The big tech guns went to a Kushner and Mnuchen led sit down at the White house today. Apple’s Cook, Amazon’s Bezos, Ajay Banga of MasterCard, Satya Nadella of Microsoft, Ginni Rometty of IBM, Brian Krzanich of Intel and Silicon Valley investor Peter Thiel.
In discussion is how to modernize the ever lagging outdated US government IT systems. There is no accounting system at all at the department of defense and they seem to like it that way, losing 3 or 4 trillion dollars every few years.
But it’s also about innovation in America. And they won’t have any ideas. They are big companies. They used to be innovators now they are product machines. IBM is now just a indian dope engineer re-seller.
Entrepreneurs are stuffed. Its very hard to have the contacts to get seed funding, and none of the loan programs work for entrepreneurs. They work for pakistanis opening hotels and gas stations and 7-11s because if they go bust they just return to pakistan and a cousin comes back and tries again. But american’s cant do that and the personal guarantees these programs require make them nearly impossible. Even if you protect your house using homestead law, if you file bankruptcy and ever sell your house they can try to grab the money unless you get back into another homestead in six months. So bankruptcy law is f-ed for americans.
What is needed to drive innovation are 250,000 loans to new companies which pass a innovation review panel. Let people work on ideas for 2 years and see how far they get that should be enough to then go and then work on venture funding. This funding would not be personally guaranteed so it is important that people have the ideas, credentials and experience to warrent them receiving them. Right now the pass comes from Venture Capital, but many of these firms have shyed away from investing at the risky seed round. Another approach might be for government to offer 60% backing to VCs that make investment in new companies.
Because america has so many rules and regulations, starting a new company can be quite daunting. Now fewer and fewer start. And fewer VCs jump in the game. It needs a electroshock to the heart by some form of relief to get many more firms trying without risking the bank. By reducing the risk for innovators in the initial stage, we will get a new heyday of innovations.