Innovation… It is said that if you can make a better mousetrap the world will beat a path to your door. This may be the oldest adage in business. It is not true. What is true is if you can create a better mousetrap AND tell the world about it AND finance the early stages of development, then the world may beat a path to your door.

The story of innovation is not always clear. Edison and Tesla were involved in the current wars. Edison said his Direct Current was better and shocked and killed animals to prove his point. Tesla proved his Alternating Current was cheaper to transmit and won the competition.

The greatest source of innovation is the U.S. Government. The space program gave us Velcro and non-stick frying pans. Defense spending gave us computers and the internet. We complain about high drug prices but do not consider that 60% of drug research is funded by the government.

The U.S. Government is also the source of most important technology. Think about the iPhone. It contains ten major technologies including a processor, a touch screen, the internet, cellular communication, and GPS. All of these came from government research.

Venture capital and research funding then combine to develop the final product and sell it. The biggest buyer of the final product is the U.S. Government. It is then the public’s job to make use of these developments and find the next big thing. We are proud that many of the most innovative companies are part of our portfolios.

Sincerely,

Katz Family Financial