Great Again: Revitalizing America’s Entrepreneurial Leadership

Pat Choate and Hank Nothhaft, at the Met Club, June 14, 2011.

I was lucky enough to receive a review copy of Great Again several months before it became available. I have also had the pleasure of getting to know Hank Nothhaft and his co-author David Kline over the past year or so, frequently exchanging e-mails discussing a variety of innovation and patent related issues. It has been exceptionally difficult to keep quiet knowing what Hank and David were writing about, and then reading the nearly finished manuscript. Simply put, everyone in the innovation industry and patent community needs to read Great Again. Every Staffer on Capitol Hill and everyone working in the White House needs to read Great Again. While Members of Congress are no doubt busy with a great many things, they too should read Great Again, but at the very least Members of Congress and those in the Executive Branch, including President Obama, should at a minimum read the Introduction, which is just 12 pages long.

Last night at the Metropolitan Club in Washington, D.C., a whose-who of the intellectual property world came out to a book signing and reception to honor Henry Nothhaft, the author of Great Again.  The reception was sponsored by Federal Circuit Chief Judge Paul Michel (ret.) and Pat Choate, the renowned economist and former Vice Presidential candidate.  Those in attendance included David Kappos (Under Secretary of Commerce and Director of the USPTO), Federal Circuit Judge Sharon Prost, Herb Wamsley (Executive Director of IPO) and Manus Cooney (principle in American Continental Group).

Met Club, June 14, 2011. From L to R: Pat Choate, Hank Nothhaft, David Kappos, Chief Judge Michel, Manus Cooney.

In brief remarks to the assembled crowd, Choate explained that Great Again is “a blue print on how to improve our economy.” Judge Michel, who also briefly spoke, noted that “it always takes a leader to have a movement.”  Both Choate and Michel are correct, and Nothhaft is indeed taking up the mantel of leadership on the issue. In order to pursue the mission of gaining attention for the intellectual property and innovation issues holding back the U.S. economy Nothhaft has recently stepped down as CEO of Tessera.  As a result there will be no actual or potential conflict of interest, so he can speak his mind freely without any fiduciary responsibilities to the company or its shareholders.

Prior to the event last night I asked Nothhaft why he was thrusting himself so thoroughly into the innovation debate. He explained:

Fundamentally I remain a lifelong idealist who feels a sense of wonderment, thankfulness and obligation to the USA for what I view a wonderful way of life and a meritocracy. I have been blessed with a lifetime of opportunities which have allowed me to achieve a fulfilling career and my American Dream. I believe that the current one size fits all government, short-termism and sense of entitlement are threatening to weaken or radically change the American system. At this crucial moment, I decided to lend my efforts to try to effect the outcome, particularly patent legislation and reforming and funding the USPTO. I feel blessed to be in a position to dedicate my time to this effort. This is sort of where I started out when I entered the Naval Academy and volunteered to join the U.S. Marines. I never would have become a Marine or an entrepreneur if I didn’t believe the impossible is possible.

The U.S. economy is flailing, jobs are hemorrhaging, and it is taking far longer to pull ourselves out of the grips of the Great Recession than anyone would like.  But now it seems Judge Michel, who himself left the Federal Circuit to speak his mind, has an important alley — a former Marine Captain who served in Vietnam and a serial and very successful entrepreneur who has created over 6,000 jobs and returned some $8 billion to investors who invested in his companies.

Chief Judge Michel and Hank Nothhaft, June 14, 2011.

The magnitude of the problems facing our economy cannot be overstated.  Neither can it be overstated that a coherent national innovation policy is the answer to what ails the U.S. economy.  As Hank explains in the Introduction, “for the first time in our history, the connection between technological innovation and job creation has broken down. And for the first time also, the wealth created by innovation is going mostly just to a handful of founders and venture capitalists rather than to many thousands of employees, not to mention the community at large.”  Through mismanagement and misapplication of tax, immigration and patent policies our leaders in Washington, D.C. have done us no favors.  Speaking at the reception last night Nothhaft explained: “We live in the greatest country in the world and we seem bent on tying our arms behind our backs.”  That has to change.

A central and often repeated theme of  Great Again is that America’s decision to give up on manufacturing has not only caused the obvious problems associated with job loss, but it has and is causing an enormous loss of intellectual property assets as well. Nothhaft quotes what Harvard Business School Professors Willy Shih and Gary Pisano told him: “decades of outsourcing manufacturing has left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy.”

Folks, intellectual property is what we have to build on for the future and the loss of manufacturing jobs is siphoning off intellectual property. Soon we will be left with nothing!

How does the siphoning off of intellectual property assets occur? Innovation is not a singular event; it is an ongoing process. Discoveries that lead to scientific breakthroughs that lead to engineering feats in turn lead to more discoveries and breakthroughs and so on. We also know conclusively that early stage discoveries, breakthroughs and innovations do not always (if ever) scale up from the laboratory to engineering draftsman to short run manufacturing to large scale manufacturing the way that might otherwise be anticipated. There will be further discoveries and breakthroughs on every level. So when we innovate here in the United States and outsource any or all of the follow-up stages of innovation the discoveries and breakthroughs that inevitably occur will be owned by those outside the United States. Great Again also drives home that when manufacturing exits R&D funding dwindles and you have an enormous problem. Already 20% of U.S. research and development has moved off shore.

Great Again is an excellent read because it is presented in straight forward fashion. There is no political agenda, no preaching, just solid facts. Nothhaft also interviewed a whose-who of Silicon Valley, including the great and nearly revered Steve Wosniak, the brain behind the genius of the Apple Computer dynasty. If I haven’t scared you enough already, or convinced you to read Great Again, allow me to point out that Wosniak tells Nothhaft that Apple could not receive funding from venture capital firms today because it would be too risky and the people involved didn’t have a strong enough track record. Amazing! One of the most successful technology companies of the last generation would be unlikely to find funding to get off the ground. One of the co-founders of Home Depot provided the same opinion to Nothhaft; namely that Home Depot would be unlikely to attract the venture capital necessary if it were just starting out today.

Ask yourself this: If two tremendously successful companies such as Apple and Home Depot couldn’t get funded today, what does that say about the future of the U.S. economy? We have enormous issues and without a comprehensive and coherent national innovation policy there is little that we will be able to do to turn the tide.

Great Again is already one of the best-selling business books in the country, already the number one book on Inc’s Business List. This is no doubt due to the fact that Nothhaft not only explains the problems in a way that everyone can understand, but he also provides actionable solutions, which is extremely rare.  Sure, anyone can talk about problems, but Hank goes the next steps and provides a road map that can be easily followed; that is if our leaders actually want to put their actions where their campaign rhetoric is.

Peter G. Peterson, former U.S. Secretary of Commerce, has written about Hank’s book: “At a time of growing concern over where the jobs, jobs, and jobs will come from, Great Again reminds us of the central role of start-ups in job creation. It persuasively documents how our regulatory, tax, immigration, patent, and other government R&D policies have not only seriously impaired the growth of start-ups, but the whole job-creation process in America.”

In a world where it is now easier to take a company public in China than it is in the U.S., entrepreneurs are increasingly America’s most endangered species. Hank provides a compelling and relatively non-controversial plan for helping entrepreneurs through tax, education, immigration, intellectual property, and R&D policies that focus what American corporations need in order to thrive here in the United States, creating those American jobs that have seemed so elusive.

If changes are ever to come for the better we all need to be informed and engaged.  So if you read only one book this summer it has to be this book!  When you are finished pass it along or recommend it to friends and family.  The more who know the more likely our leaders will start making intelligent, rationale choices.