U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

76–466 2012

A JOB CREATION ROADMAP: HOW AMERICA’S 

ENTREPRENEURS CAN LEAD OUR ECONOMIC 

RECOVERY 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

MARCH 21, 2012 

Small Business Committee Document Number 112–059 

Available via the GPO Website: www.fdsys.gov 

smartinez on DSK6TPTVN1PROD with HEARING


E:\Seals\Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVEITE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

smartinez on DSK6TPTVN1PROD with HEARING

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Graves, Hon. Sam .................................................................................................... 1 

Vela ́zquez, Hon. Nydia ............................................................................................ 2 

WITNESSES 

Andrew J. Razeghi, Adjunct Professor, Kellogg School of Management, Northwestern University, Evanston, IL ....................................................................... 3 

Seth Goldman, President and TeaEO, Honest Tea, Bethesda, MD ..................... 5 

Heath Hall, President, Pork Barrel BBQ, Washington, DC ................................ 7 

Clinton Tymes, State Director, Delaware Small Business Technology Development Center, Newark, DE ................................................................................... 9 

APPENDIX 

Prepared Statements: 

Andrew J. Razeghi, Adjunct Assistant Professor, Kellogg School of Management, Northwestern University, Evanston, IL ..................................... 22 

Seth Goldman, President and TeaEO, Honest Tea, Bethesda, MD ............. 41 

Heath Hall, President, Pork Barrel BBQ, Washington, DC ......................... 45 

Clinton Tymes, State Director, Delaware Small Business Technology Development Center, Newark, DE ................................................................... 52 

Questions for the Record: 

Rep. Owens Questions for the Record for Mr. Goldman ............................... 61 

Rep. Owens Questions for the Record for Mr. Razeghi ................................. 62 

Answers for the Record: 

Mr. Goldman Answers for Rep. Owens ........................................................... 63 

Mr. Razeghi Answers for Rep. Owens ............................................................ 64 

Additional Materials for the Record: 

The Story of OpenTable by Chuck Templeton ............................................... 69 

smartinez on DSK6TPTVN1PROD with HEARING

smartinez on DSK6TPTVN1PROD with HEARING

(1) 

A JOB CREATION ROADMAP: HOW AMERICA’S 

ENTREPRENEURS CAN LEAD OUR ECONOMIC RECOVERY 

WEDNESDAY, MARCH 21, 2012 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 1:00 p.m., in Room 

2360, Rayburn House Office Building. Hon. Sam Graves [chairman 

of the Committee] presiding. 

Present: Representatives Graves, Chabot, Tipton, West, Hanna, 

Vela ́zquez, Schrader, Chu, Hahn. 

Chairman GRAVES. Good afternoon. We call this hearing to order. 

I apologize for being tardy. I was having a hard time getting across 

town, and sometimes in D.C., that is the way it works. But I want 

to thank our witnesses for coming. Some of you came a long ways 

and I appreciate you taking the time away from your families and 

your businesses to be here and be a part of this testimony. 

Today, we turn our attention to entrepreneurs, one of the most 

critical links to our economy. Entrepreneurs who are the thinkers 

who can take an idea from concept to fruition. They are the risktakers, they are the boot-strappers and innovators we depend on to 

create jobs and spur economic growth. Entrepreneurs represent 

what is great about America, it is about opportunity, innovation, 

and hard work. It is never easy to start a company, and in today’s 

economy, it is an even greater challenge. The trend in entrepreneurship is up, but an entrepreneur’s ability to hire is down. The 

recession’s high unemployment rates may have encouraged people 

to start sole proprietorships, but there are many obstacles in the 

way of growing a company to create jobs. 

One of our witnesses today, Heath Hall, and his business partner 

started their company in the middle of a recession. Friends and 

family members thought they were crazy, but they wanted to prove 

that a small business could succeed if it was founded by entrepreneurs with a good work ethic, a great product, and people that 

believed in them. They wanted to prove that the free market is still 

the best path for success for entrepreneurs. 

This afternoon, we are going to hear from witnesses who will discuss the current state of the entrepreneurship and risks and rewards and challenges of building a company and we look forward 

to hearing your testimony. Again, keeping mine short since I am 

tardy, but I will now yield to Ranking Member Vela ́zquez for her 

opening statement. 

smartinez on DSK6TPTVN1PROD with HEARING

2 

Ms. VELA ́ ZQUEZ. Thank you, Chairman Graves. 

Our Nation’s 29 million small firms are the cornerstone of our 

economy. They employ half of all private sector employees. Over 

the past 15 years, they generated two-thirds of new jobs. Clearly, 

given this fact, entrepreneurs will be essential to our economic recovery. All small businesses help the economy grow, but it is the 

opportunity entrepreneurs that hold the most potential for job creation. These new, fast-growing firms develop cutting-edge products, 

often revolutionizing entire industries. Encouraging these 

innovators to turn their dreams into reality benefits the entire 

economy. By creating brand-new markets and sparking competition, these firms often have a multiplier effect on job creation. As 

other businesses seek to compete in newly created markets, they, 

too, add workers to the payroll. 

This spirit of entrepreneurship has always been part of our national identity and remains so today. In fact, close to 565,000 new 

businesses per month were created in 2010, the highest level over 

the last decade. During today’s hearing, we will examine how these 

innovators are contributing to our recovery and the hurdles they 

face in creating new jobs. Before the recession, starting a business 

simply required a good idea, hard work, and Internet access, but 

in today’s turbulent times, forming a business is more challenging. 

The financial crisis presented a unique set of challenges for small 

firms seeking capital. As lending standards tightened, entrepreneurs found it more difficult to secure loans and lines of credit. 

While this situation has improved, there is still a long way to go. 

SBA loan programs have played a critical role in bridging these 

gaps, providing startup with access to capital they need to launch 

and expand. 

Another critical area to businesses’ success is technical assistance. SBA’s program assists entrepreneurs by providing tailored 

education on topics ranging from marketing to procuring to international trade. For the startup, this expertise can often make the 

difference between failure and long-term growth. Initiatives like 

the Small Business Development Centers have proven effective in 

channeling, counseling, and assisting to millions of entrepreneurs 

around the country. 

While the SBDC network is the SBA’s largest such program, it 

faces challenges in the form of reduced budgets and pricing demand for its services. Today, we will hear how the SBDC network 

is adjusting to these fiscal realities and what can be done to help 

it carry out this mission of assisting small firms. 

Startups and small businesses are critical to our Nation’s longterm prosperity. Currently, this sector’s growth is largely fueled by 

immigrants, entrepreneurs, and other professionals launching new 

ventures. As the face of entrepreneurship is changing, strategies 

for supporting these ventures must also evolve. Today’s hearing 

will provide the committee’s insights into how to tackle this challenge, identify areas where entrepreneurs face the greatest obstacle 

and the help the committee craft practical solutions to these problems. 

In advance of their testimony, I also want to thank all the witnesses for participating. Your testimony provides valuable insight 

into critical topics and we appreciate your being here. 

smartinez on DSK6TPTVN1PROD with HEARING

3 

With that, I thank the chairman and yield back. 

STATEMENTS OF ANDREW J. RAZEGHI, ADJUNCT ASSISTANT 

PROFESSOR, KELLOGG SCHOOL OF MANAGEMENT, NORTHWESTERN UNIVERSITY, EVANSTON, IL; SETH GOLDMAN, 

PRESIDENT AND TEAEO, HONEST TEA, BETHESDA, MD; 

HEATH HALL, PRESIDENT, PORK BARREL BBQ, WASHINGTON, DC; CLINTON TYMES, STATE DIRECTOR, DELAWARE 

SMALL BUSINESS TECHNOLOGY DEVELOPMENT CENTER, 

NEWARK, DE 

Chairman GRAVES. Our first witness is going to be Andrew, you 

are going to have to pronounce it. Razeghi? Huh? 

Mr. RAZEGHI. Razeghi. 

Chairman GRAVES. Razeghi. Okay, well, I appreciate you pronouncing it for me. I am terrible with names. Razeghi. He is an adjunct professor at the Kellogg School of Management at Northwestern University. Professor Razeghi teaches courses on innovation and is founder of the Andrew Razeghi Companies. He works 

with organizations seeking growth through the creation and introduction of new ideas. He is a best-selling author and an expert on 

creativity and innovation and he earned his MBA from Loyola University in Chicago, has an undergraduate degree in international 

business affairs from Bradley University. Welcome. And to kind of 

explain, too, you all have five minutes and try to keep it within 

that, if possible. 

Mr. RAZEGHI. Great. 

Chairman GRAVES. Mr. Razeghi. 

STATEMENT OF ANDREW RAZEGHI 

Mr. RAZEGHI. Thank you. Chairman Graves, Ranking Member 

Vela ́zquez, members of the committee, good afternoon. My name is 

Andrew Razeghi and I am a lecturer of the Kellogg School of Management, Northwestern University. I am also an advisor to organizations on innovation and growth and an active angel investor in 

startups, and I am pleased to be here today to provide testimony 

for today’s hearing. 

As you know, small businesses are instrumental to our economy. 

As we heard, they employ 50 percent of private sector workers and 

responsible for 60 percent of new jobs. I have outlined several factors in my written testimony, however, for now, I would like to 

focus really on two principles. The first is that not all entrepreneurs become entrepreneurs for the same reasons. For some, entrepreneurship is a choice, they want to work for themselves or 

they have got a problem that they are looking to solve. For others, 

entrepreneurship is necessity. They are typically the victims of job 

loss and start businesses to create income for themselves. And for 

others still, entrepreneurship is their destiny. These are members 

of multi-generation family businesses, and as their paths differ, so 

too do their motivations and their motivations are instrumental to 

keep in mind as we create good policy. 

Second, beyond their origins, it is important also to distinguish 

between small business owners and high-potential entrepreneurs. 

These two groups differ significantly in their skills, their funding 

smartinez on DSK6TPTVN1PROD with HEARING

4 

needs, their challenges, and the social networks that they need to 

succeed. 

So, what are the differences and what are the implications? Well, 

let me just share a quick story with you. Ray Kroc, who we all 

know as the legendary founder of McDonald’s or the one that grew 

that business, was a high-potential entrepreneur; creates today 1.5 

million employees and several million employees that work for that 

company for many, many decades. The McDonald brothers, on the 

other hand, who invented the concept in San Bernardino, California, in 1940, were small business owners. Their goal was to sell 

hamburgers and shakes and to do it really, really fast. While the 

McDonald brothers saw the potential of their idea, they wanted it 

to remain a small business. Ray, on the other hand, also saw the 

potential, but he had aspired to grow the business. Ultimately, Ray 

became frustrated with that, and so he acquired the brothers and 

built what we know today as McDonald’s. The difference between 

the McDonald brothers and Ray Kroc go well beyond their aspirations, however. Small business owners and high-potential entrepreneurs also differ in their skills, their challenges, their funding 

needs, and their social networks. 

First, in terms of skills, typically, the small business is concerned 

with creating income for themselves, as I mentioned earlier, and, 

therefore, leveraging their own skills. High-potential entrepreneurs 

are really in the business of creating businesses. 

So, in the United States, 10 percent of entrepreneurs, for example, create 30 percent of our new businesses; 20 percent of our entrepreneurs create over half of our new businesses. These are a different group and these are what I call our high-potential entrepreneurs. 

Second, they have very different challenges. Small businesses 

primarily are concerned generally with cash flow and, therefore, 

are typically interested in lowering their tax burdens. High-potential entrepreneurs, on the other hand, are interested in really scaling their businesses. So, their biggest challenges are, A, attracting 

capital, and, B, attracting and hanging onto talent. So, high-potential entrepreneurs can only hope someday to pay taxes. 

Third, they really differ in the sources of capital. Small businesses typically seek, as we know, capital from banks and micro 

loans, majority of their funding from there, while high-potential entrepreneurs rarely set foot in banks, primarily because they have 

no collateral other than their dream and their vision that we know. 

So, while small businesses really trade on their collateral and interest, high-potential entrepreneurs trade on capital gains and equity with their investors. 

And finally, they really maintain different social networks, 

whereas small businesses typically network locally as members of 

the chambers of commerce and other organizations, high-potential 

entrepreneurs typically are networking globally through venture 

accelerators and incubators and the like. 

So, while both are vital to our recovery, certainly small business 

owners and high-potential entrepreneurs, because of these differences, my recommendation is that we really think about these 

entities and manage them differently. 

smartinez on DSK6TPTVN1PROD with HEARING

5 

Why is that the case? As you look at high-potential entrepreneurs, for example, they are generally backed by venture capital 

and venture-backed businesses are more resilient in economic 

downturns and more prosperous typically over the long-term. Moreover, they have exponential economic impact. 

For example, if you look at the investments made in high-potential businesses, although it is only .2 percent of GDP, the revenue 

they generate is equivalent to 21 percent of U.S. GDP. So, very, 

very high-performing companies. 

So, generally, for these reasons—the differences in their skills, 

their needs, their funding requirements, their social networks that 

make them succeed—my recommendation is that we need to focus 

just as much on these high-potential entrepreneurs as we do on the 

typical small business challenges. Thank you. 

Chairman GRAVES. Thank you, Professor Razeghi. 

Our next witness is Seth Goldman, who is the president of Honest Tea in Bethesda, Maryland. As a youngster, Mr. Goldman had 

newspaper routes and lemonade stands. He nearly pursued a prizewinning biotechnology idea before he co-founded the Honest Tea 

brand in his kitchen in 1998. Is that correct? 

Mr. GOLDMAN. That is correct. 

Chairman GRAVES. He is a graduate of Harvard College and the 

Yale School of Management, and he is testifying on behalf of the 

American Beverage Association. 

Welcome, Mr. Goldman. 

STATEMENT OF SETH GOLDMAN 

Mr. GOLDMAN. Thank you. Good afternoon. Usually when there 

is a discussion about high-growth businesses, the focus is on the 

Internet or biotech, so I am happy to be here to represent a part 

of the economy everyone understands. We make low-sugar, organic 

beverages, and over the 14 years, our continuous double-digit 

growth has created 122 jobs in 22 states. These are jobs that create 

and support manufacturing across the United States and jobs that 

cannot be shipped overseas. 

In 1998, I launched Honest Tea out of my kitchen. My co-founder 

and I brewed five thermoses of tea and got an empty Snapple bottle and stuck on a label and brought it to the local Whole Foods 

buying office. And to our great delight, surprise, and horror, the 

buyer said he was going to buy 15,000 bottles, so we had to go 

home and figure out how to make that much tea. 

We launched in the 17 Whole Food stores in the Mid-Atlantic 

and gave away more samples than we sold, but by the end of that 

summer, we were the best-selling tea in those stores. And then we 

expanded from there to the rest of the Whole Foods chain and then 

became the best-selling tea in the natural foods industry. And just 

last year, Coca-Cola purchased our company, which is still run out 

of Bethesda, Maryland. 

When we started, my co-founder and I raised money from basically the people who could not say no: ourselves, our parents, my 

sister, his roommates from college. And over the next 10 years, we 

raised $10 million in angel capital from equity. 

And so how did we manage to stay in business over that time 

while a lot of other beverage companies started and went under? 

smartinez on DSK6TPTVN1PROD with HEARING

6 

Well, first, we offered something that was clearly different. While 

everyone else was selling a tea with a lot of sugar, we were offering 

something with just one to two teaspoons. And then, in 1999, we 

became the first company to create organic bottled tea. So, once 

again, we had a point of difference in the marketplace. 

The other way we stayed in business is we were careful with our 

cash. Instead of paying for radio and TV ads, we developed alternative ways to generate attention. We did an experiment called 

Honest Cities. We set up in 12 cities a freestanding booth with bottles and it said it is an honor system, $1 a bottle, and we will see 

how honest people are. And to our great delight, most of the country was in the high 90 percent honest, but it was also a great way 

to get media coverage and we were on the Today Show and certainly raised a lot of awareness. 

The other benefit of operating on a tight budget is you make less 

expensive mistakes. We certainly made some doozies over our 14 

years, but if we had had more money, we just would have spent 

more money trying to correct those mistakes rather than to just 

recognizing when something was not working. 

Unlike most acquisitions which involve relocations and layoffs, 

when Coca-Cola invested in Honest Tea, we created a structure 

where we continued to base it in Bethesda, and our headcount has 

actually doubled since Coke invested three years ago. 

And we have been expanding jobs around the country. Last October, I cut the ribbon on a Coca-Cola-owned bottling facility that 

created 100 manufacturing jobs in Massachusetts. Next month, we 

are launching a new bottling line in California. 

When we took in Coke’s initial investment, we were in 15,000 

stores. Today, Honest Tea can be found in over 80,000 stores and 

we just signed on a new chain this morning. So, we are still growing. 

Unlike so many industries, the beverage business is one where 

outsourcing is not an issue. There is no way to ship bottles through 

those Internet cables and the math does not favor manufacturing 

the product overseas and then shipping into this market, and there 

is still no substitute for the role that skilled professionals, maybe 

a little aggressive, can play in protecting a beverage shelf. 

So, how did the Federal Government help Honest Tea? The best 

thing I can say is that the government did not get in the way of 

us launching our business. Of course, we had to make sure all of 

our bottling plants and suppliers were licensed with the FDA and 

USDA and we filed our stock offerings to accredited investors 

through the relevant entities and paid our taxes through ADP, but 

other than that, we were left to build our business. 

One way the government did support our growth is through the 

creation of the USDA Organic Standards. Having a differentiated 

product was key to Honest Tea’s survival and the USDA Organic 

Seal, which appears on all of our products, helps consumers seek 

out products grown without chemicals, pesticides, or fertilizers. It 

is a great example of a government program that helps establish 

a quality standard without any mandates or large bureaucracy. 

My experience building Honest Tea represents all that is great 

about the American economic system. A group of passionate entrepreneurs and patient investors combining their dreams, their insmartinez on DSK6TPTVN1PROD with HEARING

7 

vestment capital, and their energy to create something out of nothing, delivering jobs, strong investment returns, and healthier beverages along the way. In terms of supporting the development of 

more companies like ours, I would say the best policy is to let entrepreneurs and investors continue to take well-informed risks. 

By definition, the work we do is challenging. If it were easy or 

obvious, the big companies would have already done it. But in Honest Tea, we take two proverbs to heart. They are Chinese proverbs. 

The first is if we do not change the direction we are headed, we 

will end up where we are going. And I believe entrepreneurs are 

our Nation’s best chance to change and make an impact on the 

issues that confront our society, and that is not easy work. And 

that is why we pay attention to the second proverb, which is on the 

wall of our office in Bethesda: Those who say it cannot be done 

should not interrupt the people doing it. 

Thank you very much. 

Chairman GRAVES. Thank you, Mr. Goldman. 

Our next witness is Heath Hall, who is the president of Pork 

Barrel BBQ here in Washington. Mr. Hall co-founded the company 

in 2009. His barbeque sauce is available in over 3,000 stores in 40 

states. In November, the company opened a restaurant in Alexandria, Virginia. Widely recognized as a winning entrepreneur on the 

television show Shark Tank, Mr. Hall is known for his innovative 

approach into starting and growing successful businesses. He received his bachelor’s degree from Truman State University and his 

JD from the University of Missouri, Kansas City. 

So, welcome. 

STATEMENT OF HEATH HALL 

Mr. HALL. Thank you, Chairman, Ranking Member, and members of the committee. It is great to be here. Small businesses and 

the entrepreneurs who create them fuel the engine that drives the 

American economy and determines the overall health of our Nation. 

It is an honor to return to Capitol Hill, where I once served as 

senior legislative assistant to a guy who I see is looking at me as 

I am testifying, Senator Jim Tallon, former chairman of this distinguished committee. But more importantly, it is an honor to be back 

because this is really where the genesis of Pork Barrel BBQ was 

formed. 

In 2006, during a Senate budget debate, my business partner, 

Brett Thompson, and I were debating what we would be having for 

dinner. And as I am sure many of you have struggled to find some 

good options late at night here on Capitol Hill, we were wishing 

and hoping and thinking about the great barbeque joints back in 

Missouri that we often frequented when back home and there just 

were not any here. So, at the moment, the Senate was debating 

pork barrel spending projects on the floor, a vigorous debate, and 

as we were vigorously debating dinner, the two ideas merged and 

Pork Barrel BBQ was formed. So, we like to say that at least one 

thing came out of Congress that night that was good. No offense. 

[Laughter.] 

In the few minutes I have today, I would like to talk about three 

key issues that every entrepreneur faces on their journey to cresmartinez on DSK6TPTVN1PROD with HEARING

8 

ating a successful and small business. Those include risk assessment, access to capital, and increasing their visibility and identity. 

The first, risk assessment, there is a critical point where every 

small businessman and entrepreneur founding those businesses 

have to make the decision to move forward and invest their own 

time and money with zero guarantee of getting anything back. For 

most, like us, those include questions of where are we going to get 

the funding? How are we going to be known? Where are we going 

to secure retail outlets and customers? 

The second is access to capital. For many, if not most, getting 

through this challenge means spending a lot of precious capital on 

understanding the system and it did not take us too long to realize 

that we needed every ounce of capital that we had, and most of 

that coming from own our pockets, in order to do this process and 

do it right. And because we had such limited funds in addition to 

limited access to additional capital, we decided that we would take 

nothing out of our company from the beginning until a point when 

we could and we are still at that point today where we have realized no profits ourselves. Everything we have made, we have reinvested into the company. And I think it is important right here to 

note that every extra regulation, requirement, and delay that the 

government imposes is a burden that new small businesses have 

to overcome. These burdens cost time and money and often lead to 

many small businesses prematurely calling it quits, opting to create fewer jobs, or slowing down their innovations. I am not saying 

that none of the regulations are necessary or justified. They often 

are, but I do want the committee to understand that they come at 

a cost and time and money, which small businesses must pay and 

which could not be used for them generating jobs and growing their 

company. 

The third is the need to increase that brand identity. The challenges for most entrepreneurs in doing this is it is on a shoestring 

budget. For us, we accomplished it through social media, and in a 

stroke of luck, we were contacted by the producers of the hit reality 

show Shark Tank on ABC and that really changed the future of 

our company. We were given the opportunity to present our product in front of sharks and we got a deal from Barbara Corcoran, 

the New York real estate giant, and she is currently still a valued 

member of our company and business partner. And so it gave us 

some capital and also gave us instant national exposure that we 

could have never afforded. I sit before you today 100 percent certain that we would not be in the position we are were it not for 

Shark Tank, which kind of sounds strange that a TV show could 

do that for you, but it really has. 

Our second break came when we met a guy called Hunt Burke 

of Burke & Herbert Bank over in Alexandria, Virginia, a bank that 

believes in entrepreneurs and believed in us. He gave us the initial 

seed money after the show to really address all of the new retail 

accounts we were quickly gaining. It is also important to note, I 

think, right here that large businesses play an important role in 

the success of small businesses. Harris Teeter, a local grocery store 

on the East Coast, picked us up before we were known. Costco, a 

real contributor to cultivating small businesses in this country, 

smartinez on DSK6TPTVN1PROD with HEARING

9 

picked us up. Safeway has been a huge supporter with unsubsidized promotions and ads that we could have never afforded. 

Although I do not have any specific recommendations to the committee, I would say that in my opinion, the average entrepreneur 

does not expect or want to be unregulated. We take quality and 

safety very seriously, we take pride in offering an affordable, gourmet product that is high-quality, good-tasting, and safe for people 

to consume and that is produced by manufacturers that are current 

and have scored high on all required inspections. 

The problem, in my view, is that there is no effective safeguard 

in the system to make sure the regulations are written and enforced in a way that minimizes the burden of honest, well-intentioned entrepreneurs. One approach I would encourage the committee to look into would be for the government to adopt a partnership approach to regulation whenever possible. In these cases, it 

seems far more productive and less costly to all parties to partner 

with these businesses rather than adopting an adversarial attitude 

that leads to costly fines and mistakes that were made in good 

faith and that had no impact on public health or safety. 

I would like to reiterate that America is still the land of opportunity and, when given the chance, an entrepreneur’s idea combined with the power of the free market can lead to amazing 

things. If America is to emerge from its economic woes, it will be 

on the back of entrepreneurs. Elected officials like yourselves 

should keep in mind the sacrifices and risks entrepreneurs take 

when considering ways to increase the number of successful small 

businesses in America. It is the entrepreneur who has taken all the 

risk and invest his or her time and money into that endeavor with 

no guarantee of return, yet, if small businesses are not allowed to 

enjoy the benefit of success when it happens, they will never take 

the risk of failure. 

Thank you and I look forward to your questions. 

Ms. VELA ́ ZQUEZ. It is my pleasure to introduce Mr. Clinton 

Tymes, the state director of the Delaware Small Business Development Center Network, headquartered at the University of Delaware. In this role, Mr. Tymes is responsible for long-range planning 

and program development for the statewide network. Prior to joining the Small Business Development Center, he owned and operated his own office equipment business. He received his bachelor’s 

and MBA degrees from Wilmington College. Welcome. 

STATEMENT OF CLINTON TYMES 

Mr. TYMES. Thank you. I was instructed early and got all ready. 

Chairman Graves, Ranking Member Vela ́zquez, and members of 

the committee, thank you for inviting me to testify here today. 

For over 30 years, the SBDC Network has been providing frontline services to entrepreneurs and small business owners while developing an infrastructure dedicated to assisting all business owners across this country. 

How can we help small business growth and innovation and help 

those entrepreneurs lead the economic recovery? At SBDCs, we 

focus on that every day. It is a basic tenant of our accreditation 

process, where we are focused, where we have to develop a strategic plan focused on constantly improving services that we provide 

smartinez on DSK6TPTVN1PROD with HEARING

10 

to the small business community that is of high value and provide 

contemporary business solutions. 

Technology has changed the way most businesses do business, so, 

the SBDCs, we partner with firms like Google, Intuit, Microsoft, 

and others to bring innovation to small businesses. Guiding innovation and new technologies is an important part of our work. It may 

be high-tech, like Facebook or some of the other technologies I will 

talk about a little bit later, or just a different way of looking at 

things. 

Maui Jim was a simple idea—sunglasses that cut glare, but did 

not distort colors—but making that concept a worldwide success 

took years of working with the Illinois SBDC Program. Likewise, 

at the Delaware SBDC, we are proud of our work with Sam 

Calagione of Dogfish Head Breweries. Sam came to us with little 

more than an idea. He is now one of the leading microbrewers in 

the country and it is not high-tech, but we just made sure that 

Sam got the basics right and got the financing and funding that 

he needed to launch his business. 

SBDCs do not necessarily know about optical coatings or 

jalapeno ales, but we do know marketing, we do know finance, 

product development, government contracting, and business planning. Our clients come to us with ideas, a lot of energies, and a lot 

of issues and problems, and they need knowledge to succeed. It is 

all about basics. 

All small businesses, high-tech gazelles, local mom-and-pop organizations or companies or third-generation manufacturers are all 

focused on one thing, and that is the bottom line. Growth in sales, 

investment, and hiring are just key indicators. We see several significant areas where entrepreneurs need help: finance, technology 

development, and education, and let me give you a few examples 

of those. 

Many SBDCs work specifically to assist the firms in the hightech arena. The Delaware SBIR Program is a program that we developed, is designed to help knowledge-based firms and entrepreneurs compete and win Federal SBIR and STTR funding. For 

almost a quarter century in Delaware, we led the Nation in patents 

and PhDs per capita, but one of the things that we were lacking 

in Delaware, and we lagged behind, was the number of startups 

and technology-based businesses, as well as lagging behind in the 

number of SBIR application and awards, and, hence, we responded 

and developed this program. It was designed to be a one-stop shop 

to assist entrepreneurs and every aspect of the SBIR Program. We 

helped them with the application strategies; we provided proposalwriting workshops; we critiqued, reviewed the proposal editorially 

as well as technically before it is submitted; we provided a mentoring program for applicants, as well. All of these are designed to 

help businesses achieve their goals. 

The Delaware SBTDC, like many SBDCs, are hosted by research 

institutions that work closely with their technology transfer offices, 

science, and engineering departments. At the University of Delaware, we formed a special group called the Office of Economic Innovation and Partnerships where we merge the Technology Transfer 

Office as well as the SBTDC Program together, so that we have the 

technical side in terms of research and commercial application. Our 

smartinez on DSK6TPTVN1PROD with HEARING

11 

business expertise helps to expedite those technologies from lab to 

the marketplace. So, it is a unique model. 

I have also attached a letter from Mr. Jianrong Lin of Spectrum 

Magnetics, and in his letter, he outlines the knowledge gaps that 

he and his companies had and many entrepreneurs and how our 

team helped them. This is just one example of how SBDCs help 

businesses develop and conventionalize technologies. Similar programs are being conducted in North Carolina, Texas, Missouri, 

Michigan, just to name a few. 

The second aspect is financing. We often work with entrepreneurs who have little idea about financing. Many high-tech clients do not know how to approach an angel investor. We have 

heard that here, and do not even know what an angel investor is, 

and there is a huge gap there and we help those business owners 

to speak finance, if you will. 

At SBDCs, we bring relationships from all walks of life in terms 

of financing, whether be a microloan, a 504 loan, or angel investors 

in trying to match them. 

In San Antonio, the SBDC helped a third-generation company, 

Kiolbassa, with a 504 loan that expand their firm and triple the 

number of employees. 

SBDC identifies an entrepreneur’s strength and their weaknesses and we teach them how to relate to the financial community 

and find the right tools and the right financing program that best 

meets their needs. 

Education is the third component and it is a common theme that 

we have and entrepreneurs need. We have heard just a few moments ago about skills and enhancing those skills and building 

those skills. Well, that is what SBDCs do through our one-on-one 

counseling programs and through our training programs. We teach 

them techniques to show them the tools they need. Ideas, dreams, 

and innovations can all fail without knowledge. 

How can we work to overcome these knowledge gaps? You maximize the tools at hand. Currently, our association and network 

work with HUD’s Office of Community Development, SBA’s Office 

of Surety Bond Guarantees and Surety Bond Association. Our goal, 

to educate small contractors on obtaining surety bonds and getting 

contracts on HUD-funded contracts. Not a new program, just teaching financial skills. 

In conclusion, the ASBDC believes the most common concern of 

small businesses are the lack of capital, lack of sales, and difficulties in dealing with day-to-day complexities of their business. Some 

surveys say that the capital is bound for the qualified. We help get 

them qualified, the small business owners. As a result, nearly $4 

billion in financing was assisted in terms of SBDC assistance nationwide. Small businesses say that sales are weak. We help them 

develop markets and new products. In 2009, 2010, our clients in 

our network, their sales are four times that of the national average. If you do not know how to do it, we will, get resources to do 

it. We understand the resources are available and we understand 

how to leverage those resources that help business owners become 

successful. 

Thank you for letting me share my views about our network and 

look forward to your questions. 

smartinez on DSK6TPTVN1PROD with HEARING

12 

Chairman GRAVES. Thank you, Mr. Tymes. I am very familiar 

with the role of the SBDCs. In Missouri, and, in fact, Max Summers is here, who is the state director of the Missouri SBDCs, 

which I worked with for a long time. 

Mr. TYMES. Okay. 

Chairman GRAVES. And I appreciate the work you all do. 

Mr. TYMES. Thank you. 

Chairman GRAVES. Mr. West, we will open with you. 

Mr. WEST. Thank you, Mr. Chairman, and thanks to the distinguished panel for being here. And, Mr. Goldman, thanks for not 

giving us any of your Honest Tea, because I am sure it will be an 

ethics violation. [Laughter.] 

Mr. GOLDMAN. Well, I have some bottles here. 

Mr. WEST. No. 

Mr. GOLDMAN. I am happy to—— 

Mr. WEST. We will have to get rid of the cameras if you do. 

Chairman GRAVES. Just $1.50 per bottle. [Laughter.] 

Mr. WEST. Okay, I think I got it. 

You know, when I travel the district down in South Florida, up 

U.S. Highway 1, you see many closed storefronts, and, of course, 

that represents 8, 10, however many Americans that once worked 

there. There is a budget resolution proposal up here about taking 

those 6 tax brackets and combine them down in 2 and that top tax 

bracket being at 25 percent. 

What I would like to know is if we adopted that budget resolution proposal, having that top tax bracket at 25 percent, as we 

know, small businesses, entrepreneurs start off at Subchapter S 

LLCs, what would that do for the growth of small businesses in the 

United States of America? And I understand we close some of those 

tax breaks, loopholes, but what would that 25 percent top bracket 

do? 

Mr. RAZEGHI. So, a couple thoughts. I think, first off, as you 

know, 75 percent of the small businesses have no payroll, so, I 

think, as I mentioned earlier, and then the 25 percent are really 

generated in sales receipts and even a smaller percentage of that. 

So, I think it gets back to who that would appeal to, right? Back 

to this notion of at least my opinion on high-potential entrepreneurs, tax policies nowhere near the top of their list in terms 

of their concerns. It is back to capital, it is about getting the right 

talent, and hopefully, someday, as I mentioned, they want to pay 

their taxes and if the taxes go up, they will work harder, which is 

typically what you will hear from most entrepreneurs, at least 

what I hear. 

So, I think it will help those, again, back that are traditionally 

let us say small business centers that are focused on cash flow, and 

in a way, they want to stay small, but could use relief in that area. 

The high-potential folks, on the other hand, again, it will not speak 

to their needs. 

Mr. GOLDMAN. And just to follow up on that, I think that is 

right. The year-to-year income is not as much of a concern as the 

long-term. If you were to change the capital gains rate in a significant way, that would probably make some investors less interested, 

but as long there is—— 

Mr. WEST. You mean if you were to increase? 

smartinez on DSK6TPTVN1PROD with HEARING

13 

Mr. GOLDMAN. That is right, especially on the long-term side. 

Mr. HALL. One thing that I might say to that is that as an entrepreneur, any dollars that remain in my pocket are dollars that I 

have to invest in my company, and I think although what the two 

gentlemen before me have said I agree with, I think that all entrepreneurs would be happy to have the opportunity to have a lower 

burden on themselves personally because in many instances, we 

would turn that money right back into investing in our business. 

Mr. TYMES. The clients that we see, they usually come to us 

other than tax issues to be honest with you there, and I think that 

any lower tax would be beneficial, but the concerns that most of 

our clients are expanding, again, expanding markets, issues with 

getting a loan at this particular point in time, but I can just say 

that any lower tax I am sure would be beneficial. 

Mr. WEST. Well, and I guess then that is the next question is: 

I mean, when you come in and you are at level A, what keeps you 

from getting to level B and C, what are the primary factors or obstacles that keep you from taking it to that next level that you see 

out here in this current economic environment? 

Mr. GOLDMAN. Well, often it is capital, being able to hire more 

people, it takes capital or being able to invest in new initiatives, 

new equipment. So, that is capital-intensive, and then it is where 

there are sales. So, for our brand, which is a consumer product, 

consumers having money in their pocket to spend, having consumer 

confidence is important, too. 

Mr. WEST. Do you feel there is a lack of predictability or certainty out there? 

Mr. GOLDMAN. It certainly seems to have gotten better. We have 

seen it in our business pretty significantly, but, sir, two years ago, 

it was a lot of people were keeping their cash in their pockets. 

Mr. HALL. I think one of the interesting things that we have 

found is that the more successful we have gotten, the more challenges we face. When you have one grocery store chain picking up 

your sauces, you are producing a few thousand dollars’ worth of 

product at a time. When you are at $3,000, $4,000, or $5,000, you 

are producing potentially several hundred thousand dollars’ worth 

of product at a time. So, the need for capital really grows when you 

grow and I think that has been one of our challenges, although, we 

have had more capital access as we have become more successful. 

It is kind of a beast that needs to continue to be fed and it gets 

more and more difficult. 

Mr. TYMES. I would just like to echo that access to capital is one 

of the major ones, but there are a couple of other ones that we see. 

One is skills. Skills of not only the entrepreneur, but a skilled 

workforce and trying to attract those types of talent that they need 

to grow and I think this is increasingly important with technologybased firms in terms of attracting those individuals that have a 

technical background. I think that especially at the university, we 

see in terms of some of the companies that we are working where 

the immigration issue is also a problem in terms of trying to retail 

those skills that are needed to help those companies grow. 

Mr. WEST. Thank you, and I yield to Ranking Member 

Vela ́zquez. 

smartinez on DSK6TPTVN1PROD with HEARING

14 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. For the record, this 

is less than $75, right? [Laughter.] Yes, okay. 

So, Mr. Tymes, Mr. Razeghi in his written testimony explained 

why we must learn to better identify and support the companies 

that have the greatest potential to succeed. So, Mr. Tymes, as an 

SBDC director, when an innovator comes to you with an idea, how 

do you assess their needs and determine how you can help them 

become successful? 

Mr. TYMES. Well, it is a couple of ways. One is when someone 

comes in with an idea, just by purely the conversation, we have a 

number of assessment tools, and some things that we are trying to 

identify. First and foremost, we are trying to identify commitment, 

is that entrepreneur, is that individual committed to being an entrepreneur? One of our core values at our program and make sure 

it is the same with other SBDCs across the country, we will never 

squash the dream of an entrepreneur. Anybody who walks through 

that door, we have tools to assess what stage of development their 

idea is, we will help them self-select out of the process by helping 

them with some research, if you will. But our process and most 

SBDCs, we have training programs once we have identified in the 

assessment what those skill gaps are, we have training programs 

to fill those gaps, if you will. So, it is a process and most SBDCs 

have a process that where a committed entrepreneur with a good 

idea has a customer, will percolate to the top. 

Ms. VELA ́ ZQUEZ. And you will look at a business plan? 

Mr. TYMES. Oh, absolutely. We help them with the business plan, 

as well, because that is critically important. We always say that 

the plan itself is not the most important document, although it is 

important, but it is the process that you go through, it is the questions that you have to be able to answer as an entrepreneur, 

whether it be with financing, whether it be with your competition, 

whether it be with your industry, these are some important things 

that need to be done, and as I talked before, it is about knowledge, 

it is about more information that you have. 

And I will just add one other thing because I just wrote it down 

because I think it was Mr. Goldman that said that taking in a 

‘‘well-informed’’ risk, and I think that that is what we try to do is 

provide information to minimize those risks. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Tymes. 

Mr. Goldman, your company undoubtedly competes against large 

firms in your industry. What are some of the challenges you face 

in competing against your larger companies or counterparts? 

Mr. GOLDMAN. Yes. Well, for us, distribution was critical. In the 

beginning, I was trying to distribute the product myself, and it did 

not get us very far, and we went to the large distributors and they 

were not interested in our product because it was not sweet enough 

and probably they did not think organic tasted good. So, we had 

to go to other distributors, cheese distributors, corned beef distributors, anybody who was putting something on a truck. And so, for 

us, distribution was a key barrier and we did not have a way to 

get around it. The way we were able to succeed is we had a product 

that was different so that a store would take us on a shelf, even 

if we sort of had to go through a different door, and when there 

smartinez on DSK6TPTVN1PROD with HEARING

15 

are such big barriers, entrepreneurs have to have a unique selling 

proposition that gets them someone’s audience. 

Ms. VELA ́ ZQUEZ. Are there any benefits that you offer your employees that—— 

Mr. GOLDMAN. Oh, yes. 

Ms. VELA ́ ZQUEZ [continuing]. Your large counterparts will not? 

Mr. GOLDMAN. Yes. Yes, we certainly have a very different approach to how we interact with our employees. Because we are a 

health and wellness-focused company, we gave all of our employees 

bikes to ride a few years ago, they get healthy snack pack benefits, 

and then, of course, the most, I think, important one to them is 

that they all got equity stock options as we grew. So, as our company succeeded, they succeeded, as well. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Razeghi, in your written testimony, you talk about crowd 

source funding offered as an alternative to credit card debt for entrepreneurs. You do not see any risk for fraud abuse? 

Mr. RAZEGHI. Oh, no, there are certainly risks there, yes, and I 

think capital is one avenue. What is in the Jobs Act and the issues 

around crowdsourcing, certainly risks that people have to be mindful of that. I think the bigger risk for the entrepreneur is most traditional venture capitalists frown upon having too many early 

stage angel investors. They do not want to deal with that many 

small investors early. So, when you are talking about 300, 400, 500 

possible, that is not going to bode well when you go to, Mr. West, 

your question about A to B, when you move to that next level of 

capital, that is really the bigger risk, I think. So, no, certainly, we 

have to be mindful about it. 

Ms. VELA ́ ZQUEZ. How do we ensure that investors are protected? 

Mr. RAZEGHI. So, to some degree, the market works pretty well, 

so, if you look at some of the crowdsourcing, businesses, Angie’s 

List, for example, it sort of keeps itself honest, it runs a little like 

Wikipedia. People review those investors, they are rated, people 

can comment on what is it like to work with this investor. So, the 

market really, if you let it work, it kind of works itself out. So, that 

is my opinion on it. 

Ms. VELA ́ ZQUEZ. Okay, thank you, Razeghi. 

Mr. RAZEGHI. Sure. 

Ms. VELA ́ ZQUEZ. Mr. Hall, you started your company out of your 

home’s basement and now your product is carried in over 3,000 

stores, you mentioned, in 40 states. At what stage were capital infusions critical to your success? 

Mr. HALL. Really from the beginning, maybe the very first run 

in 2008, if you knew any of our friends or our families, you probably received a bottle of our spice rub and it cost us about $3,000 

or $4,000 to do that initial run of about 2,000 units. Once we decided we really wanted to make a go of it, it became critical to have 

capital for everything from production to trademark, getting the 

trademarks and licensing, getting all of the legal documents in 

place. Shipping, it is something that you do not think about when 

you are in your home kitchen, but when you are going bigger scale, 

it costs a lot to send across country a glass bottle with 12 ounces 

of barbeque sauce in it. 

smartinez on DSK6TPTVN1PROD with HEARING

16 

Once we were on Shark Tank really was when we went from a 

regional D.C., Maryland, Virginia company to more of a national 

company, and that is really when our first big infusion needed to 

occur. We went from 100 stores in the area to what seemed like 

250 and then 500 and then 1,000 within a few months. And that 

is really when the big capital infusion needed to occur because, like 

I mentioned earlier, the smaller you are, it seems like there is 

more pressure, but I am of the opinion now the bigger you are, 

when you have not really made it to that top level yet, you are getting bigger and bigger and more people want your product. So, 

there is the pressure to produce more product, there is the pressure 

to increase the number of products that you offer in your product 

line. So, if you have one product, you only have one product sitting 

in the warehouse. If you have six products, you have six products 

sitting in the warehouse that are not making money for you until 

you actually get them sold. So, I think really that big step for us 

when we went from more of a D.C. area company and into that 

larger regional and eventually national. 

Ms. VELA ́ ZQUEZ. Sure. 

I yield back, Mr. Chairman. 

Mr. WEST. Thank you, Ranking Member of Alaska. 

Mr. Hanna. 

Mr. HANNA. I am curious, anyone can answer this or maybe all 

of us, it is widely accepted or at least touted that one of the mistakes we make in our educational system is we take in people from 

abroad, we educate them well and we do not stamp their graduation diploma with a green card, something I personally think we 

should do, especially in STEM. 

Would anybody like to speak to that? I know it is a little off the 

subject, but—— 

Mr. RAZEGHI. Yes. So, this is my backyard, of course, as an educator and I can tell you at least anecdotally that it is certainly a 

trend. More folks are returning home versus staying here. Part of 

it is they want to go home, so, I think we cannot necessarily affect 

that. They have opportunity now in places like China and India 

where they can build their own dreams and stay by their families. 

That said, certainly if you look at engineering, for example, 75 percent of PhDs are foreign-born, as you know. We need them here 

and we could use them here. But I think beyond that, we could also 

perhaps take a page from what Israel has done. In Israel, of course, 

they train their military to code and, as a result, Israel now is one 

of the technology powerhouses of the world and—— 

Mr. HANNA. Dan Seymour’s book. 

Mr. RAZEGHI. Precisely. Precisely, yes. So, I think it is a combination both of immigration reform on the one hand and then developing our own talent here, as well, but it is certainly something 

I am in favor of is developing the talent. 

Mr. HANNA. Mr. Goldman, you mentioned the market kind of has 

a way of resolving its own issues. Do you think that the popular 

term moral of consequences is thrown a lot? I am not exactly tight 

on what—everybody means something different by it, but I think 

you know what I am talking about in terms of business. 

What are the dangers of government getting involved and how 

do you balance that? 

smartinez on DSK6TPTVN1PROD with HEARING

17 

Mr. GOLDMAN. Well, I do think inevitably, when the government 

gets involved, it is somehow going to be picking winners and losers 

and winners and losers that the market will not necessarily agree 

with. And so what happens is you may see the government propping up something that is not sustainable, I mean, from a business 

perspective. And so, one of the things that has been nice about our 

business, 14 years, although sometimes it feels like I have been 

counting in dog years, it is a relatively long time to build something. So, we have been growing, but each year, we have been able 

to digest the growth, and, as a result, we have had a lot of things 

that have failed, but the market has sort of proven it out. 

And whether you look at our housing markets, I mean, there are 

a lot of markets where the government was supporting them or directing them in a way that was not long-term sustainable. So, from 

my perspective, the markets in general are the best judge of what 

is going to work. 

Mr. HANNA. There must be some benefits to people having to 

fight through that, slog through that process. 

Mr. GOLDMAN. Yes. 

Mr. HANNA. I mean, it is a filter in and of itself. 

Mr. GOLDMAN. It is. It is a proving ground. There is no entrepreneur who—all of us, you get lucky breaks, but for every luck 

break, there are a lot of ones that—someone told me I was in the 

right place at the right time. I said, well, it took 14 years to get 

here. So, there are not enough lucky breaks to keep a budding entrepreneur in business over 14 years. 

Mr. HANNA. Thank you, I yield back. 

Mr. WEST. Thank you, Mr. Hanna. 

Ms. Chu. 

Ms. CHU. Thank you, Mr. Chair. 

Mr. Tymes, I was so glad to see that you are such an enthusiastic supporter of SBDCs. I am, too. And, in fact, even though we 

had one in the general area, I am working to get one in my area, 

the San Gabriel Valley in California, and I am aware that these 

programs have to have a certain amount of matching funds from 

the private sector, also, that overall SBDCs are facing about a 10 

percent cut in the budget. This has resulted in numerous centers 

receiving fewer funds, even though there is more client demand 

now for assistance in starting businesses, and client demand, I 

would have to think, is especially high as more unemployed people 

try to start their own businesses. 

So, what are you doing in response to this? What can be done 

in our staff being trained to respond more effectively in this current economic downturn? 

Mr. TYMES. Thank you for the question. I first would like to say 

that over the past few years, it has been difficult in terms of our 

program nationally. You mentioned we did Federal funding, but 

the matching component of that. 

Ms. CHU. Yes. 

Mr. TYMES. And that matching portion not only comes from the 

private sector, but from states, and we all know the difficulty 

states have had over the past couple of years with their budgets. 

So, it is compounded, if you will, as it moves down. 

smartinez on DSK6TPTVN1PROD with HEARING

18 

But to answer your question, the way that we have been doing 

it, again, just like other SBDCs across the country, as collaborations. I mean, that is leveraging. That is what we have to do and 

let me just give you a good example of that. We assist technologybased businesses. We do not have in Delaware the resources to hire 

someone that is technical, if you will, to assist these types of businesses. So, again, what we have done is with the new unit at the 

university, we have leveraged resources with the individuals that 

have the technical background with our expertise, again, on the 

business side of it. 

But this is the important thing here in this unique model is that 

not only do we assist those individuals in terms of internal to the 

university faculty and researchers, but we also have an arrangement that the university licensing associates and those technical 

individuals also assist us with entrepreneurs outside of the university, as well. So, you have to be really creative, but at times, you 

can only be so creative. At some point in time, it catches up with 

you and you are not able to meet the demand that is out there. Collaborations, collaborations, and leveraging resources as best you 

can, but, again, it gets to a point where you work with organizations that have the same problems that you have, and it becomes 

really, really difficult at times to keep up with the demand with 

the economy the way that it has been. We are just flooded with 

business owners that come in. 

And I will just add this, that what happens is when you have a 

situation where there is an economic downturn and things get pretty tough, the time that you spend with a business increases because what you are doing is you are going through every aspect of 

that business to try to determine, number one, how can you wring 

out as much excess as you can there because of cash flow. At the 

end of the day, that is what it is going to be all about in there. So, 

it has been difficult, but collaborations and leveraging resources as 

best you can is the only way you can do it. 

Ms. VELA ́ ZQUEZ. Would the gentle lady yield for a second? 

Mr. Tymes, how do you feel about the fact that when your program, the SBDC, is getting a cut of reduced budget of $13 million, 

yet, the administration is creating a pilot project, a pilot program 

like regional clusters, for $13 million at a time when we are facing 

budgetary constraints and the network SBDC has a proven record 

throughout the Nation. It does not make sense that we are going 

to fund a program that is a pilot, is untested, and unauthorized. 

We are on record, both the chairman and myself, telling the administration that it is not the right way to go. So, we understand the 

incredible resource that you represent in our Nation by providing 

tools and information to small businesses and I want you to know 

that I support reinstating the $13 million. 

Mr. TYMES. Thank you. Thank you very much. 

Ms. VELA ́ ZQUEZ. Thank you for yielding. 

Ms. CHU. Thank you. I yield back. 

Mr. WEST. Thank you, Ms. Chu. 

Ms. Hahn. 

Ms. HAHN. Thank you, Mr. Chairman. I enjoyed this hearing 

today and the two entrepreneurs, glad you are here and you really 

sort of confirmed what I found when I have been touring small 

smartinez on DSK6TPTVN1PROD with HEARING

19 

businesses and meeting with them, they really talk about their biggest issue is access to capital and the other thing, I was like well, 

what can I do for you, and then say customers, we need more customers. So, get the economy back on track, get the people back to 

work, that is what we need is more customers. 

My question, I kind of feel like one of our colleagues recently in 

another committee who said where are the women? And, Mr. 

Razeghi, in the 2010 Kellogg Foundation Report, it found that overall men are substantially more likely to start businesses each 

month than are women, and in your research, I am wondering if 

you found a similar phenomenon. And if so, are there resources 

that women entrepreneurs need that are not available or to what 

do you attribute the lack of women entrepreneurs that we are seeing? 

Mr. RAZEGHI. Yes. So, it is a great question. So, I do not research 

the specific, but I can tell you that other research that I have seen, 

but typically, it is more so the types of businesses. So, they are 

typically called lifestyle businesses, but work from home types of 

businesses and so on. They are because of family reasons and so 

on, there is a tendency to move there. 

In our experience that we are seeing, for example, I am involved 

with an accelerator in Chicago, where we have actually a predominant number of women, majority of women that are starting technology businesses. 

So, what are the hurdles there? Frankly, I do not study that subject closely enough, but I think there is certainly a trend, at least 

I have seen a trend moving more in that direction, but the big 

issue really are these categories of these lifestyle businesses versus 

these high potential types of businesses. 

Mr. TYMES. But the thing is, though, at the end of the day, 

whether you are a woman, whether you are a male, marketing is 

marketing, finance is finance, and product development is product 

development. At the end of the day. It is these are the basics of 

the business basics, if you will. There are some things there in 

terms of what you just mentioned, but, again, at the end of the 

day, to be successful, it is going to take some of the same skills 

that anyone will need to be successful. 

Mr. RAZEGHI. An idea I would add to that, sort of to follow on 

it, but what I see is an educator, and I guess I am concerned with 

the pipeline of entrepreneurs, is that our best and brightest, I am 

fortunate to teach at a high-ranking school, if I can be so humble, 

in Chicago. What I see typically is that there are opportunity costs 

of walking away from their student loans is why typically either 

one or the other in a relationship, somebody has to have the fulltime job while the other goes, whether it is male or female, to go 

keep the lights on while they pursue their dream. So, a thought I 

had is why do we not offer credits towards people against their student loans for every new job they create to really change the metric? Some have been extreme and say do not even go to school, just 

drop out and start a business. There are only so many Bill Gates 

that we can to that have done that and succeeded, so, stay in 

school, but let us put incentives in place. So, I think it is probably 

if we look deeper, more of an economic issue than a gender issue. 

smartinez on DSK6TPTVN1PROD with HEARING

20 

Ms. HAHN. Of course, I always love hearing men comment on 

what the issues are with women, but, anyway. 

Hey, I was going to talk to the two entrepreneurs here. One of 

the other things I was reading in the Kellogg Report is that interestingly enough, of the 15 largest cities in the country, Los Angeles 

actually created the most entrepreneurial businesses in 2011, 

which is interesting because Los Angeles usually gets pegged as 

not business-friendly and it is very difficult to do business. 

I am wondering from the two of you what geography or location 

actually played in where you chose to start up your businesses. 

Mr. HALL. Well, I will start with that. Geography has a lot to do 

with barbeque. [Laughter.] I am from Texas, I love Texas barbeque; 

I am from Kansas City, that is not barbeque in North Carolina; oh, 

Memphis is the only place to get barbeque. Pork is barbeque, beef 

is not; beef is barbeque, pork is not. 

So, I think that definitely there are some strategy with us in the 

type of product we have and the type of product people in certain 

geographies are used to. So, we kind of started out with what I 

would kind of consider a basic barbeque sauce that we thought 

would appeal to the vast majority of Americans and then since 

then, we have started to create more of the regional variances. We 

will probably in the next four to six weeks be launching our newest 

sauce, which is a Carolina vinegar sauce. We have launched a mustard sauce, which is very regional. However, one of the interesting 

things, and you mentioned Los Angeles, is we introduced the mustard sauce last year and we found that it is selling the best in California. And the reason, I think, is because it is an unusual product 

for California. There is no competition really. You do not go to the 

grocery store and see seven or eight mustard sauces on the shelf, 

you see ours. 

Ms. HAHN. We put it on our tofu. [Laughter.] 

Mr. HALL. Hey, that is fine, as long as you are buying it, you can 

put it on whatever you want. [Laughter.] Whereas in South Carolina, where you go to the grocery store and there may be a dozen 

mustard sauces on the shelf, we are now competing with 11 other 

products. So, I think that maybe for our product geography is definitely a kind of really important factor to figure in. 

And one of the things also that has helped us, we have been able 

to partner with certain companies and groups like Reser’s Fine 

Foods out of Portland, Oregon, a major potato salad, coleslaw, side 

dish company that is very predominant at barbeques, and being 

able to have our product mentioned with theirs has helped integrate us into their customer base because they trust Reser’s, they 

know it is a good product. They see we are associated with it and 

they are willing to take a chance. 

But it is really tough in the food industry. I am sure it is the 

same way with teas. When you have companies like Sweet Baby 

Ray’s and Tennessee Masterpiece and Kraft that are spending billions it seems like—it is probably not that, but that is what it 

seems like—and running 10 for $10, for 76 cents you really have 

to find ways to distinguish yourself, and we do that through what 

we think is a higher-quality product. We like to call ourselves affordable gourmet. 

smartinez on DSK6TPTVN1PROD with HEARING

21 

Mr. GOLDMAN. For me, I was working at a company called Calvert Group, which does environmentally responsible mutual funds 

and I started out out of my house, so I just stayed at the same 

place. And it is very often you will see one business sort of be the 

nucleus where others sort of come off maybe not directly related, 

and, obviously, that is what Silicon Valley is. 

I will say just as a parenthetical that a lot of startup entrepreneurs in the beverage industry are very afraid of California because of the consumer, the friendly laws, and we have seen that 

that is a state that is very intimidating to startup businesses, at 

least in the food space. 

Ms. HAHN. Okay. Thank you. 

Mr. WEST. If there are any other members who have any other 

questions, we are about to have a vote call. 

Mr. HANNA. Just a quick one. 

Mr. WEST. Mr. Hanna. 

Mr. HANNA. Mr. Tymes, what is your failure rate? 

Mr. TYMES. Failure rate? 

Mr. HANNA. Go broke rate, whatever you want to—does not work 

out? 

Mr. TYMES. That do not work out, to be honest with you, in Delaware, we have not tracked that, to be honest with you. I can say 

this, that anecdotally, that is all I can say, those that have worked 

with our programs have done fairly well, I would say. 

That is a difficult one to measure. And let me give you a good 

example. Over the past couple of years, we will get a referral from 

a bank where an entrepreneur business is in trouble and we have 

got to work to try to turn that business around as best we can and 

sometimes it works and sometimes it does not, and so, is it a failure? No. 

Another thing that is hard to measure is especially in the startup 

situation, a person comes through, we go through a training program, starting out in business, we work with them, and through 

our process, they self-select out and find out that maybe I better 

not start this business. Maybe I better not do it. Maybe I better 

save some more money and maybe I better get some experience, 

and they do not start it up. So, you ask yourself the question: Is 

that a success or is that a failure? In my eyes, I think it is a success, but that individual never started a company, they will never 

hire any employees at this particular point in time, all right. So, 

a lot of times, that is kind of hard for us to measure to be honest 

with you. 

Mr. HANNA. Thank you. 

Mr. TYMES. Yes. 

Mr. WEST. Thank you, and on behalf of Chairman Graves and 

Ranking Member of Alaska, I just want to thank you all for being 

here and participating today. And the committee will continue to 

follow closely and research the Nation and the needs of our entrepreneurs who are definitely our country’s best job creators. 

I ask unanimous consent that members have legislative days to 

submit statements and supporting materials for the record. Without objection, that is so ordered and this hearing is now adjourned. 

[Whereupon, at 2:18 p.m., the Subcommittee was adjourned.] 

smartinez on DSK6TPTVN1PROD with HEARING

22 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 62 here 76466A.001
23 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 63 here 76466A.002
24 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 64 here 76466A.003
25 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 65 here 76466A.004
26 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 66 here 76466A.005
27 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 67 here 76466A.006
28 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 68 here 76466A.007
29 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 69 here 76466A.008
30 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 70 here 76466A.009
31 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 71 here 76466A.010
32 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 72 here 76466A.011
33 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 73 here 76466A.012
34 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 74 here 76466A.013
35 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 75 here 76466A.014
36 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 76 here 76466A.015
37 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 77 here 76466A.016
38 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 78 here 76466A.017
39 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 79 here 76466A.018
40 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 80 here 76466A.019
41 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 81 here 76466A.020
42 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 82 here 76466A.021
43 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 83 here 76466A.022
44 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 84 here 76466A.023
45 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 85 here 76466A.024
46 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 86 here 76466A.025
47 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 87 here 76466A.026
48 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 88 here 76466A.027
49 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 89 here 76466A.028
50 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 90 here 76466A.029
51 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 91 here 76466A.030
52 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 92 here 76466A.031
53 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 93 here 76466A.032
54 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 94 here 76466A.033
55 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 95 here 76466A.034
56 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 96 here 76466A.035
57 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 97 here 76466A.036
58 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 98 here 76466A.037
59 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 99 here 76466A.038
60 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 100 here 76466A.039
61 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 101 here 76466A.040
62 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 102 here 76466A.041
63 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 103 here 76466A.042
64 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 104 here 76466A.043
65 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 105 here 76466A.044
66 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 106 here 76466A.045
67 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 107 here 76466A.046
68 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 108 here 76466A.047
69 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 109 here 76466A.048
70 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 110 here 76466A.049
71 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 111 here 76466A.050
72 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 112 here 76466A.051
73 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 113 here 76466A.052
74 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 114 here 76466A.053
75 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 115 here 76466A.054
76 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 116 here 76466A.055
77 

smartinez on DSK6TPTVN1PROD with HEARING


Insert offset folio 117 here 76466A.056