Presentation by William J Holstein, author of the The Next American Economy, for the NERETA Job Creation Summit, Scranton, PA, June 2017.

1. A U T H O R O F W H Y G M M A T T E R S
BLUEPRINT FOR A REAL RECOVERY
WILLIAM J. HOLSTEIN
THE
NEXT
AMERICAN
ECONOMY
Creating The Next
American Economy
WilliamJHolstein.com
How American Cities, States, and
Regions Create Technology Clusters
NERETA Job Creation Summit
June 14-15, 2017
Scranton, PA
Presentation available on
slideshare.net
Search for:
Holstein NERETA

2. OCT. 19,1992

3. WHAT IS AN IDEA FACTORY?
It can be a university, research institute, large
hospital, national weapons laboratory or a large
private sector company.
WilliamJHolstein.com

4. WHAT IS AN IDEA FACTORY?
It is characterized by:
‣ Sustained Interactions
‣ Both Formal and Informal
Between:
‣ Different disciplines
‣ Different cultures, nationalities
With A Mix of Basic and Applied Research
Mostly Funded by Government and Corporations
WilliamJHolstein.com

5. HOW DO IDEAS LEAVE THE FACTORY?
The key is the technology licensing and patenting
office.
‣ Under what terms does the office allow
development of a technology?
‣ Does it facilitate robust exchange of ideas
between "inside" and "outside?"
‣ What resources does it possess?
WilliamJHolstein.com

6. 5 STAGES OF THE
COMMERCIALIZATION ECOSYSTEM

7. STAGE 1
START UP
UNIVERSITY
SETTING
FINANCING
TEAM
SCIENTISTS&
RESEARCHERS
ONLY
WilliamJHolstein.com
GOV’T
LARGE CO’S

8. STAGE 1 STAGE 2
START UP DEVELOPMENT
UNIVERSITY INCUBATOR/
HALFWAY
HOUSE
SETTING
FINANCING
TEAM
SCIENTISTS&
RESEARCHERS
ONLY
TEAM GROWS:
- MARKETING
- FINANCE
OTHER KEY INPUTS:
- MENTORING
- PEER NETWORKING
- SKILLED LABOR
- NETWORKING MECHANISMS
WilliamJHolstein.com
GOV’T
LARGE CO’S
SBA
ANGELS
FOUNDATIONS

9. INCUBATORS
There are more than 1,000 incubators in the U.S.
Why are they not more effective?
‣ Funding is short-term and dependent on
governors, mayors, and chambers of commerce.
‣ Income streams from rentals to start-ups is so
important they do not encourage the companies
to leave.
‣ They do not establish themselves at the heart of
a technology cluster.
WilliamJHolstein.com

10. CAN GOVERNMENTS HELP FINANCE
STARTUPS?
States may create funds, such as the Texas
Enterprise Fund, but governments should not
manage the funds directly.
‣ That often leads to charges that political
or personal considerations played a role
in who gets a grant or investment.
‣ It's best if a university entity, such as the
University of Texas' IC2 Institute, makes the
judgments.
WilliamJHolstein.com

11. STAGE 1 STAGE 2 STAGE 3
START UP DEVELOPMENT MARKET
FACING
UNIVERSITY INCUBATOR
/ HALFWAY
HOUSE
OFFICE
SETTING
FINANCING
TEAM
SCIENTISTS&
RESEARCHERS
ONLY
TEAM GROWS:
- MARKETING
- FINANCE
PROFESSIONAL
CEO MAY BE
REQUIRED
OTHER KEY INPUTS:
- MENTORING
- PEER NETWORKING
- SKILLED LABOR
- NETWORKING MECHANISMS
WilliamJHolstein.com
GOV’T
LARGE CO’S
SBA
VC FUNDING
ANGELS
FOUNDATIONS

12. STAGE 1 STAGE 2 STAGE 3 STAGE 4
START UP DEVELOPMENT MARKET
FACING
VALLEY OF
DEATH
UNIVERSITY INCUBATOR
/ HALFWAY
HOUSE
OFFICE
SETTING
FINANCING
TEAM
SCIENTISTS&
RESEARCHERS
ONLY
TEAM GROWS:
- MARKETING
- FINANCE
PROFESSIONAL
CEO MAY BE
REQUIRED
CEO + FULL
FINANCIAL
TEAM
- MANUF.
- LOGISTICS
- SALES
OTHER KEY INPUTS:
- MENTORING
- INCUBATORS
- PEER NETWORKING
- NETWORKING MECHANISMS
WilliamJHolstein.com
GOV’T
LARGE CO’S
SBA
VC FUNDING
ANGELS
FOUNDATIONS

13. STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5
START UP DEVELOPMENT MARKET
FACING
VALLEY OF
DEATH
FULLY
COMMERCIALIZED
UNIVERSITY INCUBATOR
/ HALFWAY
HOUSE
OFFICE
SETTING
FINANCING
GOV’T
LARGE CO’S
SBA
VC FUNDING
TEAM
SCIENTISTS&
RESEARCHERS
ONLY
TEAM GROWS:
- MARKETING
- FINANCE
PROFESSIONAL
CEO MAY BE
REQUIRED
CEO + FULL
FINANCIAL
TEAM
- MANUF.
- LOGISTICS
- SALES
OTHER KEY INPUTS:
- MENTORING
- INCUBATORS
- PEER NETWORKING
- NETWORKING MECHANISMS
WilliamJHolstein.com
ANGELS
FOUNDATIONS

14. STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5
START UP DEVELOPMENT MARKET
FACING
VALLEY OF
DEATH
FULLY
COMMERCIALIZED
UNIVERSITY INCUBATOR
/ HALFWAY
HOUSE
OFFICE
SETTING
FINANCING
GOV’T
LARGE CO’S
SBA
VC FUNDING
TEAM
SCIENTISTS&
RESEARCHERS
ONLY
TEAM GROWS:
- MARKETING
- FINANCE
PROFESSIONAL
CEO MAY BE
REQUIRED
CEO + FULL
FINANCIAL
TEAM
- MANUF.
- LOGISTICS
- SALES
OTHER KEY INPUTS:
- MENTORING
- INCUBATORS
- PEER NETWORKING
- NETWORKING MECHANISMS
WilliamJHolstein.com
ANGELS
FOUNDATIONS
WHERE ARE THE GAPS???

15. ‣ Absence of venture
capital for early stage
companies.
‣ Mechanisms for
introducing Ph.D.
would-be
entrepreneurs to
MBA-trained corporate
executives.
MOST COMMON GAPS
WilliamJHolstein.com
http://www.truceinc.com/
‣ Difficulty in finding right mix of skills to create
core management team.

16. MOST COMMON OVERLAPS
If a state or region has too many competing
institutions…and too much institutional rigidity…
the result is confusion for end-users.
Resources are not properly focused…no one
program achieves scale.
WilliamJHolstein.com

17. MOST COMMON OVERLAPS
KEY QUESTIONS:
‣ Do government agencies,
political leaders,
universities, institutes,
innovation centers and the
private sector have broad
agreement on a strategic
direction?
‣ …and who does what?
WilliamJHolstein.com
http://www.medicine.usask.ca/family/

18. THE CHALLENGE OF SCALING
WilliamJHolstein.com
The real gains from a public policy point of
view of having start-ups and small enterprises
come when those companies are able to
scale.
An often-stated goal for these "gazelles" is to
encourage them to grow to $1 billion in
annual sales.
The biggest limitation:
access to workers with the right skills.

19. TRAINING / RETRAINING ECOSYSTEM

20. Workers pay to take appropriate classes
Support from:
- Fed / State / Local
- Foundations
- Student Loans
Companies require specific skills, advise community
colleges on courses, provide equipment and instructors
WilliamJHolstein.com
COMMUNITY/TECHNICAL
COLLEGE SYSTEM
Output
Well-trained
workers for jobs
that exist today
and in the future

21. DOES EDUCATION FEED THE CLUSTER?
‣ Are community &
technical colleges
aligned with their
region’s technology-
based clusters?
‣ Are they
anticipating their
needs in 5-10
years?
WilliamJHolstein.com
Good fortunes
for your
region lie
ahead
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22. WilliamJHolstein.com
Are workforce development people at the
table when universities, governmental entities
and the private sector discuss the industries of
the future?
Are economic development people trying to
develop a healthier regional ecosystem or are
they just chasing deals with incentives?
Do university educators understand that their
role should extend beyond the edge of the
campus?

23. CONCLUSIONS
WilliamJHolstein.com
Americans are the best in the world in creating
technology-based ecosystems, or "soft
infrastructures."
They are key to our competitiveness and to our
response to Asian powerhouses.
But no single entity is in charge of them.

24. CONCLUSIONS
WilliamJHolstein.com
They require that participants build a
consensus...and define their roles as
broadly as possible.
The culture they establish will determine
whether a cluster succeeds or fails.

25. A U T H O R O F W H Y G M M A T T E R S
BLUEPRINT FOR A REAL RECOVERY
WILLIAM J. HOLSTEIN
THE
NEXT
AMERICAN
ECONOMY
Available in print and
e-reader formats today.
WilliamJHolstein.com