Congratulations to Governor-elect and entrepreneur Peter Shumlin on his recent election. Gaining re-election at the same time are entrepreneur/Senator Hinda Miller and Speaker Shap Smith, who with Peter were the three legislators who organized and listened to Vermont entrepreneurs during the last legislative session. If I were in their shoes, there are five themes I’d keep in mind in the effort to create new businesses and jobs in Vermont. I’ll be blogging on each in detail later on.
I. We don’t need new business models, we need to execute better based on models already proven successful
Whether it be Silicon Valley coming out of Stanford, or the Boston entrepreneurial ecosystem coming out of MIT and Harvard, innovation most often percolates out of a university system, and it’s hard to think of a successful startup region that is not led by the aggressive and smart people who congregate near the best schools. The best regional example of an area turning itself around is the Upper Valley, led by Dartmouth. New Hampshire now boasts several companies valued in multi-hundred millions of dollars, including Glycofi and Adimab, both of which sprang out of technology developed by Dartmouth professors. (Vermont benefits from this ecosystem too: hot startup Sound Innovations, out of White River Junction, licenses Dartmouth-developed technology.) Not coincidentally, this new wave of companies, which includes Mascoma, all came of age after the formation 10 years ago of the “DEN”, the Dartmouth Entrepreneurial Network. The DEN, along with the affiliated regional incubator just outside of town, continues to pump out great companies. Some end up in Vermont, like Sound Innovations based in White River Junction. My first task would be to find someone young and hungry in the administration drive South on Interstate 89 and see what lessons we might learn from the DEN and reinstall throughout the rest of the Vermont. We need to create a VEN: a Vermont Entrepreneurial Network. Just as the DEN promotes business competitions as a means to gain visibility and traction for startups, Vermont also should initiate some Northern version of the MassChallenge. The MassChallenge has already brought energy and new startup jobs to Boston, which is the whole point.
II. Vermont isn’t missing critical pieces, we just need to better use what we have
True, we don’t have a Silicon Valley ecosystem here, but no one does. Yet in the last 10 years Boulder CO has been able to create incubators that not only create, but attract vibrant new companies to town. Vermont already has established its own VCET incubator, great research out of our university and colleges, sufficient infrastructure (Burlington Telecom financial debacle notwithstanding, the fiber network here in Burlington just screams), established angel groups, venture forums, local venture capital funds, and a State-sponsored Early Stage Capital Seed fund. But lots of these elements don’t work coordinate together, and some organizations have the trouble of deadwood and bottlenecks, like anywhere. What would Bain or McKinsey say about this? Well, the first task is to take inventory, map out what we have, and then have a 360 peer review to separate wheat from chaff, and also to find out who connects well with whom. Until you can map and grade the network we have, you can’t improve it. I suspect that those who would object most to this process are the ones who need it most.
III. Track Records Count–Listen to the Winners, Not the Whiners
Successful entrepreneurs almost always want to give back. Several companies started in Vermont turned into multiple-hundred million markets, including IDX, Ben & Jerry’s, and eSecLending. Dealer.com and MyWebGrocer are crushing it and will be next, and MA-based (but VT CEO-led) MocoSpace may follow it. I’m sure that those who have built considerable success stories exporting VT brainpower to international clients, like John Dwight (Charlotte) of Dwight Asset Management. And let’s not forget others, like John Abele (Shelburne) of Boston Scientific, who grew great companies elsewhere but choose to live here. The shining examples of community service from great entrepreneurs (on different sides of the political spectrum) are Tom Evslin and Bill Schubart. State government can’t afford that kind of expertise in competitive markets, but ask the winners first, and give them a big scissors to cut through the tape.
IV. Skate Where the Puck is Going to Go
Where are the best jobs being created? In technology, primarily information technology. We all love maple syrup and artisanal cheese, and we can encourage those businesses…but they are neither scalable nor high margin business. Dealer.com is probably growing jobs faster than anyone else in the State, and Champlain College is attracting terrific students majoring in computer science (as well as running an impressive entrepreneurship program via BYOBiz.) So, let’s put a lot of thought on how to keep and motivate this young entrepreneurs-to-be in Vermont. Who would be a good person to lead this type of community building effort? I’d ask Matt Dunne, energetic good guy and Googler to lead the charge.
V. Choose Investments Wisely, then Coordinate Programs
I’ve heard respected voices in the community say “You can’t pick winners”, i.e., the State should have a level playing field to help all companies, old and new, big and old, equally. But there is no such thing as bias-free decisions. What about all those industries already with community-financed infrastructure. We let railroads die, but continue to subsidize airports, for instance. So face up to the bias, and most importantly, don’t let others screw things up.
Case in point: UVM budget cutbacks have meant that they are cutting back on funding for their Tech Transfer Office, which finances patent applications from the discoveries of their faculty. UVM isn’t in the business of creating jobs for Vermonters, so I can see (although I disagree with) their reasoning. I’m not arguing for increasing general funding for UVM, I’m suggesting that funding from the state be targeted for specific purposes that best go to helping us grow high-tech jobs in Vermont. I’ll be writing more about UVM’s College of Medicine, College of Engineering and Mathematical Sciences and Business School later. (Disclaimer: I’m the husband of one faculty member, the uncle of another, and I am a mentor of UVM’s Engineering Dept’s “SEED” program. I’m speaking my thoughts from my perspective as an entrepreneur and investor, and not as an interested party.) Back to the point–there are ways to integrate some of the best of a “managed economy”–think China–and venture capital investing (doing follow-ons in winners, and not following-on with those who fail to gain traction). I haven’t figured out thoughts yet on fiscal and tax policies regarding job creation, but I’ll have my recommendations by the time we get around to Part V. I know the answer isn’t a knee-jerk “cut taxes”, but there is some type of incentive program to be arranged. However, 90% of the work that needs to be done to revitalize Vermont does not require more money, it’s more 1/3rd attitude readjustment, 1/3rd assembling critical mass such as Boston has done last June (Innovation Month) and in October (BREW), and the last 1/3rd establishing momentum.