David Michael Miller
The question put to the venture capitalist was: How do you juice up the Wisconsin startup scene when the state is judged the absolute worst in the nation for fostering new businesses?
Troy Vosseller, 32, who's a sure-footed Madison entrepreneur, was in an expansive mood as he held forth on the evils of non-compete clauses and Wisconsin's bad-news ranking for startups by the entrepreneurial-focused Kauffman Foundation.
He also made a forceful case for upgrading and expanding UW-Madison's computer science program, arguing that Wisconsin is critically short of tech talent.
We were in the temporary Gorham Street offices of gener8tor, the new-business incubator Vosseller runs with partner Joe Kirgues and others to nurture the ventures they invest in. Next spring, gener8tor moves up to Madison's signature spot for startups — the new StartingBlock complex on East Washington Avenue.
"I can't name a single venture-backed startup founded by any ex-employee of the Wisconsin Fortune 500 companies," he tells me. These companies include giants like Rockwell Automation, American Family Insurance, Northwestern Mutual, Harley-Davidson and Johnson Controls.
"Yet if you look at robust startup ecosystems like Silicon Valley's it's extremely common. You have people who, say, worked at Yahoo who have a great idea, leave their job to create their own company, have their ex-manager who made a lot of money in her own startup invest in theirs, and later the company is bought by Microsoft or who knows who.
"The virtuous cycle continues in those ecosystems," Vosseller explains. "It's commonplace. Yet here in Wisconsin I can't think of one example [of a startup spinning off from a major corporation]. This speaks to a cultural risk-aversion we have, but some of the blame also rests with corporate restrictive covenants."
Ah, yes, the non-complete clauses that Epic employees face when they leave the Verona campus and have to cool their heels.
I ask for an example of how startups are suppressed.
“Sure, Epic churns out more than 1,000 employees a year,” he says, citing the heavy burnout rate at the electronic health records giant, whose workforce is approaching 10,000. “And all of them are walking out with a one-year non-compete. So, literally, the people in the best position to innovate on health IT are legally prohibited from doing so. How does that speak to innovation in Wisconsin?”
Not well.
According to Kauffman, Wisconsin is for three years running the worst state in the nation for start-ups, while a just released Kauffman assessment of the 40 largest cities in the nation scored the Milwaukee metro area — which includes Waukesha and West Allis — a next-to-the-bottom 39th place.
Closer to home, even though Dane County has become a hub for 20-plus health-tech startups like Propeller Health and Wellbe, observers can only point to one, Redox, founded by former Epic employees. (Epic declined to comment for this story.)
Vosseller looks to California — and the continuing dominance of Silicon Valley — where non-competes are unenforceable in the courts. “If they were illegal in Wisconsin, you would have a lot more people creating companies without the chilling effect that non-competes have.”
Kirgues has been even more public than Vosseller in criticizing non-competes and the periodic reports that the business community wants the Legislature to adopt even tougher enforcement. The case for them? Non-competes are said to protect valuable intellectual property and trade secrets of the companies that are shedding employees.
The rebuttal, as Milwaukee Journal Sentinel editorial writer David Haynes puts it, is that the state should not do “the bidding of a few well-heeled companies intent on overly protective laws.” For Vosseller and Kirgues, the problem is obvious: Non-compete clauses suppress innovation.
The duo knows something about priming the startup pump. Over the past five years gener8tor has invested in 54 companies and put them through its 12-week accelerator program in Milwaukee or Madison. As a group, the startups have raised more than $120 million in venture funding and employ more than 1,500 people, according to gener8tor. EatStreet, the online food-ordering service in more than 150 markets nationwide, is probably the best known.
In recent years, gener8tor has branched out to Chicago, Minneapolis and Beloit and launched high-profile partnerships with UW-Madison and Wisconsin Manufacturers and Commerce to advance startups.
The WMC partnership is noteworthy given its usual role as the advocate of big business in Wisconsin. In early September, gener8tor gathered representatives from more than 200 startups to meet one-on-one with 20 major corporations at Miller Park in Milwaukee. Among the topics: tech's disruption of old-line manufacturing.
“They took a bit of risk,” Vosseller says of WMC.
Vosseller got his start selling his Wisconsin-themed Sconnie Nation apparel line out of his dorm room. He holds a law degree and master’s in business administration from UW-Madison, but it's computer science that holds his attention these days. He feels the best thing his alma mater could do for the tech scene is elevate its well-regarded computer science program from a department to a separate college or school offering a variety of degrees.
The state is woefully short of tech talent, Vosseller says, citing the argument of Brad Smith, the Appleton native who is Microsoft's second in command and a faithful Badger booster. Smith has pointed out that Wisconsin higher education produces less than 900 computer science graduates a year, while having about 7,700 unfilled computing jobs.
Actually the situation is even worse. Less than half of the UW's 2015-16 Computer Science class said they planned to work in Wisconsin. UW's grads get snapped up by Google, Facebook, Amazon, Intel and the other West Coast tech companies, reports Jennifer Smith, the department's communications and outreach manager.
For Vosseller it's a no-brainer that the role of computation will only increase in the economy. He marvels over a tour he took of the computerized John Deere plant in Horicon: “It's space-age shit like you would not believe exists right here in Wisconsin.”
Computer science is now one of 55 departments and programs in the UW College of Letters and Science. Vosseller points to how economic concerns prompted the transformation of the UW's business program from a mere department to a separate school with multiple degrees in the 1940s. He feels the same sort of promotion is needed for computer science.
Preliminary discussions are underway at UW-Madison, says computer science chair Guri Sohi. He says other top-ranked departments have already taken the step to college or school status, including at the University of Washington, Carnegie Mellon, University of Georgia and University of Massachusetts.
Sohi envisions an expansion of UW computer majors to include bioinformatics, robotics, human-computer interactions, autonomous transportation, machine learning and computational medicine.
He also sees the expanded program serving the employment needs of Foxconn's advanced-manufacturing plant in Racine County, which, as Wired magazine put it, will require engineering skills “that are sorely lacking in the American workforce.”
Sohi cautions that inertia will have to be overcome on campus and that the discussion will take time. “I am leading the effort, because the future is going to be so dependent on computing.”