he United States has gone “all in” on startups with a proliferation of policies, programs and prognosticators that purport to know secret sauces for success. Join the conversation and decide for yourself if there is a Love Potion #9 for sustainable startups or lots of snake oil. I believe in the power of innovation and entrepreneurship.
Anyone who doesn’t believe in that power should listen to President Reagan’s speech to the students at Moscow State University in 1988. He mentioned a US exhibition touring the Soviet Union “that shows how information technology is transforming our lives — replacing manual labor with robots, forecasting weather for farmers, and mapping the genetic code of DNA for medical researchers. When he gave that speech, I had never sent an email, still got my weather from the 6pm local news, had a huge tv antenna on my roof, and used a 5.25” disk to store my Word Perfect files. Reagan made one other statement that resonated as I prepared for today. He said, “In the new economy, human invention increasingly makes physical resources obsolete.”
Fast forward two decades and wow, the last six years have been an interesting time for entrepreneurship. It’s rare to hear a political speech about the economy nowadays without at least one mention of American entrepreneurs, isn’t it. But, if there is one rule for certain today, it is never let sound policy get in the way of dysfunctional politics. With the Moscow speech still echoing in your mind, think of all the juvenile political bickering over root causes and best solutions for addressing the recent economic downturn.
To give you a sense, the Commerce Department during the second W administration had an internationally focused entrepreneurship program called PEG – Program for Entrepreneurial Growth. No one within the domestic part of Commerce wanted anything to do with it. Likewise, the program functioned largely despite and in spite of the State Department.
As soon as W left and Obama entered, Commerce killed PEG and State launched PEG spelled backwards, the Global Entrepreneurship Program. Not to be outdone, Commerce created a domestically focused entrepreneurship program and launched the Office of Innovation and Entrepreneurship. That annoyed SBA, which also went all in on high-growth entrepreneurship. Then Veteran Affairs created an entrepreneurship program. The Department of Labor joined the bandwagon, as did the Domestic Policy Council and the Fed Labs. As you all probably know, even the Department of Energy.
A VC friend of mine recently said that when it comes to making investments, environmental impact and sustainability are the frosting on the cake. The problem comes when entrepreneurs and startups think environmental impact and sustainability ARE the cake. Causes feel nice, but the only color of green that matters is the color on money.
In fact, as Eric Wesoff recently put it, cleantech venture capital is a wasteland. He notes a couple of successful venture backed companies, and everyone likes to point to Tesla, but overall, that segment of VC has underperformed to the extent that the total dollar volume and deal count are stagnant. Early stage deals are rare.
You can draw a lot of inferences and lessons from that, but let me highlight a couple I’ve learned:
Equally important, in my opinion maybe most importantly, the world of entrepreneurship, the entrepreneurial Ecosystem, with a capital E, meaning the entrepreneurial milieu in the broadest sense of the word, is not designed today to pursue, fund or achieve revolutionary breakthroughs, but instead adaptive evolutions.