Karen Mills

Nominee to head the SBA

How Obama's SBA Chief May Change the Agency

As the President's pick to head the Small Business Administration, Karen Mills could transform the agency's approach to funding

By Jeremy Quittner

BusinessWeek January 20, 2009

If confirmed, Mills will take over an agency that has suffered from neglect during the past eight years. NICHOLAS KAMM/AFP/Getty Images

President Barack Obama's Dream Team is packed with so many  high-caliber picks, it might be easy to overlook Karen Gordon Mills,  his choice to head up the Small Business Administration. But she is no exception.

Mills, 55, shares some hometown connections with Obama. Her parents are  Melvin J. and Ellen R. Gordon, who own some 80% of the Chicago-based  candy-maker Tootsie Roll Industries (TR),  of which they are chief executive officer and president, respectively.  Also like President Obama, Mills is an alumna of Harvard University,  with a B.A. in economics and an MBA. She counts as her business school  classmates and friends such luminaries as Orit Gadiesh, chairman of Bain & Co., and Ann M. Fudge, a director at General Electric (GE) and former chairman and CEO of Young & Rubicam Brands, ranked by Forbes and Fortune among the most powerful and influential women in the U.S. Karen Mills' husband, Barry, is president of Bowdoin College.

Recognizing the Diverse Needs of Small Businesses

What will the SBA under Mills' direction look like? Those who know her  say she will balance a financier's background with extensive hands-on  experience using government to promote small business needs. And she is  likely to do so in a nonpartisan fashion. She's also likely to focus  particularly on the needs of women-owned small businesses and to help  foster a more global role for American entrepreneurs. "I have worked  with Karen over the years and she is an exceptionally capable  individual who always has the interests of our nation's small  businesses in mind," says Senator Olympia Snowe (R-Me.), ranking member  of the Senate Committee on Small Business & Entrepreneurship, who  recommended Mills for the post. Snowe says she hopes President Obama  will make the administratorship a cabinet-level position.

Mills, who has not yet been confirmed, was unable to comment when reached by telephone. But in an October 2008 interviewwith BusinessWeek SmallBiz,  Mills discussed the need for the SBA to develop an approach to funding  that recognizes the varying financial needs of different types of small  businesses. Mills says what is currently missing is "a strategy that  puts small business at the center, that differentiates between the  high-impact, high-growth small businesses who have these needs for more  long-term equity capital vs. the Main Street businesses which today  need reinstatement of their short-term credit."

Mills is currently president of private equity firm MMP Group in  Brunswick, Me., and in 1999 co-founded New York-based private equity  firm Solera Capital,  which has raised $250 million. She was also chief operating officer of  leveraged buyout firm E.S. Jacobs & Co., where she worked from 1983  to 1993, and she has consulting experience both in Europe and the U.S.  with McKinsey & Co. She has been a product manager for General Foods and serves as a director of numerous companies, including Arrow Electronics (ARW) and Scotts Miracle-Gro (SMG).

Research on Regional Clusters

Observers see Mills' experience co-founding Solera with two women  partners as an indication that she will be an advocate for the nation's  women-owned small businesses. Among the investments the fund has made  are women-owned small businesses such as Latina Media Ventures and natural food producer Annie's.  "I think she will serve very well in regard to women," says Maine  Governor John Baldacci. In recent years, the SBA has been much  criticized for failing to meet its quota of ensuring that at least 5%  of government contracts go to women-owned small companies.

Research Mills conducted for the Brookings Institution on economic  business clusters in Maine, along with her personal lobbying efforts,  helped convince the Maine legislature to pass a $50 million research  and development bond to spur innovation by small businesses. "I have  watched [Karen] operate in farms and factories and sawmills, with  boat-builders and everywhere else with comfort and ease," says  Baldacci. "I have not seen her be anything but comfortable navigating  the halls of Maine legislature." Mills was also chair of Baldacci's  Council on Competitiveness & the Economy.

Mills' work has piqued interest beyond Maine. "Her ideas about  clusters are interesting and look at different ways to finance [small]  businesses," says Susan Eckerly, vice-president for federal public  policy at the National Federation of Independent Business in  Washington. The research, which focuses on the impact that highly  innovative firms—in particular the state's boat builders—can have on  regions, suggests that businesses that trade outside of a given locale  can have a greater impact than small businesses that trade only  locally, by bringing in more money and attracting other businesses.  This in turn allows such businesses to compete better globally, her  paper argues.

Mills certainly hinted at that same idea when she accepted the  nomination in December 2008 when she said: "America's spirit of  entrepreneurship is one of our greatest assets, as we compete in the  global economy." That's true now more than ever before.

Quittner is a staff writer for BusinessWeek in New York.