Insights November 2010

The Spinoff (Part 2) – Anti-Innovation Awards

Neil Seeman

I’m at cocktail hour for an ‘innovation reception’ of researchers and entrepreneur types trying to seduce venture capitalists. Or so I thought. As I mingled, I saw two solitudes: entrepreneurs (thin and tired) and VCs (well-fed and in suits, huddling by the bar, laughing boisterously).

The first entrepreneur I met was a woman from Russia (in Canada nine months). Her English was poor. Above the cocktail din, she tried to explain to me what her company did. All I really understood was that she had a doctorate: The letters, PhD, were italicized and elevated on her business card. After twice struggling to convey what product she was trying to launch, she told me to “just look at her website.” (I did so, the next day, and got a ‘500 error’, telling me the site was broken).

Next I met another young Russian, also with a PhD (and flawless English), in Canada by way of America after souring on Chicago. She told me: “What a bore: there’s no money here tonight.” I said, “What do you think? This is Canada, there’s no real money here.” (‘Real money’ in entrepreneur lingo means high-risk ‘angel’ or ‘super-angel’ money).

“You must be American,” she laughed. “No, actually, I just don’t do passive aggressive well.” She was in green technology. Funny: everyone is suddenly in green technology these days, it seems.

I asked her why she was there. “It’s a lottery. You never know,” she said. I told her I was there because I’m writing a book on how to spin off commercial healthcare companies from universities, hospitals, and non-profits. Her answer: “tell government to get out of the way.” I said I’d heard that before.

I then fell into conversation with one young eco-entrepreneur. He’d been “working for the man” at a large organization and then quit in order to roll out a Web business to help other eco-entrepreneurs collaborate online. When I described my book, he told me “it’s the same people at these things every time – and there’s no real money here.” “Yes, I’d heard that. So why are you here?” I asked him. “I’m here because our angel told us we should check this out. I can’t afford to annoy him.”

Deep into my conversation with the eco-entrepreneur, a man on a crackly microphone announced the “winners” of the innovation award. The cocktail banter didn’t ebb. Nobody clapped. I asked another entrepreneur why nobody seemed to care. “The winners are pre-ordained. Every year there’s one or two VC poster kids; everybody loves them…until they don’t. It sucks to win the award because then you have to pay homage to the frat boy VCs, who enjoy fat salaries and expenses guaranteed by creaming management fees every year off a fund regardless of company performance.”

The winners didn’t even bother showing up. They would be fêted at a larger ‘innovation’ event later.

The logos of the media sponsors and the VCs hosting the event were on prominent display. The media got their story; the VCs won a photo-op to chest-thump about how they inspire ‘innovation’. Walking outside I met another entrepreneur-PhD, weirdly, also from Russia. He was angry. “Nothing about this kind of event is good,” he said. If VCs really wanted to help entrepreneurs, he told me, they would help his immigrant friends settle into Canada by financially supporting social services for new immigrants.

“How might government help with seed capital?” I asked. “I was born a Soviet,” he told me. “I know: government doesn’t help entrepreneurs.” I’d heard that before, too.

On the walk to the hotel I calculated 100 people were at the schmooze. Everyone missed dinner with their families to attend. No deals landed. Assuming the average person’s time there could be billed out at $400/ hour, that’s $120,000 (three hours time) plus the cost of event hosting ($30,000) = $150,000. I figure that’s enough to pay for an elite course in economics 101 for all attendees.

I’m rusty but I recall that economics 101 teaches that everyone should benefit from a decent financial transaction, which includes the giving of one’s time. I benefited from the stories I heard. It dawned on me that everyone benefited – media, VCs, the bar owner and staff – except the entrepreneurs.

About the Author(s)

Longwoods essayist Neil Seeman, Director of the Health Strategy Innovation Cell at Massey College, is co-author of the forthcoming XXL: Obesity and the Limits of Shame and is working on a book about commercializing research.


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