Gary Shapiro - The Comeback: How Innovation Will Restore the American Dream

THE COMEBACK

THE COMEBACK

GARY SHAPIRO

Copyright 2011 Gary Shapiro

Excerpts from Canada Lawmakers Ratify Free Trade Agreement With Colombia, Send to Senate by Theophilios Argitis. Used with permission of Bloomberg.com Copyright 2010. All rights reserved.

Excerpts from Colombia: Exports to Reach $40 Billion 10; Double in 4 Years by Darcy Crowe. Reprinted by permission of the Wall Street Journal , Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved Worldwide. License number 2550840759663.

Excerpts from Two L.A. agencies get $111 million in stimulus funds but have created only 55 jobs by David Zahniser. Los Angeles Times , Copyright 2010. Reprinted with Permission. All rights reserved.

FIRST EDITION

All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the publisher, except by a reviewer who may quote brief passages in a review.

Library of Congress Cataloging-in-Publication Data

Shapiro, Gary.
The comeback: how innovation will restore the American dream / Gary Shapiro.
p. cm.
ISBN 978-0-8253-0563-4 (alk. paper)
1. Technological innovationsUnited States. 2. EntrepreneurshipUnited States. 3. American
Dream. I. Title.
HC110.T4S52 2011
338.0640973--dc22
2010047997

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To my wife Susan and to her parents, my grandparents, and every other American (including those no longer alive) who sacrificed so much to come to the United States. You left behind family, you had to learn a new language, you worked hard and sacrificed so much for your children. You have contributed to our economy, you are amazing citizens and huge patriots, and you have made the United States a beautiful and successful mosaic. We can repay our debt to you by ensuring the American Dream stays alive.

Contents

Foreword

I WAS ONCE asked to provide some advice to a company that at one point had a product that was not only the best in its class, but also technically far ahead of its competition. It created a better way of offering its service, and customers loved it and paid for it.

Then it made a fatal mistake.

It asked its customers what features they wanted to see in the product and then delivered on those features. It seemed like good business: Ask your customers what they want, and then give it to them.

Unfortunately for this company, its competitor didnt ask its customers what they wanted. Instead, the competitor had a vision of doing things differently. As a result, they did it better. Their customers didnt really see the value or need for those features until they saw the product. When they tried it, they loved it.

So what did the company I was working with do when it saw what the competition was doing, despite my admonitions to do otherwise? It repeated its mistake and once again asked its customers what they wanted in the product. Of course the customers responded with features that they now loved from the competitor, while the competitor continued to innovate.

The paradigm had shifted. Innovation had paved the way. The company I was advising? I made them memorize what Alan Kay once said: The best way to predict the future is to invent it.

Consumers arent sages. They arent in the business of imagining the next great thing. Thats the job of innovators, who dont have a choice. To borrow a phrase from my friend, Gary Shapiro, they either innovate or die. Those who rely on someone else to tell them what the future holds usually find themselves six feet under before they even realize theyre in the coffin.

But progressreal progressis like that. Its punishing and its merciless.

Its also absolutely vital for the continued prosperity of the United States. As Shapiro makes abundantly clear in the pages that follow, innovation is Americas economic salvation. It creates wealth, jobs, even entire industries where nothing existed before. And innovation is the key in reversing our decline.

Like that company I worked with, our government is making a fatal mistake. It believes it is acting like a good business when it treats our economy like a focus group, asking each member of the group what it likes and what it doesnt like. Taking these answers, it then attempts to fashion our economic policy.

The results of this innovation by committee are plain for all to see: exploding deficits, minimal growth, anemic job creation, and an ever-growing reliance on government aid. Whether under Republican or Democratic administrations or Congresses, the United States has been mired in uncertainty for years.

This book is about how to reverse this process and restart Americas innovation engine. Its about how to get American back on track and reassert our preeminence in the world.

I have had the privilege of knowing Gary Shapiro for many years. He has been at the forefront of protecting Americas innovators since he helped beat back an attempt by the content community to bury the VCR thirty years ago. That was a defining moment for Shapiro, as it would be for the revolution in consumer electronics that followed. It was a fight that showed that the success or failure of innovation has as much to do with the effort to defend it as it does with the usefulness of the product.

I also worked closely with Shapiro as he helped lead the national transition to digital television. That successful effort disrupted the status quo but changed our nation for the better. Of course, along with thousands of others, I have also been to International CES, where innovation and the future are on display.

The result of those thirty years Shapiro has spent in the trenches, fighting for innovation, has led to the ideas presented here. This book is a policy guide for our lawmakers to follow if they are serious about fully enabling Americas unique culture of entrepreneurship. He presents a disturbing picture of our current situation, and offers the tough choices well need to make to get ourselves out of it.

You probably wont agree with every one of his ideas. Whether youre a Republican or a Democrat, conservative or liberal, theres going to be something in this book that will challenge your long-held beliefs. Let it. Its time we stop focusing on the success of one party or ideology, and start focusing on the success of our country.

But this book is more than a policy memo, too. It is a plea from one American to another to remember the American Dreamthe Dream that the author has lived, the Dream that I have been fortunate to live. The Dream our ancestors came to this country to live.

Mark Cuban

October 2010

Preface

M Y DEFINING MOMENT occurred In July 2008 at a lavish hotel in Qingdao, China. At a formal banquet I sat next to the head of the province, the top Communist presiding over some 100 million Chinese. With fewer than ten words, he changed me. In a few brief seconds, he planted a seed. This seed I received uneasily. In fact, for a while I just used it as an amusing anecdote. But the seed expanded, changed, and grew into a tree of resolve. This annoying man catalyzed my grief, denial, thought, and actionbut never my acceptance.

I sat next to him as part of the formal opening banquet for the SINOCES, a trade show held each year in the beautiful coastal city of Qingdao. Little did I know, this event had started several years earlier and had borrowed part of the name from the International Consumer Electronics Show (CES). At the Consumer Electronics Association, CES is our pride and joy. It is the worlds largest and most exciting homage to consumer technology innovation. Held each January in Las Vegas, with more than 2,500 companies exhibiting cool new stuff, International CES attracts more than 125,000 leaders from business, media, and government from around the world.

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