Thinking about Thinking about

Innovation & Job Growth Innovation & Job Growth

(in Connecticut, Norwich and (in Connecticut, Norwich and

other places too)other places too)

Matthew Nemerson

President & CEO of the Connecticut Technology Council

Wednesday May 26, 2010

7:30 AMNorwich

My background…Interests:•Computers, Architecture, History•Building Community•Leveraging Technology•Understandng Economic Growth

1974 – Amity Regional High School (Woodbridge – a local boy)

1978 – Columbia College1981 – Yale School of Management1982 – Publisher - Washington Monthly1983 – Started - Science Park at Yale1986 – Real Estate developer1987 – President Greater New Haven

Chamber of Commerce2000 – COO - Netkey Kiosk Software2003 – President - Connecticut Technology Council

What is the CTC?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

TodayToday……

� 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

DiscussionDiscussion

� 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 Many ways to approach

thinking about growththinking 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?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

10Image – Global perceptions

VentureLater state

Infrastructure – Global connections

AngelInvestors

Early StageSeed

Incubators

NetworksAssociations

MentorsGrants

SkilledWorkersStudents

Technology Transfer

UniversityR&D

CorporateSpin Outs

Innovation Accelerators

SBIR

Government Incentives

Validation

Entrepreneurs

Jobs > Growth

Innovation Eco-systemInnovation EcoInnovation Eco--systemsystem

11

New Job grow comes from…New Job grow comes fromNew Job grow comes from……

Existing IndustryGrowth

R&D, spin-outs, strategic connections &

investments

Starting New Companies

Created by entrepreneurs, angels

Intellectual Property and

Technology TransferUniversities foster

new companies

through

start-ups & licensing

CompetitiveAdvantage

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

13

A survey says tech companies are staying in A survey says tech companies are staying in

Connecticut but not strong supportersConnecticut but not strong supporters……

But Data is uneven across categoriesConnecticut 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

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

ConnecticutConnecticut’’s trend problems 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

LongLong--term decline term decline

in job growthin job growth

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

De

c-8

8

Oct-

89

Au

g-9

0

Ju

n-9

1

Ap

r-9

2

Fe

b-9

3

De

c-9

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Oct-

94

Au

g-9

5

Ju

n-9

6

Ap

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b-9

8

De

c-9

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Oct-

99

Au

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Oct-

04

Au

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CT

20

-Yr

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vin

g A

vg

, A

bs

Ch

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ge

(10

00

s)

0

2

4

6

8

10

12

14

16

18

20

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w E

ng

lan

d 2

0-Y

r M

ov

ing

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bs

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an

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(1

00

0s

)

Source: U.S. Bureau of Labor Statistics; Calculations by CERC

New England

Connecticut

Jobs dropping quicker than across New Jobs dropping quicker than across New

EnglandEngland

20

Cluster Portfolio GrowthCluster Portfolio Growth--Share Matrix:Share Matrix:

Relative Position of Various ClustersRelative Position of Various Clusters

Growth-Share Matrix for Connecticut's Clusters

0.0

1.0

2.0

3.0

4.0

5.0

6.0

-4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%

Average Annual Employment Growth, 1994-2004

Lo

cati

on

Qu

oti

en

t

Aerospace

Metal Manufacturing

Plastics

Medical Devices

Insurance & Financial Services

Creative Industries

IT

AgricultureMaritime

Tourism

BioscienceHealth Plans

4

WSJ : Tech leads Jobs recovery WSJ : Tech leads Jobs recovery 4/16/20104/16/2010

� 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 Connecticut jobs picture is

turningturning

Is Is ““nownow”” different for policy makes?different for policy makes?

� Political challenges in 2010� Health reform

� Global changes in growth◦ New world versus old◦ IP versus Production

� Debt as % of GDP� Climate Change

“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

Jobs and GeographyJobs and Geography

Regional Business Growth Varies in USRegional Business Growth Varies in US

Source: U.S. CensusSource: U.S. Census

RegionEstablishments

% U.S. Establishments

Establishment 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%

27272727Map: University of Pennsylvania

Geographical opportunityGeographical opportunityGeographical opportunityGeographical opportunity…………Geographical opportunityGeographical opportunityGeographical opportunityGeographical opportunity…………

Source: Michael Gallis

Gallis Corridor slideGallis Corridor slide

30Map: University of Pennsylvania

Projected growth “winners” by 2050Projected growth Projected growth ““winnerswinners”” by 2050by 2050

A new way A new way

of looking of looking

at the at the

coasts:coasts:

NortheastNortheast

Over Over

CaliforniaCalifornia

Looked at from labor marketsLooked at from labor marketsLooked at from labor markets

34Map: University of Pennsylvania

Emerging U.S. Mega-RegionsEmerging U.S. MegaEmerging U.S. Mega--RegionsRegions

And viewed by cluster growthAnd viewed by cluster growth

World populationWorld population

Journal citations 2008Journal citations 2008

Patents filesPatents files

Big TrendsBig Trends……

Wired 40 in 2008Wired 40 in 20081 Google | 1 (2007)

2 Apple | 2

3 Genentech | 4

4 Samsung | 3

5 News Corp. | 9

6 Nintendo new

7 Salesforce.com | 15

8 Cisco | 12

9 General Electric | 8

10 Nvidia | 21

Off from 2005

4.Amazon 5. Yahoo! 6. EA 8. Toyota 9. Infosys 10. eBay

Technology TrendsTechnology 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 TrendsTechnology Trends

Platforms & Structure� FCC ruling

� Cloud

� Virtualization

� Open Source

� Web 2.0◦ Google

◦ Facebook

◦ Craig’s List

Technology TrendsTechnology 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 TrendsPlace 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

DiscussionDiscussion

� 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 discussionsQuestions and discussions

� Matthew Nemerson

� President & CEO CTC

� mnemerson@ct.org

� 860 289-0878 x333

48

BENCHMARKS

Source: John Adams Innovation Institute

CONNECTICUT RANKS NEAR THE BOTTOM AMONGST THE 10 LEADING TECHNOLOGY STATES …

Metrics Expenses ($

Millions)

per patent

issued to

state

institutions

Expenses ($

Millions)

per start-up

initiated

from state

institutions

Percentage

of total US

patents

granted

Percentage

of total US

patents

grantedDelt

a vs '95

Percentage

of High

School

seniors

planning to

major in

Computer,

Engineering

or

Information

Science

Engineering

Degrees

awarded

per 100,000

residents

Business

incubators

per 10,000

business

establishme

nts

Rapidly

Growing

firms i.e.

20% YoY

for 5 years

VC

Investments

($ Millions)

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

Technology

Managers

Assoc. of

Technology

Managers

US Patent &

Trademark

Office

US Patent &

Trademark

Office

The College

Board

American

Assoc of

Engineering

Societies

Commonweal

th of MA

Inc. Magazine PwC/ NVCA/

MoneyTree

Survey

Connecticut is bottom rung of the top states…

49

BENCHMARKS

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

Cluster Employment 2004-2005(% change)

Source: PricewaterhouseCoopers, National Venture Capital Association

… AND EMPLOYMENT TRENDS, AND INVESTMENTS IN CRITICAL CLUSTERS ISDISCOURAGING …

CT Investments($ Millions)

Investment Amount

No. of Investments

Did not grow as well compared to peer states…

What to do?What to do?

Intra and Entrepreneurs' POVIntra 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 Case studies of some local

GazellesGazelles� Tangoe – www.tangoe.com

$50m in five yearsReduce Costs and Take Control of Your Global

CommunicationsTangoe 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 Case studies of some local

GazellesGazelles� HigherOne – www.Higher.com

$75m in ten yearsOur 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 InitiativesWhich 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 2005Wired 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. Cisco14. 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. Comcast32. Pfizer 33. Li &Fung 34. Taiwan Semiconductor 35. Gen-probe 36. Citigroup 37. L-3 Communications 38. Ameritrade39. Exelon 40. BP