CT Regionalism, May 2010 Presentation to Norwich CT, NCDC

Thinking about Innovation & Job Growth (in Connecticut, Norwich and other places too) Matthew Nemerson President & CEO of the Connecticut Technology Council Wednesday May 26, 2010 7:30 AM Norwich

My background… Interests: •Computers, Architecture, History •Building Community •Leveraging Technology •Understandng Economic Growth 1974 – Amity Regional High School (Woodbridge – a local boy) 1978 – Columbia College 1981 – Yale School of Management 1982 – Publisher - Washington Monthly 1983 – Started - Science Park at Yale 1986 – Real Estate developer 1987 – President Greater New Haven Chamber of Commerce 2000 – COO - Netkey Kiosk Software 2003 – President - Connecticut Technology Council

What is the CTC? 350 member state-wide business trade association ◦ 2,500 company community ◦ 10% to 15% of state workforce Promote Policies > Runs Events Programs > Help connect firms and people Build a community and set of ideas ◦ Innovation, growth, helping start-ups, more STEM Message: be global, be competitive and be part of the future

Today… Identifying the types of business sectors that can thrive in eastern Connecticut; Working with CTC in growing technology companies; Ideas and action steps to further refine Norwich’s economic development opportunities

Discussion What is Norwich’s competitive advantage? What could state do to make Norwich more competitive? What is your natural region? What would your role be a community in 10 years if all your wishes came true?

Strategy K.1. Develop ongoing process to coordinate economic development Institute a coordinated process for reviewing and promoting projects developers and attract new investors in Norwich Institute process for project planning, conceptualization, packaging, and implementation Monitor progress on regular periodic intervals Hold all partners accountable Strategy K.2. Develop local capacity to collect and publish data to track and support Establish baseline measures of the City’s current economic status that will be updated to measure progress Establish baseline measures which inform economic development initiatives Develop an environment where Measures of Success are identified and systematically reported Strategy K.3. Develop parcel-based information system to modernize City operations Connect and integrate geographic databases of the City and NPU to support work of city departments Strategy K.4. Develop economic development component of 2012 Plan Refine this plan for inclusion in the Plan of Conservation and Development Benchmark Norwich against successful cities of similar size and age; learn from their successes Use road trips to visit cities and meet with economic development entities

Many ways to approach thinking about growth… Present vs. Future (ideas) Systems vs. Projects (focus) Superficial vs. Real (data) Change vs. Destiny (control) Actor vs. Team (complexity) Politics vs. Clarity (power) Here vs. Everywhere (scale) Local vs. Regional vs. Global (flatness)

Traditional: what drives growth? A problem to solve Great ideas Self-interest Expectation of return on investments Available capital Available labor Appropriate infrastructure Facile political leadership

Innovation Eco-system Innovation Eco-system Government Incentives Venture Later state Jobs > Early Stage Technology Growth Seed Transfer Angel Corporate Investors Spin Outs SBIR Incubators Innovation University Validation Accelerators R&D Skilled Workers Networks Entrepreneurs Students Associations Mentors Grants Infrastructure – Global connections Image – Global perceptions 10

New Job grow comes from… New Job grow comes from… Intellectual Property and Technology Transfer Universities foster new companies through start-ups & licensing Existing Industry Competitive Starting Advantage Growth New Companies R&D, spin-outs, Created by strategic connections & entrepreneurs, angels investments 11

Patents per capital: We are and have been the center of innovation (1995-2000 data)

A survey says tech companies are staying in Connecticut but not strong supporters… 13

But Data is uneven across categories Connecticut is 7th in “Tech State” rankings by ITF/Kauffman

Connecticut is 7th in “Tech State” rankings by ITF/Kauffman

Scores low in VC $, non-industry R&D, Entrepreneurial Activity

Connecticut’s trend problem… Rank Change 2005 2006 2005 2006 Entrepreneurial & Business Vitality 9 11 42 44 Financial & Capital Resources 13 14 45 42 Technology Strengths 2 2 36 36 Human Capital Resources 5 7 35 41 Global Links 7 12 29 37 OVERALL 7 8 43 44

CT 20-Yr Moving Avg, Abs Change (1000s) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Dec-88 England Oct-89 Aug-90 Jun-91 Apr-92 in job growth Feb-93 Dec-93 Oct-94 Long-term decline Aug-95 Jun-96 Apr-97 Feb-98 Dec-98 Source: U.S. Bureau of Labor Statistics; Calculations by CERC Oct-99 Aug-00 Jun-01 Apr-02 Connecticut Feb-03 Dec-02 Jobs dropping quicker than across New New England Oct-04 Aug-05 0 2 4 6 8 10 12 14 16 18 20 New England 20-Yr Moving Avg, Abs Change (1000s)

Cluster Portfolio Growth-Share Matrix: Relative Position of Various Clusters Growth-Share Matrix for Connecticut's Clusters 6.0 Aerospace 5.0 Location Quotient 4.0 Insurance & 3.0 Financial Services IT Metal Tourism Medical Health 2.0 Manufacturing Bioscience Devices Plans 1.0 Plastics Creative Industries Agriculture Maritime 0.0 -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% Average Annual Employment Growth, 1994-2004 20 4

WSJ : Tech leads Jobs recovery 4/16/2010 Google profits up, 1000 new workers now, 1,000 more soon (Internet ads) Oracle, 2,000 new for SUN AMD profits up 37% Cisco, 2,000 new hires in 2010 Twitter, 170 new hires in May LinkedIn, 150 this year Dice reports: 10,000 more listings than a year ago

Connecticut jobs picture is turning

Is “now” different for policy makes? “What if the crisis of 2008 represents something more fundamental than a deep recession. What if it is telling us that the whole growth model we created over the past 50 years is unsustainable economically and ecologically and that 2008 was when we hit the wall – when Mother Nature and the market both said, no more.” NYT columnist Tom Friedman Political challenges in 2010 Health reform Global changes in growth ◦ New world versus old ◦ IP versus Production Debt as % of GDP Climate Change

Jobs and Geography

Regional Business Growth Varies in US % U.S. Establishment Establishments Region Establishments Growth, 1989-2004 1989 2004 1989 2004 # % U.S. 6,107,413 7,387,724 100.0% 100.0% 1,280,311 21.0% Northeast 1,332,756 1,454,736 21.8% 19.7% 121,980 9.2% Midwest 1,426,941 1,675,608 23.4% 22.7% 248,667 17.4% South 1,998,066 2,536,867 32.7% 34.3% 538,801 27.0% West 1,329,672 1,700,995 21.8% 23.0% 371,323 27.9% Connecticut 94,178 93,011 1.5% 1.3% -1,167 -1.2% Source: U.S. Census

Geographical opportunity… Geographical opportunity… opportunity… opportunity… Map: University of Pennsylvania 27

Source: Michael Gallis

Gallis Corridor slide

Projected growth “winners” by 2050 Projected growth “winners” by 2050 Map: University of Pennsylvania 30

A new way of looking at the coasts: Northeast Over California

Looked at from labor markets Looked at from labor markets

Emerging U.S. Mega-Regions Emerging U.S. Mega-Regions Map: University of Pennsylvania 34

And viewed by cluster growth

World population

Journal citations 2008

Patents files

Big Trends…

Technology Trends Gadgets and life style Connectivity (wifi & cellular) 4G Pricing issues Convergence of communications Displays (size, type, 3D) Flash memory = (E readers) DYI IT and comsumerization of Enterprise systems ◦ ChallengePost, topcoder and Tongal

Technology Trends Platforms & Structure FCC ruling Cloud Virtualization Open Source Web 2.0 ◦ Google ◦ Facebook ◦ Craig’s List

Technology Trends Larger & Energy Tech Distributed energy ◦ Mini fuel cells Carbon Footprint Health Care IT (Combining with devices) Alternative energy Electric Cars High Speed Rail Light Rail China & India

Place Trends Sustainable Tax Base & budget Broad demographics Two job commute sheds Opportunities for children Multi generational zoning Stable weather Water Respected government

There are limits to all ideas

Discussion What is Norwich’s competitive advantage? What could state do to make Norwich more competitive? What is your natural region? What would your role be a community in 10 years if all your wishes came true?

Questions and discussions Matthew Nemerson President & CEO CTC mnemerson@ct.org 860 289-0878 x333

CONNECTICUT RANKS NEAR THE BOTTOM AMONGST THE 10 LEADING TECHNOLOGY Connecticut is bottom rung of the top STATES … states… BENCHMARKS Metrics Expenses ($ Expenses ($ Percentage Percentage Percentage Engineering Business Rapidly VC Millions) Millions) of total US of total US of High Degrees incubators Growing Investments per patent per start-up patents patents School awarded per 10,000 firms i.e. ($ Millions) issued to initiated granted grantedDelt seniors per 100,000 business 20% YoY state from state a vs '95 planning to residents establishme for 5 years institutions institutions major in nts Computer, Engineering or Information Science Period 1995-2004 1995-2004 2005 vs. 1995 2005 2005 2005 2000-2005 2005 CA $ 6.7 $ 72.6 23.0% 6.8% 12% 44 1.3 379 $ 10,633 CT $ 11.1 $ 99.0 1.9% -0.9% 9% 29 0.9 29 $ 186 IL $ 11.4 $ 110.4 4.0% -1.3% 13% 37 0.9 124 $ 293 MA $ 7.0 $ 68.2 4.1% 0.1% 11% 76 1.9 145 $ 2,455 MN $ 8.9 $ 89.1 3.2% 0.2% 14% 26 1.8 65 $ 231 NC $ 9.1 $ 78.4 2.2% 0.4% 13% 31 1.9 44 $ 472 NJ $ 6.6 $ 62.4 3.7% -1.3% 10% 37 0.7 115 $ 947 NY $ 8.2 $ 92.9 6.8% -1.7% 10% 48 1.7 154 $ 1,074 PA $ 9.8 $ 77.4 3.4% -1.3% 10% 51 1.8 124 $ 470 VA $ 9.0 $ 51.1 1.3% -0.2% 14% 51 2.2 182 $ 413 CT Rank 9 9 9 6 10 9 8 10 10 Source: Assoc. of Assoc. of US Patent & US Patent & The College American Commonweal Inc. Magazine PwC/ NVCA/ Technology Technology Trademark Trademark Board Assoc of th of MA MoneyTree Managers Managers Office Office Engineering Survey Societies Source: John Adams Innovation Institute 48

… AND EMPLOYMENT TRENDS, AND INVESTMENTS IN CRITICAL CLUSTERS IS Did not grow as well compared to peer DISCOURAGING … states… BENCHMARKS Cluster Employment 2004-2005 (% change) Clusters MA CA CT IL MN NJ NY NC PA VA Computer & Comm Hardware (0.4) (1.6) (3.3) (2.3) (1.2) (1.4) (5.2) (0.8) (1.3) 4.5 Defense Mfg & Instrument. (1.8) (0.3) 0.3 0.8 1.9 - 3.3 6.2 1.0 4.1 Diversified Ind. Support (4.7) (1.0) (1.5) (1.0) 0.2 (1.6) (2.9) (1.0) (1.2) 1.6 Financial Services (0.3) 1.8 - 0.3 1.4 1.1 2.0 2.2 (0.2) 0.5 Healthcare Technology (0.7) 1.7 (0.3) (2.2) 4.3 (2.9) (0.7) 2.1 (0.5) 1.5 Sci, Tech & Mgt Services 5.4 7.0 0.2 4.1 1.7 4.2 2.2 6.4 5.5 14.1 Business Services 1.5 3.1 - 2.1 (0.9) (0.3) 1.7 2.9 0.7 3.9 Post Secondary Education - 4.8 2.9 5.1 2.7 (0.1) 1.1 1.4 3.3 3.8 Software & Comm. Services 1.9 0.4 (1.1) (0.3) (0.9) 0.2 (0.3) 2.5 (0.3) (0.9) Textiles & Apparel (4.9) (6.6) (7.7) (3.7) (3.1) (10.4) (9.8) (10.8) (11.2) (9.6) Source: Moody's Economy.com CT Investments ($ Millions) Investment Amount No. of Investments Source: PricewaterhouseCoopers, National Venture Capital Association 49

What to do?

Intra and Entrepreneurs' POV Issues Customer service Networked problem solving Capturing value Speed Corporate or Boot Strap Skills Pattern recognition Expert Thinking – forecasting with perspective Complex Communications – making your point

Case studies of some local Gazelles Tangoe – www.tangoe.com $50m in five years Reduce Costs and Take Control of Your Global Communications Tangoe delivers software and technology-enabled services to help global organizations manage, understand, and control their fixed and mobile communications assets and costs. Idea: Analyze phone bills Found: Companies wanted to out source everything from land lines to PDA management

Case studies of some local Gazelles HigherOne – www.Higher.com $75m in ten years Our main idea was to expand the purchasing power of our college ID card so it could be accepted everywhere - not just on campus. We decided to create a product based on combining a college ID card with a Debit MasterCard®; this would help students get their refunds from their school faster, offer more choices in how to receive their money and finally save time and money for colleges and universities. Idea: College is Debit Card has scholarship money Found: College bursar offices wanted to outsource many electronic banking issues, faculty and staff functions too.

Which leads to TBED Initiatives Supporting Tech Transfer in universities and commercialization ◦ Ohio: $500m over 7 years for R&D and commercialization ◦ New Jersey: $250m for Cancer and Stem cell research R&D and an institute ◦ Michigan:$200m grants for bio, energy, materials, security ◦ Maine: $200m R&D and tech transfer – bio, energy ◦ Florida:$142m for R&D, incubators, scholars, aerospace ◦ New Mexico: $120m R&D – super comp, stem, aerospace ◦ Penn: $75m for incubators and assistance ◦ Georgia: $33m for GA Research Alliance activities Supporting tech bricks and mortar to lure major construction ◦ NYS: $600m grant for $3.2b AMD chip factory ◦ Florida: $500m grant for Scripps Biotech institute Supporting a healthy innovation environment ◦ Penn: $120m new money for tech training and tuitions ◦ Mississippi: $28m ◦ Maine: $20m for partnerships, training & clusters ◦ Ohio: $15m to tech assistance and support for start-ups ◦ Oklahoma: $10m, including $5m for seed ◦ New Jersey:$8m for assistance programs

Wired 40 2005 1. Apple 2. Google 3. Samsumg 4.Amazon 5. Yahoo! 6. EA 7. Genentech 8. Toyota 9. Infosys Technologies 10. eBay 11. SAP 12. Pixar 13. Cisco 14. IBM 15. Netflix 16. Dell 17. General Electric 18. Medtronic 19. Intel 20. Salesforce.com 21. Vodafone 22. Flextronics 23. EMC 24. Nvidia 25. Jetblue 26. FedEx 27. Monsanto 28. Microsoft 29. Nokia 30. Costco 31. Comcast 32. Pfizer 33. Li &Fung 34. Taiwan Semiconductor 35. Gen- probe 36. Citigroup 37. L-3 Communications 38. Ameritrade 39. Exelon 40. BP

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CT Regionalism, May 2010 Presentation to Norwich CT, NCDC

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