The impetus for the bill came from a coalition of Georgia angels and venture capital investors, who examined similar programs in other states (notably InvestSC and TNinvestco). You can read the complete text of the Georgia bill as drafted here. I’ve plowed through the seventeen pages of legalese to you don’t have to. Here’s what you need to know.

Invest Georgia Program

HB 718 creates the Invest Georgia program to invest in seed, early, and growth stage companies in order to create Georgia jobs, create wealth within Georgia, commercialize R&D at Georgia’s universities, and promote the economic development of Georgia. (The name in the bill is the Georgia Capital Acceleration program, but that will change.)

A new Invest Georgia Authority (IGA) will consist of five members: three appointed by the Governor, one by the Lieutenant Governor, and one by the Speaker of the House of Representatives. Each member must have experience as a venture investor, fund-of-funds manager, or as an entrepreneur. Members serve without compensation and cannot be affiliated in any way with a fund receiving investments.

The Money

The state of Georgia will sell up to $200 million insurance premium tax credits, with the proceeds going to the new Invest Georgia Fund (IGF). This is a mechanism that has been proven in other states; credits against future premium taxes usually sell for about 85¢ on the dollar, which would nominally deliver $170 million in cash to the IGF (in equal thirds over three years, starting in June 2013). The proceeds will be invested in Georgia-based funds who are investing in Georgia-based businesses.

Administration

Through a transparent open-bid process, IGA will appoint a third-party “program administrator” that will evaluate and select Georgia-based venture capital funds. There are many respected third-parties who specialize in such assistance for other states and other institutional investors. Some of the more well known are Hamilton Lane, LP Advisors, Cambridge Associates, and many others.

Once appointed, the program administrator will conduct a separate transparent open-bid process for funds seeking investment of IGF monies, starting in September 2012. Applicant funds must have a history of investing in Georgia and/or commit to a permanent presence or affiliation in Georgia.

The Recipient Funds

The program administrator will recommend investments in funds that meet the state’s criteria and which cover a broad range of sectors that traditionally are good targets for venture capital and are important to Georgia’s economy, including technology, health care, life sciences, agribusiness, logistics, energy, and advanced manufacturing. (Retail, real estate, venue-based entertainment, financial services, mining, and professional services are specifically excluded.) Final fund selections — but not individual company investments — are approved by the IGA board.

IGF investments into the funds will be made over three years, coinciding with the sale of the tax credits. The allocation will be balanced between:

• 30% into early-stage venture capital funds, including first-time funds. IGF can account for up to 90% of the capital in such a fund, with the remainder coming from the principals and other investors. “Seed” or “early-stage” companies must have fewer than 20 employees and revenues of less than $1 million. Early-stage allocations will be between $10 million and $15 million per fund.
• 70% into growth-stage venture capital funds, where IGF can account for up of 50% of the capital in such a fund. “Growth-stage” companies must have fewer than 100 employees, but revenues of greater than $1 million. Growth-stage allocations will be at least $10 million per fund, with the cap to be determined by the IGA.

Any company receiving investment from IGF monies must be located in Georgia; if it leaves Georgia within three years, the investment must be returned.

Recipient funds will collect an industry-standard management fee and other fees (primarily legal and accounting, but specifically not to include lobbying or governmental relations).

Financial Soundness and Transparency

Investments in companies that are successfully acquired (M&A) or go public (IPO) will return capital to the IGF until it recovers 100% of its committed capital. Afterwards, the IGF and any fund returning capital will split returns: 80% to the state, 20% to the fund. This is a standard venture capital limited partnership arrangement.

Every year, each recipient fund will file a report with the Governor and legislative leaders detailing company names, amounts, and performance of qualified investments; number of Georgia employees and their average wages; and other information required by IGA to determine the fund’s contribution to the economic development of Georgia. This report will be published on a publicly-available website (after removing any proprietary or company-confidential information).

Note that this is not a CAPCO (Certified Capital Company) program such as those adopted (and regretted) by many states. You can read more about CAPCOs in the AJC here, and here, and here, and here.

My standard disclaimer applies. Also note that I am not a lawyer and I don’t play one on television. Any errors in representation above are my fault, and you should read the entire bill before making any decisions as to whether you support it. And, of course, bills in the Georgia Legislature sometimes change substantially between first reading and final passage, even if the bill number stays the same!

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Received in email, and too good not to post here in its entirety…

Checking out at the store, the young cashier suggested to the older woman, that she should bring her own grocery bags because plastic bags weren’t good for the environment.

The woman apologized and explained, “We didn’t have this green thing back in my earlier days.”

The clerk responded, “That’s our problem today. Your generation did not care enough to save our environment for future generations.”

She was right — our generation didn’t have the green thing in its day.

Back then, we returned milk bottles, soda bottles, and beer bottles to the store. The store sent them back to the plant to be washed and sterilized and refilled, so it could use the same bottles over and over. So they really were recycled. But we didn’t have the green thing back in our day.

We walked up stairs, because we didn’t have an escalator in every store and office building. We walked to the grocery store and didn’t climb into a 300-horsepower machine every time we had to go two blocks. But she was right. We didn’t have the green thing in our day.

Back then, we washed the baby’s diapers because we didn’t have the throw-away kind. We dried clothes on a line, not in an energy gobbling machine burning up 220 volts — wind and solar power really did dry our clothes back in our early days. Kids got hand-me-down clothes from their brothers or sisters, not always brand-new clothing. But that young lady is right; we didn’t have the green thing back in our day.

Back then, we had one TV, or radio, in the house — not a TV in every room. And the TV had a small screen the size of a handkerchief (remember them?), not a screen the size of the state of Montana . In the kitchen, we blended and stirred by hand because we didn’t have electric machines to do everything for us. When we packaged a fragile item to send in the mail, we used wadded up old newspapers to cushion it, not Styrofoam or plastic bubble wrap. Back then, we didn’t fire up an engine and burn gasoline just to cut the lawn. We used a push mower that ran on human power. We exercised by working so we didn’t need to go to a health club to run on treadmills that operate on electricity. But she’s right; we didn’t have the green thing back then.

We drank from a fountain when we were thirsty instead of using a cup or a plastic bottle every time we had a drink of water. We refilled writing pens with ink instead of buying a new pen, and we replaced the razor blades in a razor instead of throwing away the whole razor just because the blade got dull. But we didn’t have the green thing back then.

Back then, people took the streetcar or a bus and kids rode their bikes to school or walked instead of turning their moms into a 24-hour taxi service. We had one electrical outlet in a room, not an entire bank of sockets to power a dozen appliances. And we didn’t need a computerized gadget to receive a signal beamed from satellites 12,000 miles out in space in order to find the nearest pizza joint.

But isn’t it sad the current generation laments how wasteful we old folks were just because we didn’t have the green thing back then?

Please forward this on to another selfish old person who needs a lesson in conservation from a smart-ass young person.

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I prepared the following document as my testimony to the State Science and Technology Strategic Plan Joint Study Commission, meeting in Columbus on 30 November 2011. It’s going to be available on their website, but I decided to replicate it here.

Supporting Technology Entrepreneurs in Georgia

Stephen Fleming
Vice President, Enterprise Innovation Institute
Georgia Institute of Technology

http://innovate.gatech.edu

I.               Background/Company Overview

The Georgia Institute of Technology is one of the nation’s top research universities, distinguished by its commitment to improving the human condition through advanced science and technology. Georgia Tech’s campus occupies 400 acres in the heart of Atlanta, where 20,000 undergraduate and graduate students receive a focused, technologically based education. Georgia Tech is consistently ranked in U.S. News & World Report’s top ten public universities in the United States and has been ranked as #4 among all engineering schools (public and private) for the last six years.

The Enterprise Innovation Institute is Georgia Tech’s primary business outreach organization, and provides a comprehensive program of assistance to business, industry, entrepreneurs, and economic developers. Our goal is to help enterprises of all kinds apply science, technology, and innovation to improve their bottom lines. Specifically for entrepreneurs, our programs include:

• ATDC: The Advanced Technology Development Center is the oldest, largest, and most successful university-based business incubator in the country. Since 1980, ATDC has helped hundreds of Georgia entrepreneurs create great technology companies, and currently has over 500 member companies. Recently, it was honored as one of the ten best incubators in the world by Forbes magazine.
• VentureLab: In cooperation with the Georgia Research Alliance, Georgia Tech’s VentureLab helps launch over a dozen startup companies a year based on Georgia Tech research.
• Flashpoint: An innovative new entrepreneurial accelerator, combining shared learning, mentorship, and cutting-edge approaches to business model generation and startup creation.
• GCMI: The Global Center for Medical Innovation helps physicians and other medical professionals commercialize their inventions with a process based on the successful VentureLab model and a dedicated medical device prototyping facility.

The Enterprise Innovation Institute manages the Georgia Seed Capital Fund, which leverages private-sector investments into technology startups. This fund has not received any state appropriations in several years. EI2 also houses the Georgia SBIR Assistance Program, which has been drastically downsized due to the economic recession and the resulting reductions in the Board of Regents “B” budget in recent years.

II.              Please address the following points:

a.   What policies are currently in place that are barriers to your company/organization’s success?

The prohibition against investing state pension assets into venture capital firms has had a negative impact on local venture funds’ ability to raise capital. Although relaxing this prohibition will not have an immediate “silver bullet” effect, it should be done both for fiduciary and for economic development reasons.

b.   What policies have aided in your company/organization’s success?

The state’s annual appropriation to the Enterprise Innovation Institute (through the Board of Regents “B” budget) is the basis for all of our entrepreneurial assistance programs as well as our other business-support services in 25 locations throughout the state. Due to the economic recession and the resulting reductions in the “B” budget, our appropriations have been cut approximately 30% over the last four years. We have maintained our focus and continue to be recognized as one of the best entrepreneurial programs in the country and as the hub of much of the technology entrepreneurship in Georgia. As tax revenues recover, it’s important to bring the “B” budget back in line with previous funding levels.

In addition, the state’s support of the Georgia Research Alliance has brought dozens of superb scholars to our state, and many of them have launched entrepreneurial startups. Georgia Tech averages over a dozen spinout companies per year; most of these have benefited greatly from the GRA commercialization grant program.

Finally, the recent angel tax credit appears to be stimulating private-sector investment by individuals into Georgia technology startups. This should be monitored and, if justified, extended in future years.

c.   Where do you want to see your company/organization in ten years?

Currently, American business leaders think of Silicon Valley, Boston, Seattle, and Austin as the centers of technology entrepreneurship in this country. In ten years, I want Atlanta to be on that list.

d.   How can the state of Georgia help your company/organization realize this goal?

Please see policy recommendations below.

III.         Please include a short bio and your company/organization’s background.

Stephen Fleming has over 15 years of private equity experience at the General Partner level. Prior to his venture capital career, he spent 15 years in operations roles at AT&T Bell Laboratories, Nortel Networks, and LICOM (a venture-funded startup).

An Atlanta native and summa cum laude graduate of Georgia Tech, Stephen returned to his alma mater in mid-2005 as Chief Commercialization Officer. In 2009, he was promoted to Vice President, Economic Development and Technology Ventures, and Executive Director of the Enterprise Innovation Institute at Georgia Tech.

In addition to his roles at Georgia Tech, he is also a member of the Investment Committee of the Seraph Group, an early-stage venture capital firm. Stephen is active in the “alternative space” industry; he is an investor in three private aerospace companies and is a founding member of the Space Angels Network. Mr. Fleming also serves on the boards of the Technology Association of Georgia, the Spiritual Living Center of Atlanta, and Tech High School, a charter high school emphasizing science, math, and technology in urban Atlanta.

Georgia Tech’s Enterprise Innovation Institute (EI2) helps enterprises of all kinds improve their competitiveness through the application of science, technology, and innovation. During fiscal year 2010, the Enterprise Innovation Institute:

• Helped Georgia manufacturing companies reduce operating costs by $35 million, increase sales by $243 million, and create or save 1,350 jobs. EI2 served 710 manufacturers during the year.
• Evaluated 125 Georgia Tech research innovations and formed 16 new companies based on this intellectual property. Startups based on Georgia Tech innovations attracted $60.5 million in investment.
• Worked with 235 companies interested in collaborations with Georgia Tech, including 17 projects involving state economic development agencies. Projects resulting from those interactions generated 3,693 new jobs and produced $547 million in capital investment.
• Helped Georgia companies win $560 million in government contracts, creating an estimated 11,505 jobs.
• Assisted 71 minority entrepreneurs, who received $31.5 million worth of new contracts, sales increases, and financing.
• Served more than 250 technology startup companies that together generated capital activity (venture capital investment and mergers/acquisitions) of more than $157 million. Companies affiliated with the ATDC program reported revenues totaling more than $1 billion and nearly 3,500 jobs.
• Helped Georgia companies prepare 58 applications for Small Business Innovation Research (SBIR) grants. Companies assisted won nearly $7 million in awards.

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There are few things you need to understand. One is the effect on pensioners.

The otherwise-excellent article “Venture capital a top priority” in last Sunday’s AJC (sorry, no web version) perpetuates a common mistake. People immediately focus on the “risky” nature of venture capital and what effect it might have on pension payments. For a classic example, see Russell Grantham’s entire article from the AJC three weeks ago.

State pension plans are an obligation of the state government. State employees pay in with payroll contributions during their working career, and are guaranteed a certain set of pension benefits upon their retirement. Those benefits are independent of how the contributions are invested. [Note that all of this discussion applies to "guaranteed benefit" plans such as the Employees Retirement System (ERS) and Teachers Retirement System (TRS); some state employees, such as me, have a different pension plan that looks much more like a "guaranteed contribution" 401(k).]

Whether the state chooses to invest those contributions in Treasury bills, or venture capital, or Florida swampland, or a portfolio of Van Goghs, the retirees are guaranteed the same pension benefits. The decision to invest or not invest in a particular asset class is a fiduciary decision to be made by the fund managers — and, in 49 out of 50 states, they’ve chosen to invest a portion into venture capital. However, a decision to invest, or the success or failure of those investments, will have no impact on the individual pensioners. Those pensions are guaranteed by the full faith and credit of the state of Georgia, and you can, literally, take that to the bank.

Given that a properly-managed alternative asset allocation can significantly boost the long-term rate of return for a portfolio, it’s a fiduciarily-reasonable thing for the managers to consider, if the state law changes.

Now, what it doesn’t do is guarantee that any of those dollars will be invested in Georgia startups and have an economic development impact on the state. That’s a different kettle of fish, which I’ll address in a future post.

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It gave me a chance to meet Michael Bloomberg, and I strongly recommend that you take the time to listen to his keynote, which is archived on C-SPAN here. He made my points far better than I could have!

But I also enjoyed the panel discussion which followed. If you’re inclined, you can watch the whole thing here. My bit starts at 43:20, and I chime in again around 1:27:10. Since I had my notes on my iPad, I was able to update them in realtime at the event; that text is below.

(FYI, using Pages on the iPad with 40-point Helvetica makes a great personal teleprompter!)

Thanks for inviting me here. I appreciate the opportunity.

I could probably replace my prepared remarks with “What Mike said.” His Honor did a great job.

Although I’m not an academic, I think my role today is to discuss immigration from the point of view of a major research university. And I’d like to follow that with some of the issues with current immigration policies that affect what our students can do AFTER graduation.

For those of you who aren’t familiar with Georgia Tech, we’re the largest engineering school in the United States. But we’re not just big; some folks think we’re pretty good.

U.S. News ranks us as the 4th best engineering school in the U.S. — when the top three are MIT, Stanford, and Cal Berkeley, #4 isn’t a bad place to be.

They rank us as the 7th best public university of all types.

And we’re not just good at one thing. They rank twelve types of engineering degrees — electrical, mechanical, civil, etc. We rank in the Top Ten for eleven of them, and we don’t offer the twelfth.

We’re in Atlanta. As you might expect, since the civil rights era, we have a strong history of graduating minorities. Whether you’re measuring Bachelor’s, Master’s, or Ph.D.’s, we’re Top Ten for African-Americans, for Asian-Americans, and for Hispanics, and for minorities overall.

And we have a lot of foreign students.

Right now, about 7% of our undergraduates and 40% of our graduate students are on foreign visas.

Forty percent. As Tom pointed out, the national average for STEM graduate students is actually over 50%. And as Robin pointed out it’s north of 60% in computer science.

At Georgia Tech, the bulk of our foreign students come from, unsurprisingly, India, China, and Korea. But, overall, they come from 115 countries. –I don’t think I could name 115 countries!– Overall, between graduate and undergraduate, that’s 18% of our total enrollment, or about 3800 out of 21,000 students.

It’s hard to get into Georgia Tech. We get six applications for every slot in our freshman class, so you know that we’re pretty picky about who we let in. The 3800 foreign students on our campus are the best of the best. Smart, hard-working, flexible… you couldn’t ask for better students. Or better employees. Or better CITIZENS.

But the United States has put up barriers to letting these students build their careers in America. Just getting their student visas approved — not even talking yet about permanent residency! — is a bureaucratic nightmare. It discourages many of them to just give up, and study in other countries.

It didn’t used to be that way. A hundred years ago, the United States had, at best, a second-tier set of colleges and universities. Harvard was pretty good, but things fell off pretty rapidly from there. But, by 1950, we had unquestionably the finest higher education system in the world. We still have it today, although the rest of the world is trying hard to catch up.

What happened? IMMIGRATION. Our university system in this country was BUILT on immigration.

Specifically, Hitler came to power in 1933 and destroyed the German university system, which at that time was the finest in the world. Many of those professors, and even students, escaped to Britain and the United States. That won the war. Imagine the Manhattan Project without Jewish scientists. Imagine if they’d stayed in Germany.

After World War II, Europe was wrecked, and even MORE came to the United States from all over the Continent.

And then from Latin America, and from Asia… We imported the best brains from all over the world into our colleges and universities. And that led to a half-century of unchallenged economic dominance.

A couple of months ago, I was at a Georgia Tech student event, the Convergence Innovation Competition. I was INCREDIBLY impressed by the quality of the student entrepreneurs. They were mostly Master’s candidates in Computing or Electrical Engineering. And they were demonstrating apps for iPhones and Androids and even your television that were commercial-grade, or could get there.

I spent about a decade as a venture capitalist, and I was IMPRESSED. This was a class project, but it felt like a venture capital event. I started asking them, “Do you want to start a company around this?” I’ve still got friends in the venture business, and I think I could get some of these teams funded!

But the answer was usually a smile, and a quiet “No, I can’t.” So then I figured it out, and I started asking them: “Where are you from?”

Of 28 competitors, 26 were from overseas.

There’s no way that these 26 students can graduate from Georgia Tech and take what they’ve learned here and start companies in the United States.

They want to, but they can’t.

If you can only remember one thing I’ve said this morning, please remember that. We’re educating these children, they want to start companies here, and we’re telling them to go home.

They want to stay, but they can’t.

Removing the caps on H1-Bs wouldn’t help them. Our immigration service doesn’t recognize self-employment. And the kids couldn’t afford the fees, anyhow. So, they can find a big-company employer who is able to invest $20,000 or $30,000 in getting them an H1-B and eventually a green card. Or, they can go home. And, as Elizabeth pointed out, their economies are thriving back home, so it’s more than likely that they’ll compete with us from there!

Now, entrepreneurship is HARD. Most people who try it, fail. I think the willingness to pack your bags and move to a different country for graduate school is a pretty good filter for whether a young person has what it takes to start a successful company. And the data supports that. Over HALF of the startups in Silicon Valley have a founder from India or China.

And, remember, as the Mayor mentioned, the Kauffman Foundation found that young companies have accounted for essentially ALL the job growth in the United States over the last twenty-five years. But our immigration policy doesn’t encourage foreign graduate students to participate in that job creation. Work for a big company, or go home.

Just at Georgia Tech, we’ve seen the impact of this over and over again. One of our spinout companies, Whisper Communications, was based on work from a graduate student in electrical engineering. He jumped through all the immigration hoops possible, but eventually exhausted his options. He gave up.

He was immediately snapped up by Apple, where I figure he’s building the iPhone 6, but it delayed the formation and growth of that company by over a year. We had to bring in new founders without immigration problems.

Who knows what could have happened in that year? And I’m sure our former student is contributing economic value working for Apple, but nothing like what he could be doing in a startup.

John Doerr, one of the most successful venture capitalists in history, said “I would staple a green card to the diploma of anyone that graduates with an advanced degree in the physical sciences or engineering in the United States.” He’s absolutely right.

These people are going to create value. Create jobs. Pay taxes, for crying out loud! Why would we NOT want them to stay here? Get married, raise families, buy a house, buy 2.3 cars… the multipliers are endless.

Now, what I always hear when I speak on this subject is that “immigrants take jobs from Americans.” The Mayor already addressed this. That’s just not true for entrepreneurial immigrants! They don’t TAKE jobs, they MAKE jobs!

First for themselves, then for co-founders, and eventually—if successful—for hundreds, or, thousands of employees.

This is NOT a zero-sum game. If these immigrants aren’t allowed to create jobs, those jobs WILL NOT go to native-born Americans… those jobs simply won’t exist.

And these aren’t jobs flipping burgers or picking crops. These are high-quality high-paying jobs that your kids would like to have someday. Example: There are two million “Internet jobs” in the United States. None of those jobs existed twenty years ago. Most of the COMPANIES didn’t exist twenty years ago. Now, subtract all of those Silicon Valley companies who were founded by immigrants. It’s a pretty ugly picture.

And although Silicon Valley gets all the press, it’s deeper than that. As a bit of history, not just Google and Intel, but Pfizer, DuPont, U.S. Steel, and Procter & Gamble were once startups founded by immigrants.

Earlier, Alejandro repeated the cliché that “we are a nation of immigrants.” It’s a cliché, but it’s also true. We still have the world’s best graduate schools; other countries are catching up, but we started from far ahead.

Moreover… We have a history of risk-taking, of capital fluidity, and of tolerance of failure that has made the U.S. the best place in the world to start a company. Other countries are catching up here, too, but our culture and history give us an edge. Even with our current financial troubles, I believe that we’re still the entrepreneurial Mecca for the world.

But we have to make sure that we attract the best, brightest, and most innovative entrepreneurs, whether they were born here or not.

In honor of the Mayor, i made up a baseball analogy, but he beat me to it. Building fences to keep out brainpower is like saying that “My baseball team has enough talent, let the other teams get some good players, too.” That’s not how the Yankees play the game, and it’s not how the United States should play the game.

With that, I’ll pass the microphone and look forward to the rest of the panel. Thank you.

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There’s a good overview in the AJC here. But there were a lot of great speakers at the conference, and I wanted to share some of their thoughts with you. I started going through my notes, and realized that I had posted most of the “good stuff” on Twitter! So I decided that this month’s column would be a list of my tweets during the two days I was at Callaway (sectioned off by headings so you get an idea of different sessions, rather than one undifferentiated stream).

For those of you who follow me on Twitter, you get cheated this month. If you don’t, this may be a quick lesson in the value of social media. It’s a lot more than “What I had for lunch today”!

Getting Started

At the Georgia Forward conference

Bill Steiner lobbed me a softball question about hackerspaces. Love them, want to see more in Georgia! Thanks, Bill!

Mathew Hauer, University of Georgia Vinson Institute

Title of UGA demographics talk at #gafwd : “Georgia is the New California”!

Mathew Hauer: Over 1 million Georgians speak a foreign language at home

Mathew Hauer: Georgia has 10 of the 50 fastest growing counties in the USA

Mathew Hauer: Gwinnett County is #1 in USA for growth of Asian in-migration.

Mathew Hauer: Hispanics currently 9% of Georgia population. Will double in 10 years at current rates.

Mathew Hauer: Already more Hispanics being born in Georgia than moving here. Will accelerate. More than immigration issue.

Mathew Hauer: Almost all population growth in Georgia will be < age 25 or > age 65. They mostly don’t pay taxes. Ouch. #demographics

Regional Panel

• Tom Ratcliffe, former mayor of Hinesville
• Terry Lawler, Regional Business Coalition of Metro Atlanta
• Dan Bollinger, Southwest Georgia Regional Council
• Teresa Tomlinson, mayor of Columbus
• Deke Copenhaver, mayor of Augusta
• Bill Steiner, Northwest Georgia Regional Commission

Tom Ratcliffe: the Port of Savannah is “Georgia’s second Hartsfield”

Terry Lawler: the unofficial motto of Atlanta is “Sorry I’m late” #traffic

Tom Ratcliffe: Skilled workforce is aging. Where will we get welders when the current ones retire?

Tim Ratcliffe: Retired Army officer who taught math at West Point wanted to teach high school in Georgia. Not allowed. #educrats

Dan Bollinger: There are great teachers out there in every walk of life. Let them teach!

Ross Mason, Chairman, Georgia Department of Community Health, and Managing Director, HINRI Labs

Ross Mason: Fort Gordon just invested $460M in military communications hub.

Ross Mason: Silicon Valley is driven by Moore’s Law. US healthcare is driven by Moron’s Law.

Ross Mason: What would Georgia be like today if Robert Woodruff had moved to Florida to avoid income tax? Scary.

Ross Mason: Turn Fort McPherson into healthcare innovation park where startups and system integrators can coexist.

Ross Mason: Lack of alt assets allocation in Georgia pensions has cost us $12 billion since 2006

Ross Mason: There are more Chinese/Indians with 130+ IQs than the US has citizens. (Just reporting, not fact-checking)

Ross Mason: Texas passed tort reform. Brought 15,000 doctors to state in 18 months. Average 11 employees each.

Economic Development Breakout Session

• Mike Cassidy, Georgia Research Alliance
• Mike Gerber, Atlanta Regional Council for Higher Education
• Cliff Pyron, Georgia Ports Authority
• Jannine Miller, transportation policy advisor, Office of the Governor
• Tino Mantella, Technology Association of Georgia
• Maria Saporta, Atlanta Business Chronicle
• Ross King, Association of County Commissioners of Georgia
• Ricardo Azziz, president, Georgia Health Sciences University

Mike Gerber: Single best thing Georgia can do for economic development is improve K-12 performance

Mike Gerber: Oz Nelson said UPS wouldn’t have considered Georgia when moving HQ from Connecticut without @Georgia_Tech, Emory, UGA.

Mike Gerber: Universities are permanent economic development assets. North Carolina can’t offer Emory tax incentives to relocate!

Cliff Pyron: Savannah container port has grown 11.5%/year for last ten years. Fastest growth in USA, #4 total volume

Cliff Pyron: 40% of US population is in Southeast. Ga/Fla exceeds NY/NJ. (Me: reporting, not fact-checking)

Cliff Pyron: Savannah is the shallowest deepwater port in the world. Panama Canal expansion makes it mandatory to deepen.

Jannine Miller: Georgia has extraordinary transportation infrastructure, but we stopped investing around 1990.

Jannine Miller: Georgia is now second-to-last in transportation investment per capita. Other states catching up fast. (Pass TSPLOST!)

Jannine Miller: 70% of truck traffic in/out of Georgia starts/stops in the state. “Not Wyoming where they’re just passing through”

Tino Mantella: Georgia has 10% unemployment, but also has 5000 open technology jobs where employers cannot find right skill set.

Jannine Miller: There’s traffic everywhere in USA, not just Atlanta. What Atlanta needs is predictable and reliable commutes.

Maria Saporta (condensed): Why does Georgia have such a fragmented econ dev strategy? Too many meetings, commissions, reports.

Ross King: more discussion of city-county (and multiple-county!) consolidation in Georgia over last 12 months than in last 25 years.

Ricardo Azziz: Don’t need more med schools; need bigger med schools with higher quality education.

Kati Haycock, President, the Education Trust

Kati Haycock: Single most determinative predictor of future income is high school mathematics performance

Kati Haycock: No matter how you slice the data, USA is not keeping pace with international competitiors in K-12

Kati Haycock: It’s not just poor kids. Even USA’s top 5% ranks 23rd out of 29th compared to top 5% elsewhere.

Kati Haycock: One of only two developed countries where young people in 2010 have not achieved higher education than parents

Kati Haycock: U.S. African-American and Hispanic high school graduates score 4 years behind white students in reading and math

Kati Haycock: Remember, those scores are based on the kids who stay in high school to get a diploma #distressing

Kati Haycock: Household income diff leads to an 8X differential in rates of college degrees (77% top quartile vs 10% bottom quartile)

Kati Haycock: Success stories from Frankford Elem, Delaware; George Hall Elem, Mobile, AL. #gafwd Fired all teachers for lack of vision

Kati Haycock: Elmont Memorial Junior-Senior High, NY: low incomes, but high scores, high grad rates

Kati Haycock: same exam given to low-income African-American students in Boston and Washington DC: 19% diff (two grade levels)

Kati Haycock: K-12, Georgia is a middle-of-the-pack state in a mid-pack country. Not great place to be in knowledge economy.

Kati Haycock: Common Core is not enough. Set sights on “Advanced” curriculum

Kati Haycock: Family issues and poverty matter, but not as much as teachers who are in it to win

Kati Haycock: Why do teachers teach to the test? Because they don,t have sufficient curricular support

Kati Haycock: Need to demand more from students. Convince them that taking challenging classes in HS makes a difference later

Kati Haycock: Get rid of deadwood. Student who gets two bad teachers in a row may never recover. No teacher tenure

Kati Haycock: It’s a lot easier to start a good school than to fix a bad one. Aggressively shut ‘em down, transfer only good teachers

Kati Haycock: Good teachers don’t give up on any kids. (Me: see Roberta Pournelle’s success teaching reading to the “hopeless”)

Kati Haycock: 1/3 of teachers nationally are NOT coming from schools of education. Yay for experimentation! Teach for America, etc

Kati Haycock: No teacher should be allowed to perform poorly for more than two years. They do too much damage. Move them out.

Navneet Singh Narula, founder, nBrilliance

Navneet Singh Narula: 95% of life is figuring out what to do; only 5% is actually doing it.

Navneet Singh Narula: “The ROI on social media is that your business continues to exist in five years”

Chad Evans, Senior Vice President, Council on Competitiveness

Looks like Chad Evans (Council on Competitiveness) is using Prezi at podium. Good for him, breaking the tyranny of PowerPoint!

Of course, using thin grey typefaces on a black background is just foolish. Ah, well. We’ll get Chad to Startup Gauntlet soon

Chad Evans: US, EU, and China split half of global GDP more or less equally. Rest of world has other half

Chad Evans: US remains decades ahead of rest of world on labor productivity

Chad Evans: By 2020, Social Security, Medicaid, Medicare, and debt service will consume 92% of Federal budget. How to best spend 8%?

Cool! Chad wasn’t at conference yesterday, but is referring to tweets I (and others) posted! Twitter is more than “I ate lunch”

Chad Evans: Real life opportunities are interdisciplinary, crossing science and business “silos”

Chad Evans: Globalization is driven by global challenges, not just growth. Energy, water, etc.

Chad Evans: 40% of jobs lost in Great Recession were high-wage; only 14% of new jobs in recovery are high-wage

Chad Evans: His college interns have majors that didn’t exist ten years ago.

Chad Evans: “Early 60s is the new 30s” We’re going to work a lot later in life than our parents

Chad Evans: 25% of US workforce has been in current job less than a year. 50% < 5 years.

Chad Evans: US has largest R&D investment in world, but China on track to outpace us.

Chad Evans: Council on Competitiveness hosting national dialog at Georgia Tech next month

Chad Evans: Arizona State University building joint incubator with Brazil

Chad Evans: “Industrial policy” should not be a dirty word in Washington

Chad Evans: Multinational looking to locate plant in USA has to talk to 80 people in Washington. Compare to 2 in Brazil, 1 in China.

Chad Evans: His positive impression/narrative of Georgia’s competitiveness is not supported by the data.

Breakout Session: Solving Georgia’s Long-Term Water Supply Problem

• Patricia Barmeyer, King & Spalding
• Joe Cook, Coosa River Basin Initiative
• Mark Masters, Albany State University
• Katie Kirkpatrick, Metro Atlanta Chamber of Commerce
• Don Cope, Dalton Utilities
• Harry West, Center for Quality Growth & Regional Development, Georgia Tech
• Jim Stokes, Georgia Conservancy
• David Bennett, Atlanta Department of Watershed Management

Learning about Georgia’s water-use future at #gafwd

Based on 11th Circuit decision, Georgia will be filing motion to dismiss SECOND “water war” suit with Alabama within four weeks

Patricia Barmeyer: Water war cases are a failure of judicial system. Should have been thrown out in 1990.

Patricia Barmeyer: Only court with appropriate jurisdiction is SCOTUS. Alabama and Florida haven’t filed suit there since they’d lose

Joe Cook: Water wars aren’t just between Georgia, Alabama, Florida. Also pits Atlanta against Rome, Cartersville, south Georgia

Mark Masters: 70% of Albany (Ga.) economy is agriculture-based. Water is not optional.

Katie Kirkpatrick: Atlanta has made huge efficiencies in water efficiency. Added 1 million people, but CUT water consumption by 14%

Joe Cook: Atlanta has gone with water conservation carrots, but no sticks.

Joe Cook: Atlanta asking for 100M gallons/day from Etowah basin. Atlanta should ensure more water conservation first.

Katie Kirkpatrick: We want 250M gal/day from Tennessee River, and desalinized water from coast, but interbasin xfer is impractical

Don Cope: Building a reservoir today is a 15-year project.

Don Cope: Power generation plants are huge user of water. Evaporative coolers required to meet air quality standards

Harry West: We’ve struggled to get water conservation laws past real estate interests in Georgia legislature for decades

Don Cope: TVA claims that Tennessee River could spare 1 billion gallons/day with no impact. Over 500M gal/day flows from Ga INTO Tenn

Don Cope: Local rivalries aside, if you hurt Atlanta, you hurt the economy of the entire Southeast United States

Patricia Barmeyer: Northwest Georgia and southern Tennessee are natural geographical unit; line on the map is artificial

Patricia Barmeyer: Atlanta is forbidden by law from even exploring engineering requirements for water from Tennessee

Me: Send the Georgia National Guard to the 35th parallel, and build a pipeline!

Dan Cope: Water isn’t necessarily fungible. Cold water more valuable to power plants than warm water (hi delta-T). Allocate smarter.

Katie Kirkpatrick: Desalinization could help coastal regions, but VERY expensive to lift 2M gal/day 1000 feet to Atlanta

Patricia Barmeyer: At least allow Georgia to explore interbasin transfers. Currently prohibited by law. Bitter intra-state rivalries.

Timely coincidence! #gafwd RT @DropInTheBucket “Civilization has been a permanent dialogue between human beings and water.” – Paolo Lugari

Based on this panel, I’m willing to hand the keys of Georgia’s water issues to Don Cope of Dalton, and let him fix it. #impressive

Harry West: Georgia has not adequately considered worst-case scenarios (future growth plus inevitable drought years).

Jim Stokes: The 15-year timeline for building new reservoirs is dominated by Federal permit process (EPA, Corps of Engineers)

Harry West: Peachtree Street is a subcontinental divide. Every time City of Atlanta water crosses Ptree, it’s an interbasin transfer!

David Bennett: Atlanta already has highest water rates and lowest per-capita use in the country. Not much room for improvement.

Jim Stokes: Raising Lake Lanier by one foot would equal a new reservoir, but would require same 15-year Federal permitting process

Other Breakout Sessions (tweeted by others)

RT @joeventures: Ga Council of Arts was moved to Ga Dept of Econ Dev, in recognition of the role played by arts in job creation

RT @jim_langford: Jessyca Holland: metro Atlanta has lowest percentage of Gen Y population of any major city in US. Losing creative tale …

RT @GeorgiaForward: Paul Radford @ #gafwd : Recession = great reset for ga cities.

David Walker, former U.S. Comptroller General, CEO of Comeback America

RT @RyanTaylorAIA: David Walker says US founding fathers did not intend current government: politicians were intended to be biz persons

RT @iruncampaigns: “Government has grown too big, promised too much and waited too long to address its fiscal issues.” – David Walker

Conclusion

Hope you enjoyed the tweetstream. The mood at the conference was… hard to say. “Optimistic, but worried”? Over dinner and in hallway conversations, there seemed to be a consensus that Georgia had lost momentum over the last decade. One person in particular had met with a senior economic development civil servant from North Carolina. He asked “What do you in North Carolina think of Georgia?” The answer: “We don’t. We think about Texas, and Asia, and Brazil.”

Ouch.

But it wasn’t doom and gloom. I think there was a consensus that our destiny was largely in our own hands. Deepening the port of Savannah will help. Passing TSPLOST will help fix the infrastructure that has been ignored for too long. The 11th Circuit Court of Appeals tossing out Judge Magnuson’s looming restrictions on Lake Lanier will help until we get new reservoirs built. Even the Atlanta Public School cheating scandal may help, if it gets taxpayers and business leaders focused on how terribly broken our K-12 system is.

It’s a difficult time in Georgia, but I think it’s a difficult time all across the United States. I certainly wouldn’t trade places with California, whose deficit is bigger than our budget!

Stephen

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Once again, I’m honored to have been asked to speak in the Space and Science tracks at Dragon*Con.

Dragon takes over downtown Atlanta during Labor Day weekend. It’s enormous. All the public reports of attendance are wrong… they admit to “40,000+” but that’s low-balled to avoid fire code problems.

But for those of you who don’t know, there is a wing of the Hilton reserved for the few hundred attendees who are too geeky for DragonCon… and that’s where the Space and Science tracks are. (Plus a couple of others, like Skeptics, EFF, and Podcasting.) Yes, when most normal humans would be going in search of Princess Leia bikini models, we’re learning about astrophysics and nuclear power plants…

Anyhow, I’m on three times this year:

What’s in the Labs at Georgia Tech?
Friday, 2:30 pm, Science track

Enter the Commercial Space Age
Sunday, 7:00 pm, Space track
with Michael Mealling

NASA Goes Commercial
Monday, 11:30 am, Space track
with Michael Mealling, John Bradford, A.C. Charania

I hope those of you attending can drag yourself away from the (admittedly incredible) entertainment programming and cross the pedestrian bridge from the Marriott to join us in the Hilton. My sessions are during family-friendly hours (i.e., not Saturday night), so bring your kids. Have a great con!

PS, for those who asked: My incredibly popular and thought-provoking talk on alternative energy (“Hydrogen Cars, Ethanol, Wind Farms, and other Silly Ideas“) was apparently vetoed by Science track management this year as being insufficiently respectful to prevailing opinions, even though I filled the room last year, and there are empty slots on the schedule. C’est la guerre.

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South Carolina needs a personalized education for every student

Go read it. I actually agree with a lot of it, especially this paragraph:

A personalized, customized education for every student is the future of education. A student-centered approach will transform education from a system that treats students as identical units, teachers as assembly line workers, and administrators as managers who work to meet production quotas of dubious quality. It’s not the people in the system who are stifling progress. It’s the system itself that must be replaced.

But I replied to John in a series of tweets

@StephenFleming
Not sure if I agree. You and I didn’t get “personalized education” & we turned out OK. Restore discipline & fire 10% teachers/year

@StephenFleming
With current educrats, “personalized education” means “more excuses why Johnny can’t read.” Time to end excuses, fire bad teachers

@StephenFleming
Bring back shop classes, quit pretending all kids should go to college, upgrade technical schools

@StephenFleming
“Health care and education are next up for fundamental software-based transformation.” I hope Marc Andreessen is right! http://t.co/tfvSYKD

Then I realized that what I was trying to say really doesn’t fit into 140 characters. This post is over 15,000 characters!

K-12 education is badly broken in this country. Nearly thirty years ago, the “A Nation at Risk” report stated that

If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war.

Things have only gotten worse since 1983.

Kati Haycock, President of the Education Trust, gave a viciously factual presentation to Georgia Forward this week. You can dig back in my tweetstream for some of her points:

Single most determinative predictor of future income is high school mathematics performance

No matter how you slice the data, USA is not keeping pace with international competitiors in K-12

It’s not just poor kids. Even USA’s top 5% ranks 23rd out of 29th compared to top 5% elsewhere.

USA one of only two developed countries where young people in 2010 have not achieved higher education than parents

U.S. African-American and Hispanic high school graduates score 4 years behind white students in reading and math

Success stories from Frankford Elem, Delaware; George Hall Elem, Mobile, AL. Fired all teachers for lack of vision

Elmont Memorial Junior-Senior High, NY: low incomes, but high scores, high grad rates

Same exam given to low-income African-American students in Boston and Washington DC: 19% diff (two grade levels)

Family issues and poverty matter, but not as much as teachers who are in it to win

Need to demand more from students. Convince them that taking challenging classes in HS makes a difference later

It’s a lot easier to start a good school than to fix a bad one. Aggressively shut ‘em down, transfer only good teachers

Good teachers don’t give up on any kids.

No teacher should be allowed to perform poorly for more than two years. They do too much damage. Move them out.

Or you can read more coherent statements at the Education Trust website.

There are some good arguments to be made about getting the government out of the school business entirely, and you can read about them at the Alliance for the Separation of School & State. But, for the purposes of this blog post, I’m assuming we’ve decided as a society that there is value in a publicly-financed universally-available public school system. A better one than we have today.

A Grand Bargain

Synthesizing all the discussions I’ve had in the last week about K-12 education, and using the language of the debt-ceiling crisis, I propose a Grand Bargain.

• Immediately double the salaries of all classroom teachers.

In 2011, the median starting salary of a B.S. graduate from Georgia Tech was $60,350.

The recent average starting salary of a teacher in Georgia was $34,442. Double that is almost $70K. That would get the attention of any recent Georgia Tech graduate.

But, in return for doubling their salaries, teachers would have to accept some fundamental changes in how we run the business of public education.

1. Salary doubling only applies to classroom teachers. If you spend more than 50% of your time in a classroom in front of students, your salary is doubled. If less than 50%, you get a pro-rata increase. If less than 10%, no increase at all.
2. Employment is year-round. No more summers off. The school year is going to get longer… the kids aren’t bringing in the crops anymore. In return for your doubled salary, you’re expected to be at the school(or in continuing ed classes) all year. When the students aren’t there, you’ll be “sharpening your saw.” Curriculum development, skill development, proficiency testing, team projects with other teachers… there’s plenty to do.
3. Immediate end to K-12 teacher tenure. There are valid arguments for tenure in a research university. (And valid arguments against it, but that’s a different blog post.) There are none for K-12 teachers. End it, now.
4. Principals have complete authority to hire and fire teachers. No more deadwood. No more passing the deadwood back and forth between classes and between schools. If you’re not earning your newly-doubled salary, you have to find another line of work.
5. School boards have complete authority to hire and fire principals. Same as above.
6. A supermajority of parents can fire any teacher. I suggest 3/4ths of all parents with children in a teacher’s current classes. If a teacher receives such a vote of “no confidence,” he or she cannot be moved to a different job in the same district.
7. An end to credentialism. Last week, I heard of an Army officer with a degree in engineering who taught mathematics at West Point to military cadets. He retired to Georgia and wanted to teach math in the local high school. He wasn’t qualified because he didn’t have a degree in education. That’s absurd. If someone wants to teach, and if they can convince a school principal that they can do the work, they should get the chance. There are valid pedagogical skills that can be taught, and teachers should learn them, but you do not need a B.A. or M.A. to demonstrate mastery of those skills. Mastery of the source material is far more important.
8. Restore discipline. If a child wants to disrupt class, let him or her do it down the hall, in a classroom dedicated to the purpose. I suggest staffing it with military vets returned from Iraq and Afghanistan who are looking for work. The doubled salaries should get their attention, and the end of credentialism will make it easy for them to give it a try.
9. Bring back shop class. We’ve created a generation (or two) who think the objective of high school is to go to college—and that any child who can’t or won’t go to college is doomed to flipping burgers… or dealing drugs. Not true. In Roanoke last month, I heard the head of Huntington Ingalls shipyards explain that he needed to hire 4500 skilled welders, at salaries of $100,000/year, but he can’t find them. The kids who should have been going to technical colleges to learn how to weld went to the local four-year college instead to get a degree in Critical Studies. Now they’re flipping burgers, and the welding jobs go unfilled. That needs to be fixed.
10. Repeal ‘No Child Left Behind.’ It’s failed, and everyone knows it. “No Child Left Behind” has turned out to mean “No child gets ahead.” We’re not in Lake Wobegon, and not all our kids are above average. Repeal it, and try again… salvage any good parts in a new bill.
11. Everyone learns to read. There are far too many kids being kicked along the grade path who cannot read. There are as many excuses as there are “educators.” But the truth is, almost every child can learn to read, if it is expected of them and if they’re taught appropriate phonics skills.
    
    If a grade school student can’t demonstrate reading proficiency on unfamiliar material by, say, the fourth grade… he or she gets taken out of class and drilled on reading until they can do it. Then they may be returned to class, or rotated back a year. If that means the child takes 13 years to graduate from high school… so be it.
    
    (There are a small number of unfortunate children who—through injury or illness or genetic bad luck—are actually and truly unable to learn to read. One of them is in my extended family. We should do something kind for them. But we shouldn’t build policy around them, and we shouldn’t exaggerate their extent. Based on demonstrated literacy rates elsewhere on the planet, I suspect the number is less than 2%, and I do not believe anyone who claims it is over 5%. Therefore: 95% of students must learn to read. A very few get taken out of the classroom and taught to the best of their capabilities.)
12. Everyone learns basic math. Same as above. Rather than reproduce the arguments of Mathematically Correct, I’ll just link you to their website and you can read for yourself.

Now, before the screams and wailing and gnashing of teeth begins… if you’re a good teacher, why wouldn’t you jump at this deal? Doubling your salary to do more of what you entered the teaching profession to do in the first place. How can you argue with that?

And if you’re a teacher who opposes such a deal… what does that say about you, and your confidence in your ability to teach your students?

(If you’re a K-12 administrator who doesn’t teach… this shouldn’t cause you any grief. You continue extracting the same salary from the taxpayers as before. What’s your problem?)

How Do We Pay For It?

How do we pay for anything these days? Borrow the money from the Chinese.

Seriously: the states are broke. So do it at the Federal level. Add up the total salary of a district’s public school teachers, and have the U.S. Department of Education write the district a block grant for the same amount… wrapped in fearsome and enforceable legal restrictions that the money can only go to doubling classroom teacher salaries, and not to new buildings, new basketball courts, or new staffers for district supervisors.

Yes, this would cost hundreds of billions of dollars. So did TARP, and that was frittered away uselessly. At least putting money into teachers’ pockets would be an actual economic “stimulus” since they’re likely to spend it, and spend it in this country.

Since I don’t like open-ended Federal obligations, ramp it down over ten years: block grants of 100% in Year One, 90% in Year Two, down to zero in Year Eleven. What happens as the grant goes down?

Probably several different things.

• Some school districts would decide the doubled salaries are important, and raise the taxes from their local millage rates or whatever mechanism they use.
• Some districts would choose to keep the higher salaries, but adjust class sizes so that the successful teachers would teach more students. Over ten years, class sizes could double with no ill effect. Good teachers with effective discipline could easily manage the larger class sizes. After all, they used to do just that, fifty years ago. “What Man has achieved, Man can aspire to.”
• Some districts would keep the higher salaries, but make up part of the difference by firing non-teaching school administrators.
• Some districts would let salaries drift lower, and see if they continue to attract and retain good teachers.
• Some districts would try a combination of the above.
• Some districts (and states) would lobby Congress to extend the block grants. Ignore them.

States (and smaller political subdivisions) used to be “laboratories of democracy.” Let them experiment! Could the result possibly be worse than what we have now?

Next

I’ll end with John Warner’s tweet to me this morning:

Must move from education designed for 19th century industrial revolution, to educ designed for 21st century creative economy

Well, yes. John and Marc Andreessen and Clayton Christensen are right. We need to reinvent the educational process, and technology will play an important role in that process. I look forward to being able to develop “personalized education” for every student.

But when a patient is wheeled into the emergency room with a sucking chest wound and a broken leg, you focus on the sucking chest wound. First, stop the bleeding. Then we’ll have the time and resources to experiment with new structures, new techniques, and new technologies.

I joined the board of trustees of a local charter school eight years ago, spent several years on the curriculum committee, and have learned a lot about the current stage of education. I naively thought that technology was the solution: “Laptops! Eight o’clock! Day One!” Then we realized we were getting incoming ninth-graders who were reading and calculating at 3rd, 4th, and 5th-grade level. First, stop the bleeding. We quickly gave up on universal laptops, and started focusing on discipline, high expectations, and teachers who really believe these kids can succeed. It’s working.

We can make it work nationwide.

Double teacher salaries. Expect the teachers to succeed, and don’t tolerate failure. Expect the kids to succeed, and don’t tolerate lack of discipline. Then stand back and watch American students knock our socks off.

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When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: “Stick to the Devil you know.”

On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: “The Wages of Sin is Death.”

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

Read the whole thing at Kipling.org.

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While still at the competition, I tweeted:

Of the first 28 student entrepreneurs I’ve met in this competition so far, 2 of them were born in USA. Our immigration policy has to change!

Exactly 140 characters (the Twitter maximum), but it triggered a number of public posts, private messages, and face-to-face conversations over the next week or so. And, for unrelated reasons, I’ve wound up having variations on the same discussion with different audiences for the last two months. So I figured it was time for a blog post on the topic.

First off, some people misunderstood my comment as being anti-immigrant or anti-immigration. Nothing could be further from the truth. Heck, I married an immigrant!

Immigrants bring brainpower, ambition, and energy that our country desperately needs. (Our K-12 school system seems to be doing its best to destroy those same characteristics in the children who are born in this country, but that’s a different blog post.) And the willingness to pack your bags and move to a different country for graduate school is a pretty good filter for whether a young person has what it takes to start a company. Over half of the startups in Silicon Valley have a founder from India or China.

No, my tweet wasn’t about changing our laws to restrict immigration. It was stating that our policy has to change to allow these students to stay here! The United States has the best graduate schools in the world. We attract Master’s and Ph.D. candidates from all over the world. And, under current law, once we grant them a degree, they have one of two choices: they can get a job with a company big enough to sponsor them for a green card, or they can go back to their home country.

As a national immigration policy, that’s insane.

(I’m oversimplifying. There’s something called “Optional Practical Training” that can extend a student visa for a year or so of work experience, but there are a lot of hoops to jump through, and you can’t use OPT to start a company. And there are a limited number of H-1B visas out there, but they have layers of restrictions, and you still need a sponsoring company. And, even if you follow all those avenues, you eventually still have to find a green card sponsor or go home.)

Now, big companies like Coca-Cola or Cisco or Monsanto have whole legal departments to help their employees navigate the shoals of the US Citizenship and Immigration Services. My wife got her green card through IBM when she chose to move here from IBM Brazil. And a graduate can build a great career going from OPT to H-1B (or L-1; that’s different) to green card to U.S. citizenship while working for a multinational in the United States.

But what if you want to start a company?

Sorry, you’re out of luck. USCIS doesn’t recognize self-employment. And even if you aren’t going to be the founder, but just an early employee of someone else’s company, most startups can’t afford the legal services and fees to get you an H-1B visa, much less a green card.

So, even though young companies have accounted for essentially all the job growth in the United States over the last twenty-five years, our immigration policy doesn’t encourage foreign graduate students to participate in that job creation. Work for a big company, or go home. (And, more than likely, start a company in India or China to compete with U.S. companies.)

John Doerr, one of the most successful venture capitalists in history, said “I would staple a green card to the diploma of anyone that graduates with a degree in the physical sciences or engineering in the United States.” He’s absolutely right. These people are going to create value. Create jobs. Pay taxes, for crying out loud! Why would we not want them to stay here? Marry, raise families, buy a houseboat on the lake… the economic multipliers are endless.

But “immigration policy” has been hijacked by demagogues of both parties. Republicans rail against illegal immigrants as lawbreakers who must be punished and deported before they have “anchor babies”—children born on American soil with birthright citizenship. Democrats see undocumented workers as a vast new source of potential voters who are doing jobs “Americans just won’t do.” Both find reasons to vilify any measure labelled “immigration reform.”

There’s a valid debate to be had in this country over the right mix of open borders and social services. But that’s a completely different issue than sending back a brightly-minted Ph.D. graduate because he or she doesn’t have the right visa to start a company. Can we agree that a computer science Ph.D. from Georgia Tech is not likely to have swum the Rio Grande under cover of nightfall?

The other issue that has been raised in my conversations on this issue is that “they’re taking jobs from Americans.” That’s nonsense. These young immigrants are going to create jobs… first for themselves, then for co-founders, and eventually—if successful—for hundreds or thousands of employees. It’s not a zero-sum game. If these immigrants aren’t allowed to create jobs, those jobs won’t go to native-born Americans… those jobs simply won’t exist.

(And these aren’t jobs flipping burgers or picking crops. These are high-quality high-paying jobs that your kids would like to have someday. As a bit of history, not just Google, but Pfizer, Intel, DuPont, U.S. Steel, and Procter & Gamble were once startups founded by immigrants.)

Our policy is insane. And it may be too late to do anything about it. India and China have embraced the “reverse brain drain” and many foreign students want to go home to start companies… only a few years ago, almost all would have preferred to stay.

But there is a movement to create a startup visa. Championed by Vivek Wadwha and publicized at http://www.startupvisa.com, there is legislation in Congress to issue new EB-6 work visas to entrepreneurs who can demonstrate traction with angel or venture capital investors.

The bill isn’t perfect. There’s an annual cap on the number of EB-6 visas. And the visas are time-limited, unlike green cards. But it’s a start.

It’s a cliché to say that “the United States was built by immigrants.” It’s also true. We have the world’s best graduate schools and research institutions; other countries are catching up, but we started from far ahead. We have a history of risk-taking, of capital fluidity, and of tolerance of failure that has made the U.S. the best place in the world to start a company. Other countries are catching up here, too, but our culture and history give us an edge. Even with our current financial woes, I believe that we’re still the entrepreneurial Mecca for the world.

But we have to make sure that we attract the best, brightest, and most innovative entrepreneurs, whether they were born here or not. The Startup Visa Act would be a huge step in the right direction.

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