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Deshpande Center IdeaStream Symposium
May 13, 2003
Thank you Dr. Vest, it is an honor
to be here. Jaishree and Desh Deshpande, your generosity is noted
throughout the country but, particularly in our home. Mr. d'Arbeloff
and so many noted individuals, I look at this audience and feel
that I am perhaps well beyond where I should be, being here. I am
reminded of a most recent headline -- you may have seen in the Boston
Globe -- about a group of students from the Kennedy School who were
complaining that I had been selected as the commencement speaker
at the Kennedy School, saying that I did not have the qualifications
and stature to be able address their graduating class. The next
morning I was approached by the media -- a series of TV cameras
-- and asked what my reaction was to that and what I thought about
the student's observations, and I said that I agreed with it. I
continue to find myself in positions where I feel well above my
capability and out of place.
I have to tell another story, which is when I took the job to run
the Olympics in Salt Lake City. There was certain degree of irony
in that. I was not a great athlete in high school, college, or thereafter.
When I told my sons -- I have five boys -- that I had decided to
go run the Olympics, there was this long pause on the other line.
Then, when it appeared in the paper, when you picked up USA Today
and there was a story about my going to Salt Lake City to run the
games, my oldest son called, he said, "Dad, the brothers and
I have talked. We want you to know, there is not a circumstance
we could have conceived of that would put you on the front page
of the sports section."
So being here this evening with Dr. Vest, Mr. d'Arbeloff, the Deshpandes
and other scientists and leaders in the field of innovation and
technology is something which I find to be beyond my capability.
I want to underscore how important what you are doing is, not just
for yourselves, but to our state, to our nation, and I believe to
our total global economy and global population.
I was given a whole series of statistics by the people who work
with me in my office about the impact of university-based technology
and innovation on the world. The idea that some $20 Billion a year
is added to our economy through businesses developed that year by
university research; and that there are some 150,000 jobs per year
that come from this endeavor on a world wide basis. The impact on
us is just as notable. MIT has some- according to our calculations
-- 4,450 active licenses used by firms and approximately one-third
of them are used by companies, which currently exist inside 495
in Massachusetts. Just to show you the impact that MIT and its technology
-- its faculty students and people that have gotten together in
Symposia like this - have on our state.
The fact that MIT has been able to create this economic engine generates
not only a great deal of wealth for the individuals associated with
those projects but far more importantly, in my view, are the jobs
and the personal fulfillment and development of people associated
with these things. As we know, industry after industry will die
and waste away over time and the only way that an economy can provide
new jobs for its citizens is for there to be new businesses and
new opportunities and that is what is being fueled by MIT. Technology
is in many respects just as important -- not just to the faculty
members and the technology which they develop -- but through the
MIT concept and how it develops through its students and faculty
and in the broader community, technology then commercializes it.
That which it has learned is just being able to be picked up by
some other institutions of higher learning around the world and
in our commonwealth. I was delighted, for instance, that UMass has
just developed some technology in solar plastics - solar panels
to be made out of soft plastics - and a company was established
just recently in Massachusetts to take advantage of that technology.
But the idea of how to go from the classroom and research lab to
commercialization and making that part of a mission of an institution
of higher learning is something which MIT has perfected and something
which we need to copy on a world-wide basis and certainly on a state-wide
basis.
I know as well that what you are doing here has impact well beyond
my parochial interests in Massachusetts. I think we can all appreciate
the broader context of what's involved. On a global basis, I'm convinced
that you are seeing - as some have indicated in some recent journals
and books -- the civilizations of the world weighing the values,
which will be followed by their civilizations and by their peoples.
On the one hand, we have the model of the US and other nations of
the west -- which is model based upon individual entrepreneurship
and individual decision-making and democracy. Everything related
to the individual and the innovation and creativity of the individual,
and saying the individual given full freedoms and incentives and
opportunities for innovation, will create enormous innovation and
potential for other people to live and grow from, and that this
is the best way for building a civilization and an economy. There
are other civilizations in our word that are convinced, that no,
that's not the right model. That in fact you are much better under
a more authoritarian structure where collectivity of purpose is
defined as the objective and that this idea of individuality and
innovation by individuals is actually quite counterproductive. And
there is a debate between these differing views in the civilizations
of the world today.
As we are on the stage and are going to be compared, as our approach
which talks about individual liberties and individual contributions
is compared with those who would say no collective approach is a
more superior one, I want to be able to put our best foot forward
and be able to show just exactly we can do. What MIT and what the
Deshpande Center and with which other efforts like these are able
to accomplish is to make sure the best of our thinking the very
best of our innovation, the very best of our creativity, is shared
in our community, and in our society and ultimately with the world.
And that will, I believe, lead the world to be more likely to adopt
a philosophy based upon individual liberties and individual rights
and individual ascendancy.
I am convinced that as we think about investing in our future as
a nation and as a civilization that we are faced with choices to
make ourselves strong. There are some that are, if you will, 'classical
Republicans' and I don't want to be political. But the classical
Republican approach which is to say that what makes America so great
is our great corporations and if we just clear the decks so corporations
can be more successful and give them more money and make it easier
for them to succeed while we'll do even better on the world stage.
I don't happen to subscribe to that traditional Republican caricature.
There are those who are on the Democratic side who are characterized
as thinking what is the source of our greatness as a nation is our
government and that by investing in more government we are going
to be able to be more successful in fulfilling our mission. I subscribe
instead to a philosophy that is neither classical Republican nor
classical Democrat, but which is instead based upon a premise that
we are great because of our people and that the source of America's
greatness as a nation and as an economy has been the decision made
over the previous decades to invest in people through education
and through greater liberties and that by giving people greater
and greater personal liberties and choices and by giving them the
chance to learn and the chance to pursue their education we have
created one of the great nations, one of the great civilizations
in the history of the earth. That if we are looking for a future
as a nation and as a civilization its foundation must be investing
in our people, investing in their education, investing in sharing
what they do and learn with the world and taking that as quickly
and as aggressively to commercialization and to its application
in the world as possible.
Let me come back to something more parochial, which is how our state
fits into all of that and how you who are entrepreneurs and investors,
financiers, faculty members and others who are associated with the
process of innovation fit into, if you will, "our state."
I am convinced that this is an extraordinarily attractive place
to grow and develop ideas and technology. That this state has many
of the features which are unique in our nation and perhaps in our
world - the clusters of technology and capability that have assembled
here -- means that enterprises that begin here begin with a natural
advantage. We have also thought to keep the attractiveness of the,
if you will, 'the Petri dish" here for technology innovation
very robust and vital. There are some who would suggest we could
solve our problems best by, for instance, raising our tax rates
and business payroll taxes and so forth. I am afraid of going down
the path California is going down. I am afraid that going to an
11% income tax will scare away innovation and scare away jobs. California
is a beautiful place. We don't have their weather to compete with,
so we have to compete on other bases. For us it's a place where
that tax burden is not overwhelming with a 5.3% tax rate - they're
going up to an 11% tax rate, with over 9% today. We have to make
sure this is a place as attractive for people to come and grow their
enterprise - our regulatory structure.
I have today with me today Bob Pozen, formerly Vice Chairman and
President of Fidelity who is now our chief of economic affairs.
Part of his job is to keep clearing the underbrush of regulation
and to make it easier to make businesses grow and thrive. We recently
asked a couple of our agencies -- our economic development head
and our environmental head -- and said, "You know, people who
are thinking about starting biotechnology businesses need places
to go where they can get environmental approval. Sometimes it takes
the state a year or longer to give environmental approvals to someone
who wants to put up a biotech lab of some kind. Why don't we pre-approve
biotechnology permits in various areas of our commonwealth, so that
as we compete for these kinds of entrepreneurs and businesses, they'll
know this is a friendly place for people to do business?" We
aim to be a very friendly place for people to do business to keep
our tax burdens modest, to keep our regulatory burdens small, and
to make the investments necessary to make this an attractive place
for you to stay and grow.
Let me just note finally that as I think about my job in state government
and as I think about your job in taking what you have innovated
to market, I fall back on some of the principles I used to apply
when I was also in the venture capital world. As some of you may
know, I had the chance to work with a company that was ostensibly
involved in venture capital and what we found on occasion -- actually
what we found on every occasion -- was that no business worked like
we thought it would and every business got into trouble at one time
or another. It was the inevitable crisis. And I am convinced that
the period of crisis is the greatest period of opportunity in any
business' life, or in any enterprise's life, because you make choices
at that time that determine exactly where you are going to be long
term.
I am going to take a diversion here. I once did a consulting assignment
for a company called the Charms Candy Company. I don't know if any
of you remember Charm's Candy? Little Square candy -- you unwrap
the cellophane -- sort of like a Lifesaver, only square.
Anyway, I met with the Chief Executive, owner of Charms and I said,
"How big is your company?"
I was shocked. "$1 million in sales per year. That's all it
is. A million dollars in sales."
I said, "Boy that is extraordinarily small. I had no idea you
were so small. "
And he said, "Well, we used to be the number one, the number
one candy company in America."
I think it was back in the forties and there was a spike in sugar
prices and the price got so high and they got nervous so they entered
into a long-term sugar contract to assure a secure source of supply.
Their smaller competitor that didn't actually wrap the individual
candies called Lifesavers decided to buy sugar on the spot market,
and go up with it and down with it. To make a along story short,
the market price for sugar came tumbling down, Lifesaver was able
to buy sugar at a fraction of the cost of Charms. Charms went bankrupt
and did not emerge until many years later and obviously as a much
smaller company. That made all the difference. The decisions you
make in those times of crisis, those tough times, can make all the
difference.
In my experience, the things we had to do in the very difficult
times follow a few key principals: Number one is to be honest about
where you were and audit where you were. Audit was the first step.
I don't mean by calling in Price Waterhouse Coopers, I mean by looking
at your own company, your product and your technology, your people,
your competitors, your financial setting, your debt structure, the
whole thing and say let's audit where we are and be honest about
where we are.
Number two is to fix the team and make sure you have the right people
in place, because sometimes when things are good you sort of go
along with same people you've had all along and then you don't make
the tough decisions.
Number two was getting the team right and number three is what I'll
call 'Focus, focus, focus' - deciding what is absolutely essential
and focusing on that. Every time we got in trouble that I can recall
in my investment career there was some aspect of failure to focus
and the desire to do too many things for too many people, or too
many markets or too many products. That focusing on where we had
significant potential and what would help us accomplish our mission
was to focus.
I actually had the fun of applying those principals in the Olympics.
When I went on that Olympic jog I had mentioned, I got out there
and found out that we had a severe financial crisis. We had nowhere
near as much money as was necessary to build our Olympic venues
and hold our games. The first thing we had to do was to change some
team members -- and we did that -- carry on a full audit of where
we were -- that showed us we were three hundred and ninety million
dollars in the hole -- and then we had to figure out what was important
and focus on it.
One of my favorite stories was about our speed-skating oval. We
had to build a speed-skating oval, and they're big. You see them
on TV and these guys skate around on the speed-skating oval and
you think, I wonder how big that is. You can fit four football fields
inside that doorway. Four football fields and no posts. That's part
of our contract because the TV cameras have to be able to race around
and see no interference with the athletes. Japan built theirs, called
the M-Wave -- beautiful building, a $300 million price tag. Our
budget was $35 million; we had a problem. With the team we had assembled
and with extraordinary focus, our team came up with some remarkable
designs and built a building for $30 million dollars, and we built
it with overhead cables. We built it in the structure, if you will,
of a suspension bridge. We had piers outside of the building, we
had stretched cables across, and held up a roof. And by virtue of
building it that way -- I am not an engineer, and I apologize for
engineering folks here -- but, instead of having to build a very
tall building to hold the stress of a roof and the snow that we
had on top of it, we were able to bring the roof down very close
to the ice. That meant we had a lot less cubic space inside the
building to heat and to cool and that meant we were able to control
the climate a good deal better. By the way, not only did we save
money by bringing the structure down -- we used one-third less steel
in this building than in a conventional building -- but by controlling
the climate we were able to affect the characteristics of the ice
a great deal better. You may have noted during the winter Olympic
games, that of the 8 events that were held in our speed-skating
oval, 7 of the 8 broke new world records, and the reason was quiet
simply because we had to innovate and had to focus on finding a
way to save money. We had to bring our roof down to control the
climate better, and by virtue of that created something known as
'fast ice' -- which is hard on the bottom and soft on top.
I am an enormous believer in the ability of the human mind when
focused properly in the right team -- when it's thoroughly audited
where it is and where it needs to go -- to be able to resolve virtually
any difficulty. I am convinced that the individual skill and motivation
associated with the culture that is American and the principals
that have been so well developed and espoused by MIT, by the Deshpande
Center and others, are what is the best answer for the world's success
and the greatest degree of happiness for the greatest number of
people.
I salute the work that's done here, salute you in the work you are
about, and encourage you to keep Massachusetts your home -- this
is a great place to do business. Good to be with you. Thank you
so very much.
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