The Obama Administration "Startup America" initiative, a $2 billion public-private partnership, is apparently not accepting small startup companies and entrepreneurs. The private sector component of this program, a group called the "Startup America Partners", whose Chairman is Steve Case, the founder of AOL, and whose CEO is Scott Case, the founder of Priceline is funded by the Kauffman Foundation. They have set up a "platform" whose primary purpose seems to be that of a discount platform where Corporations can sell their goods and services to startup companies. Scott Case was quoted in the Wall Street Journal as saying they intend to screen out any company without two employees or founders and that: "Sole proprietorships, freelancers, independent consultants and aspiring entrepreneurs" are not likely to be accepted. The public sector side of this initiative is even less transparent, and it is unclear, to this writer at least, who is getting access to the allotted $2 billion, and how it is being spent.
It is called "Poe's Law". It is an an Internet adage that describes a situaton where it is impossible to tell the difference between sincere extremism and a parody of extremism. In other words, you can't make a parody of someone because it wouldn't be as good as the actual self-parody. That is the first thing I thought of when I read the statement that Scott Case, CEO of Startup America Partners, made in a Wall Street Journal interview:
The partnership is currently accepting applications and is looking to admit 100,000 high-growth start-ups (incorporated firms, usually with at least two founders and with plans to hire and grow); 10,000 ramp-ups (with five employees and a revenue stream); and 1,000 speed-ups (typically 25 or more employees). Sole proprietorships, freelancers, independent consultants and aspiring entrepreneurs with no more than an idea are less likely to be accepted"
That may not rise to the level of "Poe's Law" but in my book it came close. A program designed to help entrepreneurs that won't accept entrepreneurs! Honestly, I don't know whether to laugh or to cry. At last report, only 400 companies had joined this platform, and 200 of them were associates of theirs who were given early access to the platform. Before you try to get an account with them, you may want to read my review of this platform.
Some background information. Startup America is a $2 billion Obama Administraton "public private partnership" that was supposed to help startup companies in the United States. On the public side, the government will provide matching funds to venture capital companies who agree to invest in companies with early stage innovations and those in underserved communities. The private sector side is called the "Startup America Partnership". It was announced in January of this year at the White House. Steve Case, founder of AOL, was named Chairman, and Carl Schramm, CEO of the Kauffman Foundation, was named as a founding board member. Later, Scott Case (no relation to Steve Case) founder of Priceline was named as the CEO of Startup America Partners. The press release written at the time described the relationship like this:
The Startup America Partnership will work closely with the White House to advance the goals of its Startup America initiative. The Partnership will bring together top entrepreneurs, start-up firm funders, CEOs, university presidents, foundations, and other leaders to help entrepreneurial companies start or grow.
This doesn't seem to be the way it is turning out.
When I first heard about this program, I was stoked. Finally, our government was paying attention to entrepreneurs and startups. Having participated in all three of the Webinars organized by the Startup America, however, I noticed a subtle but perceptible change in each of the meetings. From a gung hu rooting for entrepreneurs and startup companies, to an emphasis on "companies that could experience explosive growth" - (possibly as a result of this disastrous Kauffman Foundation Study) and from a strong emphasis on "public private partnership" to an emphasis on "we are the private sector, and can do whatever we want".
During each of these meetings, they spoke of a "platform" they were developing that they seemed to be saying would be the "be all, end all" system for enterprenuers. YOu can read the story of my efforts just to get an account on this platform on this blog post - only to learn it is basically a corporate discount platform - or as one commenter put it "a coupon book". Apparently the corporations forming the Startup America partners all got together and decided the thing that entrepreneurs most needed just happened to be to buy the things they wanted to sell them.
Just prior to my writing that review, I got a letter from the "Director of Startup Engagement" at the Startup America partners offering to arrange to a phone discussion, which I immediately accepted. I had already called the local office of the Small Business Administration and they knew absolutely nothing. The Economic Development Specialist" I spoke with there read some boilerplate statement about the goals of the program from some memo she had found. When I wrote her a follow up letter asking if she had learned anything, she pasted the same boilerplate in the email and sent it back to me. After another email requesting a contact at the SBA who may be knowledgeable about the program, I was given the name of Grady Hedgespeth . I don't know his title, but two different emails to him when unanswered, so I called the local SBA office again and this time was given the name of Sean Greene, the SBA;s Associate Administrator and Special Advisor for Innovation.
My first email went unanswered, but in the second much stronger letter that I included that Wall Street Journal quote along with the opinion that this was going in completely the wrong direction, and asked if Startup America Partners had some kind of "exclusivity arrangement" with the Goverment. I also asked if they would consider supporting projects that would help smaller ventures, such as the ones I have been working on, and he finally, he responded with this message:
As with any private sector organization, the Startup America Partnership has decided where they want to focus. That doesn't preclude other groups from working to help entrepreneurs in any way that that they see fit, whether literally helping companies to start, taking a geographic focus, sector focus, and so on. Good luck with your efforts, and keep me posted as you progress.
So that's it? After all this time and effort I get a "good luck with your endeavors" message! Somehow this just doesn't seem right. Somewhere out there, there is a few billion dollars floating around, and no one seems to know anything about it - who is getting it, or what projects it is funding. If I were a conspiracy theory guy, I would think that the Startup America Partners and the Kauffman Foundation, already have relationships with the venture capital firms that will be getting these matching funds, and the entire "Startup America Partners" is just an excuse to go around the country "cherry picking" the companies they like best and introducing them to their friends in the venture capital industry.
It's too bad, because a lot of people put their faith in these guys, including our President. He once again, has naively expected Corporations to act in America's best interest, and once again, he got sucker punched. The idea of Corporations doing what is right for America, out of a sense of duty or patriotism, is apparently a quaint notion from a bygone era.
I'm not sure where to go from here. I am going to continue to build my own portal for small starup companies at American Startups. Unlike Startup America, real entrepreneurs, startups and the 40 million "zero employee companies" are welcome there. It is being built with almost no resources, but is is already better than the Startup America Platform in many ways - at least as far as setting up a system where entrepreneurs help each other. It is now in alpha test and registrations are open. I am certainly still willing to talk with the Startup America Partners - we all should be talking with people with whom we disagree from time to time. I'll probably also call my Congresswoman though. This program is shockingly similar to both the simultaneous and the bail outs - but maybe they don't consider $2 billion being a big deal anymore.
Some real journalist should really take a hard look at this program though, and "follow the money". It may be a little over the top to say it "smells funny" but I do think I am getting just a whiff of Solyndra.