Suppose President Obama is considering different alternatives to stimulate job creation. One focuses on the largest businesses, the other on medium-sized firms, and the third on the smallest companies. Being a smart guy, he wants to see the data before he makes a decision. So he asks his advisors, “What share of jobs does small business create?”

Bizarre as it might sound, the answer he will get depends on which government agency’s numbers his advisors look at. In a recent working paper, Brian Headd, a Small Business Administration economist, reported the portion of net new employment – jobs created minus jobs destroyed – in different sized firms since 1993. Drawing on statistics from the two main government agencies responsible for calculating these figures, the Bureau of Labor Statistics (BLS) and the Census, he created simple pie charts to show the portion of net new employment produced by businesses of less than 20 workers, 20 to 499 workers, and more than 500 workers.

The UK’s cities face an unprecedented economic challenge. They need to foster the economic growth necessary to recover from the deepest recession the UK has seen for decades. And they must do this at a time when public spending is dramatically reducing. This is doubly problematic for many British cities. It means far less money will be available to pay for traditional regeneration and economic development projects. But at the same time, it means that cities cannot rely on the expansion of the public sector to provide growth; indeed they will have to rely on the private sector all the more, as the public sector shrinks.

It is no surprise then that cities are looking for cost-effective ways of creating the conditions for economic growth. Encouraging innovation is one way to do this. Previous research has shown that innovation is responsible for the majority of economic growth in developed economies. Innovative places – Silicon

Valley being the exemplar – have in the past benefited from rapid economic growth that many cities would love to emulate.

The administrative framework that cities operate in is also changing. The regional approach to economic development is being replaced by a more local one. ‘Natural economic areas’ are increasingly being called on to take the lead in local economic policy; this policy has found its most immediate expression in the planned creation of Local Enterprise Partnerships (LEPs). These changes give cities and city-regions an important, but time-limited opportunity to shape policy to their benefit.

It is in this context of an urgent need for growth, a desire to foster innovation, and a shift from regional policy to local policy that the lessons of Manchester’s recent experience are especially relevant.

RICHARD SELINE WAS AN ADVISER TO MANCHESTER IN DEVELOPING THEIR INNOVATION STRATEGY.

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Yesterday I wrote about the benefits of using social proof and authority in raising venture capital.  If you didn’t read that yet it might be worth having a quick skim as a primer.

Social proof is defined as “looking for others to guide our decisions” and is also one of the most important techniques in acquiring customers in your company.  Many of you have read or at least know the primary thesis of “Crossing the Chasm” the seminal book on marketing your products to mainstream consumers by Geoffrey Moore.  It influenced a generation of tech marketers.

(PORTLAND, Ore.) July 27, 2010 — The more people used an interactive weight management website, the more weight loss they maintained, according to a Kaiser Permanente Center for Health Research study published online today in the open access Journal of Medical Internet Research.

The National Institutes of Health-funded study evaluated an Internet-based weight maintenance intervention involving 348 participants. Consistent website users who logged on and recorded their weight at least once a month for two-and-a-half years maintained the most weight loss, the study found.

“Consistency and accountability are essential in any weight maintenance program. The unique part of this intervention was that it was available on the Internet, whenever and wherever people wanted to use it,” said study lead author Kristine L. Funk, MS, RD, a researcher at the Kaiser Permanente Center for Health Research in Portland, Ore.

PURCHASE, N.Y., July 27, 2010 /PRNewswire via COMTEX/ --

Pep siCo today called on 20 promising start-ups in technology, media and communications to present at the inaugural PepisCo10 Summit, the second phase of the company's new innovation incubator program and a gathering of PepsiCo brand and marketing teams, agency partners and venture capitalists. The 20 presenting entrepreneurs are vying to earn a spot as one of the PepsiCo10, to be matched with industry mentors and to activate pilot programs with PepsiCo brands. For more information on PepsiCo10, visit http://pepsico.presslift.com/pepsico10summit.

Among the top start-ups are several connected TV technologies, a popular trend in media conver

gence; mobile couponing solutions, a still mostly unrealized consumer engagement point for consumer packaged goods companies and retailers; and niche social networking platforms that bring consumers together around common interests like music and sports.

"The top 20 PepsiCo10 finalists are incredibly talented and creative--an energizing source of outside innovation that we welcome into our organization," said Seth Kaufman, Director of Media Strategy and Investment for PepsiCo North America Beverages. "We look forward to hearing their proposals and partnering with them to inspire new approaches and opportunities to engage our consumers and retail partners."

NEW YORK (TheStreet) -- Venture capital funds were among the big winners in the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama last week, possibly giving a boost to a pocket of the deal industry that has struggled even more than most.

Though big banks like Citigroup(C), Bank of America(BAC), Wells Fargo(WFC) and Goldman Sachs(GS) got off easier than many expected would be the case as recently as a few weeks ago, they will still be subject to a host of new restrictions on activities such as derivatives trading, private equity investing, and charges they assess to merchants for credit card transactions.

Many of those restrictions emanate from the fact that these financial giants enjoy government support in the form of cheap loans from the Federal Reserve.

Jul 27, 2010 (FIND, Inc. via COMTEX) --

SUMMARY: The inventions listed below are owned by an agency of the U.S. Government and are available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of Federally- funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.

ADDRESSES: Licensing information and copies of the U.S. patent applications listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent applications.

Therapeutics for the Treatment and Prevention of Atherosclerosis and Cardiovascular Disease

Terra-Gen Power just secured a whopping 1.2 billion dollars in financing to up the ante on United States wind farms. With this latest round of cash they’ll be adding 570 megawatts of capacity to their Alta Wind Energy Center in Kern County, California to bring the total capacity up to a mega-impressive 3,000 megawatts making it the largest wind farm in the United States. The farm should be completed and ready for juicing the grid with renewable energy by the first and second quarters of 2011. Anyone up for topping that? This, “who can build the biggest wind farm,” is one showmanship game that we’re totally willing to egg on.

“Boost Innovation Without the Boss” according to an article by Paul Sloane. Citing data from The Nielsen Company’s study of 30 large consumer products companies showed that companies with White Space Teams (what they call Blue Sky) teams are far more successful at creating revenue generating innovation than companies trying to innovate through the traditional organization structure. And, as recommended in this blog, these teams are more than twice as effective when they are dedicated off-site teams! And, organizations with minimal senior executive involvement generate 80% more product revenue than those with heavy senior level participation.

Hierarchy is an innovation killer. The higher a manager goes, the more he feels compelled to “weed out” options. Unfortunately, most of this weeding is based upon Defending & Extending the existing Success Formula. Doing more of the same better, faster and cheaper dominates innovation thinking the higher the manager is placed! Rather than championing new innovations that could take the business into new markets with new products, senior people will apply the 20 Innovation Killers from Kamal Hassan! They will say the idea doesn’t fit, for a variety of reasons, and feel justified they’ve added their managerial “value.”

Over the course of the last year, a half-dozen of my most creative friends - filmmakers, writers, musicians - have fled Los Angeles. The careers that once paid their bills had dwindled to the point where they could no longer sustain themselves or their families in this city. Most found their salvation in other industries (advertising, mostly) in other states (New York, mostly).

The situation for those of us who remain here is still bleak. Many are working on career changes, like the film producer who talks about opening up a boutique; or the newspaper reporter who is now working for a marketing firm. My own husband, a filmmaker with two Sundance successes under his belt, turned to advertising when the financing for his last film fell through. A close friend with a successful band watched his new music video net a half-million views on YouTube, but sell merely 35 albums; the band subsequently broke up.

Chances are you have camping equipment, kitchen appliances, and lots other stuff that just sits in your closet gathering dust for most of the year. If a new site called SnapGoods catches on, those things could be earning you money during their downtime instead.

SnapGoods is a local lending service that connects people who want to rent something specific with friends and neighbors who may have what they need. Not using that Cuisinart? You can list it on SnapGoods and specify how much you want for it per day. Need a set of poker chips for that party? You can browse SnapGoods and, hopefully, find one to rent.

Everyone knows the broadband in the United States isn't very good.

Significant portions of the country aren't wired for high-speed Internet at all, and where it is available, it often isn't as fast as broadband in Asia and parts of Europe.

But while everyone knows that our broadband infrastructure is bad, no one knows exactly how bad it is.

See 10 counties that broadband forgot →

For years, Internet service providers have blocked efforts to publicize information about broadband availability, ostensibly, to protect themselves from their competitors.

The other day, Josh and I met with a very cool company that has some serious traction.  They’re more than doubling revenue every quarter and will soon be on track for a million dollar run rate.

The only concern was that they didn’t know what their cost of customer acquisition was, nor did they which channels would be most effective, or how much they could acquire out of each channel.  That makes it pretty tough to know how scalable the business is. 

The good thing is that customer acquisition is a pretty easily testable thing.  You can spend the next six weeks trying out a bunch of different channels and seeing what works, which is what we recommended.  It’s not about the traction—it’s about the information that de-risks your business and increases it’s enterprise value.  It’s a very different animal than an enterprise sales strategy.

Even as China is poised to overtake Japan as the world’s second-largest economy, its foreign policy is driven less by its sense of its role as a key global player than by a set of ‘narrowly defined’ national interests, says Professor Kenneth Lieberthal, Director of the John L. Thornton China Center and senior fellow in Foreign Policy and Global Economy and Development at The Brookings Institution.

Certainly, China could “make a big difference” on major global issues such as climate change, nuclear proliferation and the global economic crisis if it chooses to, Lieberthal told INSEAD Knowledge on a recent visit to Singapore.

“I think (China) is still in the early stages of figuring out how to be a global player. It still isn’t comfortable yet with what the balance ought to be between following China’s very narrowly defined national interests, versus contributing to global common goods, global stability, global rule-making, global institutions that are vibrant,” says Lieberthal.

Private equity players in the Middle East face a major challenge. With an estimated US$11 billion in un-invested funds raised before the global financial crisis in 2008, PE firms in the region are under mounting pressure to find and make meaningful investments.

At the height of the PE industry in the region between 2005 and 2007, there were about 70 transactions a year, with an average size of US$30 million. Using this yardstick, it would take more than five years to invest these funds.

As PE investment firms have to invest their existing funds before they can raise additional capital, there are some concerns that deals may be done “at almost any price” despite weak investment opportunities, according to a new report based on a joint survey of PE investment firms and investors by INSEAD and management consultancy Booz & Company. However, the same report highlights that the industry has drawn important lessons from the crisis and most private equity firms or general partners (GPs) are expected to exercise stronger investment prudence and proper due diligence. This may explain the recent focus on SME investment by some top companies.

I know you're all holding your breath on SBIR/STTR reauthorization, so here's the news, hot off the press.  We'll have more in-depth coverage later. 

SBIR & STTR PROGRAMS EXTENDED "AS IS" THROUGH SEPTEMBER 30, 2010

The House just passed H. R. 5849, "To provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes." 

What this means is that all SBIR and STTR programs (except the DoD) will be extended "AS IS" for an additional 60 days.  The DoD SBIR, STTR and CPP were previously extended through September 30, 2010 under separate legislation.  With the passing of this bill, all 11 SBIR agency programs are authorized through September 30, 2010. 

This action is the 8th in a line of short term continuing resolutions (CRs) since 2008, and is expected to quickly pass the Senate and be signed by the President this week, thereby avoiding a programmatic lapse, not just for SBIR, but for several other important SBA programs as well. 

If there is good news to this short term extension, it is that both House and Senate committees are hopeful that they will reach compromise prior to September 30, and unlike last year, the relevant committees are communicating and getting close to an agreement.  The downside to this short term action is the precarious position the agencies are put in.

It is interesting to note that in his floor speech to urge passage of H. R. 5849, Lynn Westmoreland (R-GA) stated "uncertainty is the enemy of growth." Do these elected officials realize that "uncertainty" is also the enemy of stability in government programs?  SBIR and STTR have been suffering from this uncertainty for far too long, and many agencies are reluctant to commit to making awards, especially in phase II. 


SBIR REAUTHORIZATION IN 60 DAZE?

No, that's not a typo.  Although September 30 may be almost 60 days away to us, it is far less for congress who is in the midst of a re-election daze, the likes of which we haven't seen in quite sometime. 

If all goes according to plan, congress will recess August 6 for what is known as their "district work period" and will return September 13.  The number of legislative days they will have from enactment of this bill to September 30 is estimated to be about 18. 

During the district work period you may have the opportunity to speak with your representative or senator, perhaps in person, or in a town hall.  Don't be afraid to call their local, regional or state office to invite them to visit your business.  Let them know how important the SBIR program is to you, your business, and potential new jobs.  Programs such as SBIR that help keep or add employment for good wage paying jobs, are usually popular with the politicos. 


SBIR AND THE SUPPLEMENTAL APPROPRIATIONS ACT, 2010

There are some gray clouds the agencies are dealing with in the form of H.R. 4899, "Supplemental Appropriations Act, 2010"  Although the House and Senate passed their own versions of this bill, there are many areas of disagreement between the two bodies, and the conferencing work has failed to produce enough votes to pass the legislation.  There are many issues other than raw funding in this large bill, and passage is essential in keeping much of our government operating. 

One concern in the SBIR arena is a number of rescissions made to existing budgets (retroactive) as listed in section 4114.  Obviously many of these were made to help offset the spending increases in other areas.  A notable number of rescissions are in the areas of R&D.  In the DoD we see an R&D reduction of about $505M which could translate to a loss of more than $12M in SBIR funding. 

The DoD has cautioned congress that without passage of supplemental funding, the war efforts will run out of funds in early to mid August, 2010.  You may recall that a few years ago we had a situation where war funding was in peril and the DoD started to "rob Peter to pay Paul" in an effort to protect our war fighters.  This affects most DoD programs including SBIR. 


CLOSING

In our last issue we discussed the possibilities of kicking the SBIR can down the road to the next congress.  I can tell you that most of the SBIR veterans we polled, who have been around since the beginning, and fought the wars over the years to establish and keep the SBIR program running, are very concerned about a new congress with many freshmen. 

On the other hand there is a concern of giving too much of the program away to special interests (both large and small).  There are some groups within government working for a "next generation" SBIR program.  Many of these people are relatively new to the program, and do not have a balanced view of what SBIR was created to be, or how it may best serve the private sector in addition to the government. 

SBIR was not a government idea, it came from the outside world.  It came from the visionary mind of Roland Tibbetts, who conceived the program, along with the energy, force and respect of the late Milt Stewart.  Stewart created the political environment and inertia in congress to establish the program. There was also a great cast of characters without whose participation, SBIR would not have been possible. 

Most of these people are still with us today and are of sharp mind.  Yet, in all this talk of a new SBIR program (rumored to be SBIR 2.0), we are not hearing of any involvement with any of these great people.  Perhaps the eggs think they are smarter than the chickens.

Thanks again for your time and we welcome your comments.

Sincerely,

Rick

Rick Shindell
SBIR Gateway
Zyn Systems
40 Alderwood Dr.
Sequim, WA 98382
360-681-4123
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Recent CB Insights’ data indicated that NY was beginning to outpace Massachusetts in seed venture capital deal activity.  The other interesting observation from reviewing the data over the the last six quarters was a steady decline in median deal sizes in both NY and Massachusetts as can be seen below.

Do you think that entrepreneurship is just for the young? That anyone past 50 is simply too old to start up a business? That midlife is the time when you should be thinking about retiring and preparing to live on less? If you do and if you are, then midlife entrepreneurship isn’t for you.

However, if you are someone who . . .

* likes to call the shots and live life on your own terms,

* has a strong desire for autonomy and independence,

* is a self-motivated starter,

* knows how to evaluate and take calculated risks,

* is highly self-motivated,