In The Roots of American Industrialization Meyer reexamines previous studies, provides new evidence, and presents a new explanation. He argues that agriculture and industry both grew and transformed, thus constituting mutually reinforcing processes. Eastern agriculture thrived from 1790 to 1860, and rising farm productivity permitted surplus labor to enter factories and provided swelling food supplies for growing rural and urban populations. Farms that were on poor soil and distant from markets declined, whereas other farms successfully adjusted production as rural and urban markets expanded and as Midwestern agricultural products flowed eastward after 1840. Rural and urban demand for manufactures in the East supported diverse industrial development, and prosperous rural areas and burgeoning cities supplied increasing amounts of capital for investment. Metropolitan regional hinterlands around Boston, New York, Philadelphia, and, to a lesser extent, Baltimore, experienced broadly similar transformations of agriculture and manufacturing, forming the eastern anchor of the American manufacturing belt.
As rich state Connecticut needs high salary & benefit jobsValue added Industrial traded jobs” decline in numbers due to productivity gainsNew “post-industrial” high tech jobs needed Potential exists, but job growth means income loss. Connecticut must compete in at top of knowledge sectors by promoting entrepreneurship.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.
Funding Retention EffortsAcceleratorsBusiness plan competitionsIncubatorsEntrepreneurs in ResidenceMentor networksOpening universities to collaborationSkilled workers, key talentGrants & debtRetentionRegulatory ReliefConnections to larger firmsMarket intelligence & assessments
CT Technology Council - Matt Nemerson
Who are we? An alliance of two venerable organizations Combined audience of over 15,000 people and firms in the innovation and tech-support communityPromotes growth & innovation Connects ideas and capital17 year old State-wide trade association to 25 year old State-wide trade association tosupport the technology community. support the venture and risk capitalMembers include largest to small firms community to the creation of start-upsSpeak for 2,000 tech firms and the availability capital.Global and national affiliations Members include VCs, key serviceBest practices in other states -TECNA providers, entrepreneurs•2011 Connecticut Competitiveness Agenda•Annual Legislative Agenda•Women of Innovation•Tech Top 40 Awards •Crossroads Venture Fairs•100 Companies to Watch Awards •Entrepreneurial funding events•Monthly PowerMatch •Regional Chapter meetings & events•Various forums: CEO, CIO •Development of VC funds & community•Peer to peer month roundtables •Connections to Angels and Private Equity
Connecticut and the role of Innovation Matthew Nemerson January 20122.0
Innovation Asset RequirementsFor an entrepreneurial ecosystem to flourish, the followingassets must exist within a region:Tangible Assets Intangible Assets• Entrepreneurial Capacity “A Buzz”• Business Acumen Networking Opportunities• Risk Capital Culture that is Supportive of Innovation• R&D Enterprise Community Mindset• Technology Commercialization• Human Capital Business Climate Assets• Physical Infrastructure Government Policies• Industrial Base Quality of Life• Global Linkages
A quick history of Connecticut Innovation• 17th century - Cheaper labor – Religious intolerance and dispensations• 18th c – Distributed mercantilism – Successful farms, capital, iron deposits, access to market• 19th c – Advanced Machinery to compensate for lack of European quality labor skills – "A substitute for European skill must be sought in such an application of mechanism as to give all that regularity, accuracy and finish to the work which is there affected by a skill...." Whitney – Whitney > Colt > Smith & Wesson > Winchester – Parallel innovation of inventions & implementations
The 19th Century Invention paradigm• Cluster of inventors• Support by expert mechanics• Power: water & coal• Transportation: water & rail• Labor: immigrant and local Samuel Colt• Capital: New York, Boston and local (using banks and “new” stock corporation)• Regulation – flirting with public control of rail and utilities (business inspired)• Public investment in health, education Elisha Root
Legislated innovation networks in the 19th century• The center was the Springfield Armory, founded in 1794.• It became an incubator of technology to achieve interchangability of parts.• Why? Private contractors who held government contracts had to share their inventions• When Sam Colt was first studying to mass-produce guns, the Armory was the first place he visited.
20th Century• New York Ex-urbs• No Income Taxes• Connecticut Throughway (I- 95)• Successful small towns & schools• Major industries with large supply chains – Aero-space – Finance – Insurance
Positive attributes Negative results Source: Kauffman Foundation and ITIF, 2010 State New Economy Index. *Gazelle Jobs taken from Kauffman Foundation and ITIF, 2008 State New Economy Index. The ConnecticutWhy the disconnect? INNOVATION Draft – Please do not forward or copy ECOSYSTEM
The share of CT’s jobs in high tech sector is declining State Share of Jobs in High Tech sector, U.S. Rank 2008 Massachusetts 1 Maryland 4 New Hampshire 6 Washington 7 Connecticut 18Source: AeA, Cyberstates 2008 (Washington DC: 2008) and AeA, Cyberstates 2001 (Washington DC: 2001).
While young companies create most jobs, older ones lose them Connecticut, 2008 Employees % of Jobs CT Rank Stage 1 (2-9) 30% 34 Stage 2 (10-99) 33% 44 Stage 3 (100-499) 14% 23 Stage 4 (500+) 15% 7 Source: YourEconomy.com. Edward Lowe Foundation.
Need to increase startups and stage 2 growth -5,000 +55,000 -20,000 +250,000 (c) CTC 2010 16
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%
Why not Connecticut? CEOs said… Mentioned inIssue InterviewState (or Governor) doesn’t know my company and does not 72%know how to help me. Others state’s seem more on top of my needsUniversity Research – Hard to connect with professors, grad students and 66%labs; tech transfer complicated. I do better with other state’s universities.Connections & Networks – Regional innovation networks are frail or non- 62%existent, hard for young talent to find us, highway makes it hard to get to NYC or theworld quickly, squandering our great location.Risk Capital – Seems harder to get here and investors are not as excited about 62%my industryCritical Mass – Not enough other entrepreneurial companies like mine. Top 55%competitors are elsewhere. Need to be in the center of the action for future success.Will be harder to recruit top people, customers and investors.Is it Worth the Cost? – My objective is growth, not cost-minimization: high 45%cost worth it if the environment is world class for growth and key employees. Thiscompetitiveness is not something people think about a lot here.
What we need to grow jobs• Strong networks – where people know each other through out the region• Contented CEOs - 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• Synergies - Agencies, organizations and institutions that collaborate and create partnerships
The Innovation Job Growth Eco-systemNew jobs come from adeliberate process that Venturerequires many parts of apuzzle to contribute and Later state Jobs >be better than other Early Stage Growth Technologylocations at each step… Seed Angel Transfer Investors Corporate Spin Outs SBIR Incubators Innovation University Validation Accelerators R&D Skilled Networks Workers Associations Mentors Entrepreneurs Students Grants Government Incentives Infrastructure – Global connections Image – Global perceptions 20
So, Connecticut’s venture capital community focuses elsewhereThe percent of venture capital managed in Connecticut that is invested in-state islower than in competitor statesSource: Sources and Targets of Venture Capital Investments 2009, National Venture Capital Association, PriceWaterhouse Coopers
An innovation virtuous cycle 1. Policy and culture 8. 2. Transportation Technology & Broadband & Ideas 7. Global Jobs + 3. RiskConnections and Branding Growth Capital 6. Networks, 4. Entrepreneurs Acceleration & Human Cap. & Facilities 5. Gov’t Incentives
Angels, Launch Reps Capital from the Stamford 4 Hubs Innovation Venture Center Yale & Funds UConn Advisory Board CROG, IP Sub- Factory, CT Group of New Haven Innovations, Planning Econ Dev Startup CDA, CEFIA Group Entrepreneurs, Corp. & SBIR Connecticut Stage 2 CEOs Planning Board Serial CERC, A combination of Entrepreneurs Connstep & Ent. & Entrepreneurs, NGOs, G Foundation CCAT overnment and business leaders working together CURE, BEACON & CTC & CT Science CVG Center The ConnecticutA diverse planning group INNOVATION Draft – Please do not forward or copy ECOSYSTEM
Goal 1 – Fostering high potential Start-Ups Goal 2 – Assisting Stage 2 firms 1. Business plan competitions 1. New Technology, customer needs and marketing analysis 2. Accelerators (e.g., TechStars) 2. Connections with larger firms & new supply chains 3. Virtual Incubators 3. Proof of concept contracts with state agencies 4. Building Based Incubators 4. Grants and debt availability 5. Funding (Grants, stipends, Pre-Seed investments, Angel 5. Regulatory relief and help connections, etc.) 6. Young talent, Job Training and matching 6. Retention Efforts for growing firms 7. Build a retention strategy and mechanism 7. Sponsored research programs for idea and product 8. Opening up universities to collaboration development between companies and in-state schools 9. Sponsored research programs for idea and product 8. Proof of concept Center with labs--Gov’t as market development between companies and in-state schools maker 9. IP Factory and corporate networks 10. Proof of concept Center with labs--Gov’t as market maker 10. Student Teams and Interns Programs 11. IP Factory and corporate networks 11. Mentors Network, recruitment, training and matching 12. Student Teams and Interns Programs 12. Entrepreneurs-In-Residence 13. Mentors Network, recruitment, training and matching 13. “Rent a CxO” and turn-key management capacity for 14. Entrepreneurs-In-Residence qualifying early stage concepts and firms 15. “Rent a CxO” and turn-key management capacity for 14. Serial Entrepreneur Fellows – Global Attraction Program qualifying early stage concepts and firms 15. Professional Services matching and pro bono bank 16. Serial Entrepreneur Fellows – Global Attraction Program 16. Place-making and infrastructure such as i-TOD efforts to 17. Professional Services matching and pro bono bank build a critical mass and a competitive set of locations 18. Place-making and infrastructure such as i-TOD efforts to 17. Branding and image coordination build a critical mass and a competitive set of locations 18. Key labor matching and procurement programs 19. Branding and image coordination 19. Technology training programs (i.e. CCSU, CC) 20. Key labor matching and procurement programs 20. State, regional and hub based networking programs 21. Technology training programs (i.e. CCSU, CC) 22. State, regional and hub based networking programs Programs were selected and then prioritized by a process of expert surveys… The ConnecticutLooked at all the programs in the state INNOVATION Draft – Please do not forward or copy ECOSYSTEM 26
Group ranked the programs on key attributes Managed at Hub Level Place Networking Making Programs Rent-A- CxO Entrepreneurs Young Talent, in Residence Private Funding Training, Sponsored BuildingPublic Funding Serial Matching Research Programs Incubators Entrepreneur University/ Student Teams Proof of Fellows Industry & Interns Concept Ctr. Collaboration Accelerators Virtual Retention Tech, Prof. Incubators Connect-ionsStrategy Customer, Services Mentors Network IP Factory to Large Firms (Stage 2) Key Labor Mkt. Analysis Matching B-Plan Matching Competitions Grants & Debt Retention Efforts STEM Programs (Startups) Reg. Relief & Help Creating Markets Branding Funding 27 Managed at State Level
Fairfield County The ConnecticutThink about the geography of the system INNOVATION Draft – Please do not forward or copy ECOSYSTEM 28
Tracking <Data Systems Collection For Business Database with, Startup Portals, DB company info, NAICs and Connecticut growth information by company s and [SOTS] Innovation Knowledge Ecosystem base> Track goals Hubs & programs: Comprehensive web Statewide knowledge- portal and tracking system base (iHub) to make objectively & for incoming business people, resources, special subjectively requests and needs skills, etc. findable when [DECD] needed [CI/Startup CT] Cluster Advisory Groups The ConnecticutInterconnected tracking systems INNOVATION Draft – Please do not forward or copy ECOSYSTEM
Hub Model The ConnecticutModel how the Hubs might work INNOVATION Draft – Please do not forward or copy ECOSYSTEM31
1. Success should be actual growth and jobs - Goal 1 – 50 high potential startups each year - Goal 2 – 75 “stage 2” firms assisted each year 2. Change culture of relationship between business and government - Agility, rapid cycles of program changes and improvement - Culture of experimentation and collaboration The ConnecticutSet goals to measure a performance INNOVATION Draft – Please do not forward or copy ECOSYSTEM
Projected growth “winners” by 2050 33 Map: University of Pennsylvania
Upbeat thoughts to close on…• Environment favors Connecticut – Water, warming, regulations• Density can go up – Our cities are small and have capacity• Intra-Regional transportation – Metro-North and Amtrak can expand• Housing stock is strong and well built (if old)• Near population centers of youth & talent (NYC, Boston and Washington)• But…Need to focus on growth and changing population
Stamford and New Haven do well versus other hip small cities… Percentage of Population 25-39 Source: American Community Survey 35 33 31 29 Stamford 27 Austin New Haven 25 Minneapolis 23 Durham Boulder 21 19 17 1990 2000 2005 2007 2008
Being competitive is just that… you need to win
Emerging Markets 2012• Decision Engines – Discovery fueling invention and purchases• Collaborative Commerce – Community sharing, bartering, lending, renting and gifting• Customization – Uber personalization• True Mobility – Leaving the PC behind• Creativity – Inspiration from the Everyman• Urban Farming – Local, local, local• Gamification – Revolutionizing customer engagement• Design – Pretty goods for the masses• Extreme Fitness – Boot camps and mud runs to beat workout boredom• Jobs – Rescuing the unemployed• The One to Watch: Unmarrieds – Catering to Singles
Where Do Good Ideas Come From: The Natural History of Innovation, Steve Johnson 2010