Political Opportunists vs. Technology Innovators
Do you think Americans voters are aware that the major technology innovations behind every growth era in American history were brought to market not by entrenched corporations but by hungry entrepreneurs?
Does it matter to policy makers that the capital backing these entrepreneurs came not from government bureaucrats crafting industrial policy or regulated banks making socially directed loans but from scrappy alternative investors working the hairy edges of risk?
Does the media-pundit complex give a hoot that startups that survive infancy can no longer exchange their venture investments for the broader pools of capital found in public markets, allowing risk dollars to be recycled?
Venture Capital investment in this country is spiraling down just when we need it most, hitting an eleven year low. How will the unemployed ever be put back to work if fresh new companies can't rise to replace dead old ones? Where is the next Apple, Microsoft, Dell, or Google supposed to come from if today’s young Steve Jobs, Bill Gates, Michael Dell, or Sergey Brin can’t get their unorthodox ideas financed? We’d better think about this if we’re counting on growth rather than inflation to retire those ballooning deficits we’re racking up.
Maybe I missed the vote where Congress was declared the Solver of All Great Problems. Now that they’ve done such a great job handling the banking crisis, they’re getting ready to “invest” unlimited mountains of taxpayer money in almost every key field that is supposed to drive our innovation economy. That would be a pretty hilarious proposition if it weren’t so frightening.
Has one Congressman in a hundred, regardless of party, ever actually started and run a business? How many do you think have engineering or science degrees, or served as product managers for a new launch? Have they ever done serious due diligence on an emerging technology to figure out whether it's remotely feasible, much less economically viable? Is a single one of them putting a penny of their own money at risk alongside the billions they’re gambling with?
Clean energy, electronic health records, broadband connectivity, fuel efficient cars, bullet trains, a cure for cancer – have career politicians really convinced us that they can legislate these goodies into existence? Who do they think is going to show up in Washington to collect the handouts nominally earmarked for this growing list of pet projects? Which would you guess – lobbyist laden megacorporations who can point at the hundreds of people they employ in the congressional districts of key committee chairmen or some geek who just graduated from MIT or Stanford that may have solved a holy grail physics problem but has no idea how to bundle campaign donations?
Modern day carpet baggers are gearing up for flush times. But what will become of classic market entrepreneurs when they’re boxed out of the beltway then starved of start-up dollars after what’s left of the Venture Capital community has been squeezed dry between Sarbanes Ox-gored IPO markets and punitive tax policies obsessed with gutting the rewards of success?
Shame on the Wall Street casino culture for bringing the wrath of know-nothing populism down upon us all. But please don't paint our business or the entrepreneurs we back with the same brush. We're not in it for the bonuses, we're in it for a share of the capital gains we create. We spend our days building real companies, not flimsy transaction pyramids. My partners are engineers, not finance alchemists. We live with the companies we back for seven, eight, nine years helping entrepreneurs iron the bugs out of their businesses, we don't package them into opaque securities so fast-talking snake oil salesmen can shuffle them out the door before they implode.
While stimulus dollars may create the illusion of recovery by constructing field-of-dreams demonstration projects that can’t hope to pay their own way, what are we going to do when the subsidies inevitably run out? One look at Federal ethanol policy- a cascading economic and environmental fiasco – tells the story of where we are headed if we let Congress play Venture Capitalist with our money. Perhaps we should catch our breath after the banking crisis moves off the front page before we plunge into a publicly financed malinvestment binge driven by clueless barking heads who can’t see pass the next election.