Together, the two programs have involved 82 EI2 personnel (as RD team members, lead generators, business case team members, and mentors). The two RD teams reviewed hundreds of new revenue ideas generated by a very large majority of the organization.

To date, we have invested or committed $869K into RD projects, and have collected or invoiced $1,679K in new revenue (two thirds from Bill Meffert), with more to come. It’s working! In fact, since state funding has dropped from 45% of EI2′s budget to 33% today, revenue diversification has been a necessity, not a luxury. Both new proposals and new contract awards are up significantly. EI2 has never been static, but RD has helped us adapt to the changing funding environment. In fact, it’s been integrated into everyone’s annual performance evaluations!

Beyond the obvious revenue numbers… intentionally, the revenue diversification teams (and the subsequent business case teams and mentors) are drawn from every department in EI2. In fact, it’s one of the few activities where working across organization boundaries becomes routine. This interaction spun off the EI2 “Transformation Team,” which has launched several team-building initiatives, including our quarterly meetings, the monthly newsletter, periodic internal brown bag lunches, and this summer’s return of the long-lost annual picnic!

We decided not to launch the third RD initiative in January, since there’s nothing particularly magical about an annual cycle. We’ve spent the first part of 2012 continuing to invest in the first two sets of projects. But state funding isn’t going up anytime soon, so it’s time to do it again.

On July 1, we’ll start the third Revenue Diversification program. Logically, it should be called “RD3.” But last year, as a geeky joke, I started using “R2D2″ instead of “RD2″… and, somewhat to my surprise, people seemed to like it! So, this year, in defiance of my better judgement, we’re going to have “C3PO”: “Comprehensive 3rd Pursuit of Opportunities”. (Compliments and/or insults on the name should be flung towards Don Betts!)

Dana King Brewer and Johanna Kaiser have volunteered to lead this year’s program. They’ll be selecting their team over the next few weeks… if you’re interested in helping out, please let one of them know. Once again, I want a mix of newbies and old hands from all levels of the organization.

I’ve asked David and Charles — our elder statesmen of revenue diversification — to conduct interviews of participants from the previous programs soon after July 1. They’ll ask where we got their best ideas, how we could improve the process, and solicit suggestions on improving the implementation of the selected projects. Based on that review, Dana and Johanna may choose to reproduce the process we used in 2010 and 2011, or develop a streamlined version, or do something completely different. And I’m pretty sure they’re going to recommend changes to the informal “seed” program that I’ve talked about at the last couple of quarterly meetings.

Given other obligations, full implementation of C3PO won’t start until September 1, but we’ll still try to have the winning business cases selected by the end of the year. Once again, I’m counting on everyone in EI2 — whether on the committee or not! — to make suggestions and provide constructive criticism. Thanks for all your help and support!

    Stephen

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So far, feedback has varied all over the map from “Great! I can use this!” to “Why do you want to know my health details? That’s private!” Let me take some room to talk about our intentions.

Why are we doing this?

Georgia Tech’s core approach to healthcare benefits hasn’t changed in decades. Like most large organizations, we’re self-insured. (Blue Cross may handle your paperwork, but there’s not a magic pot of money at Blue Cross… that’s our money, and they just act as a middleman.) Through the Board of Regents, we have a huge pool of employees, so we average healthcare costs across everyone, and hope that the averaging works out to a reasonable cost per employee.

Lately, it hasn’t worked so well. As EI2′s Mark Braunstein will tell anyone who will listen, the American healthcare system evolved in a different era when medicine was low-technology and people were more or less healthy, until they encountered an infection or ailment that killed them. So you had decades of low costs, then a flurry of spending (moderate by today’s standards) near the end of life. Averaging worked.

The good news is, medicine has gotten a lot better. The bad news is, better medicine is way more expensive. It means that more and more of us live with expensive chronic conditions (diabetes, heart disease, HIV, you name it) for years. Even decades. Multiple surgical procedures, multiple expensive pharmaceuticals… averaging no longer works. More than 75 percent of the country’s $2.5 trillion medical care expense is spent on chronic conditions.

My father survived for 22 years after a near-fatal heart attack. Only a few years earlier, that wouldn’t have happened; he would have died, and I would have lost my father when I was 9 years old. But, thankfully, he lived to watch me grow up. And he consumed hundreds of thousands of dollars of care over those 22 years… the first decade at our own expense (self-employed), until he hit 65 and qualified for Medicare.

We’ve seen this with our clients. The largest uncontrolled expense faced by U.S. industry is healthcare costs. General Motors spends more on healthcare benefits than on steel. So you see employers — including Georgia Tech — nickel-and-diming their employees and retirees on benefits. Charging higher premiums. Asking for higher co-pays. Reducing the percentage of coverage on certain prescriptions or types of care. It’s all necessary, but it’s not enough.

The Board of Regents is following the lead of private industry and encouraging the use of HDHP/HSA… that mouthful stands for “High Deductible Health Plans/Health Savings Accounts.” My wife and I switched during open enrollment for this calendar year. More of you will probably switch in the future. This is a big deal. Because it brings market forces to bear onto the costs of chronic care.

Carrot and Stick

Broadly speaking, the first $3000 that my wife and I spend on healthcare is now our problem. So we have an incentive to shop around. Compare costs. Verify that suggested tests are really necessary. And — most important — to stay healthy.

Because there’s a carrot to go with the stick. We pay for that first $3000, plus our 10% co-payment if we exceed that, from a Health Savings Account. We deposit pre-tax money in that account from my monthly paycheck. And, if we don’t spend it, it’s ours. Unlike the more familiar FSA (Flexible Spending Account), those HSA dollars earn interest, year over year, until you need them for medical expenses. You never pay taxes on them (unless you withdraw money for non-medical purposes). And you take the account with you when you change employment or retire.

So staying healthy now means more tax-free dollars to pay bills later in life. And if you’ve looked at the numbers for Medicare, Medicaid, and Social Security lately… those dollars may come in awfully handy.

Which brings us back to myGThealth. Changes in behavior aren’t going to help if you have a permanent disability or an inherited condition like Tay-Sachs. But changes in behavior absolutely can change your odds of the big chronic conditions: diabetes, heart disease, emphysema, and even cancer.

Most of us know this. We see the Reader’s Digest headlines when we’re checking out at the grocery store:

• The 5 Most Nutrition-Packed Foods
• 8 Things Not to Do at the Gym
• 4 More Reasons to Snack on Nuts
• 6 Household Chores that Burn Major Calories

We’re bombarded with good advice. But it’s far more effective when it’s personalized, which is why myGThealth.com conducts the online questionnaire and then presents you with your personal risks for various chronic diseases. And knowing that “I should lose some weight” is different than “I’m in the 80th percentile of high risk for heart disease. I really should lose some weight!” And it’s even more different when you learn that “If I continue the way I’m going in 10 years, there’s an 80% chance I’ll have diabetes and heart disease and die 15 years before my time.”

These are the sorts of experimental tools that health@EI2 is working on to make available to employers across the state. It’s important that we eat our own dog food. If we believe these tools are important, we should use them ourselves. And we’re serving as the test case for rolling out tools like this across all of Georgia Tech, and indeed, across the entire University System of Georgia.

Questions

This column is already running too long, but a few quick responses to questions we got from the survey last month:

My doctor already provides this service.
Great! If that’s working for you, stick with it. Some people aren’t as lucky with their personal physician… or don’t have a personal physician.

I don’t like the insinuations that we’re stupid and need this tool to get healthy.
Sorry that you feel that way. I don’t think you’re stupid. Use of myGThealth.com is optional. But even your doctor has problems keeping up with the rapid changes in medicine. Maybe you could use some help anyway?

I was reminded of the “unsinkable” Titanic every time one of the presenters assured us the site is secure and confidential.
Our experimental partner, Medikeeper, is HIPAA-compliant, just like your doctor’s office or your hospital. There’s no way for Georgia Tech to find out any individual’s health information from their site. And if hackers are really interested in breaking into a site, they’re going to hack Piedmont Hospital, not Medikeeper.com. (And if someone really wants to know about my failed eye surgery, they don’t need my medical records; they can read about it on my blog.) But concerns about privacy vary. If you don’t see a benefit that’s worth the (miniscule) risk, don’t use the site. It’s optional.

Unless it is an automatic repository that links to my physicians, etc. for all my electronic medical records, it’s just another website.
Understood. It’s early days yet for these tools. Stick with it, and I think we’ll be pleased with the level of integration available in just a few years. In fact, the Federal government is moving down the road of providing financial incentives to your physician and hospital to do just this — integrate with each other and with you through your personal health record.

I didn’t choose the HDHP/HSA option.
If you’re on one of the other healthcare benefit plans, you don’t get the direct financial benefit of saving tax-free dollars until retirement. But that’s no excuse not to get healthier!

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Remember the Georgia Tech strategic plan? You should… it has “innovation” (EI2′s middle name!) all through it. Under Goal 3, “Innovation,” it says “Establish world-class initiatives to serve Georgia Tech, the state, and other strategic national and international partners.” Over a year ago, Steve Cross convened an innovation task force which met for several months; I was the EI2 representative. Several new programs and procedures have emerged from that task force, including GT:IPS and industry.gatech.edu. The most visible is Flashpoint.

Under the leadership of Merrick Furst (Distinguished Professor in the College of Computing), a team drawn from all across campus opened applications last summer, and accepted the first class (or “cohort”) of seventeen teams. Each team was between two and five people; at least one member of each team had to be a strong technologist. Four of the teams were based on GT research licenses, but over half had some sort of relationship to Georgia Tech (current faculty or students on teams, or active alumni, etcetera).

And we recruited nearly 40 mentors, from young entrepreneurs to experienced corporate executives to seasoned venture capitalists.

And some friends in the local venture capital community organized a small investment fund to invest in the Flashpoint teams.

And Georgia Tech rehabbed some empty space for us on the third floor of the 828 West Peachtree building (conveniently across from the Technology Square Starbucks).

And then we got started in mid-August 2011.

The Process

In my November 1 column, I wrote this about Flashpoint:

The last thought I’ll leave you with is that, as the nation’s largest engineering school, we think we’re pioneering a new discipline that Merrick has named: “startup engineering…”

It’s a long way from perfect, but it’s very different than the process of just 10 years ago. It’s an exciting time to be in this business.

That was only halfway through the process, but now that we’ve finished the first cohort, we’ve learned some things. Merrick is now using this as the definition of Startup Engineering:

Unlike for-profit accelerators, Flashpoint is primarily an educational program. The “textbooks” for the educational portion of Flashpoint were:

• The Four Steps to the Epiphany
• The Lean Startup
• Business Model Generation

These books emphasize the importance of understanding your customers, distinguishing facts from opinions, and being able to rapidly iterate your business model based on market feedback. They have led to something of a “Lean Startup” cult in Silicon Valley, but they’re not only applicable to startups — they’re good roadmaps for anyone trying to create something new, including innovators inside large corporations or government agencies (or, dare I say, universities!). Well worth reading. (I suspect that Tim Israel and half the folks in MEP will say “Duh! We’ve been preaching this for years!”)

In the first book above, Steve Blank famously states that “In a startup, no facts exist inside the building, only opinions.” So we’d insist that each team spend a significant portion of each week “outside of the building” talking to potential customers. Every Tuesday, the teams and mentors would assemble for pizza around 6:00 pm, and spend the next four or five hours thrashing through what they had learned from these customers that week, and how that would affect their plans for the next week.

Then, the next Tuesday, they’d do that again. And again.

In between, there were weekly seminars and frequent one-on-one mentoring meetings. Teams spent the first several weeks trying to optimize their business models before concentrating on writing code. And the business-model work continued all the way through the end of the program during the holiday break. From mid-August through mid-December, an extraordinary amount of work got accomplished. Sometimes you’ll hear us say “Flashpoint isn’t an incubator, it’s an accelerator.” Acceleration happened.

The Result

On January 10th, the fifteen surviving teams presented their results to a standing-room-only crowd at the GTRI conference center. They did it again at Union Square Ventures in New York on January 18th. And they finished up to a crowd of over 100 Silicon Valley angels and VCs on January 26th, hosted by Andreesen Horowitz in Menlo Park. You can read some of the press coverage here. The short answer is: it worked! At least three of the teams already have term sheets, several more are in detailed negotiation with investors, and every single team attracted at least one follow-up meeting in each of the three cities.

I like to highlight the story of Pindrop Security (one of the ones with a term sheet) as an example of how “it takes a village” to create a university spinout. Pindrop:

• started with a professor in one of GT’s research centers, and
• a graduate student in the College of Computing.
• Once it appeared they would be creating intellectual property would be worth protecting, they worked with GTRC to secure patent coverage.
• They received an NSF grant with the help of our SBIR Assistance Center, then
• received Georgia Research Alliance funding
• managed through our VentureLab program.
• They licensed their GT intellectual property through GTRC.
• They won the TAG Business Launch Competition, which brought them additional funding and heightened visibility from
• the local entrepreneurial community. Paul Judge joined as chairman.
• They joined ATDC and moved into the Centergy building, then
• were selected for the first Flashpoint cohort
• and began talking to major corporate clients.
• At the end of Flashpoint, they attracted investment from local angels and
• from a highly-respected Silicon Valley venture capital firm.

Some of you will remember that, when I interviewed for this job three years ago, I presented a slide based on Jan Youtie’s work explaining how universities are becoming “knowledge hubs,” and my vision that EI2 would be the focus of that hub for Georgia Tech.

Mission accomplished. Now let’s do it again. And again.

What’s Next?

Merrick and the team are taking a deep breath to analyze what we learned in the first cohort. Applications for the second cohort will be accepted in February at the Flashpoint web site, and the teams will assemble on campus in early June for another four-month sprint. The Flashpoint curriculum should be applicable to startups in any field, not just software. We’re actively trying to expand the focus, and would appreciate any suggestions — or nominations for the expanded mentor field.

And, for our next cohort, we are planning to add to the mix by including a small number of teams sponsored by corporations that are looking to use Flashpoint as a new way to manage disruptive innovations. If one of your clients is a corporation trying to figure out how to disrupt their existing business model (before their competition does it to them!), let me know. Flashpoint should have something new and valuable to offer. We suspect that Georgia Tech will eventually offer continuing education in “startup engineering” to companies of all sizes.

(Incidentally, Flashpoint costs money to operate. Our first premier sponsor was SAIC, and we just added United Technologies Corporation at that level, along with some lower-level sponsors listed on the Flashpoint site. We also have many corporate supporters. Let me or Christina know if you have a client who might want to be involved.)

And, internally, we’re applying the Flashpoint lessons to our EI2 startup services. Flashpoint isn’t going to replace ATDC or VentureLab. But the “lean startup” concepts and our new field of “startup engineering” will start to be used as foundations for many of the services that Nina Sawczuk’s team offers.

Launching Flashpoint was chaotic, stressful, exhausting, and occasionally contentious… just like a startup! We’ve learned a lot, and we’ve established Georgia Tech as a national player in this new field of building lean startups on a firm academic foundation. I’m proud of all the EI2 people who played a part, and look forward to getting more of you involved in the future.

As always, keep up the good work.

Stephen

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Below is a necessarily-incomplete list of EI² accomplishments from 2011:

• The Georgia Manufacturing Extension Partnership (GaMEP) staff received two national MEP awards: one for innovation and one for service. We also hosted the first national Advanced Manufacturing Partnership event (at the request of the White House) and our first Next Generation Manufacturing conference. We piloted the Department of Energy’s Superior Energy Performance program and helped lead the adoption of ISO 50001 Standard for Energy Management.
• Our MBDA Business Center (MBC) won a five-year cooperative agreement totaling more than $2.4 million and was recognized as one of the region’s outstanding performing centers for 2011. The Georgia Tech Procurement Assistance Center (GTPAC) helped 4,116 Georgia businesses win $639 million in government contracts. As one of our revenue diversification programs, we also launched the Contracting Education Academy at Georgia Tech, with seven courses approved by the Defense Acquisition University.
• The Alternative Media Access Center (AMAC) helped Board of Regents institutions save more than $4.4 million in learning materials for 9000 visually-impaired students in Georgia. Late in the year, Governor Nathan Deal transferred Tools for Life, Georgia’s Assistive Technology Act Federal Program, from the Georgia Department of Labor to AMAC. Tools for Life offers options for greater freedom by increasing access to and acquisition of assistive technology devices and services for Georgians of all ages and disabilities so they can live, learn, work, and play independently in communities of their choice. We expect this new program to bring more than $1.2 million in annual funding to EI².
• Through our Strategic Partners Office, we managed Georgia Tech relationships with 243 companies and interacted with 202 faculty members, resulting in $4.1 million of sponsored research to Georgia Tech. At the same time, we participated in 18 economic development projects resulting in 1,594 new jobs in Georgia from company relocation and $63 million in new capital investment.
• Our Innovation Partners group won new business in tourism (TRAC), and in foreign direct investment and exporting. We also played a key part in steering the new Huron Consulting study of the economic impact of Georgia Tech, which will be shared with key decision makers in the government and business communities in early 2012.
• ATDC grew to more than 500 member companies, making it arguably the largest business incubator in the world. In 2011, we announced a new tier of “ATDC Select” for more personalized coaching and connection building. VentureLab launched 16 spinout companies based on Georgia Tech intellectual property. VentureLab graduates raised more than $100 million in venture capital last year. At the same time, we helped launch Flashpoint, a new business accelerator that’s getting great reviews and helping small teams evaluate and build scalable business models for their startups.
• As anticipated, much of our growth was in the area of health information technology (IT). Health@EI² enrolled 889 eligible Georgia healthcare providers, for a contract value of more than $2 million. And we won a Georgia Department of Community Health award for more than $1.7 million for our work in health IT.
• Perhaps most satisfyingly, we won an intense national competition for one of 20 U.S. Jobs and Innovation Accelerator Challenge awards from the Small Business Administration, Economic Development Administration, and the Department of Labor, with a value of more than $1.6 million. Within EI², the winning proposal was an internal collaboration between Health@EI², Innovation Partners, Strategic Partners, and Industry Services. We also drew in other Georgia Tech units (Institute for People and Technology and the Georgia Tech Research Institute), and even Gwinnett Technical College.
• The Global Center for Medical Innovation (GCMI) won a pair of Economic Development Administration grants plus matching money from the Georgia Research Alliance to initiate construction of its medical device prototype development center, which will be completed in April of this year. The center also added its first permanent professional staffers, and Emory agreed to join as a full member in the consortium (along with Piedmont Hospital and the Georgia Research Alliance).
• Our commercial real estate remains 100 percent occupied; in fact, our space in Centergy is probably the only commercial real estate in Atlanta with a waiting list! John Toon won Georgia Tech’s staff communicator of the year award; personally, I think he and his team earn that every year. And our support staff have been fully occupied bringing on board dozens of new full-time and part-time employees across the state, even through the budget downturn. (They’re funded by non-state dollars.)

There’s a lot going on! I appreciate your hard work and the great results you achieved in 2011. I hope everyone had a restful holiday, because we’re going to need it. 2012 is going to be a great year!

Stephen

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They spent one week on-site working with ECE’s Dr. Kim, Dr. Al-Regib, and Dr. Hayes preparing a commercialization plan for the proposal.  The concept was to develop the next generation in-home media convergence device.  Its design and functionality reaches beyond AppleTV, GoogleTV, Boxee, and many other recent Internet-based television solutions.

After further work back in Atlanta, the team submitted the proposal to the Korean government for consideration.  With help from Carl Rust and Dr. McLaughlin, our $9 million proposal was selected as first out of 109 submissions — a major accomplishment.  Since March of 2009 the “KORUS” (Korea US) research team, along with research and corporate partners in Korea have been developing the device.  David, Carl, and James have been supporting the team through gathering competitive intelligence, preparing market forecasts, and coordinating partner integration.  This effort led to the visitation and temporary assignment of many Korean faculty, government officials, and government laboratory researchers to our campus.

Signing ceremony at Centergy with Dr. Yeongcheol Seok, Vice President, Korea Institute for Advancement of Technology; Dr. Steve McLaughlin, Vice President of International Initiatives, Georgia Tech;
and Carl Rust, GT EI2; 3 May 2011

Building on this relationship with the Korean government, in 2009, Dr. McLaughlin began developing a MKE/KIAT (Ministry of Knowledge Economy /Korea Institute for Advancement of Technology) activity called Global Industry-Academia Cooperation or R&BD Hub (Research & Business Development Hub).

Under this effort, MKE/KIAT are sponsoring  Georgia Tech to perform research and commercialization collaboration with small- and medium-sized companies from Korea.  The goal is to jointly perform pioneering research leading to new products for US markets.  Successful projects are expected to have a local economic impact by growing their operation in Georgia to support the new business which may include some combination of sales, marketing, support, distribution, and manufacturing functions.

Georgia Tech’s reputation as a prominent research university combined with ATDC (Advanced Technology Development Center), our highly-recognized startup company incubator, uniquely qualified us for this program.  MKE and KIAT have committed $2.5 million so far, with more expected in future years.  Carl Rust and his organization within EI2 are involved in assisting with the management of this effort.

In late 2009, David Bridges and Carl Rust began developing a concept named “Global Startup Business Program in US” with the Korean government agency SBC (Small and Medium Business Corporation). The program has both entrepreneur and incubator elements.  This $1.8 million proposal is intended to provide young Korean entrepreneurs an international education and hands-on training experience so they have a higher probability of success in launching their technology based new business targeting US markets.  Those that are successful are expected to form a startup company and become part of ATDC.  A unique part of the proposal is the notion of bringing over entrepreneurs in a cohort of 10 to 15 companies.  To our knowledge, this international cohort landing concept has never been attempted.    Our success with KORUS and the MKE/KIAT hub has led to this opportunity with SBC. The Korean government is scheduled to make a decision in January 2012.

Dr. McLaughlin, Georgia Tech’s vice provost for international initiatives, has on at least two occasions described this long-term relationship with the Korean government as an archetype for GT’s future collaborations with other countries.  The initiatives bring foreign governments, enterprises, and economic development opportunities to Georgia.  As of now, Centergy is home to the KORUS team, the R&BD Hub teams, and hopefully the new cohort SBC teams.

So if you think you’re seeing more Korean faces in the Centergy courtyard, now you know why! Make them feel welcome.

Stephen

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I prepared the following document as my testimony to the State Science and Technology Strategic Plan Joint Study Commission, meeting in Columbus on 30 November 2011. It’s going to be available on their website, but I decided to replicate it here.

Supporting Technology Entrepreneurs in Georgia

Stephen Fleming
Vice President, Enterprise Innovation Institute
Georgia Institute of Technology

http://innovate.gatech.edu

I.               Background/Company Overview

The Georgia Institute of Technology is one of the nation’s top research universities, distinguished by its commitment to improving the human condition through advanced science and technology. Georgia Tech’s campus occupies 400 acres in the heart of Atlanta, where 20,000 undergraduate and graduate students receive a focused, technologically based education. Georgia Tech is consistently ranked in U.S. News & World Report’s top ten public universities in the United States and has been ranked as #4 among all engineering schools (public and private) for the last six years.

The Enterprise Innovation Institute is Georgia Tech’s primary business outreach organization, and provides a comprehensive program of assistance to business, industry, entrepreneurs, and economic developers. Our goal is to help enterprises of all kinds apply science, technology, and innovation to improve their bottom lines. Specifically for entrepreneurs, our programs include:

• ATDC: The Advanced Technology Development Center is the oldest, largest, and most successful university-based business incubator in the country. Since 1980, ATDC has helped hundreds of Georgia entrepreneurs create great technology companies, and currently has over 500 member companies. Recently, it was honored as one of the ten best incubators in the world by Forbes magazine.
• VentureLab: In cooperation with the Georgia Research Alliance, Georgia Tech’s VentureLab helps launch over a dozen startup companies a year based on Georgia Tech research.
• Flashpoint: An innovative new entrepreneurial accelerator, combining shared learning, mentorship, and cutting-edge approaches to business model generation and startup creation.
• GCMI: The Global Center for Medical Innovation helps physicians and other medical professionals commercialize their inventions with a process based on the successful VentureLab model and a dedicated medical device prototyping facility.

The Enterprise Innovation Institute manages the Georgia Seed Capital Fund, which leverages private-sector investments into technology startups. This fund has not received any state appropriations in several years. EI2 also houses the Georgia SBIR Assistance Program, which has been drastically downsized due to the economic recession and the resulting reductions in the Board of Regents “B” budget in recent years.

II.              Please address the following points:

a.   What policies are currently in place that are barriers to your company/organization’s success?

The prohibition against investing state pension assets into venture capital firms has had a negative impact on local venture funds’ ability to raise capital. Although relaxing this prohibition will not have an immediate “silver bullet” effect, it should be done both for fiduciary and for economic development reasons.

b.   What policies have aided in your company/organization’s success?

The state’s annual appropriation to the Enterprise Innovation Institute (through the Board of Regents “B” budget) is the basis for all of our entrepreneurial assistance programs as well as our other business-support services in 25 locations throughout the state. Due to the economic recession and the resulting reductions in the “B” budget, our appropriations have been cut approximately 30% over the last four years. We have maintained our focus and continue to be recognized as one of the best entrepreneurial programs in the country and as the hub of much of the technology entrepreneurship in Georgia. As tax revenues recover, it’s important to bring the “B” budget back in line with previous funding levels.

In addition, the state’s support of the Georgia Research Alliance has brought dozens of superb scholars to our state, and many of them have launched entrepreneurial startups. Georgia Tech averages over a dozen spinout companies per year; most of these have benefited greatly from the GRA commercialization grant program.

Finally, the recent angel tax credit appears to be stimulating private-sector investment by individuals into Georgia technology startups. This should be monitored and, if justified, extended in future years.

c.   Where do you want to see your company/organization in ten years?

Currently, American business leaders think of Silicon Valley, Boston, Seattle, and Austin as the centers of technology entrepreneurship in this country. In ten years, I want Atlanta to be on that list.

d.   How can the state of Georgia help your company/organization realize this goal?

Please see policy recommendations below.

III.         Please include a short bio and your company/organization’s background.

Stephen Fleming has over 15 years of private equity experience at the General Partner level. Prior to his venture capital career, he spent 15 years in operations roles at AT&T Bell Laboratories, Nortel Networks, and LICOM (a venture-funded startup).

An Atlanta native and summa cum laude graduate of Georgia Tech, Stephen returned to his alma mater in mid-2005 as Chief Commercialization Officer. In 2009, he was promoted to Vice President, Economic Development and Technology Ventures, and Executive Director of the Enterprise Innovation Institute at Georgia Tech.

In addition to his roles at Georgia Tech, he is also a member of the Investment Committee of the Seraph Group, an early-stage venture capital firm. Stephen is active in the “alternative space” industry; he is an investor in three private aerospace companies and is a founding member of the Space Angels Network. Mr. Fleming also serves on the boards of the Technology Association of Georgia, the Spiritual Living Center of Atlanta, and Tech High School, a charter high school emphasizing science, math, and technology in urban Atlanta.

Georgia Tech’s Enterprise Innovation Institute (EI2) helps enterprises of all kinds improve their competitiveness through the application of science, technology, and innovation. During fiscal year 2010, the Enterprise Innovation Institute:

• Helped Georgia manufacturing companies reduce operating costs by $35 million, increase sales by $243 million, and create or save 1,350 jobs. EI2 served 710 manufacturers during the year.
• Evaluated 125 Georgia Tech research innovations and formed 16 new companies based on this intellectual property. Startups based on Georgia Tech innovations attracted $60.5 million in investment.
• Worked with 235 companies interested in collaborations with Georgia Tech, including 17 projects involving state economic development agencies. Projects resulting from those interactions generated 3,693 new jobs and produced $547 million in capital investment.
• Helped Georgia companies win $560 million in government contracts, creating an estimated 11,505 jobs.
• Assisted 71 minority entrepreneurs, who received $31.5 million worth of new contracts, sales increases, and financing.
• Served more than 250 technology startup companies that together generated capital activity (venture capital investment and mergers/acquisitions) of more than $157 million. Companies affiliated with the ATDC program reported revenues totaling more than $1 billion and nearly 3,500 jobs.
• Helped Georgia companies prepare 58 applications for Small Business Innovation Research (SBIR) grants. Companies assisted won nearly $7 million in awards.

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It gave me a chance to meet Michael Bloomberg, and I strongly recommend that you take the time to listen to his keynote, which is archived on C-SPAN here. He made my points far better than I could have!

But I also enjoyed the panel discussion which followed. If you’re inclined, you can watch the whole thing here. My bit starts at 43:20, and I chime in again around 1:27:10. Since I had my notes on my iPad, I was able to update them in realtime at the event; that text is below.

(FYI, using Pages on the iPad with 40-point Helvetica makes a great personal teleprompter!)

Thanks for inviting me here. I appreciate the opportunity.

I could probably replace my prepared remarks with “What Mike said.” His Honor did a great job.

Although I’m not an academic, I think my role today is to discuss immigration from the point of view of a major research university. And I’d like to follow that with some of the issues with current immigration policies that affect what our students can do AFTER graduation.

For those of you who aren’t familiar with Georgia Tech, we’re the largest engineering school in the United States. But we’re not just big; some folks think we’re pretty good.

U.S. News ranks us as the 4th best engineering school in the U.S. — when the top three are MIT, Stanford, and Cal Berkeley, #4 isn’t a bad place to be.

They rank us as the 7th best public university of all types.

And we’re not just good at one thing. They rank twelve types of engineering degrees — electrical, mechanical, civil, etc. We rank in the Top Ten for eleven of them, and we don’t offer the twelfth.

We’re in Atlanta. As you might expect, since the civil rights era, we have a strong history of graduating minorities. Whether you’re measuring Bachelor’s, Master’s, or Ph.D.’s, we’re Top Ten for African-Americans, for Asian-Americans, and for Hispanics, and for minorities overall.

And we have a lot of foreign students.

Right now, about 7% of our undergraduates and 40% of our graduate students are on foreign visas.

Forty percent. As Tom pointed out, the national average for STEM graduate students is actually over 50%. And as Robin pointed out it’s north of 60% in computer science.

At Georgia Tech, the bulk of our foreign students come from, unsurprisingly, India, China, and Korea. But, overall, they come from 115 countries. –I don’t think I could name 115 countries!– Overall, between graduate and undergraduate, that’s 18% of our total enrollment, or about 3800 out of 21,000 students.

It’s hard to get into Georgia Tech. We get six applications for every slot in our freshman class, so you know that we’re pretty picky about who we let in. The 3800 foreign students on our campus are the best of the best. Smart, hard-working, flexible… you couldn’t ask for better students. Or better employees. Or better CITIZENS.

But the United States has put up barriers to letting these students build their careers in America. Just getting their student visas approved — not even talking yet about permanent residency! — is a bureaucratic nightmare. It discourages many of them to just give up, and study in other countries.

It didn’t used to be that way. A hundred years ago, the United States had, at best, a second-tier set of colleges and universities. Harvard was pretty good, but things fell off pretty rapidly from there. But, by 1950, we had unquestionably the finest higher education system in the world. We still have it today, although the rest of the world is trying hard to catch up.

What happened? IMMIGRATION. Our university system in this country was BUILT on immigration.

Specifically, Hitler came to power in 1933 and destroyed the German university system, which at that time was the finest in the world. Many of those professors, and even students, escaped to Britain and the United States. That won the war. Imagine the Manhattan Project without Jewish scientists. Imagine if they’d stayed in Germany.

After World War II, Europe was wrecked, and even MORE came to the United States from all over the Continent.

And then from Latin America, and from Asia… We imported the best brains from all over the world into our colleges and universities. And that led to a half-century of unchallenged economic dominance.

A couple of months ago, I was at a Georgia Tech student event, the Convergence Innovation Competition. I was INCREDIBLY impressed by the quality of the student entrepreneurs. They were mostly Master’s candidates in Computing or Electrical Engineering. And they were demonstrating apps for iPhones and Androids and even your television that were commercial-grade, or could get there.

I spent about a decade as a venture capitalist, and I was IMPRESSED. This was a class project, but it felt like a venture capital event. I started asking them, “Do you want to start a company around this?” I’ve still got friends in the venture business, and I think I could get some of these teams funded!

But the answer was usually a smile, and a quiet “No, I can’t.” So then I figured it out, and I started asking them: “Where are you from?”

Of 28 competitors, 26 were from overseas.

There’s no way that these 26 students can graduate from Georgia Tech and take what they’ve learned here and start companies in the United States.

They want to, but they can’t.

If you can only remember one thing I’ve said this morning, please remember that. We’re educating these children, they want to start companies here, and we’re telling them to go home.

They want to stay, but they can’t.

Removing the caps on H1-Bs wouldn’t help them. Our immigration service doesn’t recognize self-employment. And the kids couldn’t afford the fees, anyhow. So, they can find a big-company employer who is able to invest $20,000 or $30,000 in getting them an H1-B and eventually a green card. Or, they can go home. And, as Elizabeth pointed out, their economies are thriving back home, so it’s more than likely that they’ll compete with us from there!

Now, entrepreneurship is HARD. Most people who try it, fail. I think the willingness to pack your bags and move to a different country for graduate school is a pretty good filter for whether a young person has what it takes to start a successful company. And the data supports that. Over HALF of the startups in Silicon Valley have a founder from India or China.

And, remember, as the Mayor mentioned, the Kauffman Foundation found that young companies have accounted for essentially ALL the job growth in the United States over the last twenty-five years. But our immigration policy doesn’t encourage foreign graduate students to participate in that job creation. Work for a big company, or go home.

Just at Georgia Tech, we’ve seen the impact of this over and over again. One of our spinout companies, Whisper Communications, was based on work from a graduate student in electrical engineering. He jumped through all the immigration hoops possible, but eventually exhausted his options. He gave up.

He was immediately snapped up by Apple, where I figure he’s building the iPhone 6, but it delayed the formation and growth of that company by over a year. We had to bring in new founders without immigration problems.

Who knows what could have happened in that year? And I’m sure our former student is contributing economic value working for Apple, but nothing like what he could be doing in a startup.

John Doerr, one of the most successful venture capitalists in history, said “I would staple a green card to the diploma of anyone that graduates with an advanced degree in the physical sciences or engineering in the United States.” He’s absolutely right.

These people are going to create value. Create jobs. Pay taxes, for crying out loud! Why would we NOT want them to stay here? Get married, raise families, buy a house, buy 2.3 cars… the multipliers are endless.

Now, what I always hear when I speak on this subject is that “immigrants take jobs from Americans.” The Mayor already addressed this. That’s just not true for entrepreneurial immigrants! They don’t TAKE jobs, they MAKE jobs!

First for themselves, then for co-founders, and eventually—if successful—for hundreds, or, thousands of employees.

This is NOT a zero-sum game. If these immigrants aren’t allowed to create jobs, those jobs WILL NOT go to native-born Americans… those jobs simply won’t exist.

And these aren’t jobs flipping burgers or picking crops. These are high-quality high-paying jobs that your kids would like to have someday. Example: There are two million “Internet jobs” in the United States. None of those jobs existed twenty years ago. Most of the COMPANIES didn’t exist twenty years ago. Now, subtract all of those Silicon Valley companies who were founded by immigrants. It’s a pretty ugly picture.

And although Silicon Valley gets all the press, it’s deeper than that. As a bit of history, not just Google and Intel, but Pfizer, DuPont, U.S. Steel, and Procter & Gamble were once startups founded by immigrants.

Earlier, Alejandro repeated the cliché that “we are a nation of immigrants.” It’s a cliché, but it’s also true. We still have the world’s best graduate schools; other countries are catching up, but we started from far ahead.

Moreover… We have a history of risk-taking, of capital fluidity, and of tolerance of failure that has made the U.S. the best place in the world to start a company. Other countries are catching up here, too, but our culture and history give us an edge. Even with our current financial troubles, I believe that we’re still the entrepreneurial Mecca for the world.

But we have to make sure that we attract the best, brightest, and most innovative entrepreneurs, whether they were born here or not.

In honor of the Mayor, i made up a baseball analogy, but he beat me to it. Building fences to keep out brainpower is like saying that “My baseball team has enough talent, let the other teams get some good players, too.” That’s not how the Yankees play the game, and it’s not how the United States should play the game.

With that, I’ll pass the microphone and look forward to the rest of the panel. Thank you.

Tweet

Last Tuesday, September 20th, the Telecommunications Industry Association (TIA) and Numerex invited me to address the Second International M2M Standardization Meeting as the keynote speaker for their dinner at the Carter Center. I didn’t know anything about M2M, but that’s never stopped me from speaking before! So I started doing a little research, and this was the result.

Thanks for having me here tonight. I was asked to come speak about M2M communications. My first reaction was “what’s M2M”? I hadn’t heard the acronym before…

But once Alain educated me, I realized I’d actually been working on M2M for a long time.

I’ve had a few careers, but I started out in the telecommunications business… originally at Bell Laboratories, back when that meant something, and then at Nortel, back when that was a great company. In about 1985, I was teaching classes to Illinois Bell in something called “TBOS”. Anybody here ever heard of it?

Nope.

TBOS: Telemetry Byte Oriented Serial. It was a primitive method for taking contact closure alarms — relays — and remoting them to a centralized monitoring center. It was invented by the old Bell System, and Nortel implemented it in our optical fiber systems. So here I was, 23 years old, in a classroom in Chicago, teaching a class to a bunch of old phone company guys.

And here I am teaching them about TBOS. This is Illinois, so they were heavily unionized. And they’re not looking too excited.

I finally asked one of them what the problem was. He replied: “You’re saying how amazing this technology is, and how you’re able to centralize alarm monitoring at one location, and how we won’t need to have individual technicians at each office to monitor alarms. Well, that’s MY job, and you’re saying they won’t need me anymore.”

Ouch.

So way back in the dawn of time, I not only tripped over M2M, I tripped over some of the business and financial and personal impacts of M2M.

So then I went off and joined a startup company that turned out to be in the M2M space, even though we didn’t call it that… We were building something called SCADA… Supervisory Control And Data Acquisition. We sold that into the electrical power utilities, giving them telemetry and telecomm capabilities over optical fibers strung along the power cables. That replaced a fault-monitoring system which consisted of guys driving around with radios and, literally, dropping quarters into pay phones. Wound up selling that to Westinghouse, and the basic technology is still being used today.

I kicked around the telecomm business for a while, then got into the venture capital business. One of the companies I funded was an operational system layer for fiber optic networks… allowing the optical equipment to negotiate in realtime without human intervention. The idea was that the machines themselves would identify optimum routes as traffic requirements changed as well as routing around failures from cable breaks or other equipment problems. Combination of sensors, telemetry, and some centralized intelligence: that was M2M.

Good idea. We got a beta test with a well-funded startup telecom operator called… Global Crossing. In 2001. Ouch.

So we said no more messing around with these fly-by-night telecom operators. We pulled out all the stops and got a beta test with the second-biggest network in the country. A company named… Worldcom.

Yep, Bernie Ebbers company. We were in their lab when everything fell apart in early 2002. Double ouch.

So we were a bit early with that particular implementation of M2M. Companies like Cisco and Ciena do it today, so the basic idea was a good one, just ahead of its time.

Now, ten years later, I’m running the economic development group at Georgia Tech, and I’m seeing M2M wherever I go. It’s a subset of what Kevin Ashton labelled “The Internet of Things”… what happens when every physical device has sensing capability and telemetry connections to the wider world?

At Georgia Tech, we have an amazing technical depth in sensors of all types. A lot of that started with our work for the military, but a lot of it is now moving into the commercial sector. We have sensors for just about everything. Optical, microwave, acoustical, chemical, mechanical… you name it, if you can detect it or measure it, Georgia Tech probably has worked a sensor for it.

One of the most practical sounds silly, but it’s important. We have a startup company that’s putting ammonia sensors in big industrial chicken coops to control their ventilation fans. It turns out that ammonia buildup is a huge problem, and they currently solve it by having guys drive around in pickup trucks and sniff the air. If they smell ammonia, they flip on a fan for a while. Some sensor work done out of GTRI will let chicken producers do that from a central location.

I’m detecting an echo here.. here I am, putting middle-aged guys out of work again…

Then we have our work with energy harvesting. If you start planning on scattering wireless sensors hither and yon, you quickly run into the problem of powering them.

Batteries are cheap, but changing batteries isn’t.

So we have G.K. Chang working on using flexible nanomaterials to create a tiny amount of electric current, just from flexing. Which means they could be powered by wind, or HVAC airflow, or even blood circulation. That means you could instrument an entire building for temperature, or an entire oil refinery for pressure, without miles of wiring or thousands of batteries.

And I mentioned blood circulation… It turns out that putting sensors inside the human body is a huge opportunity. One of our startup companies is named CardioMEMS. You might have heard of them; they did a deal with St. Judes that values the company at about $450 million. It’s an interesting story.

Mark Allen, a professor in electrical engineering at Georgia Tech, was funded by the Air Force to invent pressure sensors that could work inside a jet engine. That turns out to be a really hard problem, since you can’t exactly run wires to them, since the wires would melt. So Mark got that working… but, at the same time, a physician at the Cleveland Clinic was looking for ways to measure blood pressure inside the heart and the major cardiac arteries.

There are a whole class of situations where arteries can rupture and cause immense damage. For patients at risk, it’d be great to have constant monitoring of their pressure and detect trouble before it starts. You can’t expect them to trot into the clinic for a CT scan every day. And if you implant a traditional sensor, you’d have the problem of changing batteries. Do you know anyone with a pacemaker? Changing that battery costs $10,000.

But Jay and Mark together were able to invent a sensor that can be remotely powered by low levels of microwave energy, so you can fit the whole thing into a little chip that gets implanted through a cardiac catheter, without surgery. So you have an outpatient procedure, then you can go home, measure your pressure daily when you brush your teeth, then have it sent over phone lines to your doctor’s office. It turns out to reduce emergency hospitalizations by 38% per year.

That’s a big deal. And that’s M2M.

At the other extreme, I met with a company last week that’s automating those huge sprinkler pivot systems you see in South Georgia. Each one of them put out about a million gallons of water per day. If you’ve been following the news in Georgia, we’ve had recent years of drought conditions, and we’re in the midst of a water war with a couple of neighboring states, because we’ve grown so fast and don’t have enough reservoir capacity.

It turns out that 80% of the water consumed in Georgia goes to agriculture, and about half of that is wasted. By building a network of moisture sensors and targeting which spots need moisture versus which ones don’t, you can greatly reduce the amount of water you need for irrigation. And one of their examples is a farmer who is farming 20,000 acres across six counties. He’ll be able to manage all those irrigation systems from one computer. That’s M2M.

One more example: vehicle-to-vehicle communication. This is something we’re working with in the Georgia Tech Research Institute, again as a spin-out of military technologies. Civilian applications mean that your car will talk to every other car on the road. If there’s a slowdown up ahead, your car will adjust your speed by applying the brakes just a bit in advance. So you’re saving gas, reducing the chance of accidents, and smoothing out the flow of traffic, all at the same time. And if you’ve ever encountered Atlanta traffic, every bit of smoothing can help.

Take it a little further, and every car on the road will start negotiating with every other, so your GPS will start giving you alternate routes based on realtime events and traffic situations. And, eventually, the cars will just drive themselves, so you can read the paper or catch up on email during your commute. That sounds pretty good to me. And that’s M2M.

So… healthcare, water usage, and traffic. That’s three of the biggest challenges facing Georgia. And M2M is going to play a key role in solving all of them. Like I said, at Georgia Tech, we’re seeing M2M technology wherever we turn. It’s a great time for the industry, and I hope you’ve had a productive day talking about it.

With that… thanks very much for having me here tonight, and back to dinner!

Tweet

There’s a good overview in the AJC here. But there were a lot of great speakers at the conference, and I wanted to share some of their thoughts with you. I started going through my notes, and realized that I had posted most of the “good stuff” on Twitter! So I decided that this month’s column would be a list of my tweets during the two days I was at Callaway (sectioned off by headings so you get an idea of different sessions, rather than one undifferentiated stream).

For those of you who follow me on Twitter, you get cheated this month. If you don’t, this may be a quick lesson in the value of social media. It’s a lot more than “What I had for lunch today”!

Getting Started

At the Georgia Forward conference

Bill Steiner lobbed me a softball question about hackerspaces. Love them, want to see more in Georgia! Thanks, Bill!

Mathew Hauer, University of Georgia Vinson Institute

Title of UGA demographics talk at #gafwd : “Georgia is the New California”!

Mathew Hauer: Over 1 million Georgians speak a foreign language at home

Mathew Hauer: Georgia has 10 of the 50 fastest growing counties in the USA

Mathew Hauer: Gwinnett County is #1 in USA for growth of Asian in-migration.

Mathew Hauer: Hispanics currently 9% of Georgia population. Will double in 10 years at current rates.

Mathew Hauer: Already more Hispanics being born in Georgia than moving here. Will accelerate. More than immigration issue.

Mathew Hauer: Almost all population growth in Georgia will be < age 25 or > age 65. They mostly don’t pay taxes. Ouch. #demographics

Regional Panel

• Tom Ratcliffe, former mayor of Hinesville
• Terry Lawler, Regional Business Coalition of Metro Atlanta
• Dan Bollinger, Southwest Georgia Regional Council
• Teresa Tomlinson, mayor of Columbus
• Deke Copenhaver, mayor of Augusta
• Bill Steiner, Northwest Georgia Regional Commission

Tom Ratcliffe: the Port of Savannah is “Georgia’s second Hartsfield”

Terry Lawler: the unofficial motto of Atlanta is “Sorry I’m late” #traffic

Tom Ratcliffe: Skilled workforce is aging. Where will we get welders when the current ones retire?

Tim Ratcliffe: Retired Army officer who taught math at West Point wanted to teach high school in Georgia. Not allowed. #educrats

Dan Bollinger: There are great teachers out there in every walk of life. Let them teach!

Ross Mason, Chairman, Georgia Department of Community Health, and Managing Director, HINRI Labs

Ross Mason: Fort Gordon just invested $460M in military communications hub.

Ross Mason: Silicon Valley is driven by Moore’s Law. US healthcare is driven by Moron’s Law.

Ross Mason: What would Georgia be like today if Robert Woodruff had moved to Florida to avoid income tax? Scary.

Ross Mason: Turn Fort McPherson into healthcare innovation park where startups and system integrators can coexist.

Ross Mason: Lack of alt assets allocation in Georgia pensions has cost us $12 billion since 2006

Ross Mason: There are more Chinese/Indians with 130+ IQs than the US has citizens. (Just reporting, not fact-checking)

Ross Mason: Texas passed tort reform. Brought 15,000 doctors to state in 18 months. Average 11 employees each.

Economic Development Breakout Session

• Mike Cassidy, Georgia Research Alliance
• Mike Gerber, Atlanta Regional Council for Higher Education
• Cliff Pyron, Georgia Ports Authority
• Jannine Miller, transportation policy advisor, Office of the Governor
• Tino Mantella, Technology Association of Georgia
• Maria Saporta, Atlanta Business Chronicle
• Ross King, Association of County Commissioners of Georgia
• Ricardo Azziz, president, Georgia Health Sciences University

Mike Gerber: Single best thing Georgia can do for economic development is improve K-12 performance

Mike Gerber: Oz Nelson said UPS wouldn’t have considered Georgia when moving HQ from Connecticut without @Georgia_Tech, Emory, UGA.

Mike Gerber: Universities are permanent economic development assets. North Carolina can’t offer Emory tax incentives to relocate!

Cliff Pyron: Savannah container port has grown 11.5%/year for last ten years. Fastest growth in USA, #4 total volume

Cliff Pyron: 40% of US population is in Southeast. Ga/Fla exceeds NY/NJ. (Me: reporting, not fact-checking)

Cliff Pyron: Savannah is the shallowest deepwater port in the world. Panama Canal expansion makes it mandatory to deepen.

Jannine Miller: Georgia has extraordinary transportation infrastructure, but we stopped investing around 1990.

Jannine Miller: Georgia is now second-to-last in transportation investment per capita. Other states catching up fast. (Pass TSPLOST!)

Jannine Miller: 70% of truck traffic in/out of Georgia starts/stops in the state. “Not Wyoming where they’re just passing through”

Tino Mantella: Georgia has 10% unemployment, but also has 5000 open technology jobs where employers cannot find right skill set.

Jannine Miller: There’s traffic everywhere in USA, not just Atlanta. What Atlanta needs is predictable and reliable commutes.

Maria Saporta (condensed): Why does Georgia have such a fragmented econ dev strategy? Too many meetings, commissions, reports.

Ross King: more discussion of city-county (and multiple-county!) consolidation in Georgia over last 12 months than in last 25 years.

Ricardo Azziz: Don’t need more med schools; need bigger med schools with higher quality education.

Kati Haycock, President, the Education Trust

Kati Haycock: Single most determinative predictor of future income is high school mathematics performance

Kati Haycock: No matter how you slice the data, USA is not keeping pace with international competitiors in K-12

Kati Haycock: It’s not just poor kids. Even USA’s top 5% ranks 23rd out of 29th compared to top 5% elsewhere.

Kati Haycock: One of only two developed countries where young people in 2010 have not achieved higher education than parents

Kati Haycock: U.S. African-American and Hispanic high school graduates score 4 years behind white students in reading and math

Kati Haycock: Remember, those scores are based on the kids who stay in high school to get a diploma #distressing

Kati Haycock: Household income diff leads to an 8X differential in rates of college degrees (77% top quartile vs 10% bottom quartile)

Kati Haycock: Success stories from Frankford Elem, Delaware; George Hall Elem, Mobile, AL. #gafwd Fired all teachers for lack of vision

Kati Haycock: Elmont Memorial Junior-Senior High, NY: low incomes, but high scores, high grad rates

Kati Haycock: same exam given to low-income African-American students in Boston and Washington DC: 19% diff (two grade levels)

Kati Haycock: K-12, Georgia is a middle-of-the-pack state in a mid-pack country. Not great place to be in knowledge economy.

Kati Haycock: Common Core is not enough. Set sights on “Advanced” curriculum

Kati Haycock: Family issues and poverty matter, but not as much as teachers who are in it to win

Kati Haycock: Why do teachers teach to the test? Because they don,t have sufficient curricular support

Kati Haycock: Need to demand more from students. Convince them that taking challenging classes in HS makes a difference later

Kati Haycock: Get rid of deadwood. Student who gets two bad teachers in a row may never recover. No teacher tenure

Kati Haycock: It’s a lot easier to start a good school than to fix a bad one. Aggressively shut ‘em down, transfer only good teachers

Kati Haycock: Good teachers don’t give up on any kids. (Me: see Roberta Pournelle’s success teaching reading to the “hopeless”)

Kati Haycock: 1/3 of teachers nationally are NOT coming from schools of education. Yay for experimentation! Teach for America, etc

Kati Haycock: No teacher should be allowed to perform poorly for more than two years. They do too much damage. Move them out.

Navneet Singh Narula, founder, nBrilliance

Navneet Singh Narula: 95% of life is figuring out what to do; only 5% is actually doing it.

Navneet Singh Narula: “The ROI on social media is that your business continues to exist in five years”

Chad Evans, Senior Vice President, Council on Competitiveness

Looks like Chad Evans (Council on Competitiveness) is using Prezi at podium. Good for him, breaking the tyranny of PowerPoint!

Of course, using thin grey typefaces on a black background is just foolish. Ah, well. We’ll get Chad to Startup Gauntlet soon

Chad Evans: US, EU, and China split half of global GDP more or less equally. Rest of world has other half

Chad Evans: US remains decades ahead of rest of world on labor productivity

Chad Evans: By 2020, Social Security, Medicaid, Medicare, and debt service will consume 92% of Federal budget. How to best spend 8%?

Cool! Chad wasn’t at conference yesterday, but is referring to tweets I (and others) posted! Twitter is more than “I ate lunch”

Chad Evans: Real life opportunities are interdisciplinary, crossing science and business “silos”

Chad Evans: Globalization is driven by global challenges, not just growth. Energy, water, etc.

Chad Evans: 40% of jobs lost in Great Recession were high-wage; only 14% of new jobs in recovery are high-wage

Chad Evans: His college interns have majors that didn’t exist ten years ago.

Chad Evans: “Early 60s is the new 30s” We’re going to work a lot later in life than our parents

Chad Evans: 25% of US workforce has been in current job less than a year. 50% < 5 years.

Chad Evans: US has largest R&D investment in world, but China on track to outpace us.

Chad Evans: Council on Competitiveness hosting national dialog at Georgia Tech next month

Chad Evans: Arizona State University building joint incubator with Brazil

Chad Evans: “Industrial policy” should not be a dirty word in Washington

Chad Evans: Multinational looking to locate plant in USA has to talk to 80 people in Washington. Compare to 2 in Brazil, 1 in China.

Chad Evans: His positive impression/narrative of Georgia’s competitiveness is not supported by the data.

Breakout Session: Solving Georgia’s Long-Term Water Supply Problem

• Patricia Barmeyer, King & Spalding
• Joe Cook, Coosa River Basin Initiative
• Mark Masters, Albany State University
• Katie Kirkpatrick, Metro Atlanta Chamber of Commerce
• Don Cope, Dalton Utilities
• Harry West, Center for Quality Growth & Regional Development, Georgia Tech
• Jim Stokes, Georgia Conservancy
• David Bennett, Atlanta Department of Watershed Management

Learning about Georgia’s water-use future at #gafwd

Based on 11th Circuit decision, Georgia will be filing motion to dismiss SECOND “water war” suit with Alabama within four weeks

Patricia Barmeyer: Water war cases are a failure of judicial system. Should have been thrown out in 1990.

Patricia Barmeyer: Only court with appropriate jurisdiction is SCOTUS. Alabama and Florida haven’t filed suit there since they’d lose

Joe Cook: Water wars aren’t just between Georgia, Alabama, Florida. Also pits Atlanta against Rome, Cartersville, south Georgia

Mark Masters: 70% of Albany (Ga.) economy is agriculture-based. Water is not optional.

Katie Kirkpatrick: Atlanta has made huge efficiencies in water efficiency. Added 1 million people, but CUT water consumption by 14%

Joe Cook: Atlanta has gone with water conservation carrots, but no sticks.

Joe Cook: Atlanta asking for 100M gallons/day from Etowah basin. Atlanta should ensure more water conservation first.

Katie Kirkpatrick: We want 250M gal/day from Tennessee River, and desalinized water from coast, but interbasin xfer is impractical

Don Cope: Building a reservoir today is a 15-year project.

Don Cope: Power generation plants are huge user of water. Evaporative coolers required to meet air quality standards

Harry West: We’ve struggled to get water conservation laws past real estate interests in Georgia legislature for decades

Don Cope: TVA claims that Tennessee River could spare 1 billion gallons/day with no impact. Over 500M gal/day flows from Ga INTO Tenn

Don Cope: Local rivalries aside, if you hurt Atlanta, you hurt the economy of the entire Southeast United States

Patricia Barmeyer: Northwest Georgia and southern Tennessee are natural geographical unit; line on the map is artificial

Patricia Barmeyer: Atlanta is forbidden by law from even exploring engineering requirements for water from Tennessee

Me: Send the Georgia National Guard to the 35th parallel, and build a pipeline!

Dan Cope: Water isn’t necessarily fungible. Cold water more valuable to power plants than warm water (hi delta-T). Allocate smarter.

Katie Kirkpatrick: Desalinization could help coastal regions, but VERY expensive to lift 2M gal/day 1000 feet to Atlanta

Patricia Barmeyer: At least allow Georgia to explore interbasin transfers. Currently prohibited by law. Bitter intra-state rivalries.

Timely coincidence! #gafwd RT @DropInTheBucket “Civilization has been a permanent dialogue between human beings and water.” – Paolo Lugari

Based on this panel, I’m willing to hand the keys of Georgia’s water issues to Don Cope of Dalton, and let him fix it. #impressive

Harry West: Georgia has not adequately considered worst-case scenarios (future growth plus inevitable drought years).

Jim Stokes: The 15-year timeline for building new reservoirs is dominated by Federal permit process (EPA, Corps of Engineers)

Harry West: Peachtree Street is a subcontinental divide. Every time City of Atlanta water crosses Ptree, it’s an interbasin transfer!

David Bennett: Atlanta already has highest water rates and lowest per-capita use in the country. Not much room for improvement.

Jim Stokes: Raising Lake Lanier by one foot would equal a new reservoir, but would require same 15-year Federal permitting process

Other Breakout Sessions (tweeted by others)

RT @joeventures: Ga Council of Arts was moved to Ga Dept of Econ Dev, in recognition of the role played by arts in job creation

RT @jim_langford: Jessyca Holland: metro Atlanta has lowest percentage of Gen Y population of any major city in US. Losing creative tale …

RT @GeorgiaForward: Paul Radford @ #gafwd : Recession = great reset for ga cities.

David Walker, former U.S. Comptroller General, CEO of Comeback America

RT @RyanTaylorAIA: David Walker says US founding fathers did not intend current government: politicians were intended to be biz persons

RT @iruncampaigns: “Government has grown too big, promised too much and waited too long to address its fiscal issues.” – David Walker

Conclusion

Hope you enjoyed the tweetstream. The mood at the conference was… hard to say. “Optimistic, but worried”? Over dinner and in hallway conversations, there seemed to be a consensus that Georgia had lost momentum over the last decade. One person in particular had met with a senior economic development civil servant from North Carolina. He asked “What do you in North Carolina think of Georgia?” The answer: “We don’t. We think about Texas, and Asia, and Brazil.”

Ouch.

But it wasn’t doom and gloom. I think there was a consensus that our destiny was largely in our own hands. Deepening the port of Savannah will help. Passing TSPLOST will help fix the infrastructure that has been ignored for too long. The 11th Circuit Court of Appeals tossing out Judge Magnuson’s looming restrictions on Lake Lanier will help until we get new reservoirs built. Even the Atlanta Public School cheating scandal may help, if it gets taxpayers and business leaders focused on how terribly broken our K-12 system is.

It’s a difficult time in Georgia, but I think it’s a difficult time all across the United States. I certainly wouldn’t trade places with California, whose deficit is bigger than our budget!

Stephen

Tweet

There is an old Vulcan proverb: Only Nixon could go to China.
–Spock, Star Trek VI

When I took over EI2 two years ago, one of the first things I did was merge ATDC and VentureLab. It was the right thing to do at the time… but times have changed. Nina Sawczuk has been director of Startup Services for almost a year and has ambitious growth strategies for btoh ATDC and VentureLab… but the strategies are different. It’s time for ATDC and VentureLab to be separated again. Let me explain.

Both ATDC and VentureLab deal with encouraging entrepreneurial startups, but their focus is different. ATDC is open to any technology entrepreneur in Georgia, while VentureLab is focused purely on opportunities coming from the Georgia Tech campus. Due to attrition over the years, both staffs had shrunk to the point where I decided the best way to maintain critical mass was to combine them. This has worked, to a point — but attrition has continued (most recently with the departure of Lance Weatherby for a local startup) while the demand for ATDC services has grown tenfold (from 40 to 400 member companies). Simply spreading the remaining staff across a wider and wider range of constitutents isn’t going to work any more. So… we have to do something else.

What we’re going to do is to learn from Tom Sawyer.

Remember the story of Tom Sawyer’s fence? Aunt Polly had ordered Tom to whitewash a fence on a hot Missouri day. Tom had other activities in mind, but a quick slap from Aunt Polly’s slipper got him to working… and to thinking. Ben Rogers came by on the way to the swimming hole:

“Say — I’m going in a-swimming, I am. Don’t you wish you could? But of course you’d druther work — wouldn’t you? Course you would!”

Tom contemplated the boy a bit, and said:

“What do you call work?”

“Why, ain’t that work?”

Tom resumed his whitewashing, and answered carelessly:

“Well, maybe it is, and maybe it ain’t. All I know, is, it suits Tom Sawyer.”

“Oh come, now, you don’t mean to let on that you like it?”

The brush continued to move.

“Like it? Well, I don’t see why I oughtn’t to like it. Does a boy get a chance to whitewash a fence every day?”

You know the rest of the story… soon, Ben trades him an apple to take over the work of painting the fence. When he wore out, “Tom had traded the next chance to Billy Fisher for a kite, in good repair; and when he played out, Johnny Miller bought in for a dead rat and a string to swing it with.” (I don’t know the market value of a dead rat in Tom’s world, but it’s apparently more than a kite.)

By the end of the day, Tom hadn’t touched the paintbrush since handing it to Ben; he was too busy orchestrating the horde of boys wanting to paint the fence.

He had had a nice, good, idle time all the while — plenty of company — and the fence had three coats of whitewash on it! If he hadn’t run out of whitewash he would have bankrupted every boy in the village.

That’s our new model for ATDC… except, I hope, without dead rats on strings.

Atlanta’s technology startup ecosystem is in a period of vibrant growth. ATDC has played a key role in the center of that ecosystem since 1980, and that’s not going to change. What’s changing is that now we’re counting on that ecosystem to provide resources as well as consume them. We’ve always had great volunteers at all levels; now we’re kicking it up a notch. We’re going to expand our dependence on volunteer mentors who will each help one or two companies. We’re going to re-establish positions for paid part-time startup catalysts (“entrepreneurs in residence”) who’ll assist more companies as well as sharing the load for classes, workshops, and other educational services. And based on our 2011 success with sponsorship, we’re opening up new opportunities for individual and corporate contributions to help pay the bills.

ATDC will provide more, and more varied, services to Georgia’s technology entrepreneurs than ever before. The difference is, most of those services will no longer be delivered by full-time ATDC staff. Mentors will come and go as they find interesting companies to work with. The new catalysts will be hired as part-time temporary employees, with the understanding that they’re not on a path to a full-time position… after a year or so, we expect them to either take a company out as CEO or senior manager, or to find something else to do. In the meantime, they can provide current, relevant, and targeted advice to less-experienced entrepreneurs, and in more areas than we can afford to bring onto the payroll.

What about VentureLab? The challenges there are different. VentureLab — including its affiliations with the Georgia Research Alliance, the Georgia Seed Capital Fund, the Georgia Tech Edison Fund, and the new GT:IPS program — offers what I think is the most comprehensive set of support services at any research university in the United States. We’ve had great successes, and expect more. But these successes take dedicated, focused effort over a period of years. In fact, the VentureLab catalysts typically act as uncompensated company co-founders more than coaches.

I don’t think those functions can be handed off to the community, at least not in the early stages of company formation. (Later on, successful VentureLab startups will join ATDC, and share in the same service mix available to outside entrepreneurs.) So VentureLab will continue to have full-time catalysts on the EI2 payroll. They’ll continue to focus on those faculty and student inventions that appear to have significant potential to become startup companies. And they’ll increasingly align their work with the new trandisciplinary research clusters that Steve Cross and I have discussed at the last few quarterly meetings.

But that leads to an immediate conundrum: Georgia Tech plans to have around twelve of these new clusters, but we only have five catalysts. How do you spread five people across twelve clusters? I can guarantee, the answer isn’t “Ask Steve Cross for money to hire seven more people”!

More fence to whitewash!

We’re already in discussions with some of the research clusters as well as academic departments and GTRI on how we can borrow some talent into VentureLab. They’ll work for us part-time, but with their salaries carried on their home organization’s books. We get talented, well-connected individuals to act as a force multiplier for VentureLab. They get great experience in helping to form entrepreneurial startups, overseen by our veteran catalysts. Everyone wins.

There are a lot of operational details to work out, but those are the broad brushstrokes. Nina Sawczuk will keep wearing two hats as EI2′s director of Startup Services and general manager of ATDC. She has promoted Keith McGreggor to director, and Roberto Casas to associate director, to run VentureLab as part of Startup Services. And Flashpoint fits in there, too. (I haven’t written about Flashpoint yet? Maybe I should do columns more than once a month!)

This is all just Startup Services; there’s lots going on in every department. No summer slowdown for EI2!

Photo Credit: Sheila Scarborough

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