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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.

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Comment Preferences

  •  W.T.F. (4+ / 0-)


    So, my startup founded by my wife and I would be automatically excluded? Because we're starting up? Even though this program is called "Startup America"?


    And he's still better than the Republicans.

    I lost my house because of Wall Street's greed- they sold it for 30% instead of helping me out. #occupywallstreet - We are the 99%!

    by AZ Independent on Tue Oct 04, 2011 at 01:00:30 PM PDT

  •  I don't know how many (2+ / 0-)
    Recommended by:
    DontTaseMeBro, DarkestHour

    entrepreneurs would be discouraged by this, after all they are people predisposed to start out on their own anyway.

    Be that as it may, the "early access" part, anyway, kind of sounds like it falls under a category which could be named "Crony __", where you get to fill in the blank with "Capitalism", "Socialism", or any other ism that strikes your fancy.

    Moderation in most things.

    by billmosby on Tue Oct 04, 2011 at 01:09:22 PM PDT

    •  I wasn't discouraged (1+ / 0-)
      Recommended by:

      I was frustrated and disappointed, but I also see this as an opportunity.  There are 40 million companies without employees in this country.  I am going to focus on them.  I think this is terrible for the Obama administration - and it would have been cool had they done something useful, but it is certainly not going to stop me from moving forward.

  •  Wipe (0+ / 0-)

    out independence and ability, one life at a time.

    Go future.

  •  Compare this to the U.K.'s stunning approach (2+ / 0-)
    Recommended by:
    adrianrf, wilderness voice

    Everyone knows by now that small business are the job creators and drive the economy. The UK's approach is simply stunning. They send volunteer U.K. entrepreneurs to the main U.S. venture forums and pick out the best prospects. They then offer to set them up and fund them in the U.K. My startup was enrolled in their program and two weeks later the British government had us on a trade mission to the middle east where they presented us to government leaders and billionaires. The idea is, of course, that the U.K. will get these new technologies and jobs. Is that brilliant?

    Check it out.

    Why can't we help our entrepreneurs instead of hobbling them?

  •  Crappyest program I ever heard of (0+ / 0-)

    Public monies to feed startups to the sharks...unbelievable.

    VC is 'not' your friend you will be sold out as soon as a profit can be made.

    Most 'startups end up as a portfolio of 'Intellectual Property' sold to a large dominant corporation in a given field and 'not' as a viable job creating company.

    Steal a million dollars from a little old lady...Go to jail! Steal a dollar from a million little old ladies...Get your wrist slapped and admit no wrong. Animal Nuz name: Sparrow- the bird in the pirate hat

    by Arrow on Tue Oct 04, 2011 at 03:33:48 PM PDT

    •  I've always been confused by the whole (0+ / 0-)

      startup a company and make sure you have an exit strategy--meaning sell or IPO (but usually sell). I mean what if I actually am passionate about what I do and want to grow a business (and by extension create jobs)? What if my objective isn't just to "flip" a company like a house in the old real estate market. Did the founders of 20th century companies like Disney, IBM, McGraw-Hill, Ford, etc, etc, etc start their companies thinking they just wanted to sell...

      Yet VCs trust these folks more than someone who really passionately believes in a product or idea or vision...because everything is a cash-producing game. We've lost the thread completely.

  •  have encountered these folks quite a bit (1+ / 0-)
    Recommended by:
    wilderness voice

    took their entrepreneur training program and went to an intro to Startup America.

    I think there are a few things going on. Entrepreneurial culture has shifted quite a bit since Kaufmann started and they have their hands tied. Their Fast Trac program used to advise all sorts of funding resources, for example. Now for the usual small business startup, they focus on the three fs (family, friends and fools). And "bootstrapping" which basically means--fund it yourself. They also have a real bias against "lifestyle" startups--meaning something you can't scale up.

    Re StartUp America--my impression both from the list of partners and from the talks I went to--is that this is mostly aimed at high tech and green tech startups (thus the emphasis on patents, international easement (as it were), academics owning their own work, and other factors. If you read it through that lens it makes total sense. And yes ultimately the benefit is to large corps because (again) our current startup culture, esp in the tech space is to develop something in order to sell it to another company.

  •  Useful information (0+ / 0-)

    Thanks for the info Rob.  I had not been aware of the nature of this program before and it does look peculiar to me.  Also, looked at and joined your site--Incredibly well-designed, looks like a lot of potential here.

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