Commerce Committee Presentation by Matthew Nemerson on January 20, 2011
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Commerce Committee Presentation by Matthew Nemerson on January 20, 2011

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Matthew Nemerson gave a presentation about 2011 Introduction of key job growth and economic development issues for the Commerce Committee on January 20, 2011.

Matthew Nemerson gave a presentation about 2011 Introduction of key job growth and economic development issues for the Commerce Committee on January 20, 2011.

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  • Most fast growing CT firms were started here – none moved here. Companies likely to move if they succeed.CEOs worried about ability to maintain growth – so getting advice, looking and finding ‘better’ locationsQuality of life overcomes weak innovation environment up to a point, but not foreverSense that other locations are becoming more business and growth friendly while Connecticut becomes less Most important take away: other locations are more curious, innovative and willing to deal with a culture of fast growth and unexpected needs.
  • The goal should be the creation strong policies, enacted more quickly, with measured results, honestly and frequently reviewed and corrected in mid-stream. How can this be achieved? We start with the assumption that changes are needed in the organizational structure, but the idea of combing DECD with the authorities is probably not a useful effort, nor will it necessarily achieve the results of offering smarter or better service or policies. In fact, the current set up of having the DECD Commissioner oversee CI is seen within the industry and off the record as intrusive and very unhelpful. The set-up today does not allow for honest give and take. The opinions of experts at the authorities who actually deal with companies is not accounted for adequately. Facts about firms and problems must often align with political realities.A better approach would be to reassign responsibilities and efforts – while leaving the fundamental structure alone. DECD would be the policy creator and monitor performance,Authorities would handle the money: undertaking all loans, investment and grant making and handling contracts for services with NGOs. (The quasi’s can contract more quickly and easily than DECD)CERC/Chambers, Trade Associations/Not for profits/non government organizations (NGO) should be used to help carry out policy – with some idea of the best roles of each group and to make sure that there is a healthy competition to keep overhead rates down and to be certain that the government is not spawning additional overlapping groups. Partnerships and short-term contracts (1 to 2 years) should be emphasized and organizations should be encouraged to apply together. The best models for this can be seen in Oklahoma with the OCAST, Ben Franklin Partnership in PA and TEDCO in MD. Tourism and the arts must be rebuilt with regional funding from new tax sources and regional control – this is too important to minimized and marginalized. Four or five regions should suffice.

Transcript

  • 1. 2011 Introduction of key job growth and economic development issues for the Commerce CommitteeJanuary 20, 2011
    Matthew Nemerson
    President & CEO – CTC
    Liddy Karter Exec. Dir. CVG cannot make the meeting
    2.4
  • 2. Who are we? A new allianceof two venerable organizations
    Combined audience of 15,000
    people and firms in the innovation, support and tech community
    17 year old State-wide trade association to support the technology community.
    Promotegrowth & innovation
    Members include largest to small firms
    Speak for 2,000 tech firms
    Global and national affiliations
    Best practices in other states -TECNA
    • 2011 Connecticut Competitiveness Agenda
    • 3. Annual Legislative Agenda
    • 4. Women of Innovation
    • 5. Tech Top 40 Awards
    • 6. 100 Companies to Watch Awards
    • 7. Monthly PowerMatch
    • 8. Various forums: CEO, CIO
    • 9. Peer to peer month roundtables
    25 year old State-wide trade association to support the venture and risk capital community to the creation of start-ups and the availability capital.
    Creates opportunities to connectideas and capital
    Members include VCs, key service providers, entrepreneurs
    • Crossroads Venture Fairs
    • 10. Entrepreneurial bootcamps
    • 11. Regional Chapter meetings & events
    • 12. Development of VC funds & community
    • 13. Connections to Angels and Private Equity
  • We need bold action and better understanding to grow jobs here
  • 14. Why is Connecticut at the bottom for job and firm growth?
    We wanted to figure this out
    Does it makes sense?
    If so, what is going wrong?
    Asked CEOs of fast growing firms
    Learned some interesting things
    Created an agenda to deal with these real issues that are slowing job growth
    Note: The following slides are CTC not CVG work
  • 15. What we usually hear…
    Taxes and cost too high here –
    But compared to other high value added locations we are competitive
    Electrical costs too high
    An issue for manufactures but not really for others, and we lead the nation in output/btu
    Not enough skilled local graduates
    There is lots of talent in the greater Northeast – and some of our cities top nation for young people
  • 16. Fast growing firm CEOs actually said
  • 17. We can fix our key weaknesses
    State doesn’t know me or my successes and other states do a better job of letting me know we are important.
    - If the state government is proactive, open and strategic, and if I am in a world class, supportive innovation environment (which I am not at present) then I can tolerate existing high costs (though not much higher).
    Networks & Connections are weak: Local professional networks are frail, there is insufficient critical mass in my cluster, it is hard to find young talent and to travel.
    -A growing business needs new ideas and talent.  Help me connect with peers, attract young employees, and make it easy to travel to global and regional hubs.
    New financial risk capital is hard to find and lack of innovation culture makes it hard to grow, despite presence of money and skilled people here. The attitude, industry awareness and availability of investors and researchers are much better in other places.
    -Why should I stay in an location that is not these most supportive of successful firms like mine, and if I need sophisticated help, where would I go?
    1. State
    Needs to Care
    2. Denser
    Innovation
    Networks
    3. Brains , Bucks & Help
  • 18. The Connecticut Predicament: A leadership opportunity
    Connecticut is very productive in the job losing large firm “industrial traded economy,” but lags in job creation the “post-industrial” new firm high tech, entrepreneurial economy.
    It has failed to translate potential into success, resulting in lackluster job growth and eroding incomes.
    Connecticut must compete in knowledge sectors and promote entrepreneurship, or risks being left behind.
    There is no central organizing force to create an culture of innovation – many groups organized for that purpose are political, parochial or operate in a spirit of scarcity.
  • 19. A preview of our 2011 Agenda
  • 20. Background on our situationGaining perspective
  • 21. The State Legislature view of Connecticut
  • 22. Gallis Corridor slide
    A Connecticut business person’s view of the state
  • 23. A tech CEO’s view of Connecticut
  • 24. The Innovation Job Growth Eco-system
    Jobs >
    Growth
    14
    Venture
    Later state
    New jobs come from a deliberate process that requires many parts of a puzzle to contribute and be better than other locations at each step…
    Early Stage
    Seed
    Technology
    Transfer
    Angel
    Investors
    Corporate
    Spin Outs
    Incubators
    SBIR
    Innovation
    Accelerators
    University
    R&D
    Validation
    Skilled
    Workers
    Students
    Networks
    Associations
    Mentors
    Grants
    Entrepreneurs
    Government
    Incentives
    Infrastructure – Global connections
    Image – Global perceptions
  • 25. We are number six in Kauffman’s innovation rankings, right?
  • 26. We should rock
  • 27. High costs are OK if matched with high performance
    Cost
    Competitiveness
  • 28. CT is failing to turn key assets into innovative, entrepreneurial growth
  • 29. What we need to grow jobs
    Strong networks – where people know each other through out the region
    ContentedCEOs - who recommend the state to their best friends
    Venture investors - who move their best firms to Connecticut and take higher risks on our start-ups
    Agencies, organizations and institutions that seek out each other (with incentives perhaps) to collaborate and create partnerships
  • 30. The Connecticut Predicament – Why we don’t have more jobs and new firms
    We have large % of large firms – they shrink
    We start too few firms – easy to leave
    Our Fast growing firms were started here
    Quality of life overcomes weak environment up to a point
    CEOs worried about ability to maintain growth
    Eco-systems are more curious, innovative and deal with fast growth and unexpected needs.
  • 31. The Connecticut Paradox
    “Personally, I love it here, but it’s not a good place for my business.” - Connecticut CEO of a fast growing firm
    So firms stay until beyond their comfort point and then often leave or find themselves underperforming. Intervention is needed earlier and start-up roots need to be explored and reconnected.
    CEO feelings about Connecticut
    It is very good for my company here 28%
    It is not good for my company to stay here 14%
    It’s great for me personally, and it’s OK for my business for now 59%
  • 32. The share of CT’s jobs in high tech sector is declining
    Source: AeA, Cyberstates 2008 (Washington DC: 2008) and AeA, Cyberstates 2001 (Washington DC: 2001).
  • 33. Smaller companies seem to create most jobs…
    Source: Stanglerand Kedrosky, “Neutralism and Entrepreneurship,”
    Kauffman Foundation Research Series: Firm Formation and Economic
    Growth, 2009
  • 34. But data analysis shows that its is the age which is the true correlation
    Years in Business
    Source: Stangler and Kedrosky, “Neutralism and Entrepreneurship,” Kauffman Foundation Research Series: Firm Formation and Economic Growth, 2009
  • 35. While young companies create most jobs, older ones lose them
    Source: YourEconomy.com. Edward Lowe Foundation.
  • 36. The story of job. “Net” jobs lost or gained only tells us a little bit. Here’s jobs created…
    Source: YourEconomy.com. Edward Lowe Foundation.
  • 37. Now look at job losses
    27
    (c) CTC 2010
  • 38. New jobs are fewer than closed businesses – but look at start-ups…
    -20,000
  • 39. Now let’s look at the whole story for jobs expanding and contracting…
    +2,000
  • 40. Large firms dominate our “smoke-stack” chasing
    +5,000
  • 41. Smaller firms dominate job creation
    Jobs started by new firms
    +
    =
    +
  • 42. Let’s compare:Stage 1 compensates for MD & TX for job losses. Not CT and MA
    32
    (c) CTC 2010
    -5,000
    +55,000
    -20,000
    +250,000
  • 43. Don’t worry about the brain drain – it may not be the systemic crisis we think it is
  • 44. CT Cities Show Mixed Results in Attracting Young Professionals
  • 45. Stamford and New Haven do well versus other hip small cities…
  • 46. Venture capitalists not finding Connecticut companies in which to invest
    Source: https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical
  • 47. So, Connecticut’s venture capital community focuses elsewhere
    The percent of venture capital managed in Connecticut that is invested in-state is lower than in competitor states
    Source: Sources and Targets of Venture Capital Investments 2009, National Venture Capital Association, PriceWaterhouse Coopers
  • 48. How to compete with other states in offering university partnership
    Tech schools tend to have the easiest time creating partnerships – these are vital to many firms
    Source: National Science Foundation/Division of Science Resources Statistics, “Survey of Research and Development Expenditures at Universities and Colleges” http://www.nsf.gov/statistics/nsf10311/pdf/tab30.pdf
  • 49. Reviewing what the CEOs told us
  • 50. Where Do Good Ideas Come From: The Natural History of Innovation, Steve Johnson 2010
    If there is a single maxim that runs through this book’s arguments, it is that we are often better served by connecting ideas than we are by protecting them…environments that build walls around good ideas tend to be less innovative in the long run than more open-ended environments. [Ideas] want to complete each other as much as they want to compete.
  • 51. Clusters are seen are key to job creation by Brookings and others
  • 52. Conclusion: thinking about economic development
    The goal should be the creation strong policies, enacted more quickly, with measured results, honestly and frequently reviewed and corrected in mid-stream.
    We start with the assumption that changes are needed in the organizational structures
    A better approach would be to reassign responsibilities and efforts – while leaving the fundamental structure alone.
    CERC/Chambers, Trade Associations/Not for profits/non government organizations (NGOs such CCAT) should be used to help carry out policy –
    The best models for this can be seen in Oklahoma with the OCAST, Ben Franklin Partnership in PA and TEDCO in MD.
  • 53. A preview of our 2011 Agenda
  • 54. Thanks for your time!
    Good luck in the 2011 session