cc  >> Jeanan Yasiri: This is  Entrepreneurialism in Society.  It is a course  that is offered through  the University of Wisconsin  School of Human Ecology.  I'm Jeanan Yasiri.  As we begin today, I'd like to  extend thanks to our partners in  supporting this course.  The UW Office of Corporate  Relations, the UW College of  Engineering for their technical  support, and financial support  provided from the Ewing Marion  Kauffman Foundation which is  committed to advancing academic  education in entrepreneurialism.  Additionally, we'd like to thank  our media partners, Wisconsin  Public Television and their  University Place crew for taping  today's lecture.  I'm very pleased to introduce  our special guest today, Richard  Leinenkugel, Wisconsin's  Secretary of the Department of  Commerce.  Secretary Leinenkugel was  appointed to his position by  Governor Jim Doyle in 2008.  The Department of Commerce has  approximately 400 employees.  It provides development  assistance in areas such as  marketing, business and  community finance, exporting,  small business advocacy and  manufacturing assessments. 

 Prior to his appointment,  Secretary Leinenkugel most  recently served as the Vice  President of Sales and Marketing  at the Jacob Leinenkugel Brewing  Company.  He joined that family business  in 1987, and he began as a  district sales manager, chain  sales manager.  Before joining the Jacob  Leinenkugel Brewing Company  Richard served as an officer in  the United States Marine Corps,  and after his enlistment he  worked for a sports marketing  firm in Chicago.  He also represented Menomonee  Falls on the Waukesha Board of  Supervisors between 1997 and the  year 2000.  Richard earned a bachelor's  degree in business  administration and graduated  magna cum laude from Marquette  University in Milwaukee.  Now, as we've discussed over the  course of this semester,  entrepreneurialism is really an  imperative.  It is for all sectors, the  private sector, the social  sector, as well as the public  sector.  And I've asked Secretary  Leinenkugel to offer his  thoughts today on how the public  sector embraces entrepreneurial  thinking.  I know he'll also be very happy  to share his experiences in  business with you as well.  So please join me in welcoming  Secretary Richard Leinenkugel. 

 (applause)  >> Richard Leinenkugel: Thanks.  Jeanan, thank you.  Very nice introduction.  Made me feel very welcome.  Welcome students to the  University of Wisconsin Madison.  I went to Marquette University  as you heard.  A private institution in the  Milwaukee area of Wisconsin.  I just was thinking about coming  to Madison but I said, wow, it's  just really big.  I'm this little guy from  Chippewa Falls, Wisconsin.  Does anybody know where Chippewa  Falls is?  You do?  Okay, northwest part of the  state, about 180 miles north of  here. 

 It's where I grew up.  And Marquette was just a little  bit smaller even though it was  in a bigger city.  So I felt a little bit more at  home.  So I'm a little bit intimidated,  believe it or not, being in  front of this big crowd of  students.  And thank you for attending  today.  As Jeanan said, I really do want  to talk with you about the  public sector, what I do at the  Department of Commerce.  So I'll talk a little bit about  what we do at the Department of  Commerce to foster  entrepreneurialism in the  business climate here in  Wisconsin.  Kind of where we connect.  I'll also talk about, at least  my beliefs, of how we have to  work with an entrepreneurial  spirit in government in the  public sector.  And I think that's going to  critical, vital to how we  deliver services in the future. 

 Resources are not going to grow  for government in the future.  At least as a taxpayer, I hope  they don't.  I hope resources shrink.  Because it's going to have to be  that way.  Because we're not going to able  to sustain it with the level of  government that we have right  now.  We've got to think smarter.  We've got to be more nimble.  We have to think like  entrepreneurs if we're going to  be successful as government  officials in the future.  How we think about it and how we  react and how we implement  processes, how we manage with an  entrepreneurial spirit is going  to critical.  And I'd also like to talk a  little bit about my family's  business up in Chippewa Falls,  Wisconsin. 

 Now hopefully some of you have  heard of it.  I know some of you who are 21 or  older may actually have tried  our family's products.  I hope those of you that are not  21 have not.  But maybe when you do turn 21  you'll celebrate responsibly  with one of our family's adult  beverages.  But I'll talk about what I did  there and how we as a small  brewer had to think differently,  had to think like an  entrepreneur even though we were  part of the world's second  largest brewery.  Some of you may not know that.  So I'll talk about that as well.  Does that sound good?  And I'm going to leave lots of  time for questions and comments  because I want to hear from you  and engage with you and interact  with you as well.  So where I want to start today  is I want to talk first about an  entrepreneurial ecosystem and  how we plug into that at the  Department of Commerce.  Now I've been at the Department  of Commerce for about a year. 

 I was appointed in September of  2008.  Prior to that I had been 21  years selling and marketing beer  for the Jacob Leinenkugel  Brewing Company.  So I know beer and I know  marketing and I know sales  really well.  But I have to admit I didn't  even know what the Department of  Commerce did before I got  interested in taking the job.  How did I get interested in  taking the job?  I was reading the newspaper last  July, July of 2008, and I read  where our previous commerce  secretary had resigned his  position.  I went on their website, and I  said what is the Department of  Commerce?  What do they do?  And I read about their business  development and how they assist  businesses and startups and  existing businesses with  expansion and becoming more  efficient in terms of  manufacturing assessments.  I read about how they're also a  regulatory agency.  We monitor petroleum tanks.  In-ground petroleum tanks to  ensure that they aren't leaking.  And if they are leaking, we  ensure that they get fixed. 

 That in our Environmental  Regulatory Services area.  About half of our division or  half of our department is in a  division called Safety in  Buildings.  We ensure that buildings, homes  and commercial buildings, public  institutions as well, are built  to standards, are built to  codes.  We certify plumbers.  We certify electricians.  We certify almost all of the  building trades.  We license those trades.  And then we inspect plans to  ensure that buildings are done  safely.  We inspect elevators.  We inspect amusement park rides. 

 So we have a whole regulatory  side of our agency in Safety and  Buildings as well as  Environmental Regulatory  Services.  I also have a division that just  looks at opportunities for  investment in Wisconsin.  And I'm talking about investment  primarily from companies that  are overseas.  Foreign direct investment, a  division that I task just to go  out and create those  opportunities to sell Wisconsin  on why locating here in  Wisconsin.  That's also part of our  entrepreneurial ecosystem and  I'll talk about that.  I have a business development  organization and that's the  division that deals directly  with businesses to help them  grow, to help them expand.  It's got a minority business  bureau in there that just looks  at opportunities within minority  businesses and certifies  minority businesses.  I also have a division of  entrepreneurship or a bureau of  entrepreneurship which speaks  directly to business startups  and fosters that entrepreneurial  ecosystem that I'll talk about.  And then outside of business  development I have a housing and  community development.  And that's about public  infrastructure and helping  communities do things. 

 We also are very much involved  in disaster relief through flood  recovery through that housing  and community development  organization.  So it's a wide ranging agency,  the Department of Commerce.  You would think that it's  strictly dealing with business.  We do indirectly in all of our  divisions but sometimes on the  regulatory side, as I mentioned.  So this entrepreneurial  ecosystem, I started to learn  more about this over the last  year and a half since I've been  at the Department of Commerce.  And I can tell you that it is,  without question, one of the  absolute best models in the  United States.  And primarily, ladies and  gentlemen, you're in it here in  Madison, Wisconsin, and at the  University of Wisconsin.  It begins first and foremost  with universities and university  research.  You're at an institution, the  University of Wisconsin Madison,  that is the third ranked  university in terms of research  dollars flowing into it in the  United States.  John Hopkins is number one, I  can't remember who is number  two, but Madison number three. 

 If you include all of the other  campuses, University of  Wisconsin Milwaukee and all of  our other campuses, we do rank  number two.  So first and foremost it starts  with a lot of federal and other  research dollars flowing into  it.  What does that do?  Well, it allows us to take the  brain power that exists in so  many capacities, so many  different departments of this  university, these PhDs  that are all over this  university and it allows them to  do research.  And it allows them to take that  research and come up with ideas.  Now it used to be, in many  models it still exists like this  in the world today, that those  big brains that do this  research, they find out and they  get something really different  and, wow, it's a great find,  they publish a thesis, a book,  and it goes on the shelf.  And it sits there.  What they didn't do was to  figure out how it could help  people.  By helping people I mean how  could it make money.  How could it be commercialized  into something that you and I  could use or that society it  could add value.  And at the University of  Wisconsin we are leaders in  commercialization of research. 

 We have a couple of things in  place to foster that research to  commercialization.  And a couple of things, if  you've been keeping your eye  open, are being built to even  hasten that process.  Long ago Wisconsin was a wheat  growing state.  We weren't all that good at it.  We had a blight, lost most of  our crop.  And the University of Wisconsin  invested in some research and  published a strategy to  transform our wheat growing  state into a dairy producing  state.  And much of that research was  done right here at the  University of Wisconsin.  Today, we are one of the world's  leaders in dairy production.  We put it on our license plate  that we're America's dairyland.  Milk, not beer, is our state's  beverage. 

 But we are leaders because we  made a decision in this state  many years ago that the  university helped strategize for  us in making Wisconsin the top  producing agricultural state.  We lead today in many, many  areas around dairy and dairy  production.  In fact, one of the things that  we do very well is cheese  making.  It's a big business in  Wisconsin.  Agricultural is a big business  but cheese making and food  processing is a big money maker  as well.  That wouldn't have happened in  the state unless the university  was able to lead a lot of that  research and commercialize that  research into actual products  that help dairy production  today.  And it's technologies that we're  exporting across the United  States and the world.  How many of you know that  Wisconsin, one of Wisconsin's  leading exports to China  is bull semen.  Those dairy cows that are in  China right now, over 75% of  them trace their genetic roots  back to cows here in Wisconsin.  It's pretty cool. 

 It's technology that we're  exporting around the world.  I just returned from China a  couple months ago so I wanted to  share that story with you.  It starts with the university  research.  That's the first part, I  believe, of a strong  entrepreneurial ecosystem, we're  a leader here in Wisconsin.  Now we have to commercialize  that research.  We have to get it off the shelf  and put it into products.  How do we do that?  It takes business leaders, it  takes thought leaders, it takes  people that have a vision.  Generally, it's not the  researcher.  Sometimes it is.  But those doctors, guys with  doctor's degrees, generally  aren't business people. 

 They generally, their strong  suit is not marketing or getting  things to market.  So how do we connect that  research, that idea to getting  it to market?  At the University of Wisconsin  we have the premier technology  transfer network in the nation  through the Wisconsin Alumni  Research Foundation, WARF.  WARF is set up to take  technology, sell the idea or  license the idea to companies,  generally privately held or  publicly held companies, who  want to commercialize that  research, spin it out into  products, and the profits for  that license flow back to the  university to generate further  research.  A terrific model for research.  How do we speed that up though?  How do we get more collaboration  to take place?  Being built right now on the  University of Wisconsin campus  here is the Wisconsin Institute  for Discovery and the Morgridge  Institute.  I'm sure you've all seen the  building going up on University  Avenue.  That is where the public  research that is being done at  the university is going to  coexist with companies that come  in and actually are on site  together.  Break down those walls and speed  up the commercialization of  research that is taking place.  So you've got the idea, you've  got the people with the know-how  to take it to market that think  big and think of the  opportunities that can take it  to market to collaborate, spin  the research this way, maybe  tweak it a little bit, come up  with a product or process or  whatever it is and now  commercialize it.  But where do they go?  Let's say it's a small company. 

 And they just need to get to  that early stage, they need to  do some further testing.  What do they do?  They need some space to do that.  Perhaps it's laboratory space.  Here in Madison, the University  of Wisconsin, again we have the  University of Wisconsin Research  Park.  They're already built.  They have over a hundred  companies there right now.  Most of them generated and spun  out of research that has flowed  through the University of  Wisconsin.  They're early stage companies.  Some of them are still in the  development phase of their  products.  Some of them are already  entering second stage. 

 Several of them have already  spun out and sold as part of  their exit strategy.  But it gives them a place with  relatively low cost rent,  located next to where all the  great research is taking place  in case they need access to  that, which is a big benefit to  them.  That's why they're still staying  here in Madison.  The University of Wisconsin  research park is going to be  adding phase two.  Room for another, I think, a  hundred plus companies in phase  two.  A great model right here in the  University of Wisconsin.  And then coming out of Research  Park these companies are  positioned for growth.  They're positioned for their  exit strategy.  My job is to get that  entrepreneurial climate, foster  it, be part of it, but to  ensure, or at least try to make  sure, that the company has the  right incentives in place to  stay in Wisconsin.  And we don't always win. 

 Sometimes when venture  capitalists come in and say okay  well we're going to fund this  company, we're going to raise  $20 million, fund this company  but we want it located where  most of the money is coming  from.  And let's say it's east coast or  west coast so we're going to  take it to Boston or we're going  to take it to California.  That's where we need to improve  in the state of Wisconsin right  now is access to venture  capital.  Venture capital is really, I  think, especially in this tough  economic environment, the  linchpin to ensuring growth  right here in Wisconsin for  business startups.  And that's a part right now  where we're weak compared to  east coast, mainly Massachusetts  area and the biotechnology side,  or California right now is  access to venture capital.  We're going to need that venture  capital to fund those early  stage companies, to fund the  second stage to where they can  get to an area where they can  decide whether we're going to go  with an IPO, issue some stock,  or we're going to sell the  company or we're going to do a  joint venture.  But that's the phase right now  that I think we're the weakest  at.  But other than that we've  developed a great  entrepreneurial ecosystem here  in Wisconsin.  My great-great grandfather was a  entrepreneur.  He left his father's business, a  brew pub, in Sauk City,  Wisconsin, along the banks of  the Wisconsin River, in the  mid-1860s. 

 He went up to work in Eau  Claire, Wisconsin, in a brewery.  And then he found or met a guy  named John Miller.  No relation to Frederick Miller  who established the Miller  Brewing Company.  And they traveled 12 miles up  the Chippewa River and they  established a brewery in  Chippewa Falls, Wisconsin,  called the Spring Brewery.  They named it that because they  located it on a spring.  Now entrepreneurs of that time  basically went where there was a  population where they could make  and sell their goods.  So Jacob, being the smart  entrepreneur, recognized that  Chippewa Falls had the largest  sawmill under one roof.  He had 2,000 thirsty lumberjacks  and there was no brewery.  So he built a brewery.  And back then beer could only be  taken as far as a horse could  take it in a day which is about  20 miles. 

 And they didn't have the modern  refrigeration so the beer that  was brewed and packaged was  generally consumed within a  couple of days.  Good thing, it was always fresh.  But a little bit entrepreneurial  climate for my great-great  grandfather in Chippewa Falls  that what we have today.  At the Department of Commerce we  try to link many ideas or many  people that have ideas with the  right resources.  The best resource that we have  to doing that is the resource  called the Wisconsin  Entrepreneurial Network.  It's called WEN.  You can find it  at WENportal.org,  WENportal.org.  The Wisconsin Entrepreneurial  Network is a networking service.  It's tied in with a wide array  of sources and programs and  services that provide the tools  for survival and growth to  entrepreneurs in all stages of  their business development.  We connect with the small  business development centers  that exist around the campuses  in the university system. 

 We have WEN directors in four  different campuses or four  different areas that can provide  strategic consulting services to  business startups.  We link in the score, the  retired executives that are out  there that are willing to donate  time to help entrepreneurs.  And it's all done through one  portal, the WEN network.  It's one of the great things  that I think is well that we  have to work with entrepreneurs  in this state.  Another thing I'd like to  mention, and it's loosely  structured within WEN, is the  Wisconsin Inventors and  Entrepreneur clubs called the  INE clubs.  We've grown the Wisconsin  Inventors and Entrepreneur clubs  to 42 clubs covering 54 counties  here in the state of Wisconsin.  There's 72 counties so we have  about 54 counties covered with  INE clubs.  Generally these clubs will meet  monthly at a location, and it's  a peer-to-peer networking  opportunity to entrepreneurs.  Their mission is to motivate, to  inspire, to connect  entrepreneurs to the resources  that they need to hopefully take  those ideas to the next level,  to commercialize those ideas.  Those two systems, the WEN  network and the INE clubs, are  really important because as an  entrepreneur you think you have  that idea but you just aren't  sure. 

 And it often is very helpful to  speak to people that have  launched businesses, that have  already done it, tried it, maybe  failed, learned from that,  launched their next business.  And to hear from people about  their experience through the WEN  network or through the INE clubs  is really helpful to a lot of  inspiring entrepreneurs.  So we support those  organizations through our Bureau  of Entrepreneurship at the  Wisconsin Department of  Commerce.  I'm sure you've heard some  statistics about small business  and business startups.  I'm a big believer that the way  to create jobs in our economy  today is to foster innovative  ideas.  To provide the support to  entrepreneurs to take their  ideas and commercialize them.  It's going to be critical for  job growth in the future.  I just got back from Israel.  I haven't read the book yet, but  there's a book that's been  published about the  entrepreneurial climate in  Israel called Start-Up Nation.  I've heard it's excellent. 

 I got to see a little bit of  that firsthand while I was in  Israel.  We were there to attend the  WATEC Conference which is  related to water technology  conference.  And Israel is very interesting  country in that they have  developed what they called  Silicon Valley of water  technology.  They come at it from the area of  scarcity.  They're a desert nation.  Their biggest aquifer is the Sea  of Galilee, they have wells and  then desalinization, taking sea  water from the Mediterranean  sea, taking the salt out of it  and making fresh water.  It takes a lot of energy to do  that but they're leaders in it.  They recycle over 75% of their  water.  Here in the United States we're  probably on average maybe 10%  to 15% in terms of recycling.  The next highest nation to  Israel is Spain. 

 They recycle 22% of their water.  Israel has goals in place to  recycle over 90% of their water.  So where do they get the ideas  to conserve, recycle water?  They get them from  entrepreneurs.  And they have somewhat of a  unique system in Israel.  They're all forced, that's the  right word, they're forced to  served in the army in Israel for  three years.  So young people, men and women,  meet while they are in the army.  And they all talk about, what  are we going to do when we get  out?  So they form connections while  they're in their compulsory army  service.  They brainstorm, they  collaborate.  They're highly educated and they  talk about, hey when we get out  of the army we should do this.  And they go into business  together. 

 It's really different.  It's unique in that they form  those relationships while  they're in the army and  brainstorm about ideas.  But here's the thing, they have  such a great entrepreneurial  climate of risk-taking in Israel  that even if they fail they are  deemed a success.  They don't let that be a burden.  They go onto the next thing, the  next idea.  Even the cab drivers that you  meet in Israel are inspiring  entrepreneurs.  If you talk to them, they all  have an idea about what they're  going to do in business.  That's just the way they think.  The other thing that spurned  entrepreneurship in Israel is  they had huge immigration from  Russia in the early 1990s.  Many of those who immigrated to  Israel in the early 1990s were  professors and doctorates,  doctoral degrees from  the universities in Russia. 

 And what Israel did was they  said we'll set you up for a  year.  We'll fund you in a business  incubator to develop a  technology or an idea  or a business.  And these doctors and people  with these college degrees came  back and spun out businesses  coming out of that.  And the Israeli government took  like 30% of their profits for  the first year as their take in  funding them in this business  incubator.  Quite a story.  So if you have a opportunity to  read Start-Up Nation, I would  urge you to do that about a  terrific way to foster  entrepreneurialism.  The final thing that I'd like to  touch on before I take some  questions is what can we do in  the public sector, in the  government sector, to be more  entrepreneurial?  When I came into the Department  of Commerce I got a lot of  questions early on from people.  What's the difference that you  see between the private sector,  the business sector and the  public sector?  And I answered it this way,  and I still answer it today  the same way.  First and foremost they're more  similar than they are different.  Because it's still about people. 

 Organizations and organizational  strength is the strength of the  people that you have working for  you and with you.  And that doesn't change.  Whether it's a private  organization or the Department  of Commerce or state government.  You have people working in that  organization.  So as a manager of an  organization you have to  motivate, you have to inspire,  you have to reward terrific  performance, you have to break  down barriers, you have to  enable people to do their jobs  as well as they can do them.  That's the same whether you're  working in the public sector or  the private sector.  What is different about the  public sector is what motivates  people.  And in the private sector  it's clear what motivates an  organization, for the most part.  It's profit motive.  To make money. 

 And by making money you reinvest  in your business, to grow that  business and you reward your  share holders, you reward your  employees.  People are motivated by money  and wealth.  They want to make sure that  their ideas and their efforts,  they're being recognized for it.  You're limited in doing that in  the public sector.  I can't walk in and reward my  best performers with a bonus or  have a bonus structure in place  for them.  It just doesn't exist in the  public sector.  So you really have to think  about it a little bit  differently.  And like in an entrepreneurial  organization you have to foster  teamwork and you have to think  about how you're going to mold  that organization to perform at  their best every day.  A lot of that is about thinking  differently.  Thinking like an entrepreneur. 

 Incorporating technology is  probably the strongest thing  that we have going for us right  now.  Something that we're going to  have to continue to incorporate  and use in the government sector  because we aren't going to be  given anymore people resources.  I'm not going to get more  people.  So I have to think about what's  out there right now that I can  utilize to increase my  productivity, and by and large  that's using technology.  So that's something that we're  going to have to continue to do.  An example of that, I'm still  amazed at the amount of paper  that is generated in government.  I sign things, I usually have a  clue what I'm signing, but it's  thick and there's multiple  copies because that's the way  you do it.  There's no other system in  place.  When we report things to the  federal government the only  thing they accept is paper with  my signature on it.  It's crazy because technology  exists right now to do all of  that electronically but we just  haven't caught up. 

 So we're going to have to start  implementing more of that  technology, and it's going have  to be done at all levels of  government.  And we're going to have to need  people in there to say you know  what, that old way of doing  things, throw that out, we've  got to do it differently because  I don't have five people to make  copies and bind things and  staple things anymore.  All it takes one button to send  it over to me and I can read it  right there and sign off on it  electronically.  We need to do things  differently.  We're implementing some of  those, you'll be happy to know.  The other part of it is  I'll call it collaboration and  communication.  I think that exists in any  organization, but it's  especially vital in  entrepreneurial organizations.  That spirit of collaboration,  breaking down walls, breaking  down barriers, breaking down  us versus them.  That's something else that we  need to do in the public sector.  Entrepreneurial organizations  are generally so small they  don't have those walls. 

 Most entrepreneurs leave  organizations when they get too  big because big organizations  develop bureaucracy.  Entrepreneurs dislike  bureaucracy, they dislike  bigness.  They leave organizations because  they get too big.  We need to have that same  attitude in the public sector.  We need to break down  bureaucracy, foster  collaboration across government  agencies, across borders whether  we're counties, cities,  villages, towns, states, we need  to start collaborating and  fostering collaboration at all  levels of government.  Entrepreneurial organizations do  it because they're small,  they're nimble, they don't have  a lot of people, they think  differently, we need to think  that same way at government.  And the final thing I'll talk  about before I just give you a  few quick thoughts on how we  operated as a brewer, was we  need to shrink the size of our  government but not necessarily  the services.  Taxpayers are going to tell us  through their legislators what  services they want.  Sometimes we have a mentality  that we're all for shrinking the  size of government but don't  touch my program, don't touch  the one that helps me.  So we're going have to make some  tradeoffs because we just aren't  going to be able to sustain what  we have right now in terms of  the size of the public sector as  a course of our gross domestic   product, our GDP. 

 It's just gotten out of whack.  So we're going have to think  differently about how we  structure government to support  services.  Because we just aren't going  have the resources.  We're going have to shrink the  size of our organization but not  necessarily our services.  So we're going to have to find  ways to provide services  differently.  That's going to be our  challenge, I think, in the  public sector.  Finally, and then I'm going to  though it open for questions, is  my brother Jake, my brother John  and I ran the Jacob Leinenkugel  Brewing Company.  Jake and John are still there  today.  When I started with the company  in 1987 we were producing maybe  80,000 barrels of beer a year.  When I left, we were nearing  500,000 barrels. 

 So we grew substantially in that  21-year period.  We grew in size, we also grew in  complexity.  In 1988, a year after I started  with the brewery, Miller Brewing  Company came to my dad.  My dad was our vice chairman of  the board.  And they wrote him a letter.  They said, Bill we're interested  in a joint marketing venture  with the Jacob Leinenkugel  Brewing Company.  My dad took that letter  to Bill Casper.  Bill was our chairman of the  board, grandson of the founder  Jacob Leinenkugel.  Bill Casper read the letter.  He asked my dad, he said what do  you think they want?  My dad said I think they want us  to buy them. 

 Well, it was the other way  around.  In 1988 we became a wholly owned  subsidiary of Miller Brewing,  the Leinenkugels did.  But we kept our independence  through a wholly owned  subsidiary structure which kept  our brewery in place, our basic  accounting and corporate  structure in place, including  the management structure, but it  allowed us to tap into all of  the benefits of Miller Brewing  Company in terms of their scale.  Their IT, their legal services,  their distribution services,  their sales and marketing  research departments.  So we were able to tap into all  of that back room resources to  help our small company grow as  an entrepreneurial organization.  We never lost that  entrepreneurial spirit.  I think that was one of the  reasons why we were able to grow  and to grow successfully within  a large company like Miller  Brewing.  Is because we forced ourselves  to think like a smaller and  hungrier craft brewery.  We could have gone to Miller and  said we want to tap into this  huge scale of doing light beers  and just doing them mass  production and selling them  cheaply.  But that's not who we were. 

 We were going to produce high  quality craft beers of a variety  of flavors and sell them at a  higher price.  And we looked at what the  smaller guys were doing in terms  of that, and participated in  that market rather than going to  a larger scale market.  And that's why I think we were  able to grow and grow  successfully in a large  organization like Miller  Brewing.  So I hope that gave you a little  bit of flavor for  entrepreneurialism in the public  sector.  A little bit about the Jacob  Leinenkugel Brewing Company as  well.  And I'm here to answer some  questions or comments that you  may have.  So please let me have them.  I think we have a mic, we want  to make sure we get you on the  tape as well.  >> Hey, my name is Eric.  >> Hi, Eric. 

 >> How you doing?  My most important question that  I've kind of been boiling over  here with is I consider myself  an entrepreneur but mainly I  just really have good ideas and  so I want to take those ideas  and I want to turn them into  something tangible and something  real.  What advice do you have as far  as steps to take to utilize the  Department of Commerce and the  Wisconsin Entrepreneurs Network  to make that happen?  >> So the question is I've got  ideas, how do I make it happen?  You mentioned the Wisconsin  Entrepreneurial Network, check  in with that and give me your  feedback on that website.  If that doesn't direct you to  the right places to go, like  where to go.  That small business development  center, that might be one, to  INE club, that might be another  one.  I think the thing to do when you  have ideas is bounce them off of  people.  Develop a network.  Network of peers, a network of  friends, family, and people with  like interests.  That was my example with the  Israelis.  They were all in an environment  where they were serving in the  military together.  The environment was that they  had their peer network. 

 They were developing their peer  network while they served  together in the army.  I think you need to find that  same peer network to take those  ideas, bounce them off, get some  feedback and then go to the WEN  network, see what resources are  available.  We have a variety of grants that  we will work with people in  terms of getting their ideas  together put into a business  plan.  That's another good thing to do  is to vet it with a business  plan and enter a business plan  contest.  There are several around the  state.  We hold one every year called  the Governor's Business Plan  Contest.  It's put on by the Wisconsin  Tech Council, Wisconsin  Technology Council.  That's a terrific resource as  well for vetting your idea.  You'll enter the business plan  contest and you'll bet get  feedback back from the judges.  Another great source for taking  those ideas and seeing if  there's something that I have  there to commercialize. 

 Eric, does that help?  >> Yeah, it does.  >> Develop your peer network,  test your ideas.  Yes?  >> Hi, my name is Walker.  >> Walker.  >> I have a question more about  the brewery side.  I've talked with local brewers  who seem to have some problems  with the three-tier system.  They say they have customers who  really want their beer, but the  federal government stops them  from selling directly to the  public.  They can't get room on the  trucks or on the shelves or  anything like that.  Do you have any comments on the  future of the three-tier system?  Is that evolving at all or is  that kind of a heated subject?  >> Are you 21 Walker?  >> Yes, I am.  >> Okay, great. 

 The three-tier system, let me  talk about what is it first  because some of you may not know  what the three-tier system is.  We had a great national  experiment in our nation back in  1919 where the sale and  manufacture of alcohol was  prohibited.  It was called prohibition.  Is it the 18th amendment?  I think so.  The 21st amendment, 1933, was  passed and sale and production  of alcohol was legal again.  Our family was back in business.  We got out of the soda pop  business and the candy  distributing business that we  were in during that time period  and we started making beer  again.  But the three-tier system was  established.  It used to be that breweries  could own retail outlets.  You can still see some remnants  of that today in some of our  major cities in Chicago,  Milwaukee, probably even a  few here in Madison. 

 You might see, oh, that's the  old Schlitz bar or that's the  old Pabst bar.  And you'll actually see their  logos in sandstone on the  outside of the building.  It's pretty cool.  But breweries owned bars.  They still do in Britain today  and other countries.  It's illegal, can't do it.  The there's three tiers.  The manufacturer has to sell to  a distributor and the  distributors sell to retail  outlets.  Bars, taverns, restaurants,  supermarkets, liquor stores.  You have to go through that  system. 

 Smaller brewers are saying hey  listen, the big manufacturers  control the distribution at the  second tier, at the distributor  level because they have the  market clout.  They have the power, they have  the scale.  So I have a great product, but  I can't bring the marketing  resources to the distributor  that the big brewer can so the  big brewer is not interested in  selling my beer.  I can't go directly to retail,  I'm prohibited by law in doing  that.  So I'm being blocked.  That's their argument.  The reality is this: Some of  that is true, but the reality is  distributors, if you sell  yourself right as an  entrepreneur, as a small brewer,  to the distributor and you have  a good beer, a good package, you  have a marking plan, a sales  plan, you can provide support,  they'll take you on.  And they'll give you a fair  shot.  Distributors today are more  interested in taking on variety  and working with smaller beers,  craft beers today than they ever  have before.  So I think it cuts both ways. 

 I think if you're a small brewer  who has a good business plan, a  good product, a good package,  can support your product, you  have a great shot at getting it  in the marketplace today.  The future of the three-tier  system, I'm not going to touch  that one.  Yes?  >> Hi, my name is Kaylee.  >> Haley is it?  >> Kaylee.  >> Kaylee.  >> I have been on a  Leinenkugel's tour and I enjoyed  myself thoroughly, but I was  with parents so it was okay.  >> I started as a tour guide.  >> Oh, okay.  >> Before I was 18.  >> But my question is how would  the drinking age, if it were  changed to be 19, affect your  company and are you kind of  pushing to get it so that it is  a lower age so you can have more  customers or how do you feel  about that?  >> Well, the law is 21. 

 I have a son who is 22.  I have daughters, twin daughters  who are 20.  One goes to the University  Wisconsin Oshkosh the other is  at the University of Minnesota.  As a parent, I believe that  responsible use of alcohol is  something that we don't do a  very good job teaching, in  general, in the United States.  European countries do it, it's  part of the culture, it's part  of their home.  A glass of wine, a glass of beer  at dinner.  They grew up and alcohol isn't  mystified to them.  I don't think we do a good job  of that in the United States.  And as parents we generally  don't do a very good job of  that.  We don't talk to our children  enough about alcohol. 

 It's kind of this mystified  thing.  So what I'm giving you now is  not as a commerce secretary or  as a person in the beer  industry, it's as a parent.  I grew up the drinking age was  18.  I think 18 is too young,  personally.  And I think it's too young  because you're still in high  school when you're 18.  But when you're 19, you're  out of high school, you're  in college, I think a better  environment for drinking is a  bar than a house party.  I know that people go to house  parties and they aren't watched,  they aren't supervised, and the  chances of alcohol being abused  at a house party versus in a  licensed premise, to me, is more  dangerous.  As a parent, I'd rather see the  drinking age be at 19.  Does that answer your question?  Yes?  >> Hi, my name is Kayla.  Just so you know, Leinies is the  only beer allowed at my parents'  house and we've enjoyed it  thoroughly. 

 >> You have great parents.  >> My question is in your  transition from being in the  brewery and being directly  involved in the family business,  how has your name affected you  now in the government sector,  helped or hindered you in that  idea?  >> Okay, sure.  How has my name helped.  It was a big benefit.  I think politically, I didn't  know Governor Doyle before I  took this job.  I had met him once just briefly  at an event and I don't really  consider myself a political  person.  I wasn't involved in politics.  But I think the governor  recognized with my experience,  my business experience and also  my name recognition, that it  would be helpful to have  somebody in my capacity, my  name, to help guide and lead our  commerce department.  It does, I think, the name  Leinenkugel is well recognized  in Wisconsin, but it's becoming  more well recognized  throughout the United States.  So that background and having  that background when I go out to  talk to companies about why to  locate in Wisconsin. 

 The fact that our family's been  doing business in Wisconsin for  142 years gives me a lot of  creditability to tell that  personal story about why  Wisconsin is such a great place  to do business.  So the name definitely will help  open some doors in that regard.  I hoped that answered your  question.  Say hello to your parents for  me.  >> I don't see other hands right  now, Dick, but I'm going to  close with one last question  just going back to your work in  the public sector and your work  as Secretary of Commerce, you  were mentioning that  government's going to have to  shrink but we are still going  have to provide the same level  of service, and if people have  been watching the news in the  last year our state government  is shrinking.  Your department experienced  layoffs, Department of  Agricultural, Trade and Consumer  Protection experienced layoffs.  Share with us a little bit about  how you were able to manage that  within the culture of what would  be typically a public  bureaucracy, how you're helping  to shift that culture to right  sizing as opposed to just  maintaining the same level of  staff.  >> Sure.  Well, the first big point to  realize is that at the  Department of Commerce and  throughout state government  there are many different layers  or different unions that  represent employees.  About 75%, 3 out of 4 employees  at the Department of Commerce  are represented by a union. 

 So you have to really work  through and abide by different  union rules in terms of layoff  notification or job  classifications because if  you're going fire somebody in  this area they may have posting  rights to go work in a different  division or a different area.  So you kind of have to work  within that.  We implemented a series of  layoffs within our Safety and  Buildings division, simply  because the level of activity  had gone down.  Nobody was building during this  recessionary period, whether it  was housing or commercial  buildings.  They weren't installing septic  systems.  We weren't doing plan reviews.  We weren't doing building  inspections.  So the activity wasn't coming  in.  We were forced to right size  because much of the revenue that  we received for providing those  services was gone.  I still had people, I was still  paying them every week, but I  didn't have the revenue coming  in to cover that expense. 

 So we were forced to make a  tough choice.  And it's never easy.  It's never something that you  want to do in terms of laying  off people because you lose good  people.  And these people have families.  So it's a real difficult  decision as a manager to make.  And it's not anything that you  want to experience.  Resources, just in general,  I think taxpayers today are  looking at it and they're going  more and more of my income is  going to support government,  whether it's local, state,  federal government.  And I can't make ends meet if  I'm giving more and more to  government support programs.  So it's going to be something  that we're going to, you, all of  us, are going to really have to  think about.  What is the level of service  that we want government to do?  And how are we going to pay for  it?  And I think that it's going to  be, we're going to have to make  some tough choices. 

 But I don't think it necessarily  just has to be those tough  choices.  I think with technology, with  the right restructuring, with  the right management, with the  right outsourcing in some cases,  we're going to be able to  provide that level of service.  See the fallacy is I have to cut  the service if I cut the people.  That assumes you're efficient at  the level of the personnel that  you're at.  It assumes you can't be more  efficient by applying a new  process or a new piece of  technology.  So we're going to be challenged  to, I think, continue to provide  the level of service but with  fewer resources, fewer human  resources, fewer dollars.  Yes, one more question?  >> Hi, my question is, what are  the new economic development  plans of state government  to help grow jobs and investment  and encourage business  consolidation to Wisconsin?  >> So the question, let me just  make sure I've got it right,  what are our main plans to help  recruit business and bring  business into Wisconsin?  Okay.  The question begs, is that the  right strategy?  Is business recruitment into a  Wisconsin a strategy for growth?  I would challenge that.  I think it's part of what we  should do, but not the only  thing that we should do, is  recruitment.  I also think growing your own is  a business strategy that we  ought to pursue. 

 And that's why I took this  opportunity to talk to all of  you who are interested in  entrepreneurialism and creating  business.  I think starting businesses,  growing what you have, is a  great business strategy for  economic development.  And it's something that we need  to continue to pursue.  That said, we also do  recruitment.  And I've been involved in  several trade missions to take a  look and going in to pitch  foreign companies or recruiting  them to come and locate in  Wisconsin.  We've also had some success in  luring biotechnology startups  and some companies coming in  from Massachusetts and  California and Minnesota  to locate in Wisconsin.  One of the most successful  programs we have in Wisconsin is  what's called angel tax credits.  We have an act that was passed  it's called Act 255, and it  provides for investment tax  credits for angel investors.  So if you're an angel investor  and you want to invest in a  startup company that we certify  at the Department of Commerce, a  qualified new business venture,  we've certified over a hundred  of these businesses right now  and awarded them angel  investment tax credits, they can  go out, get their angel  investment in and that angel  investor can take 25% off of  their Wisconsin income tax  liability.  It's a great recruitment tool. 

 It's one of the leading ones in  the country.  It's been very successful in  luring some high tech, mostly in  the biotechnology field to  locate in Wisconsin.  Another great advantage that we  have is the quality of life and  the quality of workers that we  have in Wisconsin.  And that's not an economic  incentive.  We do have economic incentives  as well.  But I really like to talk about  the quality of the people and  the quality of life that we have  in Wisconsin.  And the quality of our  education.  That's huge for employers coming  into the state.  We have a great K-12 system.  We have a terrific technical  college system. 

 Wonderful private colleges and  universities, and our University  of Wisconsin system is  tremendous.  Those are all great advantages.  Well, thank you everybody.  It was terrific being with you  this afternoon.  (applause)  Thanks.