Last year, Josh Lerner published another provocative book, Boulevard of Broken Dreams, Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It (Princeton University Press, 2009). Why bring this up now? Two reasons include:
- The ten year anniversary of the National Nanotechnology Initiative (NNI) is at hand, and
- The thirty year anniversary of the Bayh-Dole Act is also at hand. Both are subject to “celebrations” in Washington DC in coming days and weeks. Both involve government playing strong roles in innovation and jobs.
In addition, the recent election further makes for important political debate about the role of the government in stimulating job creation. Will the new Congress continue to fund nanotech? How long will cleantech be a ”darling” of politicians and venture capitalists (or flavor of the month)?
Over Thanksgiving, I was visiting my parents and picked up the local paper. A columnist had written a column with the headline ”Giving Thanks for American Ingenuity” which essentially advocated the notion that liberty, not government vision, yields innovation. Also, individual great inventors in our past were motivated by constant desires to solve problems, cut costs, satisfy curiousity, and – last but not least – pursue profit! The current political climate, according to this writer, featured too much governmental vision for innovation and not enough of good, old-fashioned “Yankee ingenuity.”
Lerner’s book would appear to both agree and disagree with this thesis, although probably more agreement can be found. Lerner, for example, shows how government played a role in the establishment of Silicon Valley. And he shows how some places like Singapore and Israel have seemed to have positive outcomes when government stimulated innovation and creation of venture funding. Lerner also speaks favorably about the US style Bayh-Dole systems which provide a favorable climate for venture capital and commercializing university-origin technology. However, Lerner also enumerates many examples of failed governmental programs which attempt to create a governmental venture capital to stimulate innovation and provide jobs. He notes dangers that can happen when commercializing university research. Hence, the title about broken boulevards.
How does this connect to nanotech? Lerner, best I can tell, does not directly mention nanotech, despite the government’s enormous billions of dollars role in funding nanotech research over the past decade. Lerner does make the point, however, that governments can get impatient with building an entrepreneurial environment, and this would arguably apply to nanotech and the current emphasis on jobs. Lerner writes, “Programs that have initial promise should be given time to prove their merits.” Lerner also writes that one potential role of government is to fund technology companies that, for whatever reason, are not the VC’s “flavor of the moment.” For example, VCs tend to herd and, in the process, might miss good opportunities.
Cleantech? Lerner notes VC herding flowed to cleantech as the flavor of the moment in 2008. Biotech gets more mentions throughout the book than nano or cleantech.
Nanotech will take time for commercialization in some more complex sectors. For example, besides Lerner, another thought leader in this area has recently written a book about government policy and innovation, which includes mention of nanotech and venture capital’s reluctance to invest in markets that are not yet ripe:
“For instance, the technological buzz about nanotechnology dates back at least to the early 1990′s. I supervised a student research project at the time that anticipated a soon-to-be-booming field. As it happened, it was the Internet that took off. The excitement about nanotechnology didn’t go away, but in the absence of any large commercial applications, nanotechnology companies have accounted for a modest share of VC investment.” Amar Bhide, The Venturesome Economy, Princeton University Press, 2008.
One important point: both Lerner’s and Bhide’s books stress the importance of international connections for innovation. Nothing is gained by being too US-centric, one can learn by reading these books. Good old Yankee ingenuity may “feel good” and linger as a political talking point, but it is fading as a relevant concept in the modern, interconnected economies of the nations (so suggests these authors as I interpret them).
Note: clearly, government funding continues to influence nanotech heavily. Approximately 10-15% of US class 977 nanotech patent filings show a federal funding statement (for the 6,551 issued patents, the percentage is 12.4%; for the 7,223 published applications applications, the percentage is 11.4%).
So, indeed, – give the columnist credit – we should give thanks for American ingenuity. We should study the history for innovation and remarkable individuals who invented great things. More important, however, we should recognize ingenuity across the globe can make our society prosperous, per Lerner and Bhide. This ingenuity involves both technical innovation in nanotech and cleantech as well as smart government policy to improve society and create a climate to create jobs linked to this innovation. Government policy makers should study the insights of Lerner and Bhide, as well as the positive experiences found in some other countries when government does things for innvoation.