Here’s more from my interview with Google’s Seattle site director, Brian Bershad, that was the basis for today’s column.
In these edited excerpts, he talks about some of the concerns he has about risks to the startup community.
Q: Are there any others stories of interest in the Seattle area?
A: There are two things that terrify me.
I’m pretty nervous about the university, as it relates to what’s happening with state funding and the conflict between where the state is trying to go and where the federal government is trying to go. and funding. The state wants to basically pull back and the federal government is trying to increase investment. That mismatch creates a tremendous amount of friction within the university that I fear will cause great people to leave.
I’ll give you a concrete example. The federal government wants to write grants. In order to bring in grants you need faculty to write proposals for those grants. In order to spend those grants you need grad students, you need postdocs, to spend them on. You have to have people who can bring in the money and on whom you can spend the money.
The state is trying to conserve on money so it’s slowing down on the hiring of faculty, it’s reducing class size, it’s reducing salaries or making salaries flat, it’s making it more difficult to hire postdocs. So you have this mismatch. The federal government would like to pump money in because that drives the economy, the state would like to constrict the educational system because that consumes money.
So I get very worried about what will happen over the next five years or so to great faculty and grad students who might otherwise go elsewhere.
There’s a reason why Amazon and Google and the startup community are here, and it’s because there is so much talent that come out of the academic system.
The second concern is at a slightly different level but sort of the same result: The constriction in venture funding will begin to hurt over time. It will hurt us at Google in that from those great venture-backed companies come great employees, come great engineers, come great technologies. As there’s less money pumping into that system, there’s less of an opportunity for those people and those technologies to be formed and there are fewer great people to hire.
Q: I would think that as less money goes into those ventures, more of the employees would try to work at Google?
A: They would, but ventures are great training grounds. Google’s a very entrepreneurial company. We like to hire engineers who can be scrappy, who can get from Point A to Point B and solve problems very aligned with the way venture-backed companies work. We have a lot of people here who’ve been in venture-backed companies, who’ve done the startup route and in effect trained or formed or molded in that.
So when the air is sucked out of that environment, it ends up hurting the bigger companies over time.
Q: There has been some interesting merger and acquisition M&A activity lately. Perhaps that will motivate venture capitalists to get active again.
A: It’s hard to know because I think you’re right in pointing out a lot of these are buys at bottom dollar. I think some of the more stable, sizable venture funds will continue forward, but the danger is we’ll lose a number of venture funds and the angels will become more reluctant.
I think the combination of these two things – if we continue through the economic climate the way we have for the next couple of years – the continuation of these things could be quite bad.
Q: It sounds like you’re concerned about what’s going to happen five or seven years from now?
A: Yes, the timeframe of – you hire a faculty member, he produces some grad students who start a company, then it hires 100 people, then that company gets bought. That pipeline has been working really well for the last two decades. I think we’ve got a big bubble in there right now. That would be bad if that bubble continues for a few more years.
Q: If it’s long enough, you lose momentum?
A: Every year the UW doesn’t hire 100 faculty, that’s 500 graduate students who don’t get formed five years from now. Say 5 percent of those grad students went off and did a startup, that’s 25 startups that aren’t happening.
Q: Could companies like Google step in with their own venture funding?
A: I don’t know very much about how our venture arm is working; it’s brand new.
Q: It seems like Google would have an opportunity to fill that bubble a bit.
A: We do a number of things in that direction. We support lots of faculty. We have fairly healthy faculty research pipeline. Every quarter we grant some number of faculty grants. We support a fairly large number of graduate students both directly and indirectly. We certainly are active in the startup community in that we get lots of visits and we make lots of visits to small companies. They ask us questions about which directions they should be going and we try to give them guidance.
I think there are different ways in which Google can help keep that culture, that environment going, beyond throwing money at it.
Q: Are you going to go to Olympia and get active in the education funding debate? I’d think Google’s voice would carry some weight there.
A: It may well. I’ve certainly not been shy about this opinion, but I’ve not made a trip to Olympia.