Washington Report

December 2009 / January 2010 By: Tom Michael Volume 7 Number 6

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The White House is still preoccupied with the national health care debate, but President Obama has also made it clear that innovation and technology are also on his mind as he tries to jump-start a moribund U.S. economy. During a speech at a New York community college in September, Obama pledged a slew of new initiatives designed to spur American competitiveness, from expanded broadband access to beefing up investment in basic science to making the experimentation tax credit permanent.

Three days later, Commerce Secretary Gary Locke announced the creation of the Office of Entrepreneurship and Innovation Policy at his department. Locke said the new office will report directly to him and be geared toward the first step in the business cycle: moving an idea from someone's imagination, or from a research lab, into a business plan.

"We're not lacking for groundbreaking ideas in this country; nor are we short on smart entrepreneurs willing to take risks," Locke said in announcing the new office. "What we need to do is get better at connecting the great ideas to the great company builders. And I think The Office of Innovation and Entrepreneurship is a big step in the right direction."

The office, which now has just four staffers culled from existing jobs within Commerce, was up and running in October just days after Locke's announcement. It also has a web site, www.entrepreneurship.gov.

According to a Commerce Department fact sheet the office will focus on the following initiatives:
—€ Encouraging entrepreneurs through education, training, and mentoring
—€ Improving access to capital
—€ Accelerating technology commercialization of federal research and development
—€ Strengthening interagency collaboration and coordination
—€ Providing data, research and technical resources for entrepreneurs
—€ Exploring policy incentives to support innovators, entrepreneurs and investors

In an interview with Innovation, Esther Lee, the department's new director of innovation and entrepreneurship policy, discussed the new agency and its plans for helping move technology to the marketplace, creating jobs and stimulating the economy. She said when President Obama announced his innovation initiative in New York he made clear that "a key part is encouraging high-growth entrepreneurship."

"We are very much focused on removing barriers to entrepreneurship, and specifically high-growth entrepreneurship," she said. Lee said the Commerce Department already works to help entrepreneurs, but the new office will expand on that.

"This office is really focused on leveraging those resources and people to coordinate better and be more effective in serving entrepreneurs," she said. As part of the office's creation, Locke also announced the launch of a National Advisory Council on Innovation and Entrepreneurship. The council, according the department's web site, "will advise the Commerce Department on policy relating to building small businesses and help to keep the department engaged in a regular dialogue with the entrepreneurship and small business communities."

Lee said she expects about 25 people will be asked to serve on the council.

"Lots of folks have expressed interest and we're blessed this has gotten attention," she said. "We really want to make sure this council has a number of successful entrepreneurs as well as innovators, angel investors, venture capitalists, but really the focus is on entrepreneurs."

Currently, the office has no budget other than existing department resources. Lee was unclear if the agency may request budget funding from Congress. Lee was also hesitant to delve too deeply into expected policy goals or to discuss planned initiatives in specific terms, reasoning that the agency needs some time to get on its feet. One thing she does hope the new office can do is give entrepreneurs a better sense of what the federal government has to offer them. And she said Commerce wants to hear from entrepreneurs and venture capitalists.
"The government is doing a lot in terms of helping entrepreneurs but many entrepreneurs don't know that and don't see government as a place to go for help or resources," she said. "I think we can do a better job of pulling those resources together to one place. We want to make sure they have a seat at the table in policy making decisions. We want to make sure that we're focused on the right issues to help entrepreneurs and not just assume we know what those are. I don't think government has all the answers."

Lee said the Commerce Department recognizes the importance of startups and small business in the U.S. economy. She said firms less than five years old accounted for almost all net new jobs in the U.S. between 1985 and 2005.
"That's a pretty powerful fact," she said. "New business is the primary engine of job growth in this country."

She also said the U.S. economy has lost 7 million jobs during the current recession and 10 million more are needed to keep up with population growth in the next decade. Technology transfer, or moving government-funded technology to the marketplace, is an excellent way to do that.

"The federal government spends $151 billion per year on R&D in labs and universities," she said. "The question is, are we doing everything we can to take those great ideas and create new businesses and economic growth?" The new office will be considering various proposals from inside and outside government to make the notoriously challenging realm of tech transfer more successful.

"Certain universities—€”like MIT and Stanford and others—€”have wonderful tech transfer offices and have a great track record of spawning new businesses that have become Fortune 500 companies," she said. "Some other tech transfer offices are under-resourced or understaffed." Lee also pointed out that more than half of all Fortune 500 companies were launched in a recession. So there could be a silver lining to the dark clouds that continue to hover over the U.S. economy.

"It's a little bit counterintuitive—€”you might think it would be harder in this recession—€”but that speaks to the fact that its as good a time as any to focus on entrepreneurs and helping entrepreneurs," she said.

Tom Michael is Innovation's Washington bureau chief.