Michael Mandel - chief economist at BusinessWeek

Mr. Mandel's talk was more informal - he spoke from notes instead of slides. However it was highly engaging, provocative, and thought-provoking (and was one of the best talks of the day). Here are my rough notes:

trying to give the larger economic context around startups

u.s. economy today - mature economy, filled with big companies, that don't want their lives disrupted. these executives talk about innovation, know they need it, but at the same time- it makes their skin crawl - innovation is too unpredictible, too chaotic

conventional economics is uncomfortable with the idea of innovation as well. 50% of economic growth is from innovation. Few economists take this into account.

economists view innovation as an unnatural act - creating something from nothing is alchemy

economic statistics are terrible for tracking innovation. example - talk is that R&D is lifeblood of economies - either shows up as consumption, or doesn't show up at all.

facts that you need to know:

• other countries have higher saving rates then U.S.
  
• other countries have access to same technologies
  
• US has almost unique ability to provide positive environments to startups
  
• startups are reason why U.S. economy is still competitive, and hasn't fallen off the map

3 reasons why the U.S. has been great for startups:

• encourage people to take chances
  
• reward people well if they succeed
  
• allow business that are not succeeding to go under - very important, free's peoples talents to go to the next thing
  

role of VCs - partly what they do is give out money, what they also do is wrest control away from founders who have good ideas, but don't know how to manage their business.

economic context - we live in a global world (India & China). these are great success stories - India problem is lack of infrastructure. China is in a boom phase, where everything comes easy. we really won't know how competitive China is until they have to deal with a bust. we don't know how big the bust is going to be -- the chinese government restricts the flow of information.

been at business week since 1989 - very hard to cover technology companies, hard to see what companies will work, what the next big innovation is going to be

big economic fears going forward - not worried about sub-prime lending, not worried about trade or budget deficits, not worried about social security or medicare.
- worried about slowdown in productivity growth the most.

1. what would it take to get faster innovation? need more basic R&D (government)
2. political system where government was really in favor of innovation. gov. can't innovate, but can stop it

michael_mandel@businessweek.com - encourages people to e-mail him (he will respond), also has a blog

Q&A:

I asked a question about Sarbanes-Oxley - Mr. Mandel's response was that initially (at his first Startup School talk), he was somewhat opposed to Sarbanes Oxley, but more recently, his opinion has changed - in light of the recent stock option back dating scandal(s). It seems like the issues around SOX aren't necessarily black and white.

new companies are explorations - go out and figure out if something is true or not. adding new information to the world - that is not a commodity.

you can't fight reality. china has gone from producing 1m college grads a year to 4m in a very short time.

smallbiz - offshoot of business week for giving advice to small businesses.