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McNair Center Weekly Roundup

Innovation Weekly Roundup: 12/02/16

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about innovation this week:

Closing the Gender Patenting Gap Could Unlock Innovation

Barbara Gault, Executive Director, Institute for Women’s Policy Research

A study by the Institute for Women’s Policy research has quantified the gender difference in patenting. The IWPR claims women’s underrepresentation in STEM fields is a major in the patent disparity and notes that patents granted to coed teams are cited more often than patents granted to single gender teams.

The divide is significant; under 20 percent of US patents cite a woman inventor and under 8 percent list a woman as the primary inventor. The IWPR suggests employers help women pay for filing patent applications and expand women’s professional network to close the gap. The McNair Center’s Tay Jacobe has written about has written about the gender gap in STEM.

Is Engine of Innovation in Danger of Stalling?

Christopher Mims, Technology Columnist, Wall Street Journal

The basic discoveries at the heart of the biggest tech companies are growing old fast. Inventions like the transistor and internet, while not relics, were invented between 1940 and 1980 when federal funding allowed for long-term research without immediate commercial use. At that time, the federal government spent 2 percent of GDP on research and development. That figure is now 0.6 percent.

The landscape of R&D has shifted. Now, corporate R&D spending is at 2 percent of GDP, from under 0.6% in the 1960’s. While this appears beneficial at face value, since the corporations who profit off inventions are funding them, it hides the fact that basic discoveries and incremental advancement is overlooked in favor of easily marketable technologies. Arati Prabhakar, Director of Defense Advanced Research Projects Agency (DARPA) explains, “we need public investment in R&D because companies only worry about the next quarter.”

Venture capitalists now fund by backing startups that are then acquired for their innovations. This still places an onus on inventors to work on marketable technologies rather than truly speculative research that used to be the foray of Bell Labs and still is in the domain of IBM Research.

How China’s Government Helps and Hinders Innovation

Anil Gupta, Professor, University of Maryland Smith School of Business; Cofounder of China India Institute
Haiyan Wang, Managing Partner, China India Institute

Although India spends a tenth of what China spends on R&D, Indian research leads to significantly more international patents than Chinese R&D.  The top-10 US tech companies’ Indian based labs were granted 50% more patents than their Chinese counterparts.

China’s shift from low-cost manufacturing to innovation is a case-study in how government policies, particularly insufficient patent protection, can inhibit innovation. Gupta and Wang claim that China’s heavy R&D investment have led to unimpressive results since foreign companies are wary about intellectual property protection in China.

While China accounts for 20 percent of global R&D expenditure, second to the US at 26 percent, they are granted relatively few international patents. Only 2.2% of USPTO patents were of Chinese origin. More patents originated in nations like Japan (18.8%) and Germany (5.5%).

China Logged a Record-Breaking 1 Million Patent Applications in 2015

Ananya Bhattarchya, Editorial Fellow, Quartz

According to a World Intellectual Property Organization report, global patent applications were up 7.8 percent in 2015 to 2.9 million filings. China emphasizes patent quantity over quality and that much of local research is not original research but rather adapting existing inventions for Chinese markets. In line with this theory, the Chinese patent office received 1,010,406 of the 2.9 million global patent applications. In second was the USPTO with 526,000 applications and the top 5 patent offices handled 82.5 percent of applications.

Government subsidies and foreign companies applying for Chinese patents for greater IP protection in the country drives the patent increase.

While China’s office has seen the greatest growth, the USPTO remains the leader in foreign patent applications with nearly 238,000 foreign patent applications.

Happy Holidays from the McNair Center for Entrepreneurship and Innovation. The Innovation Weekly Roundup will return in 2017.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 12/02/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about entrepreneurship this week:

Keep Austin Entrepreneurial

Eliza Martin, Research Assistant, McNair Center for Entrepreneurship and Innovation

In 2016, Austin was ranked as the number one U.S. city for startup activity by the Kauffman Foundation. Austin’s entrepreneurial ecosystem began in the 1970s and 1980s, and was originally focused on computer and semiconductor manufacturing.

Austin’s “Silicon Hills” has diversified into “more than the computer chip and semiconductor industry that first enabled its growth.” The annual South by Southwest Festival draws thousands of tech startups to the city and provides excellent networking opportunities for entrepreneurs. The University of Texas at Austin adds thousands of skilled employees to the city’s labor force each year. Additionally, UT Austin’s boasts the Austin Technology Incubator, a startup-focused incubator run by the university’s IC2 Institute.

Austin provides entrepreneurs with supportive policy infrastructure, skilled and energetic laborers and access to valuable mentorship opportunities. If efforts to grow Austin’s economy continue on their current path, the city will be well poised to solidify its presence as a thriving entrepreneurial ecosystem.

Overtime Rules in Limbo: What Businesses Should Do Now

Jeremy Quittner, Reporter, Fortune

Last week, a federal judge judge in Texas granted a preliminary injunction against the Department of Labor’s new overtime rules that were set to go into effect on December 1st. The new overtime rules would have increased the threshold salary for overtime workers to $47,476 from $23,600. Many small business owners, acting in preparation for the new rule, made the difficult financial decision to switch salaried workers to hourly status.

The preliminary injunction still must go through an additional 60 day period of court hearings before it becomes an official injunction. Additionally, the Obama administration’s Department of Labor could still appeal the judge’s decision to the U.S. Court of Appeals for the 5th circuit. It is not yet clear if the administration will challenge the judge’s decision. Even if the decision is appealed, success on appeal is doubtful; in the court’s recent history, the U.S. Court of Appeals for the 5th Circuit has tended to challenge the Obama administration.

McNair Center’s Catherine Kirby previously examined the effects of new overtime labor laws on small businesses in her blog post Small Business and Overtime Regulation.

One simple way billionaire investor Peter Thiel identifies game-changing startups

Eugene Kim, Reporter, Business Insider

Peter Thiel, serial VC investor and founder of PayPal, is known for his profitable investments in successful billion dollar startups, such as Facebook, Palantir, Stripe and SoFi. Business Insider’s Kim reports possible insights into Thiel’s keen eye for return on investment.

In an interview at VC firm Khosla Ventures’ KV CEO Summit, Thiel recently said, “I think in some ways the really good companies often couldn’t even be articulated…we didn’t quite have the right words. Or maybe they were articulated but were articulated in terms of categories that were actually misleading.” Thiel cautioned investors away from startups that rely on buzzwords, such as big data or cloud computing, in their pitches. Thiel said, “…when you hear those words, you need to think fraud and run away as fast as you can. It’s like a tell that you’re bluffing, that there’s nothing unique about the business.”

White House expands platforms for inclusive entrepreneurship

Kate Conger, Reporter, TechCrunch

The White House recently announced “new and expanded plans to improve diversity and inclusion within the startup economy.” The plans are focused on promoting diversity in higher education, investment and entrepreneurship. The initiatives reflect the Obama Administration’s commitment to improving minority representation in universities, investment firms and tech companies. By focusing the initiatives within the private sector, these efforts will hopefully continue after his departure from office.

More than 200 universities, all members of The American Society for Engineering Education, have signed a pledge to promote diversity in their engineering programs. Additionally, more than 30 VC firms and accelerators signed a pledge to diversify access to seed and early stage capital for underrepresented entrepreneurs and reveal information regarding their portfolios’ diversity. Furthermore, 46 tech companies, including Xerox, have joined the Tech Inclusion Pledge, demonstrating a commitment to publicly publish recruitment goals and diversity metrics.

Tom Kalil, deputy director for technology and innovation at the White House Office of Science and Technology Policy, reportedly told TechCrunch there is existing data that indicates diverse firms are more diverse are more likely to be successful. According to Kalil, “A lot of innovation comes from diversity, people with different backgrounds.”

Data science startup Civis Analytics raises $22 million

Ken Yeung, Contributor, VentureBeat

Civis Analytics recently announced that it bagged $22 million in its latest Series A funding round. Civis Analytics was born out of President Obama’s 2012 reelection campaign. Though originally focused on political campaigns, the data science company’s cloud-based platform provides data analytics tools and methodologies  to organizations focused in areas such as health care, media and education. Since its inception, the startup has relied on revenues, rather than funding, to support its operations. However, the startup announced its recent funding will go toward hiring more engineers and data scientists.

Civis Analytics CEO, Dan Wagner states the importance of data analysis to business success: “Everyone knows that they need to be using data, but most don’t know where to start. Or, if they are using data, they aren’t necessarily asking and answering the right questions.”

Stripe Investment Makes Cofounder The World’s Youngest Self-Made Billionaire

Ryan Mac, Reporter, Forbes

Brothers Patrick and John Collison are cofounders of San Francisco-based startup Stripe. Stripe is a tech company that enables private individuals and companies to engage in transactions via the internet and on mobile apps. MIT and Harvard dropouts, respectively, Patrick and John Collison recently joined the ranks of the world’s youngest self-made billionaires. Stripe recently announced a successful funding round, which doubled the startup’s valuation to $9.2 billion. CapitalG and General Catalyst Partners jointly invested $150 million in Stripe during its latest funding round.

Despite their early success, the Collision brothers are still hungry for more; Patrick Collison told Forbes in January of 2014 that, “Heartening as the success to date has been, we are so early in accomplishing the goals that we set out for ourselves. If anyone here believes that Stripe has already made it, that would be hugely problematic for us.”

QA with Kauffman’s Victor Hwang on entrepreneurship in the heartland

Ryan Pendell, Contributor, Silicon Prairie News

Victor Hwang, Vice President of Kauffman Foundation, and Phil Wickham, Executive Chairman of Kauffman Fellows set out on a road trip through America’s Midwest earlier this month to “take the pulse of entrepreneurship in America’s “middle.” Despite a nationwide political narrative that depicts the Midwest in a state of slumping stagnation, caught between booming coastal economies, Hwang and Wickham report that Midwestern entrepreneurs are actively seeking out business solutions to improve the quality of life within their communities. Since the benefits of the tech boom have been focused on the coasts, Hwang and Wickham cite the biggest challenges to Midwestern entrepreneurs as access to capital.

According to Hwang, the need to build infrastructure and capital should be considered both a challenge and an opportunity for Midwestern entrepreneurs going forward. Hwang expressed optimism for the future of the Midwestern economy, claiming that the region’s culture of “civic mindedness, that willingness to pitch in, that willingness to take risks and help others reach their ambitions” is still alive.

Policy Changes Needed to Unlock Employment and Entrepreneurial Opportunity for 100 Million Americans with Criminal Records, Kauffman Research Shows

Ewing Marion Kauffman Foundation

According to a report recently published by the Kauffman Foundation, rethinking America’s “occupational licensing policy could counter recidivism, encourage entrepreneurship and boost the American economy.” Currently, occupational licensing requirements prevent individuals with a criminal history from securing licenses that could open the door to financial stability and self-sufficiency. Many occupations that require occupational licenses are on low-skilled and high-skilled professions; increased labor participation, productivity and entrepreneurship by released inmates within these fields could therefore produce benefits for the overall economy. According to the Kauffman Foundation’s study, over 60 percent of inmates released each year from state or federal prison are still unemployed after one year of their release.

The Kauffman Foundation’s Emily Fetsch notes that the high levels of recidivism and unemployment among ex-convicts indicate a fundamental issue with the country’s occupational licensing policy: “Hundreds of professions that require occupational licenses could provide paths to economic independence for those formerly incarcerated, except for the fact that their criminal histories alone may ban them from receiving licenses, even if their convictions had no relevancy to the job.”

Fetsch recommends reforms to occupational licensing policy that would exclude only criminal defendants who pose a a public threat or when convictions are recent and relevant to the context of an occupation. Additionally, Fetsch proposes offering the formerly incarcerated opportunities to earn rehabilitation or restoration certificates, thereby preventing inmates from automatic disqualification for consideration of occupational licenses solely on the basis of their arrest. Lastly, Fetsch contemplates disposing of occupational licensing requirements altogether, expressing skepticism for the regulation’s effects in promoting public safety and health.

An Incubator for (Former) Drug Dealers

Maura Ewing, Reporter, Bloomberg

“Amid calls for more job training, less automatic background searching and other changes that would make it easier for ex-felons to become employees” Bloomberg’s Ewing reports on an alternative perspective solution on the fight to curb recidivism and unemployment  among the formerly incarcerated: encouraging them to start their own businesses.

The public and private sphere should continue to push programs that support formerly incarcerated individuals, as well as tackle the structural problems that face these prisoners as they re-enter society. However, Ewing asserts that more emphasis should be placed on the potential returns on fostering entrepreneurship among this commonly dismissed population.

Defy Ventures, a nonprofit incubator based in New York, certainly achieved success in this regard by transforming ex-convicts into entrepreneurs. Over the past six years, Defy Ventures has trained upwards of 500 released felons and successfully incubated over 150 companies. What’s more, the recidivism rate among the incubator’s alumni within five years post release is an astonishing 3 percent, compared to the national average of 76 percent. Defy Venture’s efficacy in curbing recidivism rates suggests that future initiatives to support released prisoners should be focused on entrepreneurship.

Ewing’s article tells the story of another incubator underway in Hartford. The incubator, TRAP House, focuses on supporting former drug dealers as they start new, legal companies. The incubator’s name makes a clever reference to slang for drug-stash locations and is “short for transforming, reinvesting and prospering.”

Happy Holidays from the McNair Center for Entrepreneurship and Innovation. The Entrepreneurship Weekly Roundup will return in January.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 11/18/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about entrepreneurship this week:

Nationalism is not putting a damper on this trillion-dollar sector

Elaine Pofeldt, Contributor, CNBC.com

CNBC Contributor Elain Pofeldt observes that the United States and Europe are witnessing a rise in nationalist and anti-globalization sentiment. She cites Mr. Trump’s election and the Brexit referendum as evidence. The trend may reflect a global desire to redistribute market and government benefits domestically – and a disapproval of corporations that send wages abroad and profits to the already wealthy.

In this uncertain climate, one economic principle remains key: Entrepreneurship fosters economic growth.

The Kauffman Foundation’s recently released Global Entrepreneurship Index emphasizes the importance of entrepreneurship to economic growth. This annual index rates countries on the health and quality of their entrepreneurial ecosystems. There is a strong correlation between a country’s GDP and its technological advancements. Governments should support a strong entrepreneurial ecosystem if they are truly serious about encouraging the country’s economic growth.

Currently the U.S. ranks number one on the index. The index suggests that the strength of the U.S. entrepreneurial environment lies in a strong perception for opportunity. One area of opportunity that U.S. entrepreneurs are increasingly tapping into are the regulated sectors, such as health care, energy and education.

Social entrepreneurs is also on the rise. Jonathan Ortmans, a senior fellow at the Kauffman Foundation, notes how this relates to national policy: “We’re now seeing a much larger number of public-sector leaders — government at the national and local level — jumping in and asking, `How do we tackle this and build stronger entrepreneurial ecosystems?'”

The Role of Entrepreneurship in Job Creation and Economic Growth

Margarita Hakobyan, Contributor, Huffington Post

Huffington Post’s Hakobyan emphasizes the role of entrepreneurship in job creation and economic growth. According to a report released by the Small Business Administration in 2012, small businesses created 60 percent of new jobs in the previous decade.

New businesses challenge existing markets and encourage competition by offering new or improved products. Successful entrants often steer customers away from existing companies. Disruptions in the market consequently force existing companies to innovate or watch their market share diminish.

Although the manufacturing sector suffered job losses from advancements in automation and other technologies, its productivity and scale have both risen considerably.

Manufacturing is an exception – many market disruptions create jobs. For example, Netflix, dismantled the video rental industry but created jobs by feeding a demand for large-scale processing of DVDs and maintenance of the grocery store kiosks that sell these DVDs.

Small businesses can also contribute to economic growth through their flexibility and diversity. Flexibility allows startups to react quickly to market conditions. Startups can meet consumer demands faster than established corporations because large companies often must follow long administrative processes before implementing reforms.

Venture Capital Firm Navigates Uncharted Course to Success

Michael J. de la Merced, Reporter, New York Times

The Times’ Merced reports on venture capital firm, Spark Capital. The firm is known for early investment in promising startups like Twitter, Tumblr, Slack and Oculus.

Spark is also wading into uncertain industries. It recently invested in Cruise Automation, a San Francisco-based startup that develops software for self-driving cars. At a time when Google and Uber declared self-driving vehicles “among their top research priorities,” the success of less funded and less established startups competing to break into the same market seemed doubtful. Big industry players already dominated the research on self-automated cars, so most VC firms turned to alternative ventures within less-explored markets. Despite the industry’s conventional wisdom, Cruise Automation was sold to General Motors for $1 billion within months.

Spark adopts a nontraditional process for investment decisions that focuses on products rather than markets. Instead of specializing in certain industries or markets, partners at Spark can bring any prospective venture to the table. Investors then debate the merits of pursuing the opportunity until a consensus among the partners is reached. Spark accredits its most successful decisions to an “appreciation for good product design.”

In total, Spark manages $3 billion in investment funds. Its fifth venture fund will have a first-close target of $400 million.

Ever Wanted to Back a Start-Up? Indiegogo Opens the Door to Small Investors

Stacy Cowley, Reporter, The New York Times

Indiegogo is a popular crowdfunding site that enables small venture capitalists to invest personal money into promising and creative ventures. The major crowdfunding site is the first to take advantage of a new securities rule, which allows “ordinary investors to risk up to a few thousands dollars a year backing private companies.”

Before the rule was passed, only accredited investors, or those with an annual income greater than $200,000 or net worth of $1 million, could invest personal funds in these riskier ventures. With the passage of the new rule, crowdfunding backers can own equity stakes in the companies they invest in.

The new rule addresses an issue raised during Oculus’ acquisition by Facebook. Oculus raised millions of dollars on crowdfunding sites during its early investment stages. The startup used the investments raised by crowdfunding backers to prove to venture capitalists that there was a market demand for its products. Investors poured money into the company, and Facebook subsequently acquired Oculus. The firm’s original crowdfunding backers reaped no gains; angel and venture capital investors took home the profits.

The Reason Silicon Valley Beat Out Boston for VC Dominance

Anil Gupta and Haiyan Wang, Contributors, Harvard Business Review

The Boston-Cambridge and Bay Area have histories in technology entrepreneurship and venture capital (VC). However, since the 1990s, Silicon Valley has consistently snatched a larger share of all VC investments in the US than its Northeastern counterpart. New England’s share in VC investments plateaued at roughly 10 percent. Meanwhile, the Bay Area’s share of VC investments has grown from 22.6 percent to just over 50 percent.

HBR’s Gupta and Wang identify cultural factors and state-level policies as possible explanations for the divergence between the two coastal VC hubs. For example, Massachusetts, unlike California, allows businesses to include noncompete covenants in their employment contracts. Noncompete covenants offer company loyalty, but they can also remove the need for fast-paced innovation that many Silicon Valley entrepreneurs face.

Additionally, New England and Silicon Valley differ in the type of investors and companies that they attract. The Northeast dominates in the life sciences; in the first three quarters of 2016, 60 percent of New England investments involved ventures focused on biotechnology and medical devices. Silicon Valley, on the other hand, is home to many of the startups that develop platform technologies integral to the digital age.

According to Gupta and Wang, California’s stronghold on the digital and tech industry has resulted in a “growing agglomeration effect.” Increasingly, entrepreneurs are migrating to or launching their businesses in the Bay Area to gain access to these synergies that come from being immersed in the world’s greatest entrepreneurship ecosystem.

And in startup news…

Womply bags $30M to Help Small Businesses Harness Data

Tomio Geron, Reporter, The Wall Street Journal

San Francisco-based Womply raised $30 million in its most recent round of financing, bringing its funding total up to $50 million since 2011.

The startup’s platform offers a “web-based suite of software tools” that allows small businesses to analyze performance data on sales, marketing, consumer behavior, revenue and online reputation.

Womply serves a diverse set of clients, ranging from salons to legal firms, but focuses on supporting service-oriented small business. The startup allows small businesses to gain valuable insights into their performance and consumer base. President Cory Capoccia says Womply is helping small businesses increase their efficacy “by “building technology to help grow, protect and simplify running small businesses.”

Rice Entrepreneurs

Spotlight on Rice Entrepreneurs: East-West Tea

Carlin Cherry, Research Assistant, McNair Center for Entrepreneurship and Innovation

East-West Tea is a student-run business that sells boba tea to Rice University students. Initially developed as a project for an undergraduate marketing class, East-West launched operations last month. The McNair Center’s Carlin Cherry interviews operations manager Andrew Maust.

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McNair Center Weekly Roundup

Innovation Weekly Roundup: 11/18/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about innovation this week:

On the Trail of Grassroots Innovation Across America

Eillie Anzilotti, CityLab Fellow

While technological innovation and commercial developments garner the most press, social innovation impacts daily life in tangible ways. The Cooper Hewitt Museum’s exhibit on grassroots innovation demonstrates the necessity of innovation for all socioeconomic levels. Examples include emergency water stations on migration routes from Mexico to the U.S., mobile produce markets, and wireless mesh networks.

Instead of high-cost research, low-cost innovation can solve immediate community issues. At the community level it can be easier to address problems with a bottom-up approach. Cynthia E. Smith, the Manhattan museum’s curator of socially responsible design, travelled over 50,000 miles to find social innovations. One goal in these innovations is to promote economic inclusion by addressing barriers to success.

Remarks by Director Michelle K. Lee at the IAM Patent Law and Policy Conference

Michelle K. Lee, USPTO Director & Undersecretary of Commerce for Intellectual Property

Director Lee has discussed what intellectual property policy will look like in the next administration. Intellectual property and innovation have historically enjoyed bipartisan support. Lee believes IP is essential to President-Elect Trump’s promises for job creation and on the economy, noting that IP-intensive industries support over 45 million U.S. jobs and drive economic growth.

Lee listed the USPTO’s achievements in the past eight years. The backlog of patent applications has been reduced by 30 percent despite an increase in filings. Overall pendency times have decreased by up to 25 percent. She argues that PTAB proceedings have increased patent quality by invalidating (some) bad patents early in their lifecycle. Much of the improvements in patent quality come from the Clarity of the Record Pilot (mentioned in last week’s roundup).

She also ran through many of the programs in the past 8 years. These include the Enhanced Patent Quality Initiative, Interpartes Review, the America Invents Act and President Obama’s dedication to the patent system.

Creating diversity in the innovation economy

Jeffrey J. Bussgang, Harvard Business School, Flybridge Capital
Jody Rose, Executive Director New England Venture Capital Association

The New England Venture Capital Association is launching a program, Hack.Diversity, to incorporate underrepresented talent into the innovation economy. Engineers of color will be provided with training, coaching and mentoring from the fastest growing startups funded by the venture capital group.

The Association claims that the program addresses employers’ desires for diverse talent and provides tangible pathways for community colleges and urban schools to funnel talent into high-growth industries. These groups have faced obstacles in reaping the advantages of the innovation economy. As the authors said “like the rest of the country — we face a looming schism and we are leaving behind whole populations that are not fully reaping the benefits of our entrepreneurial growth engine.” Hack.Diversity attempts to make headway in closing the gap.

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 11/11/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Small Businesses Can Expect Policy Changes Under Trump

The Associated Press

Entrepreneurs might expect policy shifts under a Trump presidency. Trump has released his plan for his first 100 days in office. However, much uncertainty over his policies and objectives remains. The battle over health care and immigration reform, taxes, regulation, the federal minimum wage, trade deals and federal contracts will be fought in a Republican-led congress that has not always agreed with the President-elect’s proposals.

David Levin, CEO of the American Sustainable Business Council, expressed the concern of many small business owners in the US: “What we don’t know is whether or not there is a sincere interest in supporting small and medium-size enterprises in this country — rebuilding Main Street, rebuilding manufacturing.”

With Election Over, Small Firms Look to Hire, Invest

Ruth Simon, Author, Wall Street Journal

With the uncertainty of the election partly resolved, some small business owners have said that they are ready to begin investing and hiring. According to a recent Vistage Worldwide poll of 380 small business owners, 49 percent of respondents said that the election of the outcome had improved their outlook for the economy. Nearly 20 percent stated that the election results encouraged them to increase their hiring or capital investment. Many point to the prospect of lower taxes and healthcare costs as sources for their optimism.

Not all business owners surveyed viewed the election’s outcome positively. 35 percent responded that their outlook for the economy had worsened. Roughly 20 percent planned on decreasing hiring and investment. Many are wary of Trump’s tough position on immigration, which could make the search for high-skilled workers more costly.

Black-Owned Businesses Face Credit Gap

Ruth Simon and Paul Overberg, Authors, The Wall Street Journal

According to data from the U.S. Census Bureau’s 2014 Survey of Entrepreneurs, black entrepreneurs are less likely to ask for capital when they need it. When they do ask, black entrepreneurs are not as likely to receive the full amount that they requested.

Black entrepreneurs in 2014 were three times more likely than white entrepreneurs to say that they were in need of additional financing but opted not to apply for it. Compared with 74 percent of white entrepreneurs, only 46 percent of black entrepreneurs received the full amount of funding that they had requested.

Simon cites challenges in access to capital and funding as obstacles for black entrepreneurs who are trying to grow their businesses. According to Alicia Robb, a senior fellow from the Ewing Marion Kauffman Foundation, “Across the board, blacks have higher denial rates, even after controlling for credit and wealth.”

How Lucrative Startups Can Avoid Disruption as They Grow

Jason Albanese, Contributor, Inc.

Jason Albanese, CEO and founder of Centric Digital, offers advice to startups looking to be the next Google or Facebook by redefining their industry. Revolutionary startups are often some of the most lucrative and successful in their field.

Market-shaking startups frequently fail to maximize their potential because market and operational disruptions often go hand in hand. Disruptive startups need to take time to grow at their own pace. Entrepreneurs cannot afford to rush the incubation period.

Most market ecosystems eventually find a new equilibrium; Airbnb and Uber recently experienced this within their industries. Albanese recommends that market-shifters foster and embrace change within company culture. Adaptivity, creativity and agility are instrumental in introducing and surviving a market disruption.

6 Strategic Business Practices For Freelance Entrepreneurs

Sam Cohen, Contributor, Huffington Post

The life of a freelance entrepreneur is uncertain and irregular. For example, daily operations lack the typical structure and comfort level that most industry jobs offer. On the other hand, self-employed entrepreneurs get to set their own work schedules and define the rules and best practices for their companies.

Despite the obvious discrepancy between freelance entrepreneurship and corporate culture, Sam Cohen recommends that entrepreneurs borrow business practices, such as building up cash reserves and establishing a performance review process, from bigger industry players.

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McNair Center Weekly Roundup

Innovation Weekly Roundup: 11/11/16

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about innovation this week:

Silicon Valley Reels in Wake of Trump’s Presidential Victory

Joshua Brustein and Eric Newcomer, Bloomberg

Silicon Valley tech giants became unlikely political players in this election cycle. The results of the election leave the Valley in an uncertain position. Clinton received 114 times the amount of campaign contributions than Trump from the tech industry, so it should come as no surprise that a Trump presidency was not the industry’s favored outcome. The immediate threat to tech companies with the election of Donald Trump is the possibility of stringent immigration restrictions. Restrictions on immigration make it difficult for high skilled employees to work in the US. Furthermore, Trump’s lack of a clear plan for technology and the tech sector has left the industry in a state of limbo.

Election Day’s Tech-Related Triumphs — and Failures

Jamie Condliffe, MIT Tech Review

Many ballot initiatives on Tuesday were tech-related. Florida voted against an initiative that would have forced those with solar installations to give up payments for energy they feed back into the grid. The outcome will promote the expansion of home solar. Nevada voted to deregulate its electrical market. In transportation innovation, Seattle approved a $54 billion project to develop 62 miles of light rail and 37 new rail stations. Washington state rejected the first carbon tax in the US, partly over concerns that it failed to raise enough revenue for clean energy projects. Montana voted against a proposal to establish and allocate $20 million to the Montana Biomedical Research Authority.

How the tech industry is reacting to Donald Trump’s improbable victory

Paul Sawers, Contributor, VentureBeat

While Trump has been outspoken on economic reform, he largely did not address the the technology industry. While Paypal Founder Peter Thiel supported Trump throughout his candidacy, the majority of tech entrepreneurs expressed dismay over the possibility of Trump presidency. VentureBeat’s Sawers includes several Tuesday night tweets from tech industry leaders on the outcome of the election.

Results of the Clarity of the Record Pilot

Michelle K. Lee, USPTO Director & Under Secretary of Commerce for Intellectual Property

USPTO completed its Clarity of the Record Pilot, a program within the Enhanced Patent Quality Initiative. The Clarity of the Record Pilot enhances patent quality by identifying best practices for clarifying aspects of the prosecution record.

68 unique data points were measured, and each point represents a best practice. Examples of best practices include separately addressing independent claims or providing specific limitations in claims that are anticipated by prior reference when used to reject multiple claims. During the pilot, examiners used 14 percent more best practices in pilot cases as opposed to a control group.

The USPTO will be holding a Patent Quality Conference on December 13 to share more information on the Enhancing Patent Quality Initiative.

Women in STEM: Closing the Gap

Taylor Jacobe, Research Assistant, McNair Center for Entrepreneurship and Innovation

McNair’s Taylor Jacobe focuses on the slow growth in women’s presence in STEM and innovation. Jacobe provides robust, global evidence of the economic benefits of integrating women into the workforce and encouraging girls to pursue careers in these fields.

The Obama administration has made efforts to introduce such initiatives, including work-life balance programs and speaking tours with successful women. However, much work remains in combating gender inequality in the workplace, especially within the STEM fields.

The solution to this inequity is neither simple nor obvious. Jacobe recommends a combination of policy changes aimed at eliminating cultural barriers for women and increasing education opportunities for girls.

Women represent 19.6% of the staff at the top 25 tech companies

Dean Takahashi, Contributor, VentureBeat

A recent study by hiring firm HiringSolved reveals that women constitute only 19.6 percent of staff at the top 25-tech companies. The study indicates a critical need for  integration of women into technology and innovation.

Many Silicon Valley tech giants have introduced measures to address the gender imbalance in their workforce. HiringSolved’s study relies on machine learning and artificial intelligence to sift through its databases of information on gender, ethnicity, and age. Although the firm’s methods are by no means foolproof, the results are telling.

Thank you to Meghana Gaur for contributing to this week’s innovation roundup.

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McNair Center Weekly Roundup

Innovation Weekly Roundup: 11/04/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about innovation this week:

Microsoft Puts Slack in Cross Hairs with New Office Chat App

Nick Wingfield, NY Times
Tech companies are moving in on Slack’s popular team-messaging market as Microsoft joins Facebook in taking on smaller players in this space. Microsoft’s size and distribution power is not enough to enter a new market. Their product must be innovative, not just another app in the Microsoft Office suite. Slack, in response, took out a full-page ad in the New York Times. They sarcastically congratulated Microsoft while also highlighting the innovations Slack has brought to numerous workplaces.

Microsoft’s current Office suite is just not keeping pace with the changing dynamics of the workplace, which require collaborative software. Slack, and other team messengers, enables multi-channel communication to organize discussion without relying on email. It is additionally fully searchable and allows a variety of app integrations. Team-messaging applications increase transparency and decentralize discussion. They are used at a variety of workplaces emphasizing collaboration (including here at the McNair Center).

AIA Patents – Approaching 50% of newly issued patents.

Dennis Crouch, Professor – University of Missouri School of Law

Crouch has created a chart showing the percentage of patents granted under the first-to-file provisions in the 2011 America Invents Act (AIA). The AIA changed the patent application rules from first-to-invent to first-to-file. By the end of 2016, half of all new patents issued would have been filed under first-to-file rules.

Patents filed under the AIA are subject to post grant review (PGR). A third party successfully petitioning that at least one claim is unpatentable can initiate the PGR process. The purpose of PGR is to dispose of bad patents early in their life through the USPTO rather than the legal system. Petitions must be entered within 9 months of a patent being issued and a final decision of validity is made in less than a year.

Innovation Labs: 10 Defining Features

 Dr. Lidia Gryszkiewicz, World Economic Forum
 Dr. Tuukka Toivonen, University College London
 Dr. Ioanna Lykourentzou, Luxembourg Institute of Science and Technology

Innovation Labs are essential workspaces for collaborative innovation. However, innovation labs’ missions and features are often ill-defined. A simple “I know it when I see it” style definition is not sufficient. Three experts in social innovation have reviewed innovation labs around the world to determine what features are essential. A few key findings include innovation labs needing heterogeneous participants, focus on experimentation and an expectation of breakthrough solutions. Such distinctions can help guide new labs and promote innovation across a variety of industries and social areas.

Additionally, creating a definition for these labs helps distinguish them from other similar models like living lab and coworking spaces. In summary, the writers of this piece define an innovation lab as “a semi-autonomous organization that engages diverse participants—on a long-term basis—in open collaboration for the purpose of creating, elaborating and prototyping radical solutions to pre-identified systemic challenges.”

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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 11/04/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Clocking In: Small Business and Overtime Regulation

Catherine Kirby, Research Assistant, McNair Center for Entrepreneurship and Innovation

In December, new US Department of Labor regulations on overtime pay eligibility will come into effect. These regulations will drastically increase the minimum salary for exemptions to overtime from $23,660 to $47,476. McNair Center’s Kirby discusses the pros and cons of the new overtime labor law. Her analysis offers insight on how to mitigate the increased costs to employers while promoting the benefits to low-income salaried workers.

  • The pros: Estimates forecast that the new regulations will create jobs in addition to providing compensation for employees working over 40 hours a week.
  • The cons: New regulations come with new costs for employers. Requiring employers to keep track of attendance and hours of more employees could be costly, especially for small businesses.
  • Policy recommendations: The Department of Labor could implement the regulations in phased increments rather than in one single shock. The government could lower small business taxes to reduce the regulatory burden.

Immigrants and Entrepreneurship

Dylan Dickens, Research Assistant, McNair Center for Entrepreneurship and Innovation

Many U.S. immigrants start businesses. Immigrant entrepreneurs are a diverse and growing group; immigrant entrepreneurs also have greatly varying levels of education. While immigrant entrepreneurs tend to live in larger states such as Texas and California, they compete for business in every U.S. state. The type of work immigrant entrepreneurs engage in is extremely varied. Partly as consequence of this, on average immigrant entrepreneurs outperform their native counterparts and are more skilled at finding market gaps by fulfilling unmet demand. Overall, McNair Center’s Dickens proposes that recent research supports the claim that immigration bolsters entrepreneurship in the US.

10 Marketplace KPIs That Matter

Andrei Brasoveanu, Author, Mattermark

Brasoveanu’s article summarizes the top ten Key Performance Indicators (KPIs) that every entrepreneur should closely monitor when building a market for their product.  Markets ultimately determine how every good and service in the economy is “discovered, priced and delivered.” KPIs, such as return on investment, growth and and burn rate, offer powerful and important insights for entrepreneurs. According to Brasoveanu, KPIs are effective and efficient marketplace metrics for getting startups on track to visualizing and contextualizing their success.

kpis

Scientists Working Outside Their Fields Are More Likely to Become Entrepreneurs

Brianna Stenard, Assistant Professor of Management and Entrepreneurship at the Stetson School of Business and Economics at Mercer University, Harvard Business Review

Highly skilled scientists and engineers are increasingly taking jobs that are outside of, or only slightly related, to their STEM degrees. Weak labor conditions in some STEM fields are partly to blame, but largely, the educational mismatch among scientists is voluntary. Stenard’s research indicates that many employees trained in the STEM fields take jobs outside of their field to acquire technical and managerial skills. Voluntarily mismatched scientists are nearly 50 percent more likely to become entrepreneurs.

Rather than bemoan an apparent oversupply of highly skilled scientists and engineers, Stenard recommends that policy makers implement initiatives that encourage technology entrepreneurship among these mismatched experts. Following a similar vein, Stenard proposes that universities should also consider adopting measures that equip STEM students with the “nontechnical skills…particularly valuable in entrepreneurship.”

And in startup news…

Airbnb’s Terms of Service just blocked a racial discrimination case

Russell Brandom, Reporter, The Verge

On Tuesday, Airbnb successfully blocked a class-action lawsuit that challenges the company’s platform on the basis of systematic racial discrimination. However, thanks to an arbitration clause in the company’s terms of service, the case will go through individual arbitration, and Airbnb will avoid a pricey and public lawsuit. The company recently added a nondiscrimination policy to its terms of service and has apparently taken measures to elimination discrimination from its network of hosts. When approached by the Verge on this issue, an Airbnb representative insisted that “Discrimination has no place in the Airbnb community.”

Palantir Prevails in Lawsuit Over U.S. Army Contracting Practices

Rolfe Winkler, Reporter, The Wall Street Journal

Another California-based startup recently won big in the courtroom, as data-mining software firm, Palantir, prevailed in its lawsuit against the US Army in the Court of Federal Claims. Palantir Technologies, Inc. ranks among Silicon’s Valley’s “most highly valued private companies” and was valued at $20 billion in a late funding round in 2015. The company specializes in big data analysis and offers its services to large commercial customers and government agencies within the intelligence community,. The court’s decision means that Palantir is now eligible for a federal contract that would award up to $200 million for work relating to the Army’s Distributed Common Ground System.
At the 2016 Wall Street Journal  Global Technology Conference, Palantir Chief Executive Alex Karp revealed that his company was positioned to go public.

GIF Site Giphy Is Valued at $600 Million

Rolfe Winkler, Reporter, The Wall Street Journal

Founded in 2013, Giphy, Inc. serves as a search engine and database for Graphical Interchange Format files(GIFs). GIFs are the “short, looping video files” that have most likely taken over your, or your teenager’s, Facebook News Feed. Thanks to Giphy, GIFs have surged in popularity and are now ubiquitous on social media sites and group-messaging platforms, such as Facebook messenger, Twitter, and Groupme. Giphy’s Chief Operating Officer Adam Leibsohn summarizes the company’s platform as a ”search engine…for the messenger generation.“
Giphy recently released an update stating that the company currently serves more than one billion GIFs per day, that are in turn watched by over 100 million users daily. This New York startup’s obvious popularity has not gone unnoticed by investors; Giphy raised $72 million in equity funding from venture capitalists during its most recent funding round, which brings the company’s  cash total to $150 million.

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McNair Center Weekly Roundup

Innovation Weekly Roundup: 10/28/2016

Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Entrepreneurship and Innovation news.

Here is what you need to know about innovation this week:

FTC Takes an In-Depth Look at Patent Assertion Entities

Weil Gotshal & Manges LLP – Adam C. Hemlock, John E. Scribner and Lisa Marie Madalone, Lexology

FTC report on Patent Assertion Entities (PAE) delineates the two major business models employed: portfolio and litigation. As the name implies, litigation entities acquire licenses by filing suit. Portfolio entities tend to negotiate licenses over expansive patent portfolios often valued in the millions. Portfolio entities account for 80% of all PAE revenue despite holding only 9% of all licenses.

The FTC has proposed a variety of measures to deter what they deem “nuisance legislation.” The report found that discovery costs were the major factor in causing the accused to settle. In response, measures to reduce the burden of discovery were suggested. Changes reducing the incentive to settle will drastically change the patent litigation landscape since 83% of litigation PAE cases are settled within 18 months.

Three angles to look at Google’s Pixel phone: design patents, antitrust, copyright

Florian Mueller, FOSSPatent

Mueller examines the Google Pixel from the perspective of different areas of law: design patents, antitrust and copyright. Innovators must consider a variety of legal frameworks designed to protect them. However, these protections have also lowered the risk of innovation and prevent copycat designs from flooding the market. Mueller discusses the strategy Apple could take against Google for infringing design patents, but he also discusses why such an exertion might fail in light of Apple v. Samsung. This FOSSPatent post provides a broad overview of the regulatory environment tech innovators face.

What’s New with the Changes to the Trademark Trial and Appeal Board Rules of Practice

Eric Ball and Emily Gische, Attorneys at Fenwick & West writing for IPWatchdog

Soon after we ring in the new year, the Trademark Trials and Appeals Board will enact new inter and ex partes proceeding rules. These new rules become part of Title 37 of the Code of Federal Regulations. Key changes include limiting the number requests for document production to 75 and minimizing surprises right before trial begins. Surprise requests for substantial discovery are being clamped down on as a litigation strategy. Testimony can now be submitted through affidavit solely, as opposed to live recordings, and all filings must be electronic. In sum, these changes will accelerate TTAB proceedings.

Lex Machina releases data on design patent litigation showing strong correlation with trademark infringement actions

Steve Brachmann, IPWatchdog

The theme of this week is design patents and trademarks, and in accordance, Lex Machina has released a design patent litigation report. While overall patent litigation is decreasing, the number of design patent cases filed has remained consistent. This is still a small portion of all patent litigation, about 6 percent. 14.6 percent of design patent cases resulted in a claimant win as compared to 2.5 percent of claimant wins in other patent litigation.  Another key finding is that 36.4 percent of all design patent infringement cases also include a claim of trademark infringement, a rare claim in other filings.

Self-driving car startup cancels first product because dealing with regulators and lawyers “isn’t worth it”

Dave Gershgorn, Quartz Artificial Intelligence Reporter

Most innovation policy tends to focus on intellectual property regulation, but there is a host of additional regulations innovators must abide by depending on industry. With all the momentum surrounding self-driving cars and their go-to-market strategy, it was inevitable that the National Highway Traffic and Safety Administration would attempt to ensure their safety. While such regulation may seem fair and necessary, the founder of one self-driving car startup has decided abiding by these requests is not worthwhile. We must question the ability of current regulation and enforcement to keep pace with innovation.

Categories
McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 10/28/2016

 Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Big Problems for Small Practices

Catherine Kirby, Research Assistant, McNair Center for Entrepreneurship and Innovation

Kirby examines the effects of the Affordable Care Act on entrepreneurship within health care. U.S. health care regulations currently hinder entrepreneurship among healthcare professionals, particularly for doctors seeking to establish private practices.
Kirby recommends that the U.S. implement policy changes that would better foster entrepreneurship among physicians. Measures like restructuring reimbursement rates and improving quality of care requirements would reduce the burdens that many private practices face and enable physicians to start small medical practices.

U.S. early stage investment holds up, late stage plunges

Joanna Glasner and Gené Teare, Contributors, CrunchBase

Venture capital investment slowed in the third quarter. Glasner and Teare write that estimates relying on end-of-quarter data may overstate declines in early stage investment.
Crunchbase compares its own projected funding totals with reported round count totals for the third quarter. Quarterly projected funds show bullish early stage investment. When factoring in projections, Crunchbase’s report for the third quarter finds that U.S. startups continue to enjoy high levels of strategic, seed and venture capital investment during seed and early stage rounds. However, there is a steep decline in late stage investment, with fewer companies raising late stage rounds and investors pouring less money into Series C and later rounds.

Startups get bought not sold

Ken Elefant, managing director at Intel Capital, PE Hub

Many entrepreneurs focus, sometimes shortsightedly, on the dream of reaching an IPO. As a result, start-ups often fail to develop important relationships with corporate investors. According to data from Dealogic, only five U.S.-based tech companies went public in the first eight months of 2016. To avoid going out of business or selling at a fire-sale price, Elefant recommends that entrepreneurs develop strong relationships with corporate investors early on so that a later search for an acquisition offer does not turn into a last-ditch attempt to save a sinking ship.
Corporate investors invest in companies for three reasons: to gain access to a technology, to break into other markets and to acquire. For start-ups, relationships with corporate investors offer viability and credibility. Additionally, these relationships provide development, support,  feedback and access to corporate engagement and funds. For companies that might not be on track for an IPO, strong relationships with corporate investors can lay the groundwork for an acquisition.

‘Shark Tank for Students’ Re-Defines Entrepreneurship

Christopher Putvinski, SAPVoice, Forbes

Putvinski focuses on a new television series, The Social Innovation Series. This “Shark Tank or a Y Combinator for students” asks aspiring entrepreneurs to address problems in health or wellness in their own communities.
The show grants $1,000 to students with promising and innovative ideas and a grand prize of $10,000 and the title of “SAP Teen Innovator” to the student with the winning idea.

How Blind Hiring Can Make Your Company More Inclusive

Frida Polli, Mattermark


In an editorial for Mattermark, Polli writes on how diverse companies outperform their non-diverse counterparts. Increasing diversity among employees not only promotes a more fair and equitable workplace environment but also offers a high return on investment for companies. See the McKinsey & Company Report on how diversity improves company performance. Polli suggests that “blind auditioning” is a possible solution for the lack of diversity in companies’ workforces. Using advanced analytics and assessment technologies, companies can ensure predictability and eliminate bias in their pre-hiring assessments of applicants. According to Polli, “improving diversity isn’t just the right thing to do, it’s the smart thing to do.”

And in startup news…

Google buys eye-tracking VR firm Eyelock

Grant Gross, Senior Editor for IDG News Service

Eyefluence is a California-based startup focused on eye-interaction technologies in Virtual Reality (VR) and Augmented Reality (AR) headsets. Serial entrepreneurs Jim Marggraff and David Stiehr founded Eyefluence in 2013.
Google acquired the startup on Tuesday. The acquisition reflects Google’s growing interest in VR and AR technology. The deal further shows the growing potential of VR and AR for entrepreneurs interested in building successful tech startups.

Wavefront gathers $52 mil Series B

Iris Dorbian, Author, PE Hub

Another California-based tech-based startup, Wavefront, recently reported raising $52 billion in Series B funding. Investors include big names such as Sequoia Capital, Sutter Hill Ventures and Tenaya Capital.
Wavefront develops metrics monitoring services for cloud and modern application environments. Wavefront offers invaluable services to leaders in the software industry that rely on Cloud technology, such as Workday, Box, Lyft, Microsoft, Intuit and Groupon.