Government is killing Silicon Valley innovation

Government is killing Silicon Valley innovation

Summary: I just spoke with Bob Ackerman, founder of Allegis Capital, and he is very concerned about innovation in Silicon Valley, primarily because of the cumulative impact of US government actions and regulations.Here are some notes from our conversation:- I'm very worried about the seed corn, that we won't have that next crop of innovative companies five, ten years in the future.

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BobAckerman.jpgI just spoke with Bob Ackerman, founder of Allegis Capital, and he is very concerned about innovation in Silicon Valley, primarily because of the cumulative impact of US government actions and regulations.

Here are some notes from our conversation:

- I'm very worried about the seed corn, that we won't have that next crop of innovative companies five, ten years in the future.

- Innovation is in trouble because of restrictions on H1B visas; unfavorable tax policies regarding stock options; the failure to change Sarbanes-Oxley in regards to startups which increases costs; and the government investing billions of dollars picking winners and losers, such as the bailout of the automakers. It's all building into a crescendo that harms innovation.

- I'm afraid that Washington doesn't understand venture capital and what we do. The Treasury department wants to regulate VC firms in the same way as hedge funds and private equity. This is wrong. VC firms use no leverage, while hedge funds and private equity leverage funds at huge ratios and look for short term gains. VC firms should not be regulated in the same way, it will hurt the smaller VC firms which are the most productive. This is a cottage industry.

- We are in a code red situation in Silicon Valley. We have to compete with with world for talent and capital. Right now a lot of our Indian and Chinese engineers are leaving and going back home and capital is following them.

- Silicon Valley is taking its success for granted but our success is the byproduct of an environment that encourages and rewards risk and that's changing. About 17.6 per cent of US GDP comes from public companies that were venture backed.

- I don't want to come across as a crying venture capitalist - all woe is me. The VC industry needs to change, it needs to evolve. Some firms aren't going to make it. Darwin's law is alive and well.

- I still view myself as an entrepreneur and this environment makes it harder to build companies in the US.

- - -

Please see:

Bob Ackerman bio:

http://www.allegiscapital.com/team-ackerman.html

Topics: Government US, Banking, Emerging Tech, Government

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239 comments
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  • Who cares?

    'm tired of this struggle for capitalism, I'm off to Galt's Gulch.
    MSFTWorshipper
    • Obese MS worshipping mouse wielding monkeys not innovating enough?

      You guys all talk like you know everything ... but, looking at the dizzy heights you have, ummm, errrr, oh yeah, only Microsoft, and Microsoft worshippers.

      There will be no innovation in the US, and other countries will value their intellectual capital from a far higher perspective than the silly short term self fulfilling greed of the few.

      Your on your own soon. We'll keep our FOSS folk away from you, but you're welcome to our mouse wielding invoice bearing monkeys.
      fr0thy2
      • That's not just microsoft. Any oligarchic company WILL

        do what's necessary to stifle anybody else innovating or making money. Then they turn around and say others are depriving THEM of innovation.

        All this should be a sitcom because it's like a poorly written one made for cheap laughs.


        HypnoToad72
    • Yeah right

      Its obvious this MSFTWorshipper is actually a open source software for free freak. He's just pushing buttons with foolish statements meant to rally his friends, the open source free software movement.

      You're about as transparent as it gets.
      A Gray
    • Lou Dobbs

      This is all Lou Dobbs fault.
      yobtaf
    • Who cares?

      Give John and Dagny my best. I think this is a perfect example of what happens when you offshore everything including service. now we are all scratching our heads. people are funny but I think it wont be long and everyone one will be in the streets asking for real change no the crap we have now.

      ~Peace
      sbass@...
  • Wah, wah, wah!

    Americans like Franklin, Westinghouse, Whitny, Kilby, didn't need fake "incentives"!
    kd5auq
    • What do we expect from a democrook government?

      "When in doubt, raise tax".

      The last thing you expect them to understand is pro innovation and business.
      LBiege
      • Republican?

        How about a Republicrook. When in doubt give a tax break to the rich!

        Keep politics out these blogs. It is not the place for it.

        One more point Mr. republican, the Bush admin. was just as much of a problem with H1B visas and everything else as the Obama admin.

        He won, so wait the next four years and run a better candidate that can win and, if you are truly patriotic, always wish your country the best, regardless of what party is in power!

        e_ecruz
        • Nothing wrong giving tax break

          Repub screwed up by doing it via huge (pre-Obama) deficit and inflation.

          btw, a real patriot w/ a clear understanding of how economy works has no choice but to hope Obama fails. In order for this nation to truly recover, Obama socialism has to fail, and that's just the way it is.
          LBiege
          • 8 Years wasted

            The Republicans had the Upper and Lower House, and the President; why
            didn't they reform the US tax system - one of the most complex,
            convoluted systems in the world? why didn't they remove agricultural
            subsidies and protectionism when it comes to trade?

            All of these things they could have done, and would have been very hard
            to undo when Obama came in. 8 year of opportunities down the toilet. 8
            Years the Republicans were in charge and the spent like drunken sailors
            and took the US into a war (Iraq) that didn't need to occur - there were
            no weapons of mass destruction, yet 60% of americans maintain there
            was; and you wonder why idiots are voted in.
            Macintoshtoffy
          • Americans got the government they deserve

            ... at the end of the day. After all, they once gave Bush 90% of approval rate. Now they made the same clueless mistake supporting Obama ruining this nation.
            LBiege
          • Your wrong, wrong, wrong!

            Americans didn't get the government they deserve. Americans deserve better, much better. Voting for a succession of clueless Republican and Democrat administrations is the result of 100 years of dumbing down the masses through a sabotaged educational system ... courtesy of the ultra-left National Education Association (NEA) and their alliances with the various state teacher associations. It's evil -- pure evil.
            Tony R.
          • Restrictions on H1 visas?

            Restrictions on H1 visas? After working for a software service company for 5 years - and seeing growing numbers of H-1 aliens on our engagements, I finally got canned myself.

            At this point, who in their right mind would want to gamble on an engineering degree when employers have carte blanche to bring in aliens to work on the cheap? It's comparable to bringing in $1/hr. migrants to pick lettuce because "no American is willing to do the work". Is THIS what our parents and grandparents died for in two wars?

            I've always been a conserviative, but maybe we should all join the Teamsters at this point - they seem to have been quite successful in protecting US truck drivers!
            plevin@...
          • you need to look back

            Under Bush congress was not contolled by the republicans the entire time. And as a note about Obama, he cant do anything other than executive orders either if it doesnt come from the house first.
            desamuelson
          • Come on mate, stop lying

            Apart from the tail end of his presidency - he had many years they could have done something. They could have passed the legislation within 6months - and if it meant working over the recess then the Republicans should have no problem doing it considering that they are, after all, making decisions for the good of the nations long term interest.

            Stop this crap of bending over backwards apologising for 30 years of crap US policies because of a lack of any backbone by US politicians to implement comprehensive reform when required.
            Macintoshtoffy
          • WHY didn't the Republicans reform taxes?

            Same reasons the Democrats haven't. Low priority.

            BTW, Congress was controlled by the Dems at the end.... and STILL no sign of change then either. There wasn't even a *real* work to change any of it for the better either when Clinton was in office.

            And as far as Obama is concerned, He'd do well in the eyes of the people he's supposed to be leading, as Mr. President. (No offense here, but as someone who claimed "no more politics as usual," he seems to be doing politics as usual, just in a blind knee-jerk quickness way.)

            [ edit: additional materials ]

            Congress doesn't have to do what the pres wants... and can even override his veto if there's enough of them to do so. Doesn't matter who's in charge or the rhetoric being preached at us (motivational or otherwise,) when the rubber hits the road, they all come out the same... and most of the time, it isn't really the best person for the position... as somehow there are those who get bought.
            DaemonSlayer
          • Theres plenty wrong with the tax break mentality...

            ...see the current economic mess...and notice I said mentality.

            Anyway you sum up why the Republican lost. The country finally realized that the Republicans literally just sit on their butts when in power and complain about some mythical government ruining things that they somehow have no part in. Now that the Dems are in power instead of getting their butts in gear their doing just what you're doing...blaming the Dems...even though they just came to power. America did what it had to do. ATTEMPT to put some people in office that were actually going to do something rather than blow smoke up our arse as they do in North Korea. We have idiots that really believed America was doing just fine....just like the North Koreans think everything is wonderful while people die in the streets because their government tells them so. The Republicans are communist in sheeps clothing.
            storm14k
          • Sorry but...

            Reps and Dems are just opposite sides of the same coin. Their perceptions differ, but when you really dig in, no real difference.

            AND neither one seems to pay full attention to the constitution's edicts like they should.
            DaemonSlayer
          • Short memory...

            the dems didn't just come in to power. They have been there a while.
            Erroneous