The Obama Administration just successfully passed important small business legislation, for example, that has no value at all for tech startups. This probably shouldn’t surprise us: former President George W. Bush was clueless about this stuff, too.The right wing wingnuts will be outraged because Cringely's solution requires "more government". But it is sensible. It is a way to get money into the hands of people who will do more than stuff it under their mattress (like the Republican death march to extend the Bush tax cuts for the ultra wealthy).
The good news is that none of this really matters a lot: tech startups will continue to happen in great numbers no matter what Congress and the White House do. The bad news is neither institution would know a tech startup if they saw it and there probably are ways that government could help but won’t.
The new small business legislation intended to support startups is based entirely on debt — getting banks to lend money to small companies. But the only kind of debt that most tech startups know is credit card debt. Little tech companies grow by selling equity, not borrowing money. Short-term debt goes on plastic at 18 or 23 percent because no bank has — or will — lend to real tech startups in any significant amount.
They’ll finance new Burger King franchises, but lend money for electric cars or new kinds of data storage or — shudder — software? Forget about it.
Presidents Obama and Bush didn’t know this, Fed chairman Bernanke doesn’t know it, nor does Treasury secretary Geithner. None of these men have a minute’s experience with tech startups, yet our economy is almost entirely dependent on those startups for real recovery.
So since these distinguished bozos don’t know what to do, I’ll just throw out a couple ideas I came up with this summer on those long drives from town-to-town with the kids and Mary Alyce asleep in the back of the RV.
You've got to read Cringely's solution. It is a bit wacky, but strange times call for strange solutions. It is worth a try!