That’s a shame because with more and more U.S. high-tech being outsourced to other countries, it is now more important than ever that we acknowledge and support the “real” startups—those that do not involve high-tech products. Of the over six million new businesses started each year, only a handful of them are considered high-tech, yet they are the ones that attract the attention of investors, the government, and the media. Very few people acknowledge that the remainder of the six million even exist.

Take for example, Annie Haven, who started her business in 2005 and has steadily grown 30 percent a year ever since…with customers as far away as Spain and Singapore. And what is Annie’s business? She sells dried cow manure on the Internet.

Annie grew up on a cattle ranch and developed a process for drying cow manure and packaging it in 3 inch by 5 inch “tea” bags. The “tea” bags can then be steeped in 5 gallons of water to make liquid fertilizer for plants and gardens. Since the cattle are free range and eat only organic food, the fertilizer is also organic—and all natural.

To me, that is pure innovation…good old-fashioned American ingenuity…and we need to encourage and support more people like Annie Haven. Whether through the media, private investors, or the government, more attention needs to be paid to the “simple” innovations and creations that are being carried out every day by totally unknown and out-of-the-spotlight people.

My hat is off to Annie, and all the many unsung innovative entrepreneurs around the world.

*

Here are some highlights from the article:

• Women own 40 percent of private businesses in the U.S., but create only 8 percent of venture-backed tech startups.
• Just 14 percent of Venture Capitalists are women.
• Women outnumber men at elite colleges, law schools, medical schools, and the overall workforce, but are noticeably scarce in the high-tech world.
• Only 18 percent of college students graduating with computer science degrees in 2008 were women—down from 37 percent in 1985.
• Only 1 percent of girls taking the SAT in 2009 said they wanted to major in computer or information sciences.
• Mixed-gender teams have produced technology patents that are cited 26 percent to 42 percent more often than the norm.

• Women have few role models in high-tech.

These are just a few of the key points presented in this illuminating article. I highly recommend the article, because it speaks directly to our country’s decline in innovation and loss of high-tech leadership.

The title of the article is Out of the Loop in Silicon Valley, by Claire Cain Miller. I included a link here.

Innovation creates so many jobs and so much opportunity for our country…it is absolutely key to our long-term success in the global economy, [and patent filings] are a reflection of innovation.”

—David Kappos, Director of the Patent Office

It would be hard to argue with Kappos statement—the U.S. has been a world leader in innovation for decades. Unfortunately, that reign may be coming to an end.

The number of patents filed in 2009 dropped 2.3 percent from the prior year…the first year since 1996 that fewer patents were filed by U.S. inventors year over year.

Yes, you say, but we are in the midst of the Great Recession, and we should expect patent filings to drop. True enough, but it does not explain why U.S. patents (yes, U.S. patents) issued to inventors in foreign nations increased 6.3 percent over the same period.

Here is what Bijal Vakil, partner on White & Case’s intellectual property team, in Palo Alto, CA had to say:

…this trend could spell financial ruin for some U.S. companies. We’ve lost our competitive edge, and other companies from other countries stand to benefit.

I’m about to go and watch the President’s State of the Union speech, where he is supposed to talk about jobs and getting our economy back on track. We’ll see!

But, here’s the real deal—Congress and the Administration can posture and postulate all they want, but if they don’t come up with a plan to get our kids and schools revitalized in the areas of math and science, innovation leadership will soon be taken over by other countries…and where does that leave our high-tech businesses then?

“…you can confidently presume that we are leading the way in finding a model that maximizes revenue return for our shareholders… The current days of the Internet will soon be over.”
—Rupert Murdoch

It seems that big business made a mistake some time ago by not charging for Internet service the same way they charge for cell phone service. Now they are trying to put the toothpaste back into the tube. Will they succeed?

About 360,000 people recently downloaded an iPhone app for the Wall Street Journal. Murdoch said these users would soon be made to pay “handsomely” for accessing WSJ content. And that is just a start.

Recently, Time Warner announced plans for a new billing system that “meters” Internet usage and charges customers according to how much they download. In addition to subscription rates for services (see WSJ above), customers would pay for Internet usage “plans,” and would face stiff penalties if they exceeded their limit of Internet usage.

Not only is high speed Internet access out of reach of 40 percent of American homes, it is more costly and slower in the U.S. than in 21 other developed countries. Now, with the new pricing plans, like Times Warner, high speed Internet would be even further out of reach of 10′s of millions of Americans.

Is this how America is going to reassert itself as the innovation leader of the world. The Internet is an integral part of innovation, design, invention, developing, and building—and the Internet in the U.S. is already technologically behind most of the rest of the developed world.

Where does this leave America on the new world stage of information technology and innovation?

It is this “…at the expense of Innovation & Adaptation” that has plunged the U.S. down the list of innovative nations. If what Tom says is true–and I believe it is–then it is definitely up to small businesses to be the innovators who brings the U.S. (or any country) back up the list.

Typically, when someone thinks “Innovation,” they immediately think of electronic gadgets, the Internet, social media, Silicon Valley, or any new invention that may change our social status or the future of mankind. Nothing could be further from the truth. Yes, those things mentioned certainly are innovations, but they are not what innovation is all about. Here is Webster’s definition of Innovation: “the introduction of something new: a new idea, method, or device.”

Innovation can, and should be, everywhere…in our businesses, in government, and in society in general. Here is an example of a basic form of innovation:

Justin Esch and Dave Lefkow were having drinks with friends when they came up with the idea for “Bacon Salt.” They quit their successful jobs at a Seattle technology company and set out to perfect their idea. Working out of Esch’s garage, with zero marketing budget, they sold “Bacon Salt” products to 25 states and 12 different countries, and are expanding worldwide as rapidly as they can.

They also continue to innovate by expanding their “Bacon Salt” concept to other products. Their current hot seller on their web site is bacon flavored lip balm…they’ve sold 10,000, and many sales are to repeat customers.

Esch and Lefkow are a worldwide phenomenon, and last year raked in $1.4 million in profit–just from a combining bacon and salt. Not what one would call “high tech.”
(Justin and Dave will appear on Oprah Friday April 24).

How does the U.S. (or any country) develop and promote a culture of creative thinking–Innovation–in jobs; in society; and in the lives of their citizens? It is going to take changes in education, in family values, in governments, and in individual entrepreneurs. Can we do it?

• A 2008 study found that high school dropouts cost the American public more than $100 million per year.

• A 2009 study found that one high school dropout in Ohio will cost the state’s taxpayers $200,000 from the time they drop out until they reach age 65.

• Every 29 seconds another American student becomes a dropout. (How many kids dropped out while you were reading your email today?)

• Four out of every 10 young adults (age 16-24) lacking a high school diploma received some type of government assistance in 2001.

• A dropout is more than eight times as likely to be in jail or prison, as a person with at least a high school diploma.

So, we spend hundreds of millions of dollars each year supporting high school dropouts without batting an eye–but we turn out with protests, signs, and marching, when AIG does something stupid.

Even worse than the high cost of our high school dropouts, is how this situation is contributing to the downfall of the United States as the world leader in Innovation. We are losing our best young minds because our educational system is broken and needs to be totally restructured. Trying to prepare students just to score high on their SAT tests no longer works.

Our educational system needs to teach and encourage young minds how to dream, how to visualize, how to question, how to search…and they need to know it is ok to try something and fail. Unless we start to teach “outside the lines” we will continue to lose brilliant young minds that could make a difference in America’s future.

Of course, we cannot put this entire burden on teachers–we need mentors, sponsors, participating businesses, civic leaders, and the like. When school lets out is not when education stops–life is what happens after classes, and it is up to all of us to make sure every young person in our community learns how to use that time to make the best life.

America is no longer the Innovation leader of the world, and I am afraid if we don’t change the way we educate our young people, we will never regain that role.

Any agreement or disagreement–or, is everyone still too worked up over the bailouts and executive parties?