Hello, and welcome to this week’s installment of the Future in Five Questions. This week, DFD interviewed Bobby Franklin, the president and CEO of the National Venture Capital Association, whose members include Silicon Valley’s Andreessen Horowitz and Sequoia Capital. Franklin, who has led the trade group for more than a decade, discussed why it’s premature to assume President Donald Trump’s VC-packed administration will bring radical change — as well as the flood of investor cash chasing AI companies and the policies that would actually help the “Little Tech” startup ecosystem. An edited and condensed version of our conversation follows: What’s one underrated big idea? Failure. And what I mean by that is in other societies, other countries, other cultures, failure is often shame on the family, and it sets people back, whereas in the U.S., often the entrepreneurial ecosystem celebrates failure because it recognizes that it's one step closer to success. So [how] venture capitalists and entrepreneurs think about failure is, “Okay, you figured out one way it doesn't work. Now you can go to the next and get closer to the way it does work.” We talk to policymakers often about it, and I think it's important for policymakers to appreciate the level of failure because if there wasn't [any], it would mean we weren't taking risks enough, and we weren't pushing the envelope of innovation. What’s a technology that you think is overhyped? Where I sit, I'm not sure there's any technology that's overhyped. Perhaps there are lots of technologies and ideas that are too early, not yet ready for prime time. There are certain aspects of AI companies that could probably be accused of overhype just because artificial intelligence is such the hottest thing that I think a lot of people may be misappropriating. If you don't have AI in your name, sometimes I think people feel like it's not worth investing in now, and people are so into AI that it's hard for me to imagine that every single one of those examples where people say it's about AI is truly artificial intelligence. Having said that, I have complete faith in the benefits of where AI technology is taking us. I just think around the edges, there might be some overhype. Between a third and a half of venture investment goes into what is categorized as AI, and it's hard for me to believe that every single one of those investments are truly AI. What book most shaped your conception of the future? One that I recently read was Chris Dixon's “Read Write Own” and the concept is about how blockchain technology can do so much that has nothing to do with crypto or digital currencies or things like that. And it really opened my eyes to imagine a world. One of the examples, a great example, is for us to imagine a social media company that is built on blockchain technology, where the individual user sort of owns their presence in that network, as opposed to the way it is now, where the social media networks own everything about the network. So imagine you're on a network that's built on blockchain technology, and for one reason or another, you don't like the way that network is operating, and you decide to take your name or handle, and because you own it and you move it to another blockchain technology, imagine the competition that brings. And imagine the power differential that puts in the hands of individuals versus companies. What could the government be doing regarding technology that it isn’t? I wish government better understood where new technology comes from. And in my front row seat, technology comes from entrepreneurs, along with their VC investors, taking chances and pushing the envelope. I want government to appreciate and understand how companies are formed, and for the most part, they have no idea. [Last week], it was reported the president raised tax issues with Republicans, and one of them was carried interest [a tax break that lets investors lower their taxable income and Trump said he wants to end]. And to me, that shows a lack of understanding of how the entrepreneurial ecosystem actually works. The last several administrations have had people from this space, and just because you have a handful of people doesn’t mean that the vast number of policymakers and staff, the White House and Capitol Hill, and everything else have that same appreciation. It’s just like the challenge we had in the last administration, when there was a lack of mergers and acquisitions for fear that the FTC or DOJ would block this, that and the other. And so the flywheel of innovation came to a much slower pace, and that hurts the entire ecosystem. If you can’t have exits, then you can’t return the dollars that enable entrepreneurs to take chances. … We are absolutely hopeful and optimistic [that will change with new leadership], but proof’s in the pudding. What has surprised you the most this year? I have been most surprised — and this is after sitting in this role since 2013 — by a company that I learned about from one of our board members. So the name of the company is HistoSonics, and it is based on technology and research out of the University of Michigan, and they have a headquarters in Minneapolis. And they're treating cancer and cancer tumors in a way that I think everyone should be excited about. They've been approved by the FDA to treat liver cancer, and what they have found is they can couple a little device on the outside of one’s skin and send basically sound waves to that tumor, in precise [ways]. I mean, it's almost like internal surgery without ever going inside the patient.
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