Sunday, October 16, 2011

Stay Hungry, Stay Foolish

The video of Steve Jobs' commencement address at Stanford that is making the rounds on the internet includes a reference to the back cover of the final Whole Earth Catalog, encouraging its readers to "stay hungry, stay foolish." Jobs repeated the line to his audience of graduating seniors: "Stay hungry, stay foolish."

I've had two sayings for years that come close: "A hungry entrepreneur is a good entrepreneur," and often contend the best way to address uncertainty is with "cultivated naivety." In a March 2010 staff training tutorial, I described the idea this way:
Cultivated Naivety: The principle that it is better to be ignorant than to make hasty assumptions. It is the presumption that novel evidence provides the luxury of learning through experience.
As for hungry entrepreneurs, something happens when people get too comfortable. All too often, we get lazy, complacent, and risk-averse, leading us to protect more than innovate. Very few large companies can overcome this trend. And those that do, normally expend far more in resources than a lithe entrepreneurial startup competitor would, if the barriers to entry are not unnecessarily high.

Sunday, October 9, 2011

Education: Budgetary Strawman

Rep. Paul Ryan (WI-1), Chair of the House Budget Committee, has been recently quoted attacking President Obama as "a pyromaniac in a field of strawmen". Cute turn of phrase. Unfortunately, it characterizes most of our nation's political figures, including Ryan himself. There was an article in yesterday's New York Times entitled "Anti-Federalism in G.O.P. Race Aims at Education". While I might be inclined to dismiss attacks on education as a drive toward insular ignorance, as I read the article I began to think there is surely merit in rethinking our nation's approach to education, and to consider that there might be cause for reducing spending on education without compromising our nation's strengths.

As an "unschooling" dad and entrepreneur, I find that "No Child Left Behind" and "Race to the Top" both overvalue conformity and standardized testing over creativity and innovation. The Economist recently did a profile (without questioning the underlying assumption of validity) showing a global obsession with standardized tests. Perhaps Obama's recent moves to relax the federal education-related requirements on states and locales is a move in the right direction.

But I wondered if calls to reduce or abolish the Department of Education might not have some moment, in this age of austerity. This is a difficult question for me as a research entrepreneur since I have and plan to again propose R&D projects to the DoEd. Reducing their budget necessarily reduces my opportunities. But I firmly believe in supporting the greatest good for the greatest number even when that sometimes counters my own short-sighted self-interest. So I took a look at Third Way's "Your Federal Tax Receipt" to get a handle on just how big the federal education budget is, to determine how much fat might be cut. Um... talk about strawmen!

Over all expenditures for education related items amount to less than 3% of the federal budget, more than half of which is for elementary and secondary education. That still leaves a little room for trimming some of the arguably misguided federal mandates toward conformity and standardization. The push for our children to acquire skills for the workforce sounds a bit too much like the call for maleable assembly-line workers of a century ago. To this entrepreneur, it lacks the drive toward innovation that I'd prefer. Still 2.9% is not a smoking gun. Far from a bloated bureaucracy, DoEd administration accounts for a mere $0.12 per $1000 in taxes collected.

After elementary and secondary education, another 1.1% is accounted for by Pell Grants, special education, and rehabilitation services, which seem worthy enough. Expenditures for "Innovation and Improvement" at $0.29 per $1000, and the Institute of Education Sciences at $0.17 are neglibile as well. Even if Michelle Bachman or Rick Perry were able to shutter the Department of Education, the result on the deficit would be akin to you or me finding a dime on the street once in a while and sending it to the IRS. Put in perspective, the same $1000 in taxes pays for $204.39 in Social Security benefits, $130.67 in Medicare, and $47.06 on operations in Iraq and Afghanistan.

Come on America, isn't time we put aside pettiness, and work together to resolve our nation's ills? Let's make the hard choices, and set our priorities to what will create the most benefit despite our political or ideological leanings. What would be so wrong about rallying behind both Barack Obama's and Scott Walker's efforts to create high-quality jobs? Who cares who gets the credit! Ideologies don't garner results. That comes from rolling up our sleeves and getting dirty together, rather than simply slinging the dirt around.

Friday, October 7, 2011

House Small Business Committee's CLOSED Mic

The majority site for the House Small Business Committee is called "Open Mic". A better name perhaps would be "Censored Mic: tell us only what we want to hear."

On September 23 I posted a couple comments. My comment on the main page, regarding SBIR reauthorization has never been posted. When I called, a staffer explained that they get many postings, and not all are open for the public to view. Huh? I thought it was called "open mic". I guess you have a different understanding of that term. Surely, they have a right and responsibility to keep discussions on topic. But to censor views that don't support their portrayal of things is a bit beyond the pale.

The other comment I posted on the "feedback" page regarding the high cost and uneven burden of health insurance for small companies, garnered the following response:
Delivery has failed to these recipients or distribution lists:
The recipient's mailbox is full and can't accept messages now. Microsoft Exchange will not try to redeliver this message for you. Please try resending this message later, or contact the recipient directly.
Not quite what I was hoping for. So, I resubmitted the comment on their main page. Still no posting. A week later, I resubmitted a somewhat extended and specific version of my SBIR reauthorization comments on their resources page summary of H.R. 1425, which presents an incomplete and misleading depiction of the actual bill. For your edification, despite the actions of the House Small Business Committee, I append that September 29 comment and my suggestion for dealing with small business health insurance below. You can judge for yourselves whether they warrant censorship.

SBIR Reathorization
We need long-term or permanent reauthorization of SBIR. The Senate had called for 14 years, then compromised for 8. No shorter! The three year reauthorization in HR 1425 (section 101) is woefully short. It takes more than three years for a single review and award cycle for Phase I and Phase II. Small businesses and agencies need the certainty of a long term reauthorization in order to develop crucial innovations.

We need SBIR to be retained as it was intended: to spur innovation and business creation. That means, there should be no softening of the small business definition criteria and no accommodation for businesses majority owned and controlled by any entity other than individuals or another small business(sections 106/107). No large venture capital-owned businesses (no hedge funds/no private equity); no large corporation subsidiaries. This is needed to ensure cost-effective use of taxpayer dollars to support innovations, business and job creation, while cutting out the middlemen. "Financial structure" matters!

SBIR should be expanded to reflect the value of small innovative businesses, which employ 40% of American tech workers. We currently receive a mere 4% of federal contracts and grants. The percent allocations for SBIR should be increased from 2.5%. A reasonably conservative figure would be 5% of agencies' budgets for SBIR. As a minimum the Senate (S. 493) compromise of increasing SBIR from 2.5% to 3.5% over ten years should be adapted.

There should be absolutely no loopholes created for bypassing Phase I (section 105). Period. Small dollar (~$100-150k) Phase I awards are necessary to ensure that the program continues to seed the earliest stage, high value/high risk/high reward ideas, without overextending the federal government's commitments. Phase I allows risk to be mitigated, while providing capital for early stage ideas that have nowhere else to get funding!

Thousands of businesses, tens of thousands of patents, hundreds of thousands of jobs depend on the House Small Business Committee doing what's right for SBIR and the nation. We depend on you not to cave into to special interests. SBIR needs to be maintained as a merit-based driver of innovation, problem solving, and job and business creation and growth. It has succeeded in this for over a quarter century. No more compromises.

Small Business Health Insurance
Here is a simple idea to benefit small businesses and their employees, and to simplify the burden on insurance company actuaries. Here is a new regulation that would simplify things, while providing for a more fair distribution of health care costs among the population.

Require that health insurance providers establish rates by geographic region and other broad demographic measures, rather than by the size of the employee pool at a particular company. It is absurd that the premiums charged per employee are two or three times the rates that would be charged for the exact same employee if they walked across the street to work for a company with 800. If rates were determined fairly, without regard to the size of the company pool, my rates would drop substantially, allowing me to continue providing coverage, while rates per employees at large corporations would barely nudge upward. It would be a fair distribution of rates, reflecting the actual risk factors per individual, and would even the playing field, so small businesses could compete on an equal footing with large companies for the same quality employees, without having to gouge their own bottom lines.