[Senate Hearing 112-617]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-617

 
                 PERSPECTIVES FROM THE ENTREPRENEURIAL
        ECOSYSTEM: CREATING JOBS AND GROWING BUSINESSES THROUGH 
                            ENTREPRENEURSHIP

=======================================================================

                               ROUNDTABLE

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 18, 2012

                               __________

    Printed for the Committee on Small Business and Entrepreneurship


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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                      ONE HUNDRED TWELFTH CONGRESS

                              ----------                              
                   MARY L. LANDRIEU, Louisiana, Chair
                OLYMPIA J. SNOWE, Maine, Ranking Member
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
TOM HARKIN, Iowa                     JAMES E. RISCH, Idaho
JOHN F. KERRY, Massachusetts         MARCO RUBIO, Florida
JOSEPH I. LIEBERMAN, Connecticut     RAND PAUL, Kentucky
MARIA CANTWELL, Washington           KELLY AYOTTE, New Hampshire
MARK L. PRYOR, Arkansas              MICHAEL B. ENZI, Wyoming
BENJAMIN L. CARDIN, Maryland         SCOTT P. BROWN, Massachusetts
JEANNE SHAHEEN, New Hampshire        JERRY MORAN, Kansas
KAY R. HAGAN, North Carolina
  Donald R. Cravins, Jr., Democratic Staff Director and Chief Counsel
              Wallace K. Hsueh, Republican Staff Director
               Brian van Hook, Democratic Policy Director
          Meredith West, Republican Senior Professional Staff


                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Brown, Hon. Scott P., a U.S. Senator from Massachusetts..........     4
Moran, Hon. Jerry, a U.S. Senator from Kansas....................    20
Risch, Hon. James E., a U.S. Senator from Idaho..................    20

                               Witnesses

Gorman, Juliet, Communications Director, Etsy....................     5
Gerber, Scott, Founder and President, Young Entrepreneur Council.     5
Williamson, Tim, Chief Executive Officer and Co-Founder, The Idea 
  Village........................................................     6
Daugherty, Scott, Executive Director, North Carolina Small 
  Business and Technology Development Center.....................     6
Mitchell, Ph.D., Matt, Senior Research Fellow, Mercatus Center at 
  George Mason University........................................     7
Lowe, Hon. Craig, Mayor, City of Gainesville, Florida............     7
Nigro, Joe, Business Evangelist, Vsnap.com.......................     7
Wadhwa, Vivek, Fellow, Stanford University.......................     8
Friederichs, Christina, Managing Director, Helzberg 
  Entrepreneurial Mentoring Program..............................     8
Laskey, Alex, President and Founder, Opower......................     9
Hyman, Jennifer, Chief Executive Officer and Co-Founder, Rent the 
  Runway.........................................................    10
Burfield, Evan, Chairman, StartupDC..............................    10
Greene, Ph.D., Patricia G., Paul T. Babson Chair in 
  Entrepreneurial Studies, Babson College........................    11
Acharya, Nishith, Director, Office of Innovation and 
  Entrrepreneurship, Economic Development Administration, U.S. 
  Department of Commerce.........................................    11

          Alphabetical Listing and Appendix Material Submitted

Acharya, Nishith
    Testimony....................................................    11
    U.S. Department of Commerce Economic Development 
      Administration 2011 i6 Green Challenge Winners.............    47
Brown, Hon. Scott P.
    Testimony....................................................     4
Burfield, Evan
    Tesimony.....................................................    10
Daugherty, Scott
    Testimony....................................................     6
    Prepared statement...........................................    54
    Biz Boost Report.............................................    57
Friederichs, Christina
    Testimony....................................................     8
Gerber, Scott
    Testimony....................................................     5
    Prepared statement...........................................    65
Gorman, Juliet
    Testimony....................................................     5
Greene, Ph.D., Patricia G.
    Testimony....................................................    11
Hyman, Jennifer
    Testimony....................................................    10
Landrieu, Hon. Mary L.
    Opening statement............................................     1
    Chart titled ``Private Sector Job Growth''...................    40
    Chart titled ``2009 Graduate Students in STEM Fields''.......    41
    Chart titled ``Top 10 U.S. Engineering Graduate Degree 
      Programs''.................................................    42
Laskey, Alex
    Testimony....................................................     9
    Prepared statement...........................................   113
Lowe, Hon. Craig
    Testimony....................................................     7
Mitchell, Ph.D., Matt
    Testimony....................................................     7
    Prepared statement...........................................    71
    ``Working Paper on Freedom and Entrepreneurship: New Evidence 
      from the 50 States''.......................................    74
    ``Testing Baumol: Institutional Quality and the Productivity 
      of Entrepreneurship''......................................    98
Moran, Hon. Jerry
    Testimony....................................................    20
Nigro, Joe
    Testimony....................................................     7
Risch, Hon. James E.
    Testimony....................................................    20
Snowe, Hon. Olympia J.
    Prepared statement...........................................    43
Wadhwa, Vivek
    Testimony....................................................     8
Williamson, Tim
    Testimony....................................................     6


                         PERSPECTIVES FROM THE
                  ENTREPRENEURIAL ECOSYSTEM: CREATING
          JOBS AND GROWING BUSINESSES THROUGH ENTREPRENEURSHIP

                              ----------                              


                       WEDNESDAY, APRIL 18, 2012

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met in a roundtable discussion, pursuant to 
notice, at 10:05 a.m., in Room 428-A, Russell Senate Office 
Building, Hon. Mary L. Landrieu, Chair of the Committee, 
presiding.
    Present: Senators Landrieu, Risch, Brown, and Moran.

 OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chair Landrieu. Good morning, everyone. Let me call this 
third roundtable on the entrepreneurship ecosystem to order. I 
really appreciate the special effort that many of you made to 
be here and to be a part of this exciting, and I hope, 
productive series of roundtables that the Small Business 
Committee has been conducting over the course of the last few 
months to explore some ideas relative to strengthening the 
entrepreneurship ecosystem in our country. I really appreciate 
your participation. You have all come highly recommended.
    The goal of these roundtables is to take the ideas that 
come from them and the discussions, and this is going to be 
very informal, hopefully very interactive, much different than 
a sort of staid, stiff, formal hearing. So, I hope that you 
will be enthusiastic about sharing some of your best ideas.
    You are all a very impressive group of experts and leaders 
in your own right, and I am going to introduce you briefly in 
just a minute.
    As we look at the definition of an ecosystem, it is defined 
as, ``a system formed by the interaction of a community of 
organisms within their environment.''
    When I read this definition this morning in preparation, a 
couple of the words jumped out to me. It is a system. It is not 
a hodgepodge of unrelated pieces.
    The word ``interaction'' is important. It indicates it is 
not action going one way but back and forth. It is not one 
organism but a community of organisms that have to work 
together for the whole to be successful, and of course, we all 
understand what the environment is.
    Let me welcome Senator Brown, who has joined us. Thank you 
for joining us.
    It is a very interesting definition, I think, to apply to 
the work that our Committee is trying to do without 
jurisdiction over and admitting that we do not have 
jurisdiction over all aspects of business.
    Obviously, the Commerce Committee has their jurisdiction. 
The Finance Committee has jurisdiction over the tax code. Every 
other Committee has jurisdiction over different rules and 
regulations and policies related to health care, education, et 
cetera, et cetera.
    Our Committee is really a Committee that is focusing on 
trying to pull as many of these ideas together and promote them 
as a package to the Congress to strengthen this ecosystem. Some 
of those bills will have to be actually marked up in this 
Committee. Others will have to share jurisdiction with other 
Committees.
    So, do not be just restricted in your comments even if you 
think, well, this really belongs in Banking. The Banking 
Committee will eventually get it sooner or later.
    So, with that definition while exploring what makes certain 
individuals into entrepreneurs is an interesting and useful 
endeavor, it is also ground well covered.
    These discussions are taking a look at relationships 
between those entrepreneurs and their current environment for 
entrepreneurship and how we can make them more robust.
    Babson College, which is represented here today, has done 
some exciting work. We are looking forward to hearing from 
them. In fact, in their many research papers and documents, 
Babson has identified the six domains of any entrepreneurial 
ecosystem.
    First, they start with a conducive culture that rewards 
innovation, creativity, and experimentation. The question is, 
does our culture here in Washington do that? Do our states do 
that? Do our local governments do that? Does the private sector 
do that? Rewarding innovation, creativity, and experimentation. 
Are we risk-averse or taking too much risk?
    Second is enabling policies and leadership that provide 
regulatory and capital support. What is the regulatory 
environment? Are we providing enough capital? Third, 
availability of appropriate finance including microloans, 
private equity, and public capital.
    Four, quality human capital that includes both skilled and 
unskilled workers from home and abroad.
    Five, venture friendly markets for products by creating 
distribution channels and entrepreneurship networks.
    And six, a range of institutional infrastructure supports 
including incubation centers, legal and accounting advisers.
    These are the six domains identified for Babson. Many of 
you have done work in this area. You may have your own domains. 
Please share them with us today.
    Now that we have at least one idea of what makes up an 
entrepreneurial system, hopefully we can develop ideas that 
come from these discussions into policies that will strengthen 
this ecosystem in the United States.
    My goal is for the United States to have the strongest, 
most vibrant, most dynamic, most finely tuned ecosystem in the 
world; and I think that if we do that, the country will stay 
number one with our economy. If we do not, we will fall behind.
    Our first roundtable was focused on developing and 
strengthening and understanding, I would really say, the high-
growth entrepreneurs and what makes or separates high-growth.
    We know jobs are created from these startups. We have been 
told a lot up here that it is not just the new companies that 
are creating the jobs, obviously, but it is those companies, 
the new companies, that are the gazelles and the high-growth 
companies. There is not a complete consensus about that, but 
that information is coming to us loud and clear.
    The second roundtable was held on March 22nd about a 
specific government program called SBICs, Small Business 
Investment Companies, which was not a new idea. It was 
developed in 1958. It is a 60-year-old program that authorizes 
$3 billion to basically create non-bank lenders, small business 
investment companies that have the great strength of being a 
public-private partnership where licensed or registered groups 
can go out and raise private capital and then the government 
matches a two-to-one match to create a pool of funding that is 
lent out, an idea that evidently in 1958 Senators like Lyndon 
Johnson (who was the other Senator involved? President 
Eisenhower signed it) did not think the banks were making 
capital readily available to main streets all over America. I 
think that is a challenge that we still face today.
    Both Congress and the President have proposed expanding 
this program. It has been proven to be effective over many 
years and I am supporting, strongly supporting, that expansion 
and hoping we can get it done.
    Today's discussion will focus on mentorship and technical 
assistance, what works and what does not, what kind of 
mentorship is important, what kind of technical assistance.
    Entrepreneurship education, again, can you teach someone 
how to be an entrepreneur or is it innate? If it is or not, how 
do we make more of them that are successful?
    What is the role of local government? We have one of our 
mayors here. Do local governments have a role and how do the 
local governments in cities or counties working with states, 
what is working and what is not working.
    Private sector accelerators. Some of you run those. How are 
those effective? High risk skilled talent pools, where are 
they, how do we get more of them?
    Then of course, promoting small business exports. It has 
been very disappointing so far that we have not been able to 
reauthorize the Export Bank. Hopefully, we can get that done 
sometime soon. That is because one percent of U.S. small 
businesses currently export their products or services to the 
world even though 95% of the world's customers are outside the 
borders of the U.S. If we could double or triple that, I think 
it would mean a tremendous number of jobs and wealth creation 
for the United States. So getting the Export Bank authorized is 
important.
    I am going to ask each of you to introduce yourself. When 
we do this, either some people take too long and go on and on 
or some people do not say anything. We are going to try to find 
that happy medium. Okay?
    I want you to really realize that you have an opportunity 
to tell in a minute or less about yourself and the one or two 
things that either you are most proud of or why you think you 
have been asked to be at this roundtable.
    Then as you know, we will start off with questions from 
here. When you want to speak or have something to say, just 
stand your nameplate up like that and we will go back and 
forth. We will try to give everybody an opportunity, and really 
again, the idea is to have a free flow of discussion.
    I am going to recognize Senator Brown, who is busily not 
listening to me or maybe listening and signing his letters, 
signing his letters for an opening statement and then he may 
have to leave.
    Senator Brown. I am listening.
    Chair Landrieu. Go right ahead.

 OPENING STATEMENT OF HON. SCOTT P. BROWN, A U.S. SENATOR FROM 
                         MASSACHUSETTS

    Senator Brown. First of all, thank you, Madam Chair, I 
wanted to attend as I have attended the other small business 
roundtables that you have held. I greatly appreciate them and I 
have learned a lot, and most importantly you have had folks 
here from Massachusetts.
    We obviously have Patricia. It is good to see you. And Joe 
Nigro, MassChallenge. I want to thank you for holding these.
    In Massachusetts, we had a field hearing on access for 
capital for small businesses in Boston. It was really laser 
focused on how to create new capital and that is why I was very 
happy that my amendment on Crowdfunding was able to pass.
    Joe, I know you were instrumental in it. Thank you. The 
folks in MassChallenge actually started a site called 
wefunder.com and have about $6 million worth of capital ready 
to go out the door for new startup businesses.
    In Massachusetts, we are an innovative state. We have, I 
think, more opportunities than some states. Not all states. But 
as a result of working with you on this Committee and providing 
SBIR reauthorization, the new Crowdfunding opportunities, 
looking at a lot of the SBA opportunities that we have been 
able to get reauthorized, it is a good thing.
    It is funny. The biggest challenge I see as I travel around 
the country, I am sorry, around the state, is that lack of 
regulatory and tax certainty. You do not know what is next. 
That is one of the biggest challenges. You do not know if the 
tax policy is going to change.
    FDA, EPA, NLRB, whatever the entity is, SEC, you do not 
know what is next. That is really scaring a lot of investment 
dollars away. There is upwards of $2 trillion on the sidelines. 
What I have tried to do is to work on those things that are 
going to move our country forward on Crowdfunding, for example. 
We are working on the Hire a Hero Veterans bill to get that tax 
break there so folks will actually want to hire and expand. I 
am concerned about a lot of the business deductions that are 
expiring at the end of the year as well as the individual rates 
for a multitude of businesses that file as S corporations. 
Business owners do not know, as I said, what is coming down the 
pike.
    I spent the entire of last week in Massachusetts touring 
small businesses from a meatball company that is the number two 
meatball company in the entire country, and I know each and 
every one of you had.
    All they want to do is make meatballs. But they are saddled 
with that lack of certainty as to what is the tax policy 
because they are a sub-S corporation. What is going to happen 
with the EPA and the DEP and a lot of the municipal, state, and 
then Federal regulations that are just saying, you know what, 
we may best move.
    So, this is a good opportunity to work on the things that 
matter. I appreciate your holding them. I am looking forward to 
participating. I have other hearings I am attending, but I 
wanted to show my support for your efforts.
    So, thank you.
    Chair Landrieu. Thank you, Senator Brown, and he has been 
one of our more active members of our Committee. I am really 
grateful and very appreciative for his attendance and his 
interest both here and at home. I thank him very much.
    Let us begin, Juliet, Ms. Gorman, with you, and again 
please, one minute. Do not be shy but do not be too long.
    Ms. Gorman. Sure.
    Chair Landrieu. You have to speak right into these mics. It 
is a little bit awkward but press your red button and then lean 
into your mic.
    Ms. Gorman. Okay. Hi, guys. I am Juliet Gorman. I am the 
communications director at Etsy. Etsy, if you do not know us, 
is an online marketplace for hand-made in vintage goods and 
supplies. We have over 800,000 sellers on our platform, 
handmade and vintage goods and supplies.
    I am actually wearing a few things today made by Etsy 
sellers from New York and California. But we have 800,000 
sellers on the platform, three quarters of them, more than 
three quarters of them are women entrepreneurs, many of them 
with home-based businesses.
    They sell everything from food to furniture. Like I said, I 
have got some accessories today. We have around 40 million 
unique visitors come to our market place every month.
    Last year our sellers had over $525 million in gross 
merchandise sales. That may not sound like a big figure in the 
big picture of the economy, but $4000 in supplemental income at 
the holidays or when you have a car payment or when your kid 
needs braces, when you want to go out for an extra dinner with 
your husband or even possibly quit your day job, makes a big 
difference.
    Chair Landrieu. Juliet, that is perfect. Perfect. Perfect.
    Scott.
    Mr. Gerber. Thank you, Madam Chair. I much appreciate you 
allowing the YEC to be represented today. Again, my name is 
Scott Gerber. I am the founder of an organization called the 
Young Entrepreneur Council. We represent nearly 400 of the most 
successful young entrepreneurs in the country who have created 
close to 20,000 jobs and hundreds of millions of dollars in 
revenue.
    In addition to that, we have spearheaded a national 
movement called Fix Young America, which is a campaign where we 
have taken some members (actually some that are represented 
here today) and aggregated their best ideas surrounding policy, 
private-sector solutions, and philanthropic solutions to the 
youth unemployment crisis through entrepreneurial means.
    Right now we actually have this book coming out of policy 
solutions which I would love to give to the Committee on May 9. 
But most importantly our mission is to provide Americans under 
the age of 35 and recently graduated the opportunity to become 
entrepreneurs in an economy in which frankly we see the 
traditional job losing its value.
    Chair Landrieu. Fabulous. Terrific. And please share that 
book with us and hopefully you will share some of those ideas 
in the book today.
    Mr. Gerber. Yes, ma'am.
    Chair Landrieu. Tim. Mr. Williamson.
    Mr. Williamson. Thank you, Senator. My name is Tim 
Williamson. I am one of the cofounders of The Idea Village, but 
first and foremost, I am an entrepreneur from New Orleans who 
moved away and came back home in the late 1990s to find a 
declining city.
    So, The Idea Village was founded very specifically because 
we believe that entrepreneurship creates change. I love to hear 
the word ``ecosystem,'' but back when we started, we called it 
an ``idea village.''
    The answer was to build a network of university, 
government, and professionals that singularly would identify, 
support, and retain entrepreneurial talent.
    The good news is we have worked with over 1800 
entrepreneurs in the last 12 years. We have engaged over 2000 
people to write 56,000 consulting hours and $3 million in 
capital.
    New Orleans is becoming a laboratory for innovation and 
entrepreneurship, rated the number one brain magnet in the 
country and number two best city for jobs. But fundamentally we 
are seeing a model where ecosystems are coming together to 
support entrepreneurs and more importantly keep them in the 
city to make a better city.
    Thank you.
    Chair Landrieu. Thank you, Tim. And I may have to be a 
little partial here because, of course, that is my hometown, 
and my brother is the mayor of New Orleans. So, he works very 
closely with Tim but they really are developing quite a 
wonderful model that other cities could emulate. So, it is 
exciting, and thank you for coming again.
    Mr. Daugherty, Scott.
    Mr. Daugherty. Good morning. I am Scott Daugherty. I am the 
State Director of the North Carolina Small Business and 
Technology Development Center, which is operated through the 
University of North Carolina system. I also serve as the 
Commissioner for Small Business for the State of North 
Carolina.
    I am here today principally because our SBTDC has had for a 
number of years a very strong commitment to serving existing 
businesses with 10 to 150 or so employees.
    Chair Landrieu. Fabulous.
    Mr. Daugherty. We think this is a significant market place. 
It is grossly underserved but has enormous potential for growth 
including growth in export markets.
    Chair Landrieu. Thank you. We are really looking forward to 
your expertise in that area and we have been hearing nothing 
but very positive things about North Carolina.
    Mr. Mitchell.
    Dr. Mitchell. Good morning. Thank you so much for having 
me. My name is Matthew Mitchell. I am a senior research fellow 
at the Mercatus Center at George Mason University.
    As you may know, George Mason was sort of put on the map in 
1986 when James Buchanan won the Nobel prize in economics and 
he won it for studying public choice. Since then, Vernon Smith 
also won the Nobel Prize in economics there, also for 
pioneering in the field of public choice.
    Public choice focuses on the ways in which government 
policies are actually determined and carried out. I think his 
weighs on entrepreneurship in particular. I too appreciate the 
ecological metaphor. I think it is a really appropriate 
metaphor.
    Recently, I had been looking at the public choice ways in 
which the ecology of entrepreneurship can sometimes be 
interfered with. Just like a natural ecology, entrepreneurial 
ecology needs to be a bottom-up process and quite often can be 
subject to interference from governments or otherwise.
    Chair Landrieu. That is an excellent point, and I hope that 
we will have a little bit more thought provoking comment about 
that. Just like governments can ruin physical infrastructure, I 
mean physical, natural environments, governments can also, with 
the wrong policies, disrupt, the I do not know if you would 
call it natural but the strength, dormant strength or natural 
strength of a people to grow jobs and produce wealth.
    Mr. Lowe.
    Mr. Lowe. Hello. I am Craig Lowe, Mayor of Gainesville, 
Florida, home of the University of Florida and I am also on the 
U.S. Conference of Mayors Technology and Innovation Task Force.
    It is really an exciting time to be Gainesville because our 
entrepreneurial ecosystem is really starting to take off. The 
latest development is a startup incubator at the University of 
Florida that is called the Florida Innovation Hub.
    It is designed to bring together scientists and innovators 
and entrepreneurs. It is 48,000 square feet. It is also home to 
the U.S. Office of Technology Licensing. It opened in October 
but already there are 15 startups as well as the offices of 
venture capitalists, law firms that deal with entrepreneurs, 
design firms, and other entities that offer services to 
startups.
    It is the first building in what we call our Innovation 
Square but already it is having broader economic impact. For 
example, we had a company that is relocating, well, is actually 
locating, that is based in India that will be bringing over 400 
jobs to our city.
    Thank you.
    Chair Landrieu. Thank you, Mr. Mayor. That was perfect.
    Mr. is it Nigro?
    Mr. Nigro. Correct.
    Chair Landrieu. Joe.
    Mr. Nigro. So, thank you very much for having me today. I 
am really excited to be here. So my name is Joe Nigro. I am a 
founding team member of a startup company in Boston, 
Massachusetts called Vsnap. Vsnap is a 60-second video 
messaging company for your smart phones, tablets, and 
computers, just a more personal alternative to e-mail.
    That is kind of my pitch. I should have put my 60-second 
pitch on Vsnap and sent it to everybody.
    [Laughter.]
    Maybe I will do my follow up on that. But I am part of the 
world's largest accelerator competition based in Massachusetts 
called MassChallenge. You know, you brought up earlier today, I 
have it here, interaction of a community. Interaction of a 
community is a crucial part of the ecosystem and that is 
exactly what MassChallenge is, hundreds of entrepreneurs 
running around like crazy trying to figure it out, as I like to 
say, and doing a great job at that.
    So, I am really looking forward to this discussion.
    Thank you.
    Chair Landrieu. Well, good. When you all figure it out, 
please tell us.
    Mr. Nigro. Will do.
    Chair Landrieu. Mr. Wadhwa.
    Mr. Wadhwa. I am Vivek Wadhwa, an entrepreneur who founded 
two technology companies, turned academic, and in my spare time 
I write for the Washington Post and for BusinessWeek.
    I have been researching global policy entrepreneurship, 
immigration, and so on. I have been shocked at all the myths 
that persist in policy circles. I have researched why companies 
are going overseas and doing outsourcing; the education systems 
of our competitors; and what makes the U.S. tick and gives it a 
strategic advantage--this includes enterpreneurship and 
immigration policy.
    I have been surprised that I am able to shatter so many 
myths that are out there and come up with more sensible policy. 
For example, Chile is doing an experiment called Start-Up 
Chile, that I helped develop. Entrepreneurship is booming there 
and this experiment costs very little.
    Chair Landrieu. Wonderful. Thank you very, very much.
    Ms. Friederichs.
    Ms. Friederichs. Good morning. Thank you for including me 
today. I am Christina Friederichs, the Managing Director of 
HEMP, which stands for the Helzberg Entrepreneurial Mentoring 
Program. We are focused in the Kansas City area where we 
strengthen entrepreneurial leaders through excellence in 
mentoring by matching proven business veterans or mentors with 
growing business owners for a three-year program.
    We focus on entrepreneurs or businesses that have a minimum 
of five employees or over $1 million in revenue because we have 
identified there is a gap of resources available between 
startup and mature companies.
    In the 17 years that HEMP has been facilitating organized 
mentoring, we have witnessed over 200 entrepreneurs 
significantly contributing to the economy through job creation 
and revenue growth.
    I thank you for the opportunity. We are excited to 
participate today.
    Chair Landrieu. Thank you so very much.
    Mr. Laskey.
    Mr. Laskey. Thank you very much for having me, Madam 
Chairwoman. And, Senator Brown, thank you again.
    I am the President and Founder of a company called Opower. 
We are an energy information company. We work with 70 utilities 
across the globe on three continents. There are 250 of us now 
at the company and the most exciting number is that this year 
alone we will generate one terawatt hour of energy savings 
which is nearly two-thirds the size of the entire solar 
industry's output in 2011.
    So, we are helping people save energy equivalent to nearly 
two-thirds of the size of the solar output in 2011.
    We work with almost every utility in Massachusetts. I think 
Massachusetts has been the state in which we have gotten the 
biggest energy savings. We are not yet working with Entergy but 
working on that. And we are working with a utility in 
Gainesville.
    There are 250 of us today but five years ago there were two 
of us squatting at a desk. We have had, I guess in retrospect, 
gazelle-type growth although it seems incremental as it has 
gone along.
    There are two policy areas that I hope that this group 
addresses, domain specific on energy efficiency. There are 
policies that make sense that have been signed into law by 
Democratic and Republican governors at the state level that 
ought to happen at the Federal level that will untap a $40 
billion market opportunity for small and big companies alike 
and put money back in the pockets of people across the country.
    The second policy area I hope this group addresses is, as 
you mentioned it Chairwoman in your opening remarks, labor and 
the talent pool, particularly immigration.
    Chair Landrieu. Thank you very much.
    Go ahead, Senator Brown.
    Senator Brown. So, are you working like with EnerNOC and 
those types of companies in Massachusetts?
    Mr. Laskey. No. We work directly with National Grid and 
NSTAR. We deliver reports that show people how their 
consumption compares to neighbors in similar size homes.
    Senator Brown. Yes. I get those. So, you are working with 
National Grid.
    Mr. Laskey. How are you doing?
    Senator Brown. I am fine because I am never there. It is 
funny. You know, I am never there. I am surprised that my 
consumption is not down because I have unplugged everything, 
like nothing is on and supposedly my neighbors are still better 
than me. So, I am glad you are here. I might want to talk to 
you later. I am not quite sure how that works.
    Chair Landrieu. He is complaining about his personal report 
but this is good. This is how we find out.
    Mr. Laskey. On average, people spend six minutes a year 
thinking about their energy use. The Senator, who is as busy as 
anyone, is spending some time thinking about energy use. That 
is a good thing.
    Chair Landrieu. It is good for us to focus.
    Ms. Hyman.
    Ms. Hyman. My name is Jennifer Hyman. I am the CEO and 
Cofounder of Rent the Runway, which is a site that rents 
designer dresses and accessories to women for 10 percent of the 
price but more importantly it empowers women to have 
aspirational experiences before all of the special events in 
their lives.
    So, the concept of Rent the Runway and the gall is to 
democratize luxury in the United States and then later 
globally. I started the business while I was at Harvard 
Business School in Boston. I am funded by two Boston VCs, Bain 
Capital and Highland Capital as well as Kleiner Perkins.
    We have grown to a company in just two years of 125 people 
located in New York City. We have a huge warehouse that we run 
as well. We have around 3 million members now. So, it has been 
very fast growth and I think that I have been helped along by a 
lot of mentorship as well as education that I think would be 
beneficial to other entrepreneurs.
    Chair Landrieu. Well, may I say the men on our staff had 
not been familiar with your company but all the women did know 
about it. So, we are excited.
    Senator Brown. I am. Okay. My daughters I am sure they use 
you guys.
    Ms. Hyman. That is really wonderful to hear.
    Chair Landrieu. This is a great help to parents as well. 
Good idea.
    Senator Brown. It is wonderful for me as well.
    Chair Landrieu. Mr. Burfield.
    Mr. Burfield. Yes. Again thank you, Madam Chairwoman.
    Chair Landrieu. You have to push the button and pull it a 
little closer to you.
    Mr. Burfield. Thank you, Madam Chairwoman and Senator 
Brown, for this opportunity to talk about these issues.
    My name is Evan Burfield. I am the Chairman of StartupDC, 
which is a regional effort here in the Greater Washington area 
associated with Startup American network to help grow exactly 
the ecosystem you are talking about from a private sector 
standpoint here in Washington.
    My background. I started my first venture-backed startup 
when I was 19 just after graduating from high school and have 
been building companies since then.
    Most recently, I am the Founder and Chairman of 
Synteractive. We are a consulting firm that builds out social 
applications in the cloud, including building out applications 
like recovery.gov here for the U.S. Government.
    When we look across the Greater Washington region, there is 
a number of challenges that we can identify that we are trying 
to tackle.
    How do we get large corporations and small startups working 
together in better ways? How do we unlock latent angel capital? 
How do we create more flexible space options?
    But the one that I want to talk the most about today is how 
do we unlock more talent and create more talent available to 
the startups because the lack of enough talent to help these 
startups grow is the number one issue facing startups here in 
the region but it is also one that we hear when we talk to all 
these other regions around the country through Startup America.
    Chair Landrieu. Wonderful.
    Dr. Greene.
    Dr. Greene. Good morning and thank you for having us here 
today. My name is Patti Greene. I am a professor at Babson 
College, like Vivek, a later stage academic and probably 
because of that I am really interested in the intersection of 
research, teaching, practice, and policy, how do we pull it all 
together in order to really have an impact in our small 
business economy.
    I think I am probably here today also, though, because I 
like to connect dots which means that I spend a lot of time 
with different kinds of technical assistance programs around 
the country and through some other programs around the world.
    So, I am on the SBA's advisory board for the SBDC; a 
Cofounder of the Diana Project, which looks at women and 
venture capital inside the country, but also women and all 
kinds of resources outside of the country; worked a lot with 
frankly many of you around the table.
    But it is about technical assistance and what does it 
really take to recognize an ecosystem that is not just about 
startups but all kinds of businesses.
    So, that is really where we play out. And as of last month, 
I am one of the owners of Artworks in Gettysburg, Pennsylvania.
    Chair Landrieu. Wonderful.
    Nishith Acharya.
    Mr. Acharya. Thank you, Senator. I am Nishith Acharya. I am 
Director of the Office of Innovation and Entrepreneurship and 
Senior Advisor to the Secretary of Commerce.
    I just joined the Administration a few months ago. I had 
been CEO of the Deshpande Foundation in Massachusetts where I 
got to meet many of you and moved down here primarily because I 
was excited about what the Administration and its partners in 
Congress were doing around the issues of innovation and 
entrepreneurship.
    Just to mention a few, the Economic Development 
Administration where I sit we have ran the i6 Challenge for the 
last two years where we have given $12 million directly from 
EDA, an additional match from several agencies including the 
Department of Energy, EPA, USDA, and then private sector match 
from a lot of the winners including Louisiana Tech to support 
centers that help universities and research centers identify 
innovation, create processes to commercialize that innovation 
and actually get it out the door in the form of startups that 
will benefit their regions.
    That has been a very exciting program to watch grow, and we 
will be running it again this year as well.
    EDA has also run the jobs and rural innovation accelerator 
which has been helping later stage companies with training and 
other areas where they can really develop their local economy 
through tax credits, training money through the Department of 
Labor as well as the USDA and others.
    Then of course, the President signed the interagency 
memorandum last fall requiring all agencies to develop plans 
for commercialization, and I look forward to working 
Administration-wide on seeing that have a major impact on how 
the U.S. Government funds for R and D really lead to more 
innovation and more entrepreneurship across the country.
    Chair Landrieu. Thank you, Mr. Acharya. I really appreciate 
your leadership in this Administration and your efforts in this 
regard.
    Let me start with a very broad question and then I will 
have a series of individual questions to just get the 
discussion going.
    Do any of you sitting around the table think that what we, 
I think, want to accomplish strengthening our entrepreneurship 
assets in America and creating jobs can be done by the private 
sector alone? And what specific role do you believe that the 
Federal Government either should or should not be involved in?
    Go ahead, Mr. Gerber.
    Mr. Gerber. Madam Chairwoman, I think that everybody would 
agree that government regulation in some ways is always a 
barrier to business. Whether people agree or disagree on the 
specifics is always a matter of politics.
    Chair Landrieu. Is it always a barrier?
    Mr. Gerber. I think that in many cases when it comes to the 
specifics regarding how someone can grow a business or on a 
city- or state-level, how businesses are dealing with Federal 
and city and state regulations, these tax implications and 
other things, as Senator Brown mentioned, will impede many 
businesses' progress.
    With that being said, I think that the main aspects for 
younger entrepreneurs where I would like to speak is 
specifically about creating a paradigm shift toward treating 
entrepreneurship in as high a regard as a traditional 
employment opportunity.
    I believe that begins in the education system. I also 
believe where the government comes to play is in promoting 
through ecosystem development, through various different 
mentorship programs, expanding technology awareness and other 
means to really connect with the younger generations about this 
topic, is something that I frankly do not see enough of today.
    Chair Landrieu. Now, be a little clearer though. What would 
government have to do with mentorship?
    Mr. Gerber. Uh-huh. So, for example right now there are 
thousands of government organizations like SBDCs across the 
country. You also have a variety of things like SCORE, the SBA, 
a variety of programs that are starting to make strides in 
connecting with young entrepreneurs.
    But ultimately an issue that is problematic is that many of 
them are run by government agents who ultimately have never had 
any business experience, who frankly have not made any real 
effort to connect with the community as a whole to bring in the 
business community in the collegiate years or in the high 
school years when these individuals are in their most formative 
years of deciding what their employment opportunity will be.
    So, those are some of the things I think on a mentorship 
level are important.
    Chair Landrieu. Excellent points. Of course, SCORE is 
private sector and so is SBA. They are government-funded but 
not government run.
    Let us go to you, Mr. Daugherty.
    Mr. Daugherty. I think the question had to do with private 
sector alone.
    Chair Landrieu. Yes. That was the question.
    Mr. Daugherty. And the answer is clearly not. There are a 
bunch of private sector initiatives represented here today and 
they are all great and good and wonderful. But unless there is 
an opportunity for profit, you are not going to get broad scale 
replication of things like an SBDC network or other kind of 
platforms for reaching large numbers of entrepreneurs across 
the nation.
    The private sector needs to be participatory partners. 
Clearly, they need to be looked to for good ideas on new ways 
to do things. But if we are going to wait for the private 
sector to do it all, you have to do is look at the banking 
system right now.
    They are not lending. They are awash in money but they are 
not lending. So, it has taken some activity out of the Congress 
to stimulate movement in that area. I think you would have to 
continue to do that.
    Chair Landrieu. I think the government has a role and the 
private sector has a role. We are trying to flush some of that 
out.
    Mr. Burfield, did you have a comment on that?
    Mr. Burfield. I would like to respectfully disagree with 
Mr. Daugherty. I think the private sector is absolutely capable 
and is creating vibrant startup ecosystems across the country.
    I mean all of the efforts that we are doing here in the DC 
region, you know, if anything, we are keeping our local 
government and our State government informed in what we are 
doing but we are driving it because we are passionate people 
that care about this and we see, you know, a vested interest 
for a region that we care about and actually growing the 
ecosystem.
    But certainly, legislation like a JOBS Act which is very 
thoughtful, very targeted in removing some of the barriers to 
private sector activity has been very beneficial. I think there 
are other very, very targeted areas where perhaps the private 
sector by itself cannot tackle the full problem.
    I want to come back again to the fact that, you know, we 
have a significant jobs crisis in this country. We have high 
unemployment, high underemployment but at the same time when 
you talk to many of our most successful startups, when you talk 
across our overall region, we cannot find talent fast enough. 
There is very clearly a labor market inefficiency across----
    Chair Landrieu. Does the private sector provide the talent 
or does the government have to change the rules to provide the 
talents?
    Mr. Burfield. I mean, I think the issue the issue at the 
end of the day is the talent that a lot of our startups need is 
not necessarily the talent that is being produced. It is not 
necessarily the talent that is available. So, you end up in a 
dynamic where startups are competing with other startups. They 
are trying to steal talent from large companies.
    Chair Landrieu. Not to press you on this, is it the private 
sector that can produce that talent or is it the government 
that has to work with the private sector to produce it?
    Mr. Burfield. The private sector absolutely can.
    Chair Landrieu. Cannot or can?
    Mr. Burfield. Can. Can. I mean, you look at programs like 
Hungry Academy here in D.C. where LivingSocial, one of our big 
success stories here in the D.C. region, has actually set up a 
program to train people who have never been software developers 
before and actually teach them how to code, teach them how to 
operate at startup speed, teach them the cultural values that 
they need.
    But I think government has a role to play in helping to 
create those incentives because that is essentially an 
apprenticeship and training program.
    Chair Landrieu. Is that a charter school?
    Mr. Burfield. No. No. It is for grown-ups. I mean, it is 
for adults.
    Chair Landrieu. It is for adults.
    Mr. Burfield. It is for taking people who are in one career 
and teaching them how to transition their skills set into 
skills that are more relevant to what the startup economy is 
creating.
    Chair Landrieu. Mr. Williamson.
    Mr. Williamson. One point. If it's the private sector 
solely, the answer is no. I think there is a partnership.
    I do think it needs to be started by the private sector. I 
think the most effective ecosystems are led by primarily 
entrepreneurs who decide that they want to do it within their 
community and there has to be a private sector leading this 
network but the government is a critical part of the network.
    Secondarily, at the beginnings of an ecosystem, there needs 
to be an honest broker. So, if it were purely profit-led, you 
might not be able to build a vibrant ecosystem because some 
would benefit and some would not. So, the role of the 
government is important to be in that network to help balance 
out the university private sector mix.
    Lastly, I do think in terms of innovations there are 
opportunities where the government can be a participant. We 
modeled the program this year as the government/entrepreneur-
in-residence because most entrepreneurs do not know what they 
do not know. So, in dealing with government who helps them 
guide it?
    Could there be mentorship from the government in local 
communities to help local entrepreneurs figure out ``how do I 
maneuver this bureaucracy?'' or ``how do I do this?''
    I think government is a partner.
    Chair Landrieu. And Dr. Greene.
    Dr. Greene. I would go back to where you started really 
with the idea of the system of interactions and, of course, it 
has to be everybody involved. One of the things I think we 
might think about in building that ecosystem is that government 
means a lot of different things.
    So of course, today we are sitting here, we are talking 
about the Federal Government. When we are looking at an 
ecosystem, we also have to think about how many different 
governments do we have to deal with and how do we really align 
the opportunities, resources, and challenges in order to make 
that ecosystem a healthy one for everybody.
    I work mostly right now with the Goldman Sachs 10,000 Small 
Business Program. We are in six cities and in every city you 
have a very strong relationship with the mayor's office. In 
some cities we have the state involved. But it is really a 
matter of trying to figure out what is the best way for the 
ecosystem to work as a system that is aligned to meet the 
needs.
    Chair Landrieu. And to challenge you all to think, and I am 
going to get to all of you, the difference between the skills 
and experience necessary to build one or a series of successful 
businesses, entrepreneur businesses, and the skills and 
experience necessary to strengthen the entrepreneurship 
ecosystem and how many ecosystems--what is the optimal size of 
an ecosystem?
    That is an interesting question. Is it a national ecosystem 
or is it a national ecosystem with hubs, subsets? Is it a 
locally developed ecosystem? That is what we are trying to pull 
some ideas out of you but stay on the original question.
    Does government have a role? Help us define it. Or can the 
private sector do this alone?
    Mayor.
    Mr. Lowe. Yes. Actually, I think government definitely has 
a role and sometimes government does have to come first. For 
example, with the innovation hub that I was just speaking 
about, that was enabled by an EDA grant that helped develop 
this economic incubator that develops commercial applications 
from academic research, academic research that was done at a 
public university which, in turn, gets funding from the state 
and Federal level.
    Also, the ecosystem is also fostered by other means such as 
community redevelopment agencies. Our community redevelopment 
agency took very much so a leading role in our downtown 
community, and the business community is actually thriving 
there as a result of it.
    In addition to that, of course, we have local and state 
incentives which help spur entrepreneurialism as well.
    Thank you.
    Chair Landrieu. Excellent point. Dr. Mitchell.
    Dr. Mitchell. Thank you so much. So, what I would argue is 
that governments do play a role but it goes back to that 
ecosystem metaphor. Economist from Milton Friedman on left have 
long recognized that governments play an incredibly important 
role in setting the environment in which business can grow.
    They need to protect property rights. They need to ensure 
that contracts are enforced, and they need to police fraud and 
things like that.
    But otherwise, there is a large, large literature that 
suggests that when governments get involved in particular 
types, trying to promote particular types of businesses there 
are a lot of problems associated with that.
    So, setting an environment is good but then targeting the 
particular firms or types of firms for special privileges can 
set up and enormous number of problems.
    So, by ``privileges'' I mean things like subsidies or loan 
guarantees. Regulations is an interesting one. A minute ago I 
think you appropriately ask, are all regulations harmful, and 
the answer interestingly enough is no.
    Many regulations are bad for the economy but they are very, 
very helpful for particular firms and that is part of the 
problems with regulations is that they--take, for example, the 
regulation, sort of ripped from the headlines some famous 
regulations that required financial firms to use the three 
major credit rating agencies as they had a mandate to use their 
services.
    So, this is the kind of regulation that is of great benefit 
to the three major credit rating agencies. It is a de facto 
monopoly. But it is very, very harmful in the sense that it 
creates a number of other problems along the way.
    Chair Landrieu. Excellent point.
    Ms. Hyman.
    Ms. Hyman. I just want to speak my personal experience. I 
am a Bloomberg fellow in New York City, and Mayor Bloomberg has 
set up a group of entrepreneurs every year who are all young. 
We are all under the age of 35 years old, and he connects us 
with other leaders, CEOs of other companies in New York City 
who become our mentors over the course of years and help us 
develop quickly all of the leadership skills and all the skills 
that we need to continue being the CEOs of our company.
    I am only 31 years old now. I am managing a 125-person 
team. I have certainly never done that before but I am being 
coached by the CEO of NBC Universal and the former chairman of 
Bloomingdale's who are able to give me real management advice.
    Bloomberg set up a system whereby young people can 
accelerate their growth as leaders by nature of connecting them 
to other mentors.
    The other thing that I think is really interesting in New 
York City is Bloomberg is just opening up a campus for 
entrepreneurship through Cornell University in New York.
    One of the biggest hurdles to growth in New York is the 
non-presence of engineers. There is basically trench warfare 
amongst the startups in New York for engineering talent. The 
starting salary of an engineer in New York City is about 
$110,000. That is how much in demand young engineers are.
    I would claim that one of the reasons why the bay area has 
been such a hot bed for entrepreneurial growth is really 
because of Stanford University and how amazing it has been as a 
technology center.
    By nature of the government going in and helping to funnel 
talent into an area both to train the leaders of those 
companies as well as to funnel younger talent in in areas that 
are going to be fundamentally important like technology to 
companies like ours I think that there is no other city that I 
would rather be in right now to be an entrepreneur because of 
what the government is doing to help startups like ours.
    Chair Landrieu. So interesting, and of course, Mayor 
Bloomberg is an extraordinarily excessive entrepreneur himself, 
creating one of the most famous and most profitable businesses 
in the recent history and then went on to be Mayor.
    So, he has a unique, really not singularly unique, but 
special talent that some mayors have, some do not and it brings 
to mind that we are going to give him a ring and get him to 
come and make a presentation.
    How many fellows are there?
    Ms. Hyman. Every year there are around 30 to 40 fellows.
    Chair Landrieu. And this has been going on for 10 years or 
so?
    Ms. Hyman. It has been going on for the majority of his 
time.
    Chair Landrieu. Of his term. Okay.
    Let us see Mr. Nishith.
    Mr. Acharya. Nish.
    Chair Landrieu. We will just call you Nish.
    Mr. Acharya. That is fine.
    I will make a couple of comments. I think the evidence is 
that the Federal Government and State governments have played a 
great role in supporting both innovation and entrepreneurship.
    Most of the incubators around the country have gotten some 
government funding at some level, whether they were starting 
out, whether the buildings they are in received support to 
renovate, whatever it might mean.
    I would look at three buckets. One of the opportunities I 
have is to manage the National Advisory Council on Innovation 
and Entrepreneurship for the President and for the Secretary.
    There are really three buckets of interest areas that they 
focus on where the Federal Government has a very important 
role. The first is around the risk of supporting innovation.
    There are a lot of technologies, particularly expensive 
technologies in clean tech and in life sciences that are not 
yet ready for the private sector to fund entirely.
    The business models are not clear. The technology itself is 
very nascent, and at EDA our i6 Challenge is meant primarily to 
support some of that really cutting edge technology and helping 
it move just a little bit closer to market readiness.
    The second part of that, and I think the SBIC program at 
SBA, and then EDA's funding as well around innovation is to 
support funding in regions that do not have a plethora of 
capital.
    So, there are some parts of the country that do not have 
ventured capital, that do not have a lot of large banks, and 
they certainly do not have a shortage of good ideas as well. 
So, government plays a great role in matching those ideas and 
getting them out the door if you will.
    The second part is on a business process if you will. I 
think the Patent and Trade Office does an amazing job of 
helping support our competitive edge as a Nation which is in 
our most innovative ideas and giving them the protection that 
they need.
    I mentioned SBA and the SBIC program which is, again, 
helping alleviate risk in those areas that do not have it, 
creating funding vehicles.
    And then thirdly, the Federal Government obviously works 
heavily on the issues of immigration and then STEM education 
which at every entrepreneurship meeting I have ever attended 
those two things come up over and over, and I think we play a 
huge role in that. So, I think the role is enormous.
    Chair Landrieu. Getting back to educating engineers. I 
wanted to take a minute, this is a little political and I do 
not have a Republican here but I will try to be an honest 
broker as I can on this.
    The Solyndra issue is an interesting example. Highly 
politicized. The loan went bad, taken a lot of hits, the 
Administration has taken a lot of hits on that.
    But I do not know if there exists a venture capital firm or 
venture capital enterprise that does not have one or two of 
their deals go bad. Right? Do you all know of anyone, a venture 
capital company that has all winners? Does anybody know that?
    So, the nature of venture capital which is that the 
government is trying, now whether it is a good idea or not for 
the government to do this, that is a question. But when the 
government tries to set up a venture capital fund, the nature 
of it is that you are going to have some spectacular failures, 
correct? And you are going to lose money, but the idea is that 
the two or three that make it pay you back 10 fold.
    While this has been highly politicized, it is, in essence, 
the government's effort, whether that was a good idea or not, 
to try to set up a venture capital fund that would invest in 
certain industries that did not really exist in the United 
States and this Administration thought they should.
    It has not really been described that way but I think 
everybody at the table understands it. As I said, whether it 
was good or not I do not know.
    Mr. Laskey.
    Mr. Laskey. Thank you. Certainly, we have had investments 
from Accel Partners and Kleiner Perkins and NEA, three of the 
most successful venture capital funds. They invest far more in 
companies that do not work out than in companies that do.
    Chair Landrieu. Say that again. They invest in far more 
companies that what?
    Mr. Laskey. They invest in far more companies that do not 
succeed than in companies that do. They hope that companies 
like ours will make them whole and their investors more than 
whole in the end.
    But I wanted to respectfully disagree with Mr. Burfield and 
Mr. Gerber about the role of regulation and of government in 
promoting and ensuring the success of entrepreneurship.
    I think others have already talked to the importance of 
STEM education. But there is no question that no matter how 
good any kind of secondary training can be, unless we have, to 
use the ecosystem analogy for a moment, the sort of core 
nutrients for an ecosystem, that ecosystem will not succeed. In 
an entrepreneurial ecosystem those nutrients are the people 
doing the work. I am a product of public schools and a private 
university that receives a lot of public funding and I suspect 
that is true of everybody around this table. Our public 
education needs continued investment and innovation.
    In addition, twelve and a half percent of the people in 
this country are immigrants, but 40 percent of the founders of 
Silicon Valley startups are people who either came to this 
country directly for better educational opportunities, or whose 
parents came so that their children could have better 
educational opportunities. So, I think we would be remiss if we 
did not think about the importance of both good immigration 
policy and good STEM education in creating a strong 
entrepreneurial ecosystem.
    Specifically on regulation, if you think of three of the 
big industries that require the most innovation around this 
table, I think we would agree that education is one of them. 
Healthcare is another and energy is the third, with which I am 
most intimately familiar. All of them are heavily regulated 
industries and businesses.
    Our business would not exist without smart regulation, 
regulation that is now in place in 26 states that aligns the 
utilities' interests with the public interest, by driving 
toward energy efficiency which everybody agrees is a good thing 
and putting money back into the pockets of people in small 
towns and big cities across the U.S.
    Chair Landrieu. Alex, you have given us two words that will 
stay with this Committee. Core nutrients, excellent thought and 
concept; and smart regulation. It is not no regulation, it is 
not a lot of regulation, it is just smart regulation that is 
aligned with specific goals.
    I think we do have a challenge, I have to say, with the 
regulatory environment that we have right now at both the 
Federal, state, and local level.
    This is very interesting. Do you all want to go on on this 
subject for a little bit longer or do you want to switch? Do 
you all have something really to say? That is fine. Dr. Greene 
or Juliet, I will get you. Juliet, go ahead.
    Ms. Gorman. I just wanted to echo what Jennifer mentioned 
about the trench warfare over software engineering talent in 
New York and in terms of private-sector kind of nontraditional 
educational solutions for that we are doing a similar thing 
specifically around women in software engineering.
    We are working with a group called Hacker School, hacker 
not in the sense of like infiltrating security but the 
traditional tinkerer.
    Chair Landrieu. Not the CIA.
    Ms. Gorman. No, no, no. The traditional definition of 
hacker as a tinkerer, solution builder, to fund grants 
specifically to women who want to move into software 
engineering. It is a three-month, fully-paid school and we are 
hosting it at our offices. So, I think that is one example.
    But to your point about what it is kind of the culture and 
the network that encourages mentoring, I think sometimes we as 
entrepreneurs can provide tools to other entrepreneurs to do 
that peer-to-peer mentoring.
    We do this on Etsy. We have a teams program. 200,000, more 
than 200,000 of our members are members of a team. They 
organize either by geographical area or by subject area. So, 
you know, jewelry makers or the Atlanta Street Team.
    They will pool resources. They will put on events. They 
will do cooperative advertising. They will advise each other 
and we have given them very simple tools to do this.
    So, that desire, that community of creativity is there and 
you allow the face-to-face connection. I think it does not take 
much.
    Chair Landrieu. That is a wonderful segue into mentorship 
or technical assistance because I have decided that one of the 
pieces of the bill that we are putting together is going to be 
focused on this issue because it comes up at every single 
roundtable.
    Every roundtable that we have had mentions the importance, 
at some point, on mentorship opportunity for that entrepreneur. 
We are searching for is the right way to strengthen, I am 
searching for the right way to strengthen either the Federal 
Government's role in that or state or local government or some 
non-government entity that could be an honest broker.
    So, let us talk about that. What the Federal Government has 
done sort of so far is through a network of small business 
centers that are at our public universities.
    We give out ``X'' amount of money. My staff is going to 
give me that number before the end of this hearing. We also 
have Women's Business Development Centers. We have Minority 
Business Development Centers.
    One of the pieces of that that I have been particularly 
high on is the SCORE chapters which are not government 
chapters. They are private-sector individuals that have come 
together. It has been a long-standing major organization. There 
are others.
    They receive $7 million from the Federal Government but 
they take that $7 million. That is it, and leverage it 10 times 
to reach thousands of entrepreneurs because it is really a 
volunteer mentorship network.
    What would be your best suggestions if the Federal 
Government could come up with a new sort of approach to 
mentorship? I have become aware of the Vistage organization. I 
do not know if you all know Vistage out of California, the 
Milken organization?
    This is a for-profit mentorship network. They make money 
mentoring which is fine, I mean they have made a business model 
out of mentoring.
    But there are some nonprofit entities. You just talked 
about in your own company, Juliet, you all are doing this 
mentorship. So, (a) what could we give out, highly competitive 
grants from the Federal Government through, you know, an agency 
that is well-positioned to really identify those great 
mentorship opportunities out there and scale them up, should it 
be coming from our universities, should it be coming from 
certain businesses that are good at it?
    Mayor Bloomberg obviously has a wonderful program, but it 
is small. As you said, it is 30, 40 a year. We have a country 
of 350 million people.
    So, let us hear some ideas about mentorship and I am so 
happy to be joined by two Senators. Senator Moran and Senator 
Risch, and of course, this is very informal. You are welcome to 
jump in right now and give any comments that you like, 
Senators.
    So, why do we not ask our Senators to say a word. Everybody 
from all over the country is giving us excellent ideas about 
strengthening the entrepreneurialship ecosystem in the United 
States and at every level in every region down to every Main 
Street and community in our country.
    Senator.
    Senator Moran. Madam Chairman, I will defer. I do want to 
say a couple of things but I will defer to Senator Risch.
    Senator Risch. Go ahead. I am going to pass anyway.
    Chair Landrieu. Okay.
    Senator Risch. First of all, thank you for holding this 
hearing. Currently, entrepreneurship is so important. We all 
know that. It is where jobs are created. Thank you, Madam 
Chairman, and I yield to Senator Moran.
    Senator Moran. Senator Landrieu, this is the third 
roundtable that I have at least attended in part.
    Chair Landrieu. Thank you.
    Senator Moran. I think these are very valuable. As I 
indicated the last time we were together, I think that the 
conversations that occur here may be more useful than the 
hearing setting that we often have in the United States Senate, 
and so, I appreciate the individuals coming to Washington, 
D.C., and sharing with us their thoughts.
    I have, over the course of my Senate career which is now 
only slightly more than a year, tried to become somebody who is 
an advocate for entrepreneurship and innovation.
    And in large part because I saw the failure of the 
President and the Congress to deal with the deficit issues that 
our country faces, if we have the unwillingness or inability to 
deal with those things in regard to spending and revenues, 
maybe we can address this issue on the growth side.
    You look at what the potential is it seems to me it is in 
entrepreneurship, startup businesses, and innovation. So, I 
have been very interested in all the comments that I have heard 
now in three of these roundtable discussions.
    As I started down this path of trying to find what the 
necessary ingredients are to create an environment in which 
startups have a better shot at success and in the process of 
pursuing success put people to work, I mean there is a 
regulatory component and I had heard that talked about. There 
is a tax component. Capital formation. We have passed the JOBS 
Act.
    A wide array of things. A lot of research that goes on 
using Federal dollars, how can we make sure it is available and 
can be commercialized.
    But the one I want to highlight today is this global search 
for talent, the battle for it, and I understand before I got 
here at least three of you have talked about this topic.
    I am trying to figure out how I can play a greater role in 
moving Congress in the direction of visas for highly skilled, 
trained, educated workforce.
    I spent some time in Silicon Valley a day or two last week 
during the recess, met with a number of startups as well as 
some who were startups a few years ago and now are significant 
corporations.
    The global battle for talent is, it seems to me, to be 
perhaps the most important issue we face in being able to grow 
our economy. I wanted to relay to the Chairman and now to 
Senator Risch the story that I heard in which one of those 
companies had dozens, I think it was 68 employees, ready to be 
hired. The visas did not work and now they are expanding in 
Canada, not in the United States, as a result of the workforce 
there.
    We heard a bit about repatriation, the money that companies 
have abroad that they are trying to figure out, tax code-wise, 
how do we get it back. It occurs to me that if your money is 
abroad and the workforce is abroad, what do we do to encourage 
you not to grow your company abroad, and this workforce issue, 
I think, is the significant one.
    So, I want to highlight the importance of that, lots of 
areas in which we need to work on and to create an 
entrepreneurial environment in the United States, but it seems 
to me that the vast majority of members of the Senate, of 
Congress perhaps, could agree upon the desirability of a policy 
that would allow foreign-born but U.S. educated, highly trained 
individuals to remain in the United States and use their skill 
set and intellect for our economy's benefit and yet we get 
caught in his immigration, broad and all-encompassing kind of 
conversation and the politics never seem to allow us to do what 
at least I think the vast majority of policy makers in 
Washington, D.C., know that we should do, or if told the facts 
would easily reach the conclusion that we need to do this.
    So, if you can help me find the way to get the political 
environment that we need in order to advance the economic 
environment that we need, I am interested in that conversation.
    Chair Landrieu. Absolutely, and I look forward to working 
with the Senator on that. I think there is a common ground that 
can be found by giving opportunities to U.S.-educated foreign 
students.
    There is also an issue of people being born in the United 
States, educated in the United States, and giving them an equal 
opportunity to compete against those born elsewhere. That is 
part of the debate that we have to find a balance on but I 
think that we can.
    But let us talk about mentorship because I literally am so 
impressed that every entrepreneur I have talked to reminds me 
of all the evangelists that I know. They are so anxious to 
share how they did it and how it worked and it is like they do 
not try to keep it a secret. It is an amazing thing to me.
    You would think they would be thinking I built my business 
and I have made a lot of money and I do not want anybody else 
to know. It is the opposite. They have the most interesting 
desire, almost a need, to share how they did it and are happy 
to tell you everything about it. It is just quite wonderful. I 
think that we should try, if we can, to capture that and scale 
it.
    Mr. Gerber.
    Mr. Gerber. So, a few things regarding my personal role 
with the Young Entrepreneurship Council, which is a 501(c)(3) 
nonprofit corporation.
    We educate roughly 10,000 young people through ongoing 
mentorship utilizing technology, live chats with successful 
entrepreneurs, content we create for every major media outlet 
in the United States and so on.
    The first point regarding the grants you discussed earlier 
is you would think that I would have a better sense just from 
being so entrenched in the entrepreneurial ecosystem that I 
live and breathe, that I would know even what is available to a 
nonprofit like ours if we're to continue to facilitate not only 
the education of 10,000 individuals but hundreds of thousands 
if not millions. Simply from a research perspective that 
information is very difficult to find. So, putting that out in 
the forefront would be very helpful.
    I want to address a statistic that we found in a national 
survey that we did where 90 percent of young people that were 
recent college grads found that entrepreneurship education was 
vital but literally nearly half of them never even had a single 
entrepreneurship education experience in college, and those 
that did found them highly ineffective.
    And there are now a few reasons I think for that. The first 
is going back to the SBDCs, most college campuses have no 
concept of what SCORE is, no concept of what the SBDCs are; and 
these are great facilitators of community organizers that can 
actually bring in these ecosystems.
    So, I think along with the monies given to these entities 
that they should be mandated to throw competitions, bring a 
certain level of public relations to college campuses, and 
educate through their various opportunities not just business 
and MBA students but more importantly those who do not have a 
business degree or are going for that level of education.
    Lastly, just looking into technology to scale things that 
actually makes sense. You know, obviously again, SCORE is a 
perfect example. I have worked with Ken and that group a few 
years now. Ultimately it is very much a person-to-person 
experience.
    Your cost for education is very high whereas utilizing 
technology you can still have a one-on-one experience in many 
ways but on a mass scale.
    So, I think that those are the kinds of government grants 
and other programs that should be looked at.
    Chair Landrieu. Thank you. That is exactly what SCORE is 
hoping to do. Of course, their allocation is $7 million, that 
is going to require some additional investment but I think it 
would be well spent.
    Tim.
    Mr. Williamson. Well, thank you. I think you hit on the 
core issue or opportunity, and Ms. Hyman's idea of a fellowship 
and a mentorship is incredible. That really is how you build 
those networks in cities like New Orleans or other or other 
``B'', ``C'', ``D'' cities that do not have that network of 
lawyers and CEOs, and I think what we have been looking at is 
how do you import that.
    So, in a city where the lawyers and the accountants and the 
CEOs do not have experience or entrepreneurship is relatively 
new, you need to bring CEOs and investors and universities into 
the community to build those mentorship networks; and so really 
I guess a post-Katrina phenomenon where universities like 
Stanford, Harvard, MIT, Babson, and others who brought in teams 
of MBAs to directly provide consulting and mentorship to local 
entrepreneurs is an opportunity, I think, to scale where these 
individuals can actually come into communities.
    They can provide direct consulting to an entrepreneur which 
is valuable, but as Scott was saying, to get that experience of 
being an entrepreneur is incredible.
    So, I look at that answer as how do the second-tier cities 
that do not have the built-in networks bring those networks in.
    The last part of your question, ``What is the size of the 
ecosystem?'' There is one real ecosystem, but how do you create 
local ecosystems that engage those networks? I would love to 
have the network that Ms. Hyman has in New Orleans. How do we 
incentivize corporations and universities to go directly into 
the second-tier cities or third-tier cities, to provide that 
mentorship?
    Chair Landrieu. Well, you know, Goldman Sachs has really 
stepped out with their entrepreneurship 10000. I think that is 
exactly what they are trying to do.
    I am not sure if I know. I know New Orleans was one of your 
cities, but I do not know all of your other cities.
    If I could ask Goldman, was that your idea to kind of reach 
out to cities that might not be in the top tier of this 
entrepreneurship or did you just not care, did you just go 
wherever? Kind of explain how Goldman shows what ingredients 
you were looking for when you reached out to create this kind 
of really it is like an entrepreneurship training and 
mentorship program.
    Dr. Greene. Thank you, Senator. We really did look for 
areas that were underserved in entrepreneurship education. Now, 
New Orleans, of course, has a great deal of things going along 
in entrepreneurship but we are looking for the educational 
piece of it. So, we are in New York which was the first one. 
New York, New Orleans, Houston, Chicago, and LA and Long Beach 
at the moment with two more coming quite soon.
    Chair Landrieu. See, I would think that all of these cities 
except for New Orleans were already sort of, had a lot of the 
components of it.
    Dr. Greene. And that is the issue right there. They have 
the components. They do not have the system. New Orleans is 
working hard in the system. There is another ecosystem meeting 
coming back up shortly sponsored by the mayor's office.
    But how do you actually turn it into a system of 
interaction where the educational pieces are connected with the 
finance pieces are connected with the business assistance 
pieces.
    So, we actually talk about our program as an intervention 
where we come in. We provide the education. They are given 
their business advisors. At the end we basically say, okay, you 
are being released back into the wild of the ecosystem and part 
of the training is how do you identify and how do you use all 
the other resources that are out there.
    Chair Landrieu. Joe.
    Mr. Nigro. So, thank you. In Massachusetts and the city of 
Boston more specifically in MassChallenge the mentorship, I 
believe, falls in the laps of the entrepreneurs themselves.
    We are incredibly enthusiastic. We have a lot to say. I see 
how the public and private sector in Massachusetts works 
together to create this incredible district called the 
Innovation District, which I was living in California for a 
couple of years a few years ago and when I came back to Boston, 
that area in the Seaport District in Boston was just completely 
transformed into literally an innovation district within two 
years.
    Mayor Menino in the city of Boston, you know, put 
MassChallenge right there to build out this infrastructure 
where, you know, students from all the surrounding area of 
colleges around Massachusetts can go.
    It is almost like, if you build it they will come, and 
entrepreneurs want a place to go. They want a place to exist. 
It is now in the hands of the entrepreneurs to kind of foster 
that mentorship.
    Chair Landrieu. Do you know how many Federal research 
dollars land at those universities every year?
    Mr. Nigro. Oh, man. Probably a lot; I am not sure. A lot.
    Chair Landrieu. That might be one of the reasons why 
entrepreneurs flock there because it is not the private capital 
that is invested there first, you could argue that, but it is 
the Federal dollars that go to those universities.
    What I am going to ask my staff to do, we do not have it 
done for today, but we are going to put up a map that is going 
to show where the Federal research dollars go. I bet there is a 
direct correlation, I could be wrong, a direct correlation 
between the entrepreneurship strength around Federal research 
dollars.
    Now, you want to think about NIH. You want to think about 
National Science Foundation. You want to think about the 
research that goes on for the Department of Defense.
    We are not spending, to my mind, and I am an appropriator, 
we are not spending the percentage of our total overall 
spending on research and development that your companies would.
    Your companies, if you want to grow, I think have to invest 
between what? Five and 10 percent in research and development? 
The Federal Government overall is somewhere between two and 
three. That should be frightening to everyone.
    Now, it will go a little higher, I think, for defense. But 
overall we are spending less than three percent in long-term 
research and development. When you look at the research and 
development, though, and where it is, I think there will be a 
direct correlation to this, you can tell, Silicon Valley with 
Stanford and some of the research that is done there. 
Massachusetts, New York.
    I represent the South, and not to get on a high horse about 
this, but our delegations way before I even got here were very 
concerned about the lack of investments in some of the southern 
universities because, and maybe it is like this in the Midwest, 
I do not know, but we do not get those same dollars.
    When we try to create that same kind of dynamic technology 
sector, it is not that our people are not smarter, that our 
people do not work hard, we just do not seem to have the same, 
I do not know, opportunity or maybe because the universities in 
other parts of the country got a head start on us, and we are 
recovering from lots of things. The Civil War being one, but 
other things.
    It is very interesting to me and I am going to really push 
the data on this to find out if there is a correlation.
    Senator Moran. Chairman Landrieu, it would be interesting 
to know which came first.
    Chair Landrieu. That is true.
    Senator Moran. The map will be interesting. I am anxious to 
see it. But the environment, which environment existed first, 
the Federal dollars and the research occurring----
    Chair Landrieu. Or the reverse.
    Senator Moran. Right.
    Chair Landrieu. That would be interesting to see. Go ahead.
    Dr. Mitchell.
    Dr. Mitchell. Thank you. I just wanted to address that last 
point because that is a really interesting question, just 
address it from sort of it on my research design hat.
    With all due respect, I am not sure if we would learn that 
much from that kind of a study and the reason is if you look at 
the way people do, say, macroeconomics. You tend not to do 
studies that it would be very, very surprising if we could tax 
everyone at this table and redistribute the money to me and I 
could not, then studied and found out later that--and then we 
would investigate that I would do well after that.
    It would be very, very surprising if I did not do very well 
after that. So, that is why we do not do studies of, say, 
stimulus that way. We do not do studies of research investment 
that way because it would be very, very surprising if taxpayer 
dollars that were raised throughout the country and 
redistributed to certain research centers did not somehow 
produce greater growth.
    I would suggest a different type of research design, and 
the nice thing is that there has actually been a number of 
studies that have done this which is to look across countries.
    The nice thing about that is that the tax dollars come from 
within the country and are spent within the country. So, it 
does not have that research design problem.
    A number of studies have examined this and found that there 
is a very, very strong correlation between entrepreneurship and 
what economists refer to as economic freedom. So, economic 
freedom is largely designed as well protected property rights, 
low and stable tax regimes, nondiscriminatory tax regimes.
    That is just as important as having low taxes is you do not 
have a complicated tax code that rewards some and punishes 
others. Few limited regulations that are reasonable, that are 
thoughtful regulations as you suggest.
    Again, to me, it gets back to creating an environment that 
is nurturing for growth and nurturing for entrepreneurship but 
it is not one and where you are trying to push your buttons and 
sort of from the top down and say I am going to redistribute 
here and we are going to get growth.
    Chair Landrieu. Mr. Mayor, please go ahead and then we will 
get you Ms. Friederichs.
    Mr. Lowe. Yes. With respect to mentoring, the innovation 
hub that I have been talking about is set up to promote 
mentoring and to allow those in startups to be able to first 
mentor each other because there are actually those who have 
been entrepreneurs before they are sort of serial entrepreneur 
you might say.
    And also there are plans for a new program at the 
University of Florida specifically for entrepreneurs. It will 
actually operate on a slightly different calendar year, 
actually January through August.
    But another interesting thing about the program is that it 
will include a residence hall designated essentially for 
entrepreneurs and it is located right across from the 
innovation hub so that there will be a high degree of 
interaction with respect to that.
    Thank you, Madam Chair.
    Chair Landrieu. Thank you. I will get one more comment on 
this and then we are going to switch subjects to make sure we 
cover everything before 12:00.
    Ms. Friederichs.
    Ms. Friederichs. Thank you. You mentioned before that 
entrepreneurs are eager to share, that they are not private 
about it. I think a large portion of that is if you are a 
business owner and you are struggling to make payroll that 
month and you cannot pay your house payment, only another 
business owner is going to understand that.
    It is very lonely for business owners and it is a community 
that they work together and they understand one another and 
everyone is seeking out a mentor, whether it be formal or 
informal, as a business owner.
    If you have an organized, facilitated mentoring program 
such as the one that I run HEMP, Helzberg Entrepreneurial 
Mentoring Program, and you measure the results, it can make a 
huge impact on the economy.
    In an eight-year period where we measured the one-on-one 
mentoring of entrepreneurs with another seasoned entrepreneur, 
43 percent of revenue growth and 30 percent employee increase 
count as well as contributing over $750 million to the economy 
in that eight-year period.
    So, the impacts of mentorship are very impactful and we 
work also with the SBDC in Kansas City and helped them start a 
mentoring program as well called CEO Coaching and More, and 
they rose to the top five in the country the year after they 
starting the mentoring program again because of the effect.
    Chair Landrieu. Are you all a nonprofit or for-profit?
    Ms. Friederichs. We are a nonprofit, 501(c)(3). We were 
started by Barnett Helzberg, who had a company called Helzberg 
Diamonds. He had a mentor of Ewing Kauffman who ran Marion 
Laboratories, and he mentored him.
    Once Barnett sold his company, he wanted to give back to 
the Kansas City area. So, he started this nonprofit of 
mentoring other entrepreneurs. He said it has been the greatest 
investment he has made.
    Again, the entrepreneurs are willing to invest the dollars. 
They are seeking for the help to have someone who has been in 
these shoes. A lot of times it will save several years and 
several dollars because you are preventing mistakes because you 
are talking to someone who has been there and done that.
    Chair Landrieu. Well, let me ask you all. This record will 
be open for two weeks and you could be very, very helpful to 
our Committee if you have identified any successful mentoring 
organizations in your area, whether they are not-for-profit, 
for-profit, or government-sponsored like SCORE, please let this 
Committee know because we are trying to collect the universe of 
what is out there so we can have a discussion about whether we 
should help strengthen it or whether it is sort of okay on its 
own and what the Federal Government might do.
    And when I mean government, it is the Federal Government 
but we are also in a position, of course, to encourage local 
government, state, and municipal level governments to follow 
suit or at least encourage them to do so.
    We want to hit three more areas very quickly. We sort of 
touch this but if anybody has anything they want to say or add 
to entrepreneurialship education, any ideas about what the 
Federal Government can do or not do to prepare people more. Are 
entrepreneurs born, are they trained, et cetera?
    And then private sector accelerators. We want to talk a 
minute about that. And then the small business export efforts 
that the Federal Government is doing. Do you think this is 
helping or not.
    But let us start. A few comments on entrepreneurial 
education, what works, what does not work, what have we seen 
out there. Go ahead. We will start with one of the experts 
here.
    Dr. Greene. Who will remember to pull the microphone toward 
her this time.
    Of course, you can teach entrepreneurship. I mean, there is 
a skills set that is about starting and about growing 
businesses. So, breaking down that skill set and adding on 
training about a mindset, you can actually teach 
entrepreneurial behaviors and you can watch entrepreneurial 
outcomes.
    I would suggest that one of the most important things about 
entrepreneurship education is that it should not be just for 
the business owners. One of the challenges entrepreneurs run 
into all the time is working with professional service 
providers and policymakers and educators who do not understand 
who they are and what their businesses need to grow.
    So, an expansion for the attorneys, for the accountants, 
for again all of the professional service providers to actually 
understand that this is a not large corporate business, it is a 
different entity, could make a huge difference. So that was, 
you know, just one part of thinking about it differently.
    Chair Landrieu. Okay.
    Ms. Hyman. So, I actually think there were three key things 
that I needed in order to start Rent the Runway in addition to, 
you know, learning about merchandising, learning about 
operations, learning about technology.
    But the three applicable things were, first of all, I 
needed legal guidance and advice from the very beginning. I was 
lucky enough to have procured free legal advice from Latham and 
Watkins, who took me on as a client for six months without me 
paying anything because they believed that we would get funded 
and I would be able to pay them at some point in time.
    But had they not given me that legal advice from the 
beginning, my company would not actually be, I would not hold 
the same ownership and equity in my business. I would not have 
the right sort of contract with my cofounder. I would not have 
set up the organization in the way that we needed to in order 
to get venture capital funding.
    So, that was number one. Number two is actually 
understanding how do you hire people. So, I learned a lot at 
Harvard Business School about how are you strategic or how do 
you, you know, build a service operation.
    But no one told me how do you actually hire someone, what 
is insurance, how do you execute payroll, how do you care for 
people's health care.
    And these were huge problems that sunk up a lot of time in 
the beginning of starting the company that were like the 
tactics of how you actually formulate that team that were 
really important to us.
    And the third thing was not just access to capital because 
I think that access to capital is always going to be limited by 
things like where you are from and what your educational 
background is and, you know, my access to capital was solely 
because I was at Harvard Business School and I had that brand 
name behind me that I was given credibility with the venture 
capital community in Boston because I had no previous 
entrepreneurial experience.
    But more important than access to capital was teaching the 
skills of how do you actually procure capital, how do you pitch 
yourself, what are investors whether they are venture 
capitalists or they are angel investors or they are private 
investors, what do they want to hear in those first few minutes 
because 95 percent of all companies are nixed in the first 5 to 
10 minutes when they talk to and investors.
    So, if you are not given the training on what are you 
coming in with, I think that a lot of great ideas are probably 
nixed at the beginning. So, I think that these are just more 
needs building blocks that people need in addition to just 
being smart individuals who are educated about the areas of, 
you know, expertise.
    Chair Landrieu. Jennifer, thank you for being so honest 
because I am sitting here thinking about exactly what you said 
and from a perspective from a United States Senator it is, I do 
not know what the word is, it is difficult for me to really, I 
accept everything that you said, I agree with everything that 
you said, but I just want to repeat what you said so that you 
all can think of this from what I hear.
    Because she was from Harvard, she got in the door. Because 
she had been trained to make her pitch in two minutes, she got 
the money. Now, I am thinking about the 4.5 million people I 
represent. I am thinking about all the smart wonderful kids in 
Mississippi and Alabama and Texas and Florida, a few of them do 
go to Harvard. Lots of good kids at LSU.
    They do not get in the door because you go to Harvard, you 
go to Stanford, you go to ``X'' and ``X'', the door opens. If 
you do not, it does not. My job is to open the door for the 
kids that cannot get in, and I am having a hard time figuring 
out how to do this.
    Ms. Hyman. Well, it is even harder if you are a woman.
    Chair Landrieu. Yes, and if you are an African-American 
woman, you can just go down the line. I am sorry that my 
colleagues are not here, but when I hear some of my colleagues 
say, ``Oh, anybody can get access to capital,'' I know the 
truth and that is not the truth.
    Capital does not flow to the smartest most able, it flows 
to those that are most connected. Period. That is the truth. 
Now every now and then an unconnected, very smart person will 
get the capital they need but it is the exception not the rule.
    My job to figure out how to switch that, how to get the 
smartest people regardless of where they went, the most able 
people, the ones with the best ideas and the strength to carry 
them out whether they are connected or not, connected.
    That is the only way this country is going to move forward. 
The country that figures that out the fastest will get there 
the soonest. This is a very difficult question. So, that is 
what I need you all to think about.
    Evan.
    Mr. Burfield. Entrepreneurship education is personally for 
me a very important subject. Again, I literally graduated from 
high school and set out to try to build a company; and it was a 
really, really painful the first two or three years because I 
did not know anything.
    Chair Landrieu. But your parents gave you or somebody had 
to tell you or somebody gave you some idea, huh?
    Mr. Burfield. Absolutely. Uh-huh.
    Chair Landrieu. It was your parents?
    Mr. Burfield. My parents and, you know, ultimately I went 
down and found some business school professor down at Darden at 
the University of Virginia and convinced them to help me and 
built my mentor network and did all that stuff.
    I actually went back to my own high school this last year 
which to your point, you know, Thomas Jefferson High School for 
Science and Technology here in Virginia, it is the number one-
ranked high school in the country by U.S. News and World Report 
but there was no curriculum around entrepreneurship.
    There was not any structure, any program related to it. I 
agree with the idea that there is content that you need to 
teach related to entrepreneurship but I think learning to be 
entrepreneurial is something that fundamentally has to be done 
by doing.
    The biggest thing that struck me in trying to set up, we 
actually set up a venture accelerator inside the high school so 
students were encouraged sophomore year, junior year to 
actually start companies, build those companies.
    We brought in a tremendous network of mentors from the top 
venture capitalists in the region, all of this. But the biggest 
thing that struck me is the nature of the way that we educate 
our children goes in some significant way fundamentally counter 
to the values set that is important to entrepreneurship.
    So, we have an education system that teaches kids do not 
challenge the status quo, to teach to the test, to regurgitate 
what they are told, to not fail whereas the essence of being an 
entrepreneur, not the actual nuts and bolts contents you need 
but the essence of challenge the status quo, be creative, 
persevere no matter what----
    Chair Landrieu. Be willing to fail.
    Mr. Burfield. You are going to fail, fail, fail, fail, 
fail; and to Alex's point, I am sure when Alex thinks about 
what it feels like to go from zero to 250 employees in a few 
years it feels like week after week after week of failure and 
some level of surprise when you get to the end and you go, wow, 
we have gotten there.
    But that challenge of, you know--when we talk about the 
role of government, one of the things I was struck with was 
Jefferson is a pretty innovative. For a public high school, it 
is about as innovative as you can get. But even then it was a 
challenge to work almost against the regulations, against the 
rules, against wait a second you want to set up a venture pitch 
competition and actually give high school kids money to invest 
in their companies. How is the school going to control the 
money? Well, it is not.
    Chair Landrieu. Yes.
    Mr. Burfield. These are a lot of the challenges you face 
when you really try to talk about instilling a culture of 
entrepreneurship in the way we educate our children.
    Chair Landrieu. Which is why we are pushing some charter 
schools that are more accepting to new ideas. New Orleans is 
full of them. So, we will get back to that.
    Alex.
    Mr. Laskey. I just wanted to connect what you had said 
earlier about the feeling when you talk to entrepreneurs that 
they sound like evangelicals.
    I think we have one big thing in common, in spite of a 
great deal of evidence that says we are wrong or that the 
answer is no. We keep pursuing yes in a semi-psychotic way.
    And yes, there is a lot of failure along the way, but it 
actually feels like success if one in 10 things go right.
    You know, I too am concerned. In full disclosure, I also 
went to Harvard, and I am concerned about access to capital for 
people elsewhere across the country.
    There are great stories of people. I think one of the 
things that government can do really well, in addition to 
investing in education so that there are more talented people 
better trained across the country, is to highlight success 
stories.
    So, highlight success stories of businesses that have 
started in unusual places or by unlikely people. We should 
highlight those success stories because venture capitalists are 
not stupid. They will follow the money. If we can begin to 
highlight great successes in places like New Orleans or 
Birmingham, Alabama, businesses that are doing well, then money 
will follow.
    Chair Landrieu. Excellent idea.
    Scott and then Juliet and then we will have to start 
wrapping it in about 10 minutes.
    Mr. Gerber. Thank you. I will be very quick with comments. 
I have four specific things that we have uncovered that would 
help train young entrepreneurs especially starting at the high 
school level.
    The first is there currently is something known as the 
well-rounded funds Title V. It is under the current No Child 
Left Behind Act. Currently, there is no check box that would 
allow high schools to purchase any form of entrepreneurship 
education materials. This is not abstract. This is literally 
that you cannot check a box to buy entrepreneurship-related 
materials.
    When you look at programs like, case in point, where we 
share a lot of interest, Madam Chairwoman, is around especially 
minority entrepreneurs. I worked with a group called the 
Network for Teaching Entrepreneurship which has educated nearly 
400,000 young people from mainly African-American communities 
across the United States with incredible success rates compared 
to other case studies.
    They have to actually raise money in order to sell into 
school districts their various educational platforms and 
curriculum, unlike a physical education curriculum which you 
can easily just buy based on allocated funds.
    The second is looking at other kinds of school concepts----
    Chair Landrieu. Hang on. Do you run that as a nonprofit or 
for-profit?
    Mr. Gerber. Which one?
    Chair Landrieu. The one you just said.
    Mr. Gerber. The Network for Teaching Entrepreneurship is a 
nonprofit.
    Chair Landrieu. Nonprofit.
    Mr. Gerber. That is correct.
    Another is gearing specific schools toward the realities of 
the new economy and the workforce. There is currently a program 
in New York called the Academy for Software Engineering that we 
have uncovered. It is done by Fred Wilson, members of the state 
government and local government in New York. The concept 
basically being to create a charter school around software 
specific training.
    I think that these are the kinds of concepts that the 
government from an educational funding level should be looking 
at so that they are also keeping in mind what the workforce 
readiness needs to be.
    The last thing just to bring up is, you know, personally 
going to schools and speaking to thousands of students a year, 
the first thing I really get teared up about in many ways is 
the fact that I will have students come up to me, say I am 
about to graduate with $25,000 in debt, I have a liberal arts 
degree or I am an auto body shop mechanic. They have no concept 
of how to take that relevant training they have into the world 
of business.
    So, I think that when we look at ways that you are funding 
federally these institutions in any capacity, there should be 
some parameters set around the fact that if you leave school as 
an auto body mechanic and you do not know how to run an auto 
body shop, that is a big problem.
    I would encourage, especially around the mentorship 
discussions that we are having today, that we not just talk 
about mentorship in the abstract. Of course, I do not think 
anybody would say that mentorship is not incredibly important. 
It is a lot of the reason why I am even here today.
    But the fact that you cannot, as a young person, use 
mentorship to, let us say, go after a microloans as the SBA 
because there are intermediaries that ultimately will block you 
from funding because a kid who does not have any credit is a 
problem. So we are talking from not just the intangible 
experience, but making it a tangible experience using that.
    Thank you very much.
    Chair Landrieu. Thank you very much.
    Juliet.
    Ms. Gorman. Quickly, I hear the challenge you are facing 
around access to capital and folks that do not usually get it 
and I just wanted to just add one optimistic note from the 
standpoint of kind of the do-it-yourself manufacturing 
movement.
    The barriers to entry are dropping. For basically like the 
price of a gym membership, you can join an organization called 
Tech Shop, which has locations nationwide, and have access to 
millions of dollar of machining tools.
    I think platforms like Etsy what they are basically doing 
is lowering the barrier to entry to have a product idea, get it 
manufactured, and reach a global market quickly, and also they 
are lowering the barrier to entry for consumers to support 
those kind of independent creative businesses.
    So, I do think, I mean Etsy has had 39 million in venture 
capital funding but entrepreneurs on Etsy have not and they are 
still supplementing their income and in many cases quitting 
their day jobs, and it is not about, you know, that classic 
entrepreneurship story of Instagram getting sold to Facebook 
and making, you know, however many hundreds of millions of 
dollars.
    It is, again, about making your car payment. It is about 
quality of life. It is about time with your family. You know, a 
lot of small businesses are formed for non-pecuniary benefit 
reasons like control over your time, creative satisfaction, 
being your own boss.
    So, I do think there is a bit of an optimistic story about 
how the manufacturing ecosystem is changing in terms of access 
to folks who do not have the traditional education or the means 
to raise a lot of money.
    Chair Landrieu. Okay. That is an excellent segue into two 
things. One, this bill that we just passed that was somewhat 
controversial but the President supported it, many people 
supported it.
    I did not vote for final passage but I did vote for the 
Crowdfunding piece that Scott Brown and others put forward, and 
I was actually a cosponsor. We cosponsored that piece of 
Crowdfunding because it had more safeguards than the bill that 
came from the House.
    Very interesting to me to those of you that have raised 
money by venture capital and what you had to do to get their 
money. Now that you can go basically to the Internet and take 
your business up to $1 billion.
    Have you all followed this bill or are you thinking about 
it? Could you comment about what advantage or disadvantage you 
think this will have to you or to the world that you are in?
    I know that is a broad question but I am very interested 
particularly, Juliet, to hear from you and Jennifer. But go 
ahead.
    Ms. Gorman. I think the issue is education. A lot of the 
folks we are working with do not necessarily see themselves as 
business people when they get started and so they are not 
thinking about financing from day one.
    We see a lot of folks again in the creative community using 
platforms like Kickstarter, which is not so much about raising 
money in exchange for equity in your business but more frankly 
just about community charity essentially.
    But the power, I guess, there is the network effect. That 
is the thing that platforms like Etsy are banking on. It is not 
that traditional hierarchical incumbent model.
    So, I think the issue is just how do we as Etsy get this 
information about Crowdfunding and what is enabled and the 
government resources in front of folks who are just thinking 
about a lot more of the tactical stuff that Jennifer alluded 
to.
    Chair Landrieu. Jennifer.
    Ms. Hyman. I am skeptical of things like just crowd 
sourcing for funding or Kickstarter mostly because I think 
money has to be tied to accountability as well.
    So, one of the reasons why I wanted to raise from 
institutional investors is because I wanted board meetings 
every single month where I was accountable for the metrics of 
how the business was doing.
    I wanted people who had been there, done that on my board 
with the ability to actually, you know, fire various people in 
the company if we were not doing a good job.
    If you are just going to give young people money when they 
do not necessarily have someone guiding them, watching over 
them, and some idea that they are accountable for that, I do 
not know how successful that is going to be especially because 
most entrepreneurs are young and without the necessary 
experience.
    So, even angel investors, some of them are going to be 
quite involved and give you that mentorship and give you that 
advice. So, I think there has to be a combination of capital 
with accountability for how you use that capital.
    Chair Landrieu. And there was very little of that in this 
bill and I think we have to be very careful about what we did 
but it is done.
    Evan.
    Mr. Burfield. I think a lot of the Crowdfunding provisions 
are going to have a democratizing effect on the ability to 
raise capital. I think you have already been seeing those 
changes occurring in the venture capital industry before the 
JOBS Act.
    I mean, the reality is, you know, we probably spent $16 
million in venture capital in my first business back in the 
late 1990s before we ever really understood what our product 
was or our market.
    You know, nowadays companies can find that out for a couple 
of hundred thousand dollars in capital. I mean, the cost of 
innovation, the cost of experimentation and discovery has just 
dropped like crazy.
    That has been having a significant impact. You are having 
accelerators now, you know 500 startups, the goal is to find 
500 startups at a couple of hundred thousand dollars each and, 
you know, see which ones really succeed or fail. You know, a 
lot of those accelerator problems I think do take a much 
broader swath of entrepreneurs than you might have seen even 
five years ago from traditional venture capital.
    I think, you know, any platform, any of those Crowdfunding 
platforms to be successful I think they are going to tend to be 
tied to some sort of accountability model.
    I think you are going to see Crowdfunding paired with 
accelerators being probably the most successful model because 
somebody needs to put that imprimatur of credibility on it.
    But anything, to your point, that starts moving it to the 
value of the idea versus the value of who you know immediately 
is beneficial, and I think that has been the history of a lot 
of what the Internet has done to various other markets to date 
and I think it is going to do the same thing to venture 
capital, and that is a good thing.
    Chair Landrieu. Okay. We are going to get Scott and 
Christina and then I am going to ask Nishith, as a 
representative of the Administration, to have the opportunity 
to close.
    We did get the numbers on the research. California is the 
leading state to receive Federal research money. They received 
$47 billion. Michigan is second at $18 billion dollars New York 
is third at $14 billion. Texas is fifth, I am sorry, fourth at 
$12. Massachusetts is fourth at $12 billion.
    The lowest is Idaho, Delaware. Let us see. I am sorry that 
is not true. But those are the figures and I am sorry I do not 
have the lowest states. But anyway, we are going to get that 
out to you all and go head, Christina.
    Ms. Friederichs. I think it goes back to what you were 
saying earlier too about the connections and trying to open the 
doors for those that cannot get in, whether it be venture 
capital or any other needs that you might have, and it goes 
back to building support systems for entrepreneurs, whether it 
be mentoring or common groups, education, things of that nature 
so that they can build those connections.
    And then once you get those referrals, they can move you on 
to those and you have a better success rate of getting venture 
capital or the support that you need.
    It also goes along with, have you read the book, The E-
Myth? It is about how entrepreneurs usually have a skill or an 
idea and they take that and that is how they start their 
business, but beyond that, they do not know how to actually 
operate a business. It is a great book and it really supports 
everything we are talking about here.
    Chair Landrieu. Wonderful. Let us get it and put it on our 
shelf. We are collecting your books and papers.
    Alex, final word. And then we will have Nishith Acharya.
    Mr. Laskey. I just wanted to touch on the topic that you 
said you wanted us to talk about that we did not have time to 
which is the Export Bank and small-business exports.
    Chair Landrieu. Yes.
    Mr. Laskey. The last year I have spent the majority of my 
time outside the U.S. In fact, my passport is today getting 
extra pages added to it because I have run out of space. And I 
have benefitted some from the Commerce Department, State 
Department, Department of Energy.
    But I think there are many opportunities to expand the 
ability for small businesses like ours to export our products 
and services overseas. One particular problem that I see with 
the Export Bank is that it seems that the ability to export 
capital goods is supported under the Ex-Im bank but that----
    Chair Landrieu. But not services.
    Mr. Laskey. Not services and software. And particularly as 
we move to a software-based economy, the entrepreneurs in this 
room, I think, would benefit from the expansion of those 
support services being linked to software and IP, not just 
capital.
    So, I look forward to continuing to travel around. We have 
now just opened an office in London and that is----
    Chair Landrieu. Because if you think about it, I mean, it 
makes just common sense without even having to be an expert 
that America who has been the most successful country in the 
world for this entrepreneurial, democratic, open society, we 
would have a lot of ideas and services that help to create this 
country that the world is desperately in need of and we could 
make a lot of money selling it or sharing it or whatever your 
model is.
    So, we have got to get about that because there is nobody 
better than America that can go over and tell everybody, until 
you get your private property rights done over here, you are 
not going to be able to do anything. Until you set up a 
mortgage system where you can mortgage your home, have a 
mortgage system, you are not going to be able to build a middle 
class.
    I mean, there are things we know even though we beat 
ourselves up and say how terrible we are, the fact is we are 
pretty great and we still are.
    So anyway, thank you very much. All right.
    Mr. Acharya. Thank you, Senator.
    I think one of the things you are hearing that is the great 
struggle here is that entrepreneurship is inherently a very 
personal journey and it is a very local experience even though 
we live in a globalized world and we are talking about Federal 
policy which affects a very large country, a very complex 
dynamic economy and how do we reconcile the two issues there.
    I think the exciting thing is that you are seeing 
nationally a common agenda around innovation and 
entrepreneurship. In my last position and now with the Commerce 
Department, what I am seeing is that everybody at the higher 
education level and then regionally is thinking about 
innovation and entrepreneurship.
    I would imagine that all our major research universities, 
our community colleges, they are all focusing on innovation and 
entrepreneurship.
    Some, like MIT, are very focused on lab to market and how 
to commercialize more high-growth entrepreneurship. Others, 
like Tulane in your home State, are the leaders around student 
entrepreneurship and civic engagement.
    Then community colleges, we have actually 170 community 
colleges in this country that have signed a letter promoting 
entrepreneurship programs in community colleges.
    So, this is a national effort. The reality is that 
everybody is in a different place in the work that they are 
doing and I think the flexibility that we need in our Federal 
policy should reflect that, that what MIT is working on will 
require a set of focus, a different set of circumstances, a 
different amount of money than maybe what the community 
colleges are doing as they get started.
    Also, I was at the University of Wyoming which has over 50 
startups in Laramie, Wyoming. Clearly, their needs are going to 
be very different than what some of the other universities are 
doing.
    But nonetheless we should support the development of that 
ecosystem where they may be at level ``A'' and MIT might be at 
level ``D'' that is okay. They still need the same support 
around the issues we have talked about, mentorship, access to 
capital, access to business models that can support them and 
then the right economic development conditions in their region.
    On the entrepreneurship side, similarly I think every 
regional economic development agency is now looking at 
entrepreneurship. At EDA most of the applications we get for 
business accelerators, and we have funded over 700 over the 
years at University centers and regionally economic agencies, 
really focus on entrepreneurship and where are we in the 
continuum of developing entrepreneurship.
    Some, like Idea Village and MassChallenge, are really, 
really far ahead nationally, you know, over 1200 applications 
for each program and robust mentorship and entrepreneurship 
programs for each of the applicants.
    So, what they need is at one level of funding and support, 
probably more money, more technical support, more agencies that 
can work with them at the Federal level, Labor, Energy, 
Commerce, SBA, they can all do something for these programs 
because they are so big and have such a vast array of startups 
under them.
    Then again, I bring up Wyoming and other places where they 
are just getting started, or Lowell, Massachusetts. Their needs 
are similar but at a different level.
    They are looking at money to refurbish old mill warehouses 
and buildings to create incubators. They are looking at 
retraining local workforces that used to be good at 
manufacturing or agriculture or telecommunications and 
transitioning those skills.
    Or they are looking at middle aged workers whose expertise 
is in financial services but are not going to go weatherize 
homes now because they have been laid off. They are going to 
maybe figure out another way to work and maybe entrepreneurship 
is the path they need and what is their development strategy to 
help those workers.
    So, I think we are seeing a vast array of programming 
around the country that is very different. I think Crowdfunding 
will actually help that significantly as we are seeing.
    Most organizations are trying to develop ideas and culture 
around the entrepreneurship and that little bit of money to 
help the culture is going to be critical.
    So, I hope we can continue the discussion around a broad 
national policy that reflects the diversity of where 
organizations and regions are.
    Chair Landrieu. Well, thank you very much. It is almost the 
bewitching hour of 12 noon and I know that you all have a lunch 
to get to and planes to catch so we are going to end but thank 
you again.
    This has been very, very stimulating. I hope you feel like 
you have been challenged with your own ideas and the thoughts 
that have been very invigorating to the discussion. I can 
promise you the ideas that you put out today and emphasized 
will be included in the reports, of course, from the Committee 
this morning itself but hopefully some of your ideas will 
actually get into legislation that we hope to put together 
literally in the next few weeks to introduce.
    So, thank you all very much.
    The meeting is adjourned. The record will stay open for two 
weeks.
    [Whereupon, at 11:56 a.m., the Committee was adjourned.]


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