Less Changey, But Still Hopey About 2011

1/6/11

Last year at year end, I wrote about technology trends. Those trends, like the merger of the cloud and mobile devices, personalized medicine, reprogramming of human cells to cure disease, and the re-emergence of nanotechnology, still hold. Startups are breaking down impossible barriers in computing, biology, energy, and materials science. The USA is leading and will continue to lead the world with tremendous innovation.

However, this year, the big impacts are will be made at the politico-economic level. Will government free business to innovate? Will we drown in debt, heading toward our own Greek or Irish “austerity?” There has not been a more critical year for the country since 1980 when we had a choice to leave the Carter malaise behind. The innovation community needs signals and concrete deeds that we are valued so we have some certainty about friendly policies in the future. Here are four trends to watch in the coming year.

Trend 1. Rediscovering innovation and the private sector. I hope we will look back at 2010 and 2011 as the year the United States began to save itself, rediscovering that technology innovation is the key to our economic recovery, and even to our success as a nation in the coming years. Venture funded companies contribute 20 percent of GDP, from zero 40 years ago. This means freeing the private sector to innovate to create new business that will be central to our productivity and economic growth. I was hoping the Obama Administration would have grabbed hold of this agenda from the start, but I am less hopey-changey now. Nonetheless, President Obama received the message this fall and is already reaching out like never before to entrepreneurs, and with folks like Austan Goolsbee leading the charge and a tailwind of fierce and justified rage from free-market advocates, there is reason for hope.

Alternatively, it could be the year that we cede control of our future to government, led by state employee unions, and runaway federal and state spending and debt, miring the country in an anti-business economic malaise that will cause us to make Chinese the primary language taught in our underfunded schools. Our Federal elected officials like Sens. Cantwell, Murray, and most of the representatives from WA seem to “get” innovation and have been effective advocates in DC, but it is not clear the governing party quite understands that it is innovative and entrepreneurial companies that create jobs and lead the United States into the future, not government. Spend one day in China and the entrepreneurial optimism whacks you in the face like a 2×4. Maybe our leaders will re-discover this in 2011, or they will be the minority party in 2012 with a repeat of 2010.

Our state politicians are another matter. While the Washington state federal delegation on both sides seems to understand innovation, the State folks in power seem to say the words, but their deeds show that they are captured by the unions and the backward looking partisans … Next Page »

Robert Nelsen is a co-founder and a Managing Director of ARCH Venture Partners. He focuses on biotechnology, pharmaceuticals, and nanotechnology. Follow @

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  • M. Plaia

    Sir,
    You make the following glib statement:

    >> This means freeing the private sector to innovate to create new business that will be central to our productivity and economic growth. I was hoping the Obama Administration would have grabbed hold of this agenda from the start, but I am less hopey-changey now. Nonetheless, President Obama received the message this fall and is already reaching out like never before to entrepreneurs, and with folks like Austan Goolsbee leading the charge and a tailwind of fierce and justified rage from free-market advocates, there is reason for hope <<

    How many trillion$ of dollars must the private sector be sitting on before innovation to start new business commences? Start up companies are dying on the vine or not even getting started due to lack of venture funding. Yes, this is "free market" but someone has to spend money to make the economy move. Companies, investors and financial institutions cannot sit on massive piles of cash and decry the fact the economy is not moving.