By J.D. Harrison April 20
John Chambers, chairman and chief executive officer of Cisco Systems Inc., was one of several executives from some of the country’s largest tech companies who spoke last week at 1776. (Chris Ratcliffe/Bloomberg)
It’s common for start-ups to pitch ideas to or seek support from their industry’s largest players. Whether they’re soliciting investments or advice, or perhaps trying to sell their company as a potentially lucrative acquisition, entrepreneurs are always looking to get the attention of top technology executives.
Sometimes, though, the roles reverse.
During an event last week in Washington, top executives from some of the nation’s largest technology corporations instead solicited — sometimes explicitly, sometimes subtly — the help of a jam-packed room of entrepreneurs. Rather than trying to sell their company’s services or some new innovation, though, the executives were selling the benefits ofpolicy changes they want from Washington.
It was a sales pitch split into two parts. First, that what’s happening in Washington has implications not merely for today’s Silicon Valley elite, but also for new and small ventures vying to become tomorrow’s tech titans.
“Government has huge implications on the success of every company, especially the smaller companies,” John Chambers, Cisco’s chairman and chief executive, said during the forum sponsored by tech lobbying group TechNet at the 1776 start-up campus in Washington. “And when we go in to talk to leaders, they’re actually more interested in talking to smaller companies than they are talking to companies like ours.”
In that second line, the second half of the message seeped through — that is, that the changes the executives believe their industry needs won’t happen without a united push from both ends of the technology sector’s size spectrum, including start-ups.
“We in the high-tech community need to get our message tighter,” Chambers said.
So what does that message entail?
Moments into the forum, several speakers on the panel began beating theimmigration reform drum, calling on Congress to make it easier for employers to bring in skilled workers from around the world. In large part, they said, that means lifting the current cap on what are known as H-1B visas, which are set aside for workers with advanced degrees in high-demand fields like science, math and engineering.
“Our national strategy has been to welcome these students to our universities and then they must go back to their countries,” John Doerr, one of the wealthiest venture capitalists and a partner at Kleiner Perkins Caufield & Byers, said during the event. “What kind of strategy is that? That is brain dead.”
Chambers followed up by explaining the political hurdles in Washington, noting that smaller, targeted immigration bills “have been held hostage to the prospect of a larger immigration bill.” Moments later, Kim Polese put the issue into context for entrepreneurs.
“Every entrepreneur is competing with large companies for the top tech talent, so we absolutely must reform high-skill immigration,” said Polese, chairman at ClearStreet, a financial-planning software company. She pointed to surveys showing that roughly 70 percent of engineers in Silicon Valley were born outside the United States. Keeping the talent pool small, she said, hurts new companies the most.
“Immigration is the lifeblood of our start-up economy,” Polese said. “We need to fix this permanently. Otherwise, we’re really starving our start-ups of the talent they need.”
Similarly urgent, the executives agreed, is the push for patent reform. Many in the technology community have for years been calling on lawmakers to completely overhaul the current system, which they say makes it too easy for so-called patent trolls to purchase vague or ambiguous patents for the sole purpose of suing and charging inordinate licensing fees to those that use the technology.
“What we’re trying to do is get a patent system that really works,” Chambers said. “One that protects the small entrepreneur’s investment but also doesn’t slow down our growth and production.”
Once again, enter Polese: “By the way, start-ups are really being impacted by this, because trolls are not just coming after the big companies, they’re coming after the start-ups, too,” she said. Polese later pointed out that most early-stage firms “don’t have deep pockets to defend themselves, so they usually have to settle or go out of business.”
In other words: We’re all in this together.
Randall Stephenson, chairman and chief executive at AT&T, brought up another pressing agenda item for large companies across all sectors — and that’s tax reform. He noted that the U.S. taxes corporate profits and investment gains at a higher level than any other developed country.
In today’s digital world, Stephenson said, “capital markets are extremely liquid, and capital will flow to the highest return as efficiently as we have ever seen in history.” In other words, pleading with U.S. companies not to shift their operations overseas, he argued, is akin to asking them to “fight gravity.”
“Gravity always wins,” he said. “So instead of throwing up barriers around the United States, and saying you can’t pull that capital out of the country or you can’t bring that capital back in from overseas, we have got to put in place a tax system that works for businesses.”
In hammering the point home to the entrepreneurs back in the room, Stephenson zeroed in on the impact the tax code has on the very lifeblood of start-ups: funding.
“What if you taxed profits at a level vis a vis the rest of the world, and then did the same with capital, what would happen to investment?” he asked, suggesting that reducing taxes on investors’ returns would likely encourage them to pour money into new and growing businesses. “If you don’t have investments, you don’t have jobs, and if you don’t have jobs, you don’t have growth.”
Shepherding these changes through Washington’s political maze will require a concerted effort from the entire tech community, Chambers said, and it’s not merely about convincing policymakers of the merits of each individual measure. Rather, it’s about convincing them to fundamentally change the way they think about growing businesses and the economy, he said.
“Government is used to moving at a much slower pace and acting like a safety net now has to change dramatically,” Chambers said. “If they don’t move rapidly to change our tax policy, if they don’t move rapidly to encourage entrepreneurship, if they don’t evolve the education system to create the skill sets that businesses need for the future, not for the past… that’s where we could mess up.”
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