Jeffrey Bussgang, a leading venture capitalist, shares his optimistic vision of the economy’s future.
With developing countries eating away at the U.S. industrial base, many pundits and government officials, including President Barack Obama, are placing much of their hopes for this country’s future on American ingenuity and entrepreneurship.
One of the leading experts on entrepreneurship is Jeffrey Bussgang, author of “Mastering the VC Game: A Venture Capital Insider Reveals How to Get from Start Up to IPO on YOUR Terms.” Bussgang, a senior lecturer at the Harvard Business School, has held key positions on both sides of this high-stakes business. He helped found two highly successful startups by the time he was in his early ’30s, and today he is a managing partner at the Boston-based Flybridge Capital Partners, an early-stage venture capital firm with $560 million under management.
Bussgang took a break from his hectic schedule recently to speak with IndexUniverse correspondent Alex Ulam. Among his insights: Companies like Blockbuster may be toast, but there’s plenty to be hopeful about in the U.S. economy.
Ulam: What are the green shoots for the economy?
Bussgang: I see a huge amount of innovation going on right now in all sorts of technology areas. It’s the ‘software-is-eating-the world,’ sort of paradigm right now. And as a result, the opportunities are tremendous for technology disruption and innovation and value creation.
I think that’s one of the reasons why you see industries being transformed, such as retail and health care and financial services and energy—sectors that had never really been touched by technology are just now truly becoming opportunities for transformation and disruption.
Ulam: Can you point to any particular sectors that seem to be especially close to being on the verge of being disrupted?
Bussgang: Retail is a great example. Blockbuster obviously going out of business due to Netflix, and Circuit City is going out of business, in large part, due to Amazon. And people are questioning whether even Best Buy can survive the online explosion. Meanwhile, there are all sorts of interesting e-commerce models attacking individual niches, whether it’s a Diapers.com, or in the shoe category, or in fashion, or in jewelry. And so the whole e-commerce paradigm has been completely turned upside down.
The foundations for that were laid when I worked at a company called Open Market in 1995. We invented the online shopping cart, and invented secure-payment technology. Nearly 20 years later, that is now rippling through the retail industry.
Ulam: So is that creating concentration in outfits like Amazon?
Bussgang: Amazon’s a huge player. But I don’t think it’s too much concentration risk. I think there are plenty of companies that are doing interesting things beyond Amazon. And certainly, Google is competing now with Amazon. And Apple is competing with Amazon. And Microsoft is competing with Amazon. And Wal-Mart competes with Amazon. So you’ve got some pretty powerful competitors.
And at the same time, you have these little companies that are popping up and creating a lot of value.
Ulam: So the little companies will be able to create niche marketplaces?
Bussgang: You're seeing it today.