PROFILE-November + December 2009
Edited + transcribed by Peter A. Smith
Photograph by Nathan Eldridge
Businesswoman, venture capitalist, mother, Obamas Small Business administrator
Discussed: Economic recovery, cluster development, robotics, Brunswick, boats, and organic beer
Karen Mills lives in Brunswick and works in Washington, D.C., as the head of the largest single financial backer in the country—the Small Business Administration, an agency holding over $45 billion in loans.
President Obama appointed Mills to serve as the SBA administrator in part because of her experience in the private sector. She has worked at General Foods Corporation, Scotts Miracle-Gro Company, and Arrow Electronics, Inc. From 1999 to 2007, Mills cofounded and then ran Solera Capital LLC, a venture capital firm in New York. She also headed Brunswick private-equity firm MMP Group, Inc.
In recent years, Mills worked in Augusta, securing a $15 million grant for a Maine boatbuilding cluster, coauthoring a Brookings Institution report on cluster developments, and working on a specialty food industry cluster. In an address as the SBA administrator earlier this year, Mills said small businesses could provide a model for national economic recovery. She specifically cited the regional economic development model of Maine’s boatbuilders.
While Mills may be from away and tends to work closer to the White House than the Blaine House, she’s still a passionate advocate for the businesses—and the business values—found in Maine.
Maine: Where are you from originally?
KM: I grew up in Boston, and my husband, Barry, is from Rhode Island. For a long time, we lived in New York City. In 2001, Barry had the great privilege of being asked to be the president of Bowdoin College. We moved with our three boys: William, Henry, and George. George is now a junior at Brunswick High School; the other two have graduated.
M: From my understanding, you were known around Brunswick for being the wife of Bowdoin College president. Has that changed since you were tapped as the Small Business administrator?
KM: It was more than that. In 2005, I began working for Governor John Baldacci when he asked me if I would get involved with the Brunswick Naval Air Station base closure. I was very involved in the creation of the North Star Alliance, which was the boatbuilding cluster we formed with the composite technology expertise at the University of Maine. For me, that really started an interest in economic development and small business growth in the public sector. I was able to help the governor with other economic clusters and growth initiatives as the chair for his Council on Competitiveness and the Economy. The other way that people know me in Brunswick is that I’m a mom, a shopper at the farmers’ market, and I know a lot of the Main Street businesses.
M: Tell me a little about your background in business.
KM: I’ve really spent the last 25 years growing small businesses. In the 1980s, many of them were manufacturing businesses from all around the country— injection-molded plastics, metal stamping, and hardwood floors. I was involved running businesses through the 1991–1992 recession, so I have some experiences that are relevant to today. I know how small businesses need to operate to withstand a recession and how they can recover and grow again.
M: You’ve also had one foot in managing New York private equity firms and another in investing in Main Street–style businesses, like Annie’s Homegrown Macaroni & Cheese.
KM: Annie’s was more of a high-growth business. But I have been involved in all kinds of businesses, including Peak Organic Beer, which is brewed in Portland. I helped start the cluster around food in Maine. We have blueberries, potatoes, lobster, and fish. We have so many terrific food companies. What we saw from the boatbuilders was that when they clustered together they had more economic power. They were able to attract trained workers and conduct research and development. We applied the same model to the food companies.
M: Have you been able to apply this cluster model on the national scale?
KM: We have been working on it. The president is very interested in regional economic development clusters, in innovation, and in entrepreneurship. We are working across agencies and with the White House. For instance, I was just in Detroit, Michigan, at the opening of the robotics cluster. We put 200 automotive suppliers experienced in robotics together with the Department of Defense, which has a great need for unmanned robotic probes. Here was a really distressed sector with a lot of expertise and we brought them together and gave them a new market. That’s something we are able to do at the SBA.
M: But small business loans have been down. Is this changing?
KM: Yes, yes, and yes. As you know, back in October 2008, the credit market froze. And the economic crisis happened. Small businesses couldn’t get access to credit. All loans, including SBA loans, just dropped. They bounced around the bottom. In February, Congress and the president passed the Recovery Act. The act gave the SBA over $700 million dollars. We were able to use that to improve our two flagship programs: 7(a) and 504. When we increased our guarantees and lowered our fees, volume started to return. It’s up over 60 percent. We’ve been able to put over $11 billion into the hands of small businesses. While SBA loans were way down in the first half of the 2009 fiscal year, they shot up in the recovery as we were able to get these improved SBA programs running.
M: From my understanding, business owners are still saying they have trouble receiving credit loans. You’re constantly on the road talking to these people, is that what you’re hearing?
KM: Right now, I think it would be great if you encouraged business owners to come ask about the SBA loans because we are often able to help. For a good business that still should get a loan, it’s our job to provide this guarantee to help banks make loans.
M: With all your travel obligations, how often are you back in Maine?
KM: I live in Maine. My family is here. Maine is an extraordinary place to live. In terms of the values—not just from small businesses, but from our community. In Maine, people reach out and help each other. Maine is a state of small businesses. The work I did with the governor was growing small businesses and having them be the backbone of the economy. Now, that’s going to be the way things happen all across the country.
M: Not everyone in the U.S. is going to be building boats and growing potatoes, I hope.
KM: Yes, but the principles are the same. If you have small businesses leading your economy, it’s different than big businesses. When the big textile and pulp businesses left Maine, we had to figure out a strategy that relied on small businesses clustered together, or individual businesses on Main Street. Maine taught me how to make an economy work on small businesses, and now I’m bringing that expertise to my role in Washington.