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An Open Letter to the Government 2.0 Summit

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As you may know, there is currently a summit called “Government 2.0“, designed to provide a forum to discuss the role of government in technology, and technology in government.  Their agenda is mostly concerned with improving government efficiencies through open standards and applications of technology.  I have written this letter in order to try and get those in government to think a little bit differently about startups than they do about traditional businesses.

Think Small

The entrepreneur’s mindset is necessarily one of smallness.  Small budgets, small sales, and small teams.

Government, on the other hand, thinks big.  Big bailouts, big social programs, big health care reform.

That focus on the big companies handicaps our nation’s future.  To Washington, you have to be big or be invisible.

This is a huge mistake.

America’s past successes in manufacturing and information markets was a result of our ability to innovate.  Now that it is readily apparent we are struggling in those fields, we need to return to our core competency: innovation.

Innovation must be supported by the government, both directly and indirectly.  While many new products are coming out of large industry, they are mostly limited to big technologies at that require big dollars to research and produce.  These fields clearly require huge investment with little payoff.  An example of this is the US automotive system which took billions of dollars without significantly changing their future.

Government must strive to affect the greatest change with the least intervention and cost.  A startup is the antithesis of a big company — we’re small, hungry, and efficient.  When you’re as large as the government, we’re also extremely easy to overlook.  But we are able to drive innovation cheaply because we don’t have the baggage characteristic of big entities.  We move freely within our markets, reinventing ourselves to better serve our customers.  We can work without overhead: from our garages, our kitchens, and our apartments.  Our lack of size is our strength, but it also makes us easy to ignore.

The startup community has learned lessons from the greed of the past; no more hundred million dollar failures, as was so typical of the dot-com crash earlier this decade.  Now we are focused on profitability and success.  And we are successful; led by groups such as 37signals and YCombinator, the startup community has begun using its leanness and size as a great advantage.  Twitter is quickly becoming one of the more influential conversations in the world.  Facebook, now huge, took less in funding than most explosive failures from the early part of the decade.  Small works, because being small forces you to innovate better and faster. And innovating better and faster is burned into the genetics of our country.  Innovation.  Determination.  Focus.  These are characteristics that you will find in small companies, but rarely in larger ones.

At Industrial Interface, we’re competing against some huge, entrenched, traditional companies.  This means that we need to innovate to compete.  We have had to take every minute advantage and make that work for us.  We found that connecting our users together earlier in their design stages is a great model: it reduces waste and fosters innovation.  But our size works against us in a public arena; not only can we not afford the overhead, but we often can’t even get the attention of decision makers who could help us better the system.

I have several suggestions which I think would be most beneficial to the startup community:

  1. Provide a funding source.  There are only a few small players in the VC / seeding community.  Ideally, a government program would operate in a manner similar to the NEA, issuing small (under $100k) grants to applicants who qualify and meet a screening criteria.  Better yet, many veterans of the fundraising and startup communities love to give back; a position like this would greatly benefit from their expertise.
  2. Adequately protect smaller interests in the legal system.  While one of the strengths of a startup is the lack of overhead, they are hurt when forced to compete in another landscape.  Threats and intimidation through lawsuits isn’t an uncommon occurrence.  Arbitration would be a very good solution to this problem, although patent reform is also related.
  3. Rebuild the safety nets.  Health care is an obvious target, but unemployment, bankruptcy protections, and other government-based means of supporting people means that entrepreneurs will be more willing to take risks.  While some risks are bad, I would argue that we want to create a system that encourages people to take entrepreneurial risks, especially when the (monetary) stakes are low.

If the government continues to examine big issues without considering the small ones, we will have some trouble continuing American economic leadership into the 21st century.  We must not mistake the size of companies for their value.  The future iPods and Twitters will likely come from a company that nobody has yet heard of.  Our next great innovators will come from the startup trenches which are largely ignored by the government, simply because of their size.  If we can help guide smaller companies earlier, we will find greater success at a lower cost.

Signed,
Travis D. Leleu
VP of Technology
Industrial Interface, Inc.

Category: Efficiency, Industrial B2B Sales, Interesting Stuff

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