I have ever been about the future of the U.S. economy. The challenge is unique: poor and diminishing growth, a sticky unemployment rate, sky-high deficits and a sovereign debt that makes us one of the most fiscally irresponsible countries in the world.”

In his Oval Office speech on Iraq, President Obama acknowledged his concerns about the economy and declared, “Our most urgent task is to restore our economy and put the millions of Americans who have lost their jobs back to work… we must unleash… innovation… and nurture the ideas the spring from our entrepreneurs.”

So here’s what I don’t understand: If everyone, including the president, believes that supporting innovation and entrepreneurship is the best path forward, why aren’t the policy leaders taking action? Thomas Friedman of the NY Times has been hammering on this issue for the last year, calling on the president to “launch his own moon shot” and make innovation and supporting the start-up economy his top priority.

First, let’s review the data. The Kauffman Foundation did a comprehensive study of historical job creation and, not surprisingly, found that small businesses are the main source. “Without startups,” writes Senior Fellow Tim Kane, there would be no net job growth in the U.S. economy. This fact is true on average, but also true for all but seven years for which the U.S. has data going back to 1977.” See the following chart: