Technologies do not launch themselves. Entrepreneurs do. Unicorns do not launch themselves. Unicorn-entrepreneurs do.
About 97% of patents are said to gather dust, and one reason is that there is no one who can successfully commercialize them . These technologies go from birth to death without growth.
The Department of Commerce’s Economic Development Administration (EDA) has started a program to offer funding to develop more Tech Hubs around the country. Will this be another government boondoggle and support EDA’s friends without doing much for the country?
Focusing on tech will continue to get the same old results. It will just enrich the same old ‘inside-the-beltway’ tech developers, including corporations, universities, and organizations. If EDA wants to really revolutionize and spur unicorn development all over America, and not just in Silicon Valley (and in China), it should remember one simple rule: It’s not about the tech, it’s about the entrepreneur. And we can develop great entrepreneurs everywhere.
EDA should refocus from tech to Unicorn-Entrepreneurs. Here are 5 reasons.
#1. Unicorn-entrepreneurs, not technologies, build real unicorns.
Only 1% of 85 billion-dollar entrepreneurs relied on the technology (The Truth About VC from www.dileeprao.com). The other 99% needed smart entrepreneurs who used commonly available technologies and built real unicorns. To build successful ventures from tech, areas need entrepreneurs with the business-smart strategies and finance-smart skills of Unicorn-Entrepreneurs.
#2. Someone needs to bridge the gap from tech to Aha when VCs show interest.
Many technologies fail or are still born because no one commercializes them. Few technologies are attractive enough to attract VCs and CEOs. Among the 85 billion-dollar entrepreneurs I financed, analyzed, or interviewed, 99% had to prove their business strategy before being taken seriously. This means that technology by itself does not launch unicorns. It is the entrepreneur.
#3. VC is not the answer.
Not only do VCs wait for Aha, but VCs only fund about 100/ 100,000 ventures, fail on about 80%, succeed on about 19%, and have home runs on about 1%. This means that only about 20 / 100,000 ventures benefit from VC. Few VC-financed ventures become home runs and benefit the area. Worse, VC successes are often sold to a strategic buyer for a VC exit and provide no long-term benefits to the area. On the other hand, 94% of billion-dollar entrepreneurs took off without VC, stayed in control, and kept the venture in the area. For technologies to be commercialized and to benefit an area, Unicorn-Entrepreneurs are key.
#4. Technologies without Unicorn-Entrepreneurs may benefit China more than the U.S.
China seems to benefit significantly from technology developed by the U.S. Either the products from the technologies are made in China, or China finds ways to appropriate the technology. Can the EDA’s program help the U.S., and help the U.S. keep its threatened lead? There seem to be some favorable directions in the program but how will they be enforced? The language includes the following:
· “by ensuring the industries of the future—and their good jobs—start, grow, and remain in the United States”: Let us hope they have teeth in the program to make sure that the winners will stay in the U.S. and not outsource to other countries. And prevent tech theft.
· “we are making sure the supply chain for America begins in America. We’re bringing manufacturing and innovation back, creating good-paying jobs.” This is good, but where does it talk about exports? America has a huge trade deficit and has been exporting its wealth. If the U.S. is going to borrow money to spend on technology, should it care about exports?
#5. Unicorn-Builders import wealth into an area.
Areas become richer when they export more than they import. Small businesses usually do not export – they mostly serve local markets. Importing businesses make areas poorer. Unicorns with VC have to offer an exit for the VCs, so any benefits may be short-lived. Unicorn-Builders often stay in the area, import wealth into the area, offer long-term jobs, and make areas wealthier. Tech Hubs should be focused on Unicorn-Builders.
Unicorn-Entrepreneurs are the missing link in EDA’s plan to bridge the gap from tech to Aha:
· Tech potential is often not known till Unicorn-Entrepreneurs use them to start unicorns.
· VCs are not in the game before Aha. Unicorn-Entrepreneurs bring the venture to Aha!
MY TAKE: Unicorn technologies do not launch themselves. Entrepreneurs do. Good intentions are not enough. The U.S. government needs to understand the real ramifications of its policies. EDA needs to develop Unicorn-Entrepreneurs who know how to use the technologies to develop growth ventures and benefit all areas of the U.S. and not just Silicon valley – and keep the ventures in the area. VCs need to exit, and they may sell their ventures to an out-of-area corporate buyer to get their lucrative exits. Without including Unicorn-Entrepreneurs in the mix to use the technologies, build unicorns, and control them, the benefits will go to other areas and countries.