Aug 132015
 

The important role that Angel and seed investors play in bringing new ventures and technologies from concept to market cannot be understated.

The role that the Angel investment community can play in also bringing about real and lasting change  to many lower income people, neighborhoods and cities in the US is both real and significant.  My hope is that social and impact investors will consider another perspective  as they analyze future deals and in that process fuel a new wave of community entrepreneurial growth that will change lives and generate impressive and measurable returns – both financial and social.

INTEL Makes a Move to Close the Venture Capital Access Gap

A scan of recent blogs and news sites on the internet indicate that the issue of diversity in new venture funding has gained the attention of venture financiers.  On June 9th, Intel announced:

Intel Capital, Intel Corporation’s global investment organization, today announced the Intel Capital Diversity Fund, which will invest in technology start-ups run by women and underrepresented minorities… The largest of its kind, the fund totals approximately $125 million, and investments will cover a broad spectrum of innovative industries.

“We believe a diverse and inclusive workplace is fundamental to delivering business results,” said Intel CEO Brian Krzanich. “Our goal with this new fund is to meaningfully support a technology start-up workforce more reflective of society, and ultimately to benefit Intel and the broader economy through its success.”

The National Venture Capital Association (NCVA) has also recently announced its growing awareness for the need to expand the pool of entrepreneurs to be more inclusive of those that have been traditionally left out – without either exposure or access.

The NCVA is: the venture community’s flagship trade association. The NVCA serves as the definitive resource for venture capital data and unites its nearly 400 members through a full range of professional services.  NVCA is committed to expanding opportunities for women and men of all backgrounds to thrive in the entrepreneurial ecosystem and has a long history of working to increase diversity through public policy, research, events and collaboration. As part of that commitment, we launched the NVCA Diversity Task Force to develop a clear and measurable path to increase opportunities for women and men of diverse backgrounds to thrive in venture capital and entrepreneurship.

Impact Investing: Deal Analysts Need to Prioritize Social Change

Given the small number of  Black and Latino entrepreneurs on any list of funded ventures, we can assume that few have had to hunt for the “money” for scaling a venture and fewer have succeeded in that hunt.  Luckily, I have been successful in the hunt twice, funding two ventures. The first, a digital content development company,   “bootstrapped” with generous incentives, including investment from a Caribbean government looking to create high tech jobs for its young students.  The second, a genomics research firm, generously funded by an Angel interested in kick starting a new direction in biotech research.

As stated in prior blogs, most entrepreneurs will find it hard to get financial backing. Investors know they are in the power seat.  And there are way more sellers of ideas and venture visions out there then there are investors with ready portfolios and check books.  So investors are “pitched” frequently with concepts and business plans, some good but most probably unrealistic.

I have often heard VCs tell me that they would prefer to invest in a bad idea with a good experienced launch team then a great idea with an inexperienced team.  For many VCs and Angels, good ideas are a dime a dozen.  But a team that can move a concept through the full venture cycle,  from seed to scale to stable return and then to exit, is much harder to find.

So the caution that Angel investors’ analysts have when scanning possible deals, especially those at seed stage,  is very valid if their focus is solely on risk minimization and return maximization –  the goals for most investments and investors.

Closing the Venture Capital Access Gap

But the multi-generational disparity in capital market access for many social groups and communities across the US is well known but seldom discussed.  Lack of access to the needed funding to fuel local entrepreneurial development has left many communities without an economic infrastructure or sources of employment beyond large retail corporations looking for low wage – low skill employees.

Without an “intervention” of some type, this “access to capital market gap” will only increase.  Perhaps the INTEL initiative, described above, and the growth of “Impact Investing” will bring needed change to both the attitudes and screening process employed by Socially Conscious Angel Investors.

Impact Investors desperately need to recruit, train nurture and fund community focused social entrepreneurs to bring about real change.

On May 19, 2015, the Boston-based publisher Bibliomotion released Investing with Impact: Why Finance is a Force for Good. The book debuted as an Amazon Best Seller and received praise from luminaries including Lynn Schusterman, Frances Hesselbein, Marshall Goldsmith, Antonio Pedro dos Santos Simoes, Antony Bugg-Levine, Arianna Huffington and Pope Francis.

The Thrill of Tech

Many socially focused investors believe that extending their deal criteria beyond the need for a healthy financial return, adding some social benefit, no matter how vague,  is enough.  For many portfolio managers – a non-financial benefit of any kind is all that is needed to claim a venture is “social.”  The mere fact that social impact is now considered a metric of deal success is great progress from the way it used to be.

But what is needed is a more aggressive and intentional focus on using capital and capitalism to bring about social change and social improvement.  This is not VC funding as it is normally practiced and this is not social venturing that waits for deals to materialize and then rigorously screens them for financial return first and social impact a far off second.

Many venture firms’ new diversity initiatives are primarily focused on bringing more “diverse” entrepreneurs into the hot world of tech start-ups.   Many investors, social or otherwise, want to find the “new tech” or great new proprietary Intellectual Property (IP) or new tech tool that supposedly can become a disruptive innovation in fields like education or personal finance.

Many Socially Conscious Investors believe that we need to find more diverse candidates to compete for funding for ventures to serve well established tech markets.  But what they fail to see is that the sole focus on “tech” investing probably does not provide either the products/services or jobs that many lower income communities need.  The social impact of investments in tech maybe much less than the social impact of investments in human services companies.  But investors still love “tech.”

Please don’t get me wrong – I love tech too.  I have been a technology product developer many times, with more than 5 tech products of note in my career and working with tech since the late 80s. I admit that the thrill of a new technology start-up is a great and sometimes lucrative experience.

Impact Investors Tip:  21st Century Community Services

But moving from what is hot to what is needed to bring about social change and improvement is the jump I would like our Angels to make.  Will Socially Conscious Angel Investors embrace the concept of Impact Investing?  – Fueling  entrepreneurs that are living in (and serving) lower income communities across the country (urban and rural).  Helping these pioneers get access to the funding needed to create their ventures; create jobs for local workers and create new sustainable sources of wealth for local entrepreneurial families.

When Angels solely focus on “Tech” they are projecting their market perspective and their cultural perspective.  In lower income communities, the service industry is often more important, both as a source of steady top line revenue for local business and as a job creator for the community.  Creating local supermarkets in food deserts; creating safe, healthy and professional childcare facilities for teachers and workers; creating tech servicing companies for schools or creating much needed training centers – all deliver a social impact that improves the community while also  delivering a healthy financial return, if designed and managed by qualified entrepreneurs.

Too many community entrepreneurs searching for seed investments needed to bring a service firm to scale are screened out of consideration because their venture is low tech or no tech.  What young deal analysts working for Socially Conscious Angel Investors maybe overlooking is the fact that community entrepreneurs are offering the services that are needed for social improvement; that will generate both stable top line revenue for a young firm and jobs for the people in the community.  Maybe low tech but High Impact – Good Return.

Local service companies also create local entrepreneurs that become models for the community – especially needed for young students.  These community based companies are often more focused on training rather than requiring the already highly trained, best and brightest employees from the best schools – desired by most tech start-ups.

Skilled entrepreneurs, talented modelers,  savvy financial analysts focused on maximizing  impact first  – can make a significant and lasting  difference to so many communities across the nation and deliver a healthy but longer term return for IMPACT Investors .

Impact Investors –  look beyond tech and  provide the fuel for community entrepreneurs to create a new 21st century,  service industry in lower income communities.

 Posted by at 10:40 pm
Jul 152015
 

The issues of income inequality, race, and poverty have recently risen to national consciousness, becoming a topic of conversation for 24/7 media outlets, presidential candidates, corporate board rooms and now the hallowed halls of America’s private equity networks.

For most, the world of finance, as it is played in the high stakes game of private equity and venture investing, is very foreign. The training needed to successfully swim in the entrepreneurial shark tank is given to very few.  Successful entrepreneurs create ventures that impact markets, employ dedicated teams of people, create jobs, create tax revenue, create wealth for their employees and serve large growing markets.

Entrepreneurship as it is played out on a national level marries those with ideas that have national application to the investors that know they will get a good return if they provide the early “seed” funding to kick start a money making concept. These networks of investors connect entrepreneurs they select to both capital for growth and networks of expertise to help them build and grow quickly. If you are an entrepreneur, connect to the right investor or investor network and your business could go national overnight.

Finding funding is hard for most and nearly impossible for others

Finding a funding network is difficult for many budding entrepreneurs. For the Black and Latino entrepreneur, connections are nearly impossible. Private equity, as the name implies, comes from wealthy individuals looking for a better return on their wealth then a traditional investment would provide. These individuals are very sophisticated investors that may pool their funds together to increase their collective purchasing power. These pooled networks are a critical component of the new venture “eco-system.” Entrepreneurs unaware of the rules, protocols and expectations of these networks will be considered “risky” or not considered at all. Unfortunately Black/Latino entrepreneurs, with limited exposure, are rarely considered for investment or nearly always classified as too risky.

Entrepreneurs that attempt to take an idea from concept to market must build a team that can launch the company, product or service. The skills needed are broad, from finance to technology to marketing to service delivery. If a launch team for a new venture lacks these skills, these networked investors would think they are not ready and would simply not be interested. For the entrepreneur looking to go national, recruiting and funding the launch team generally requires investments of at least $1MM. Most in private equity funding  know that an entrepreneur’s good idea or concept is probably worthless unless there is a skilled team ready to take it to market.

Sources of “seed” capital have many people with so-called great ideas calling on them constantly. Since these very new start-ups are some of the most risky investments, the investors can be and should be very selective as to which firms they support and which ones they pass by. But what has become apparent to many that follow the rise and fall of new ventures and the flow of seed capital is the apparent lack of funding available to entrepreneurs of color. Many of these entrepreneurs are un-aware of the process, protocols, and networks needed to find the capital required for growth and scale up beyond “a good idea” and a few customers.

Entrepreneurs create tax makers

Business schools provide students with a glance inside the world of new ventures. But too few students of color are sitting in on these classes. Even with this training, until you have been in a start-up or watched one go through its stages, it is difficult to gain the understanding needed to find capital. This lack of awareness, leading to this lack of capital for entrepreneurs of color, is contributing to the perpetuation of poverty and lack of opportunity for so many. Entrepreneurs are needed in every community if the US is to rebound and create more tax makers than tax takers.

Private equity practitioners have to manage their risk carefully. For them it is easiest and safest to find new ventures within their known networks, among those that are familiar or those that have been already exposed to raising capital. Successful and prominent Blacks and Latinos have not organized their collective wealth so as to serve as a source of capital for budding entrepreneurs of color. And few private equity firms actually employ people of color and fewer are managed by people of color.

Find ways to enhance entrepreneurship in communities

But there is a new buzz among some private equity groups – as they are becoming aware of the growing lack of demographic diversity in their portfolios. CB Insights reported on the disparity in founding teams with a tragic statistic. Of those receiving venture funding only 1% are African American. Forbes reports that only 8.5% of those pitching their ventures to angels are minority entrepreneurs.   Large tech companies like Intel are taking on the lack of diversity in the entrepreneurial ranks head on. Intel announced that it has formed its own venture firm with $125M invested to fund minority tech entrepreneurs. We should all hope, for the benefit of our collective economic futures,  that the best and brightest entrepreneurs from communities that desperately need transformation and revitalization will be supported, bringing their businesses to market and creating jobs and economic wealth where it did not exist prior.  The old ways that have led to yet another example of  income inequality have to be updated – allowing new seats at a table that has been both exclusive and illusive.

Entrepreneurship, if channeled correctly, can help to bring communities out of poverty. Minority entrepreneurs are more likely to hire from their communities providing opportunities for other young entrepreneurs of color to learn by watching and participating in a start – up. We have many historical examples like Arthur G. Gaston, Madam C.J. Walker, Maggie L. Walker, Annie Malone, that clearly demonstrated how economic wealth from entrepreneurs can be used to enhance the lives of many from local communities.

Entrepreneurship is a calling for some people. Many will start their firms and struggle through the cycles of growth and scale. But when they are poised to become national, they need capital to hire the start – up team, to develop their products, to organize their companies and to legitimize themselves in the eyes of their future prospects.   There are few networks of wealth that Black and Latino entrepreneurs can call on. Few places where they can get the experience and exposure they need to swim in the shark tank. Until that changes, these communities, that are desperate for economic revitalization, will always be beholding to those from outside. It is time for private equity to catch on and catch up to the need to make more tax makers than tax takers and take the risk to aggressively recruit, train and fund ventures from qualified entrepreneurs of color.

Jun 302015
 

Education – Exposure – Employment – Entrepreneurship

Educators and non-educators are now pushing for serious and lasting education reform. At the same time, lower income boys are gunned down on a near weekly basis throughout the country. The most horrific shootings, often caught on video, are shown over and over on 24 hour news shows, boosting ratings. Poverty has impact. It creates a fertile ground in this 24/7 world for the hate mongers to recruit the disaffected, the forgotten and the lost, all hoping to find a community of like minded and often dangerous companions and supporters. What happens when the disaffected become the majority?

The urban inner city “gangs,” well known to most, have morphed, or better yet spread from the streets of the inner cities to the virtual online world accessible to nearly every child.

How many more tragedies do we have to see before we recognize what can happen when masses of young men are left out of the economic mainstream? Their receptivity to calls for glory from nefarious operatives, planting seeds of hate, increases dramatically when these young men lose hope and can not see themselves EVER participating in the mainstream economic future of the country. These lost young men come in all shades and come from all regions. Most are poor. Most have not been served well by public education. Many are facing challenges unknown to those setting policy; enacting legislation; creating new education ventures or offering well researched theories of change and school reform.

Many of the education reform movements over the past few years required massive increases in spending on new curriculum, new teacher training, or new facilities. But few investments in public education (public or philanthropic) actually flow to those most in need of hope and economic exposure at a time when they are eager to participate. The fact is, per pupil tuition and grant funds seldom flow to the child or their community outside of the school they attend. Many readers might refute this argument, saying that public schools across the country are funded by tuition dollars allocated per child from government (federal, state and municipal) to school districts. But the lower income child (and most parents) are so far removed from school funding and budgeting, they do not recognize the connection between their child’s attendance at a school and the school’s operational revenue.  The per pupil tuition and grant money flow supports a massive educational bureaucracy. There are very few, if any,  education lobbyists today advocating to divert some small portion of funds to create jobs for lower income public school children.

Motivation for Academic Persistence

In many of the neighborhoods that are served by dysfunctional and poor performing schools, jobs for young and old are nearly impossible to find. And if a job is available it may be working within a chain store of some type, often at the counter or cash register, gaining skills with limited applicability outside of the customer facing, low paying food service or retail trade. Not to say these are not good jobs. They are. But they often do not provide a living wage and they are not careers.  When parents, grandparents and children are all vying for the same meager opportunities, the young can directly and daily see a future for themselves that does not provide much motivation.

For far too many students stuck in persistently depressed neighborhoods, their life experience and the experience of those around them shape their future vision. What educators and policy makers don’t seem to understand is that our lower income children are actually acting as “rationale agents” as defined in economics. They are making choices based on what they know, what they have been told and more importantly what they have experienced.  Perhaps their level of engagement (or more likely disengagement)  in school  is directly related to what they see (or more likely do not see)  as their future.

In neighborhoods where parents have never been to college; where career jobs are impossible to find; where low income dead end job openings result in block long lines of applicants; where the school and the jail are among the largest and well known local employers; where unemployment is the norm and where hopelessness has become pervasive – what future vision and motivation should we expect?  Motivation enough to propel a child forward, pursuing the rigor and challenge of algebra, geometry, or uncovering the nuances of the plot line of The Great Gatsby?   They ask – to what end?   Why learn to swim when there is no water around?

Rationale Agents

Our children, are “rationale agents.” If we have taken away their hope at a young age, what choices will they make today about their future. If day-to-day survival is a battle in which they have to take up arms to feel safe, how much of a future do they see? If the dignity of life has been stripped away because of family subjugation to the welfare system how much respect would they have for others and themselves. If the media, with its glorified materialism, continuously makes them feel like a second or third class citizen because of their daily reality, how do they find and sustain basic human dignity and self respect?

The elephant in the room in education reform is poverty and the culture that it creates. A culture that may vary by region, city or neighborhood.   But at the core of this national poverty culture is the fact that our kids are losing the hope and drive that comes from striving for the so-called “American Dream.” Young men are more practical these days. They know early on what the “deal” really is. They see it in their homes as their parents often struggle, living with such dire and debilitating financial insecurity that creates households dealing with ongoing stress and mental humiliation.

Too much of this so-called education reform is simply funneling money from government to district/school budgets, to curriculum publishers, to national education vendors that have created business models around the lucrative flow of seemingly recession proof education dollars.  Our children, especially those from lower income communities, need jobs. They need to experience work. They need to understand, in the short term, what the impact of education can be. They need to see role models of educational success in their communities. They need to see local young community entrepreneurs creating jobs in the neighborhood for their brothers, sisters, fathers and mothers.

Day-to-day reality or future vision

Getting an education is hard work. It takes persistence. The motivation to pursue an education is often fueled by a compelling future vision. Exposing kids early to the benefits and challenges of the world of work will prepare them to become participants. Expanding employment opportunities for lower income children is critical. With education and exposure we can implant the seeds of hope that will push a young man to study and study hard. But if these capable young men are surrounded by others with a similar dream, unfortunately meeting to compare horror stories and frustrations on the unemployment or welfare line, can we blame them for becoming discouraged? When discouragement is the norm, the community suffers irreparable damage to its psyche,  self esteem and its hopes for the future.

Those few lower income kids that do succeed educationally often leave the community, taking a career focused job with a large stable employer. A choice that is both rationale and economically sound. But that means the best and brightest leave the community rather than focusing on finding ways to create wealth and jobs for themselves and their community as entrepreneurs.

We should expand our initiatives well beyond education reform. What is needed is economic revitalization for those communities that have been intentionally and persistently, neglected and forgotten.  The current future where hopelessness dominates has to be re-cast into one in which all can participate in the challenge of building and progressing toward a dream for their tomorrow. I propose that we focus on the 4Es which will provide a future vision of hope to many lower income children. We already have too many tax takers in our society. What we need is a new focus on the development of tax makers.

Education – Exposure – Employment – Entrepreneurship

Mar 122013
 

2013 is a time to reflect on the learnings of the last 3 years. We continued the research started in 2010 into public education in the United States. At the time of the last blog entry we were waist high in data and data sets, reviewing results from state standardized tests across the country and other sources. Unfortunately the findings were shocking. The data told an obvious story of generations of children that would be left behind and relegated to a lower income existence of dependence and vulnerability. The most surprising finding from this deep dive into data was how obvious it was that many K- 12 public education systems were systematically failing the majority of lower income children. This silent and well known fact within education was unspoken in many circles, taken for granted as if silently stating “that’s just the way it is.”

Data, comes to the analyst in computer files filled with columns of numbers. The numbers have to be interpreted by the analyst or researchers. We review those numbers and with our experience and knowledge give some assessment and insight into what the numbers mean and often we recommend changes to make the numbers better. This process of analysis, can be done far from any school, without the face to face communication with any teacher or the insight one gets about a school’s capacity to teach from watching the lunch program or the the interaction of the children. But I realized that to really study public education you have to get beyond the numbers and into the schools, districts and organizations that are part of the public educational industrial complex.

To that end we have:

  • worked as a Trustee with a charter school that was about to be closed for poor performance and that has turned around to become a top performing school
  • submitted a charter school application that was reviewed but not approved
  • launched a new and innovative tool for teachers, school adminsitrators and districts used by many states in 2012 that provides student feedback on their classroom experience
  • become a member of an Advisory Board for the State Board of Education
  • initiated talks with district leaders to help in the turn around of failing schools
  • traversed the college application and acceptance process for my daughter

These efforts, in the day to day work of transforming education go well beyond the numbers to provide real insight into the massive challenges that confront the nation.  Still an outsider to the field of education, I consider this exploration – research – with the objective to first understand the field as much as possible and then to find ways to bring about step wise change.

At many times during this journey, what was most discouraging is the realization that the current system is so broken, so massive, so entrenched, so resistant to change – that the US may be doomed to become a second rate power with a high price but low skill work force.  To  snap back from this gloomy outlook one must recognize that the resilience of the American People, if mobilized to action, is probably the greatest force for change.  We will write more about findings in the coming months and discuss what we have found that seems to be working and provide recommendations for step wise change.

 

Oct 042010
 

This weekend “Waiting for Superman” opened in the Boston area in two theaters.  The movie is a documentary that follows several children as they try to navigate the public education system in search of a school that will provide them with the best opportunity for their future.  Although the movie seemed a bit too one-sided in its critique of traditional public schools, the stories portrayed are representative of many lives negatively impacted by a failing public education system.    But what seems  to be the most compelling message is the fact that the United States is rapidly slipping further away from its  role as a global leader. 

The crisis in America’s public-school system, which among developed countries ranks 21st in science and 25th in math, is methodically laid out in Davis Guggenheim’s “Waiting for Superman.”  The complexity of the failing system is also exposed and the key message is that the students in many schools are irrelevant to the bureaucracies that exist to maintain the system’s economic status quo.  Unfortunately that status quo does not require students to learn. They only have to be warm bodies occasionally occupying a school chair for the money to flow. 

In the US 10% of our high schools can be classified as “drop out factories,”  a high school where no more than 60 percent of the students who start as freshmen make it to their senior year.  The highest concentration of dropout factories is in large cities or high-poverty rural areas in the South and Southwest. Most have high proportions of minority students.   These factories are a breeding ground for poverty, crime and the disenfranchised.  What the nation as a whole seems to forget is that what we ignore today we will have to face in crisis tomorrow.  The disenfranchised are the ones that terrorists recruit, gangs enroll and prison systems house.  But they return to the streets angry, educated in the sub-culture of crime, marked with a record that precludes meaningful employment, with little prospect for their future and unfortunately finding their prey in the neighborhoods that choose to ignore the problem rather than face it head on.

Education reform, a phrase that hides the magnitude of the challenge, was a central theme in the recent Washington D.C. mayoral election.  The nation’s capital has one of the worst school systems in the country but spends more per students than nearly every other district nationally.  The money flows. Parents in the district send their kids to schools that persistently produce failing results.  A new chancellor tries to make radical change with the blessing of then Mayor Fenty, closing failing schools and removing some of the rampant incompetence so evident by the results. 

But the D.C. reformist, challenging an intransigent system and neighborhoods  seemingly unaware of the negative impact of the failing education system, were  swept out of power by the ballot.  The status quo remains, winning the day, ensuring the economic base of the failed education system continues even if the kids are left behind.  

The major flaw of the movie “Waiting for Superman” is the lack of solutions considered or discussed.  There are school districts across the country that are making changes, reforming from within, re-aligning the status quo to focus on student performance.

In Massachusetts, one of the largest high schools  has embarked on a path of reform that has shown progress.  Brockton High School re-aligned its teachers, union and administrators to focus on student performance.  It transformed its culture from one in which the status quo of lowered expectations was replaced by a focus on accelerating achievement.  The development of an achievement culture is no small feat for a high school with more than 4,000 students.  But it can be done.  “Waiting for Superman” gave us a glimpse of yet another inconvenient truth of our society.  However, on the ground day-to-day leadership, the likes of Brockton High School,  give us hope that real people – teachers, union leaders, administrators, parents and students – that face the reality of reform can make a difference without waiting for some mythic super – hero that will never come.

New York Times Article on Brockton High School

Waiting for Superman Trailer

 Posted by at 7:53 am
Sep 062010
 

The United States is facing a crisis of confidence. The fundamental shifts and re-alignment of the economic base of the United States and the world are wreaking havoc on businesses, markets and governments. Uncertainty is very uncomfortable. But as a nation we have lived through uncertainty before. US manufacturers rallied in the days of World War II. As a nation, with a unified vision, we were the major player, bringing a world in chaos back to order. In the 60’s the resolve of a President and the brilliance of American engineering demonstrated that the moon was within reach. The communications systems that link the world today stem from American innovations. Microsoft, Apple, Oracle, Google, Ebay all got their start in the United States. We are a country of innovators and entrepreneurs. What the United States desperately needs now is the innovative drive and entrepreneurial spirit which is the root of American culture.

Consumer demand is based on an implicit household balance sheet and income statement. Americans in their wisdom are saving more because they are looking out at an economic horizon where joblessness may remain high, credit will be much tighter, declining housing prices have reduced perceived wealth and the value of traditional investments have dropped and continue to decline. Over leveraged consumers are prudently cleaning up their balance sheets, paying off debt, curtailing spending and in that process exacerbating the contraction in the US economy. The result is persistent weakness in consumer demand which will not fuel a recovery any time soon. Propping up the economy through supports that are focused on rebuilding this declining consumer demand may be short sighted.

The small business that employs 5 today could possibly employ 10 tomorrow with the right mix of opportunity, human capital and financial supports. The small business that employs 50 could employ 100 if business to business demand increased, the small business management team is prepared for growth and the dollars to finance operational expansion are available. It is this notion of “stepwise” small business growth that is needed now in the United States. The traditional new business growth curve has to be rethought. As a nation we cannot settle for slow small business growth. We need jobs and we need them now! Viable, scalable, small businesses must be identified and “pushed” beyond the traditional small business development growth curve toward a new Stepwise small business growth curve.

Small business owners are not optimistic about the future of the economy or their own business prospects. Many feel as if they have been left out of the largess distributed during this period of economic uncertainty. Small business owners were hit hard by the credit crunch. As demand declined, the need for financing increased to support operations during a time of business downsizing. Lenders were more selective, and the small businessperson became a casualty of government neglect as large banks were bailed out allowing Wall Street to return to its culture of excess. Unemployment benefits had no impact on small business owners, even if their business activity stalled completely. The result of the focus on unemployment payments gave the job seekers life supports while the job makers had to fend for themselves.

Climbing out of this economic downturn will require the United States to regain its global competitiveness. The US consumer is tapped out. We must find ways to open doors to the global economy. Regaining global competitiveness must be the priority. Investments in education, research, and global outreach are needed. Large multinational businesses are able to play the global financial markets to ensure that they maximize the return on their global investments. Local businesses support local economies. Local businesses with global reach will build jobs.

Hopefully, The government will soon recognize that American entrepreneurial drive, American innovation, and the risk taking nature of America’s small business community will be the basis for the economy’s recovery. Tax policies will take much time to cycle through to jobs. Investments solely in infrastructure fund old world sectors focused on US demand. Small business needs access to global demand, similar financial supports given to auto makers and banks and a White House that can inspire a new entrepreneurial wave calling forth the pent up talent of America’s young, America’s entrepreneurs and America’s small business owners. See below.

 Posted by at 7:33 am
Aug 012010
 

More than 18 months ago I started a journey, driven by curiosity and a desire to make a difference in the lives of children in the US. That led to an intense and often times obsessive focus on gaining a researcher’s understanding of a then unfamiliar “market” called public education. What I found in the process was most surprising.

I had little understanding of the complexity of the public education system before I began. As a layman, outside of the field, like many people I knew that schools existed to educate children and teachers were the professionals we called upon to do that work. I also knew that many children in the system were not being served well, ending up as casualties by dropping out or by getting an education that neither prepared them for college or career.

In my private sector focused daily existence these issues seemed distant and far removed from the high impact profit world I was accustomed to. This convenient blindness is one of the root causes for the current state of our schools. After 18 months, I now clearly see that the failure of public education in the United States is a major national security issue.

The United States is falling behind. Many would prefer to stick their heads in the sand, wave their flags and wear their USA T-shirts made in China. There are others that have seen the writing on the wall and have adopted a style of selfish unpatriotic greed which has resulted in job loss to India, China and any other location where profit can be maximized even if it accelerates this country’s decline.

The US Government has been complicit, in some instances offering outright cooperation to economic competitors and in other instances demonstrating such gross incompetence that one might assume it to be purposeful in its intent. Not only are we shipping jobs overseas, we are allowing workers from other nations to flow into the country illegally to take jobs that have been knowingly offered by major US corporations looking to keep their wage rates low. On the other hand the best and brightest among us find the Wall Street lure of fast money and power too strong to ignore – so we lose much of the talent that could transform our nation to a culture of greed and excess.

At the same time we are building schools in Iraq, winning the hearts and minds of the people of Afghanistan, and providing aid all around the globe, we have generations of school children that have not learned basic skills like reading and simple arithmetic. A number of these “failed” kids will graduate to the United States penal system, the largest by far (per capita) of any Western society. Many of these children, left behind academically, will become expert at extracting welfare dollars from a system of supports that is unintentionally enslaving rather than liberating lives. And of course there is the population that will simply self destruct as they fend for their daily survival on urban streets where there is a necessity to pack more fire power than the local police.

Our decline is not only coming from our urban districts. Schools in many affluent communities are behind as well. Many college professors are openly complaining about the lack of preparation, academically and socially, of high school students as they enter college. The result – lack of critical thinking skills, combined with an undeserved sense of entitlement that often results in mental laziness within college communities where the peer pressure of the party culture dominates. Of course most international students are here focused on a purpose – to extract the best education and return to build their lives in their home countries – our economic competitors. There are more honors students in China and India than the total population of the United States. We are losing our global differentiation and our willingness to work together for a national vision.

In this election cycle we will find the same politicians that were complicit in bringing about this decline, using the tools of deception, marketing, sales and statistics to divert the attentions of the electorate from the reality of their future. The “pundits and prognosticators” in their continued efforts to expand their audience will whip up false debates that will divide, distract and deter us from making any national progress. Hidden behind the campaign slogans and direct mail solicitations are politicians that call themselves Republicans or Democrats, sheepishly aligning themselves to party while sacrificing the future of the country.

A national investment in Education is one way out of this quagmire. We must re-arm our electorate with the skills they need to become globally competitive again. We must re-arm our electorate with the knowledge they need so they can become more informed about their future and the future of this country. We must re-tool an education system that has fallen into the hands of political agendas, power brokers and politicians focused on the next election cycle while leaving the children behind.

Our geo-political competitors, with much larger populations, are educating their children to become the world’s future doctors, lawyers, scientists and teachers. Our American kids are becoming obese, dropping out, without skills they can use to contribute to themselves or the tax base needed to support America’s aging population.

Lack of education, few opportunities, a growing underclass, large prison population, and a growing chasm between the haves and have nots – this is a historical recipe that we have seen many times before. That is why I believe that education is fast becoming The National Security issue of our time.

Although this phase of my research is done, I intend to detail specific findings in a series of upcoming blog articles. Comments are welcomed.

 Posted by at 4:59 pm
May 252010
 

Does equal opportunity for all mean that we are all the same?  Does it mean that high school students share the same goals?  Travel the same academic path? Have the same abilities and interests?  Of course not.  It is time that the debate on education reform focus on the student as an individual and not merely  an undifferentiated member of a racial, ethnic or socio-economic sub-group.

When we examine the life of any one student, we will most likely find within that story a deep and meaningful history filled with sorrow and joy, strife and struggle of some kind, as well as  set backs and opportunities. What seems to be lost from the current education debate is a discussion of the student as an individual.  The policy makers speak in broad terms about sub groups as if in a country as diverse as the United States these subgroup definitions still have real meaning.  These broad labels,  although convenient, are misleading.  They meld together in an undifferentiated classification the richness and nuance of so many distinct personalities, lifestyles and perspectives.  These 20th century labels, once important in the era when counting and quotas were used to set policy, have created a unfortunate paradigm in education that minimizes the individuality of the American student of all races, genders and cultures.

America is a great country.  A major source of that greatness comes from the diversity of the population.  But mention the term diversity and we first think about race, ethnicity, culture or gender.  We are losing sight of the diversity of individual personality in this country while at the same time focusing too much on these divisive and soon to be irrelevant broad racial, ethnic and gender labels.  Take 15 minutes and talk to a student in high school.  The conversation may reveal a child that is disinterested in education, unmotivated and struggling.  Talk to another student and you may find a child that is so future focused that they are searching for every opportunity, advancing along a self  directed path to a future they have long envisioned for themselves.  Talk to another student and they may be comfortable in school, although challenged by the work load but enjoying the academic ride not sure where it may lead.

Classifying these students by race, ethnicity or gender does not provide any insight into the best ways to reach them with the right guidance and instruction. Does it matter if the unmotivated student is White, Black, Hispanic, Gay or other?  Clearly it shouldn’t.  But unfortunately it does.  And because of this reliance on these outmoded 20th century broad labels, the education reform debaters are not discussing  the  needs of individual students.  So we create policies that attempt to close an achievement gap based on 20th century definitions of required knowledge and 20th century categorizations of students that provide no insight in how to teach or reach them.

It may be more valuable to classify students along a continuum of motivation than it would to adhere to a classification based on ethnicity.  A “Motivation Continuum” would cut across race, class, and culture.  Gaining an understanding of the underlying motivation and future vision of a student would provide key information critical to the development of strategies to engage and encourage them on  their individual educational journey.  Measuring motivation is hard.  Self reports are not precise and assessment is politically difficult.  So instead we use race, ethnicity or gender to classify students because it is easy and has become politically accepted.  But it is time for a new framework to be developed that considers the student as an individual with distinct, individualized motives and abilities.  A hastily considered framework is offered below.

The Student as Individual Framework

The “Student as Individual Framework” proposed is not intended to describe large social groups.  The framework recognizes that within any socio-economic group there is much diversity and in many instances there may be more commonalities among members of different races, ethnicities and cultures.  This framework is not intended to describe any or all students.  It is instead offered as a paradigm that would encourage a shift in focus from the achievement gaps of large undifferentiated social groups to the needs of the student as an individual learner.

Review the testing data from nearly any city in the US.  Within schools that are generally underperforming you will find students that have beaten the odds, not succumb to institutionalized low expectations, demonstrating their abilities by outscoring most of their peers in their respective states.  The framework above can capture and classify these students in a way that would allow for a meaningful discussion about enrichment programs, school choice or other intervention that would enhance and focus their self directed energies.

The framework can also be used to describe unmotivated students in the wealthiest suburbs or the poorest inner city schools.  Clearly moving students from the lower left portion of the framework to the upper right is the most desirable path.  But pragmatic action has to be the priority.  Well intentioned broad policy may marginally move sub-groups forward while leaving behind those most able to contribute to themselves, their communities and this nation.

As I talk with students, I am struck not by the color of their skin, the language spoken at home or the income of their parents.  What seems to come out most in a conversation with young students is their relationship with the world around them, their curiosity to explore that world, and their relationship to their own future.  Are they curious? Do they question?  Are they passionate about something?  Do they have a vision for themselves?  Are they followers or are they leaders?

The framework attempts to understand these attributes and to classify them into convenient categories that can be used to discuss educational strategies intended to move individual students forward.

  • For those not yet proficient onward to proficiency.
  • For those that are not  motivated onward to becoming self motivated.
  • For those with advanced proficiency onward to greater challenge and development
  • For those with limited interest in academics onward to more meaningful alternatives

Each individual taking a distinct journey not necessarily to the same destination but to one that hopefully will be uniquely suited to their vision of where they want to go and their ability to attain the needed knowledge to get there.

Motivation and Drive.  Is it reasonable to assume that it is easier to guide and coach the self motivated student than it is to encourage a chronically unmotivated student?  What do our schools offer those students that have “checked out“ mentally from the classroom, showing no motivation to participate in the learning process?  The opposite question is as important.  What are schools doing for those students so self directed and driven that they are finding academic success in school communities where failure is the norm?

The Student as Individual Framework also considers  the academic ability of the individual.  This is potentially politically incorrect because it suggests a truism that many prefer to ignore.  Some people are just smarter than others.  This is a phenomenon that cuts across race, ethnicity and culture.  The ability to understand math concepts, the nuance underlying great literature or the scientific constructs of the world around us is not universal.  There are those that quickly grasp the method, meaning or principle of the subject matter while others will forever struggle to get to basic familiarity with the same.  This is a fact of life.  Equality of opportunity does not mean that we are all of the same ability.

In the future world, as described in a very worthwhile book called 21st Century Skills, Bernie Trilling and Charles Fadel describe a new paradigm for learning that include skills well beyond those traditionally measured on standardized tests or taught in our schools today.  The authors provide compelling arguments that the current K-12 school paradigm needs to be reviewed and possibly re-thought. In the new globally connected 24/7 world, education must include multi-cultural exposure, engaging team oriented work, and technology enabled curriculum which offers the promise of differentiated instruction to support the individual learning styles of our students.

Consider the following questions as they are plotted on the Student as Individual Framework.

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Obvious Implications

Shifting focus from race and socio-economics to underlying student motivation is more difficult when debating education policy and reform.  Math skills can be tested easily with multiple choice questions.  English proficiency can be also tested with well researched questions on reading comprehension or vocabulary.  But how can you accurately test and measure a student’s desire to learn or their interest in academic pursuits?  Is motivation a better predictor of success in college and career than raw skill assessed in a series of multiple choice questions given in a multi-hour exam in a setting far removed from the requirements of college or the world of work.  Understanding how motivated a student is in their learning should provide valuable insight and guidance to teachers and lesson planners.  It is well known that the more engaged the student is in the process of learning the more they learn. Moving away from the convenient and often times damaging 20th century concept of the achievement gap toward a focus on individual progress will change the debate in ways that will positively impact students of all types. It is time we start to focus on  individuals and not sub-groups.

 Posted by at 12:07 am
Apr 252010
 

Parental Influence Framework

The framework below is offered to foster discussion about a key group of influencers in the lives of children.  We score kids based upon their academic results continually.   But each child starts their education at home, within their families, communities and cultures.  Our current system of standardized testing takes a snap shot – like capturing runners at the instant when  they are crossing the finish line ribbon.  What we do not have a good measure or understanding of – is how far each has traveled to get to the test day.  Parents are the primary  teachers and perhaps we need to design a method for evaluating them and their influence both positive and negative.  Here is one hastily considered proposal.

  1. Involved, networked and engaged
  2. Willing, able but unknowing
  3. Un-empowered and disenfranchised
  4. Overburdened / incapable
  5. Self absorbed
  6. Apathetic

The Need For a Framework

Conversations with teachers in communities that have a very high population of lower income students tend to focus on the daily classroom battles they have to fight to first maintain order and secondarily to teach.  Discussions with teachers from more affluent communities center on the need to provide meaning to students of all abilities.  Classroom discipline for these teachers in affluent communities is much different and may be more focused on the use of cell phones in class rather than  screening for weapons or warding off gangs that are vying for control of school territory.  Teachers in low performing schools are complaining that they are being blamed, almost exclusively,  for students that are academically unprepared and low performing on standardized tests.  But many teachers can make a coherent and convincing argument that they are working with the “products” of social  and familial systems that have failed, in many cases long before a child enters school.

In Massachusetts the school year is minimally 180 days long.  During these 180 days the law states that students must receive 900 hours of structured learning time (excludes lunch, recess, study hall, etc) which equates to 5 hours per school day.  Generally school will start at 7:30 and finish at 2:00 or 2:30 (including lunch, recess, study periods) – about 6 or 7 hours under school supervision or 1,260 hours in school during the year.  On the surface this may seem like a lot of time but not when compared to the rest of the child’s life.  The table below demonstrates that students are generally in the supervision of the school only 21% of their waking hours.

Days in Year         365 Days in School                  180
Hours per day           24 Hours in school day                     7
Hours per year      8,760 Hours per year               1,260
Adj for sleep time (8hrs)   ( 2,891 )    
Available hours per year     5,869 % of available hours 21%

 

During the time away from school the child is influenced by their parents, household circumstance, community, interests, peers and of course mass media.  When it comes to supervised time these children leave the school and return to their homes to be supervised by parents and guardians.  The result and impact of that out of school supervision is not rigorously measured in the same way that we measure the time spent in the school. 

An obvious but often times politically controversial question must be – What is the role of parents/guardians in the education of their children?  How do we account for the influence of the remaining 79% of a child’s waking hours on their achievement scores and on the achievement gap?  Parents and their role in their kid’s success seems to be getting little press these days and that is unfortunate.

Parents are not homogeneous.  We all know at least one parent that is on their kids back night and day creating a pressure cooker environment about the need to do well to get into one of the top schools.  These high stress parents may have all of the Baby Einstein collection, had the headphones playing Mozart during infancy, and took the time to research the best pre-K schools years prior to when their child would have been ready to enter.  For every one of these highly involved parents we also can find those parents that may have too many children, none of which are cared for well and few if any encouraged to achieve much of anything.  These parents may comply with the law, sending their child to school, but feel it is the school’s job to educate them to whatever level is required.

Parents do have a responsibility to and for their children.  In fact, American values, a term I use very cautiously because it has been so corrupted in political circles, seems to have a common thread of ensuring that each generation of Americans was able to move up the socio economic hierarchy beyond their parent’s starting point.  The classic American immigrant story is the father or mother that worked whatever job they could find, made sure their kids were ready for school each day and placed their hope for the future of their family on that next generation.  Could it be that the failure in our schools and the current  “achievement gap” is also a reflection of an erosion of core values in our society?

This line of questioning led to many conversations with teachers in both affluent and lower income schools.  The result of those conversations is captured in a framework that describes a hierarchy of parental involvement and engagement with their children’s  education. 

On one extreme are those parents that are well versed in the mainstream culture, understanding the requirements of success, understanding the college admissions process and possibly shaping their children’s future from Kindergarten.  These parents are highly involved, very aware of what is needed and networked into the right sources of information and opportunities.

On the other extreme are those parents that have all but given up their parental responsibility to others.  They are so apathetic about their children’s education or self absorbed that their children are more likely raising themselves.  Some  may be incapacitated due to substance abuse,  incarceration or a lack of desire to fulfill a parental role.  These parents are discussed often by teachers because their children need more guidance, motivation, encouragement and support.

Between these two extremes are parents that are more than willing to do what is best for their children but simply do not know how or where to begin.  In these economic times there are other parents, some with the strongest desire and best of intentions for their children, that simply do not have the time to give them as they navigate a labor market that requires multiple jobs to make a living wage.  These parents are so over burdened with work or illness that they have to sacrifice their parental role for the family’s economic survival.  Of course there are also parents that believe that the schools know best and therefore they should allow the school system to do what is best for their children.  They may be intimidated by the school’s authority and leave their child’s future to the so-called professionals.  The “drama” filled lives of some very self absorbed parents may also creates an environment where children are treated as if they are distractions burdening their parents and taking time away from their parent’s social “activities.”

  1. Involved, networked and engaged
  2. Willing, able but unknowing
  3. Un-empowered and disenfranchised
  4. Overburdened /  incapable
  5. Self absorbed
  6. Apathetic

Does the Framework Ring True?

Some would argue that in very general terms the children of each of these parental categories present very different challenges for teachers, school systems and policy makers.  Are the over achieving high stress Type A students more likely to come from the Involved, Networked and Engaged  or from Willing but Unknowing parents?  Could it be that children that are not academically motivated are more likely to come from households where Apathetic or Self Absorbed parents reside?  These are tough questions.  But the framework is not intended to describe all or any.  It is intended to be a basis for questioning assumptions, talking through social issues and opening a dialogue that is more expansive than the current focus solely on the school portion of the day. These issues, although possibly politically charged, are necessary when discussing education reform pragmatically.  The framework provides cover for a meaningful debate because it is  distanced from the underlying issues of class, race, socio economic standing and cultural heritage.

Strategic Implications

Standardized tests are designed to measure academic skills.  But they assume, implicitly in the way their results are used, that students are starting from the same point. How do you measure and account for the fact that the distance that a student has traveled in their journey through their individual socio economic hurdles may be a better indicator of success in this new emerging, multi cultural, digitally connected, global work world?  Should we therefore be reconsidering our reliance on measures of “raw” academic output tallied on the day of the test.  Or should we also be measuring  how much a child has learned over their academic career, no matter the starting point and familial circumstance?

Questionnaire on Topic (please provide your opinion on this important topic)

We have developed a 3 minute questionnaire to get your feedback on this Framework.  Please cllick here to take the survey .  After you complete the survey you will be able to see the current results which will be posted as they are collected.

 Posted by at 9:53 am