Many pundits and economists observe that we are in the midst of the greatest financial crisis since the Great Depression. What they haven’t fully yet processed is that we are in the midst of the greatest wave of government intervention in business since the New Deal. Across massive, diverse industries such as energy, health care and life sciences, financial services and automotive — to name just a few — we are embarking on arguably the most business-focused, activist US government in history.
I moderated a very timely panel yesterday at the MIT VC Conference on the new role of government in business in general, and entrepreneurship in particular. MIT is one of the central cradles of American innovation and entrepreneurship. The fact that they asked me to focus on this theme is clearly a signal that entrepreneurs are focused on better understanding the New World Order of government as the “third wheel” in the VC-entrepreneur equation.
Joining me on the panel were a group of four very talented leaders whose careers have spanned both sectors. In effect, these four were uniquely experienced at “seeing both sides” of the private sector-public sector partnership:
- Dan O’Connell, Massachusetts Secretary of Economy and Housing under Governor Patrick.
- Ranch Kimball, former Massachusetts Secretary of Economy and Housing under Governor Romney and now CEO of the Joslin Diabetes Center.
- Phil Giudice, Massachusetts Commissioner of Energy and former SVP at EnerNOC.
- Paul Afonso, former chairman of the Department of Telecommunications and Energy under Governor Romney and now a partner at Brown Rudnick.
A few themes/observations that were shared:
- Dan O’Connell observed that, at least in Massachusetts, when government leaders say, “We’re from the government and we’re here to help,” it’s not the old Ronald Reagan punchline. Instead, it’s an earnest attempt at striking a helpful partnership with the Patrick administration — led by a governor who himself was a former business leader. He also pointed out that business leaders need to appreciate that government’s involvement in business has a different goal: local job creation, not capital return, requiring some compromises on both sides when embarking on collaboration.
- Phil Giudice observed that from his recent visits to Washington DC this last week, it is clear that the Obama administration is preparing for a massive, long-term, strategic effort around energy independence from which billions of dollars will flow. Phil led the passage in MA of a landmark Energy Bill in partnership with business leaders from the New England Clean Energy Council (Flybridge Capital is a sponsor and member of the council).
- Ranch Kimball expressed his belief that NIH funding will grow again and that MA is incredibly well positioned for the surge in private and public life sciences spending that will flow to MA, citing with pride the extraordinary talent in Massachusetts (and not just in Cambridge and Boston, Dan noted, but throughout Worcester, Lowell, Springfield and elsewhere).
- Paul Afonso observed that when business wants something out of government (a growing trend as there is more that is being “given”), they need to not just send their lobbyists with their hands out, but rather encouraged CEOs to get to know government leaders when they don’t need anything so help lay the groundwork for collaboration.
Massachusetts has pioneered many of the initiatives in teaming business and government (health care reform, life sciences and clean energy being three salient recent examples). It will be fascinating to watch the new administration embrace, copy and adapt some of these initiatives over the next few months, and perhaps take them further still.
Jeff Bussgang is a general partner with Boston-based VC firm Flybridge Capital Partners.