The Spirit of American Innovation – Dead or Alive? Passage of the JOBS Act Is a Step in the Right Direction for Revival
On February 21, 1947, Edwin Land demonstrated an instant camera and associated film. Called the Land Camera, it was in commercial sale less than two years later. Land’s company Polaroid originally manufactured sixty units of this first camera. Fifty-seven were put up for sale at Boston’s Jordan Marsh department store before the 1948 Christmas holiday. All fifty-seven cameras and all of the film were sold on the first day of demonstrations, greatly surpassing the company’s expectations.
Historians as well as those of us from an older generation will remember Polaroid as a member of the “Nifty Fifty” – a grouping of Dow Jones stocks that sported hefty multiples and, at one point in the ‘70s, the company’s stock sold for more than 90 times earnings (you can see an Economist article on this here). As you may know, the story doesn’t end happily as the original Polaroid filed for bankruptcy in 2001 and, like its one-time rival, the also-bankrupt Eastman Kodak (as reported in The New York Times here), a victim of the rise of digital photography.
In reflecting on the Polaroid story, I got to thinking about American innovation. It seems that there is a divergence of opinion about America’s future when it comes to innovation. Some pundits posit that we are in the state of decline while others take a more optimistic view.
Interestingly, not long after the aforementioned Polaroid anniversary, Apple’s market cap passed the $500 billion mark, a relatively exclusive club. Some market observers believe that the company could reach the trillion dollar mark. Why? Two reasons, I suspect. First, Apple’s penetration within its key product areas, most notably Macs and iPhones, is relatively low, offering considerable growth opportunities. And, the tablet computer segment is really in its nascent stages (if my daughter, nearly inseparable from her iPad, is any indication, this product could become indispensable). The second reason for Apple’s continued success is innovation and clearly the company will continue to be a leader in this area as there are still areas that the tech juggernaut has yet to conquer.
While innovation is critical to Apple’s continued success, it is also critical to America’s future… Why? Innovation leads to job creation as a recent study Apple recently released indicates. The study by Analysis Group found that Apple has directly or indirectly created 304,000 U.S. jobs. According to the study, these jobs — spread across all 50 states — include thousands of jobs in numerous industries, from the people who create components for our products to the people who build the planes and trucks that carry them to our customers. For example, this figure also includes workers in Texas who manufacture processors for iOS products, Corning employees in Kentucky and New York who create the majority of the glass for iPhone, and FedEx and UPS employees. Together with the 210,000 iOS jobs generated by the app economy, these 304,000 jobs make a total of 514,000 U.S. jobs created or supported by Apple.
Of course to innovate companies need money as not all companies are as well-heeled as Apple. We need to make it easier for entrepreneurial companies to access the capital markets. It appears that we might be headed in the right direction. Earlier this week, the House of Representatives voted to pass the Jumpstart Our Business Startups – JOBS Act – a bill that aims to make it easier for startup businesses to raise capital, partially via online crowdfunding. The measure passed 380-41 and is headed to the White House for President Obama’s signature.
The JOBS Act would create a new class of business known as “emerging growth companies,” a category that would include most startups. These companies would be allowed to attract investors online through crowdfunding. In addition, such companies would also be able to sell up to $50 million in shares before having to register with the Securities and Exchange Commission, as well as have up to 1,000 shareholders — double the current maximum.
Published: March 30, 2012 By: