Mr. McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
Benjamin: Just how do you mean that, sir?

When Mr. McGuire famously whispered the word plastics to a young and confused child of the suburbs played by Dustin Hoffman in the classic movie The Graduate, the idea was that plastic was the future and young Benjamin should get with the program.

Well, if The Graduate were remade today, the new buzzword for the young could be “analytics.” Thanks to the Internet, the world has become a swelling ocean full of data. One grand challenge of our age is to find a way to harness that data. And that’s where the burgeoning field of analytics comes in. Companies as large as IBM and as small as Twitter are looking to hiring people who can boil down this ocean of data into knowledge and insights that can help improve the performance of their businesses.

But the field is so new and growing so fast that there just aren’t enough qualified workers who can do these jobs. IBM currently has over 2,500 job postings for analytics-related jobs, and 60% of its new hires come from universities.

So IBM is taking the matter into its own hands. On Dec. 9, Big Blue announced that it was working with Fordham University’s School of Business to create a new business analytics curriculum to help prepare students for jobs in the field. IBM is currently working with several other schools on similar initiatives, but this is the first program that IBM has announced.

Click here to read the rest of the post on Businessweek’s Techbeat.

My newly departed colleague Steve Baker’s last piece for BusinessWeek is a contrarian take on social media. Given that this skeptical piece was penned by one of social media’s biggest fans and practicioners, it’s worth a close read.

Says Baker: “The problem, according to a growing chorus of critics, is that many would-be guides are leading clients astray. Consultants often use buzz as their dominant currency, and success is defined more often by numbers of Twitter followers, blog mentions, or YouTube hits than by traditional measures, such as return on investment.”

Read the rest of the piece here. It’s generating a pretty vibrant discussion on bw.com.

The most difficult part of Bloomberg’s acquisition of BusinessWeek has been seeing so many hugely talented colleagues and friends leave the operation. Five close coworkers of mine, most of whom I’ve been working with over the last nine years in the technology cluster, are no longer working for the tech team. Left coaster Rob Hof, Chicago correspondent Roger Crockett, and my three NY homies Steve Baker, Steve Hamm and Heather Green. Damn, that is a gaping hole you all have left!

[Steve Baker On the Streets of El Paso]

It has been a pleasure and honor to work with all of you. Thanks for everything you’ve taught me over the years, and thanks for your camaraderie. I know we’re all going to keep in touch but the office will feel pretty empty without you all–especially the Mother Ship in NY. Best of luck in all of your new ventures and I’ll see ya on the 43rd floor, Playwright, University Cafe, etc. I have no doubt you will all go on to do different and interesting things, and I am eager to see each of you ramble down those new paths.

[Real Rob Hof Posing with Virtual Rob Hof]

Georges Doriot, the founding father of the venture capital industry and subject of my book Creative Capital, continues to pop up in the news. On Dec. 1, in the Financial Times, Luke Johnson, founder of the British private equity firm Risk Capital Partners, wrote an editorial, “A call to arms for ex-soldiers in business,” about the unique role that the military has played, and continues to play, in spurring innovation.

Johnson credits Doriot as the pioneer of the VC industry and for forming the “link between the military and venture capital.” As I argue in my book, Doriot learned how to become a VC during the war when he was in charge of research and development in the Quartermaster Corps of the U.S Army.

As further proof of his theory, Johnson mentions a new book, Start-up Nation, which explores the role that the Israeli military and social networks and leadership training provided by Israel’s mandatory military and reserve service has helped foster a vibrant entrepreneurial culture in the middle of the world’s most chaotic region. (At one point I considered calling my book Start-up Nation, too!)

For Doriot’s singular efforts, he was promoted to the high rank of brigadier general and was received the Distinguished Service Medal, the highest U.S. military medal given to a noncombatant, as well as being decorated a Commander of the British Empire and awarded the French Legion of Honor.

Also, the New England Journal of Technology recently ran an interview with Leo Beranek, a cofounder of BBN Technologies, a landmark technology company that was a leader in computer networking and communications. The interview was done by MassTLC chairman Steve O’Leary and Mass High Tech editor E. Douglas Banks. Beranek was presented with the Massachusetts Technology Leadership Council Commonwealth Award for lifetime achievement.

In the interview, Beranek is asked if he remembered Doriot. He replied:

“Venture capitalism really didn’t start until General Doriot came into the picture with the American Research and Development Corporation. But until then the banks were doing it. The banks were not taking any stock. They just lent you money, so they didn’t get to make any big profits from it.”

“Well, General Doriot was of course with the big venture capital firm, American Research and Development. He was very famous and very powerful because he was financing all these companies of which Digital Equipment is his most successful.”

And then he goes on to recount an amusing anecdote, which I never heard, about how Doriot threatened to sue BBN after they poached a star employee of one of the companies Doriot had invested in.

Man of the Meltdown
How hedge fund manager John Paulson made billions in the crisis
By Spencer E. Ante

Editor’s Rating:
The Good: A fascinating account of how John Paulson profited big time from the housing meltdown.

The Bad: A times the narrative seems a tad scattered and gossipy.

The Bottom Line: A dramatic and plausible account of one man’s triumph.

The Greatest Trade Ever
By Gregory Zuckerman
Broadway; 293 pp.; $26

The Great Recession of 2009 destroyed trillions in wealth. But a few lucky or shrewd souls profited from this catastrophe. Perhaps the single largest beneficiary was John Paulson, a hedge fund manager who engineered the greatest trade in history, earning his firm $20 billion by betting against the housing market. In 2007, Paulson took home a staggering $4 billion for himself, the largest one-year payout in the annals of finance. That’s more than $10 million a day, if you’re counting.

How Paulson and a handful of contrarian investors pulled off this once-in-a-lifetime coup is the subject of The Greatest Trade Ever by Gregory Zuckerman, a senior writer at the The Wall Street Journal. Paulson has released a statement calling the book a disappointment filled with inaccuracies, which he didn’t specify. But The Greatest Trade Ever comes off as a fascinating and believable counter-narrative to the growing pile of books recounting the disastrous mistakes made by many of the supposedly smartest minds on Wall Street. It is also a surprisingly dramatic work—although not always in an enjoyable way. It is the drama of waiting to see the horrific destruction scene in an apocalyptic movie.

Read the rest of my book review here.

This morning, at 6 am, while most of you were sleeping off turkey and gravy, I got up to appear on a new NPR show called The Takeaway. It’s hosted by the great journalist John Hockenberry and his co-host Celeste Headlee.

The subject of our segment was first time business owners and how they are dealing with the recession and Black Friday. Two small biz owners from the New York area were guests, including one guy from Brooklyn who runs a new store that sells skateboards and fresh cut flowers! I was invited to provide more of a big picture, as one of the show’s producers had recently read my story “Fertile Ground for Startups.”

Check it out by clicking here (see the “Listen” link). It’s only 8 minutes long. And it gave me another opportunity to harp on a growing theme of my work: The key role that small business plays in creating jobs during the aftermath of a recession.

I hope and predict that the Obama Admin. will make job creation its singular policy focus in 2010, and come up with innovative ways to help small business–not hurt it. If not, he and the Democrats will be in for a rude awakening come the mid-term 2010 elections, and the U.S economy will not be in much better shape than it is now.

Editor’s note: I apologize for not posting that much over the last week or two. With BusinessWeek’s acquisition by Bloomberg, life has been especially nutty. Now that the deal is scheduled to close on Dec. 1, I hope to resume posting on a more regular basis.

Happy Thanksgiving!!!

In this week’s issue of BusinessWeek, we published the inaugural list of “The World’s Most Intriguing New Companies.” I am thrilled that we launched the package right as Global Entrepreneurship Week kicks off, taking place Nov. 16-22, in 85 nations.

In my lead story for the package, “Fertile Ground for Startups,” I made two big points:
1. Startups are playing an increasingly important role in American business
2. Startups may play a central role in any recovery.

There was one startling new study, based on 2007 Census data, I was unable to work into the story that I want to highlight now, which provides some empirical evidence supporting the second point.

According to a new study by the Ewing Marion Kauffman Foundation, which was co-written by the respected economist Robert Litan, companies less than five years old generated nearly two-third of the net new jobs created in the U.S. in 2007. Without these startups, “net job creation for the American economy would be negative in all but a handful of years.”

The upshot: It is clear more than ever that new companies and the entrepreneurs that lead them are the engines of job creation and economic recovery.

It is well known within economic circles that new companies produce the majority of new jobs in the U.S. economy. What this reports reveals for the first time is extent of that trend, and the fact that startups play a particularly important role in growing jobs out of a recession. New companies have produced all of the net new jobs in the U.S. from 2001-2007, and also from 1980-1983, the last big American downturn, according to the study.

Read the rest of the BusinesssWeek blog post here and also see an embedded link of the report.

The venture capital market appears to be bottoming out after a long decline, according to a Fenwick & West survey of the venture capital market for the third quarter of 2009.

There are two significant data points worth pulling out. First, the number of investment rounds for higher valuations (i.e. “up rounds”) exceeded the number of investment rounds for lower valuations (i.e “down rounds”) for the first time this year. Up rounds exceeded down rounds 41% to 36%, according to the survey. In the second quarter, down rounds exceeded up rounds 46% to 32%.

This the equivalent of a rising valuations in the stock market, suggesting that VCs are getting more optimistic about the value of venture-backed startups.

The second related point is that the average price of venture deals increased 11%, the first increase this year. That compares to a 6% decline in the second quarter, and a 3% decline in the first quarter.

Read the rest of the blog post here on BusinessWeek’s TechBeat.

Fenwick & West Q309 VC Terms Survey Report

Here’s the lead of my story introducing a big new project and special report I’ve been working on the last few months. It’s called “The World’s Most Intriguing New Companies,” and highlights 25 of the world’s coolest startups with game-changing potential.

In addition to my story and the list, the package also includes five profiles of standouts companies on the list: Epizyme, Driptech, Layar, Phycal, and China Water & Energy. And that’s not all! We’ve also created an interactive slide show of the 25 startups, plus an online extra about another Chicago startup called CitySourced. Check it out and let us know what you think.

Fertile Ground for Startups
History shows that a certain breed of entrepreneur feeds off adverse conditions, and this recession is no exception

By Spencer E. Ante

Who needs job security? In June 2008, as the recession was moving from bad to worse, Caterina Fake gave up a comfortable, executive-level job at Yahoo! (YHOO) to launch a company. She left California and set up shop in New York City to co-found Hunch, a Web site that uses the experiences of others to help people make decisions. The 40-year-old, who had co-founded the photo-sharing site Flickr before it was acquired by Yahoo, couldn’t resist the idea of creating something new, whatever the economic headwinds. “The entrepreneurial spirit really thrives in situations of adversity,” says Fake. “The world is full of more possibility.”

Fake isn’t alone in betting on that. A crop of potentially groundbreaking companies is emerging from the wreckage of the Great Recession. No question, some will blow up, and others will fail to reach their potential. But the downturn has done little to dampen the entrepreneurial spirit. During the first half of this year, angel investors financed 24,500 new ventures, 6% more than during the same period last year, according to the Center for Venture Research. The overall amount of money going into startups has declined, but the figures suggest that this year will see the birth of roughly 50,000 companies with enough promise that someone is betting money on them. “It may be that this is the best time to start a company,” says Carl Schramm, president of the Kauffman Foundation, an organization that promotes entrepreneurship.

“VAST AND UNTAPPED”
With that backdrop, BusinessWeek set out to find the world’s most intriguing new companies. After much reporting and research, we’ve assembled a list that’s a barometer of innovation trends in the global economy, with startups that are pioneering new markets in biotechnology, clean technology, health care, and Web computing. Hunch is just one of 25 that made the final cut. Other standouts include Epizyme, a Massachusetts outfit creating cancer-fighting drugs that attack errant proteins; China Water & Energy, a Hong Kong company developing massive wind-power farms in the Chinese countryside; and Driptech, a California startup engineering low-cost irrigation systems for poor farmers around the world. “The markets that we are addressing in India and China are vast and untapped,” says Driptech’s 26-year-old founder, Peter Frykman.

Read the rest of the story and package here.

Last Thursday, I went down to Union Square in downtown New York City and ran into Verizon’s marketing juggernaut for its new Droid phone.

The new Motorola device, which was released today to the general public, is being supported by the single largest marketing campaign that Verizon has ever launched for a single device.

So what does all that money buy? Well, lots of glitzy TV commercials but also some cheesy live marketing events. As I got off the train at Union Square, I noticed a long line of about 75 people. The people were waiting to get the chance to play a game in which you could scoop up a Droid phone in one of those boardwalk games with the little hand-operated cranes. All that was missing was a carnival barker shouting into a megaphone with a monkey perched on his shoulder.

Verizon is clearly pulling out all the stops to turn the Droid into a hit. And so far, it seems to be working.