Building the “fourth economy” is all about combining traditional economic development tools with creative solutions to ever-evolving challenges. The Fourth Economy Index is our framework for thinking about what sets communities and regions up for success: investment, talent, sustainability, place, and diversity.
Elements of these indicators came up again and again throughout three “21st Century Cities and Global Leadership” discussions at the recent Thrival Festival, focusing on questions like what might attract and retain talent in Pittsburgh and how to ensure that economic growth is sustainable. And while diversity can mean many different things (and does as a metric in the Fourth Economy Index), one element of diversity that had an undeniable presence throughout the discussion was cultural diversity. Continue reading “Cultural diversity in the “fourth economy””
Comeback City. Best Place to Live. Best to Visit…It’s a good feeling when your hometown receives so much attention. Living in Pittsburgh inspires a sense of pride and as I travel around the country, I am always happy to tell people about the highlights of our region’s transformation. That travel though has also opened my eyes to the fact that we are not doing enough to retain those titles. There are issues in our community, our economy and our civic and social infrastructure that must be addressed if we want to wear the badge of pride into the next decade. Continue reading “Pittsburgh’s Next Opportunity”
6 Key Priorities Shape the Economic Development Agenda
Regional industry, especially homegrown industry, must be an integral stakeholder in the development of strong and effective regional economic development partnerships. It cannot be said enough. This was emphasized once again in Fourth Economy’s recent engagement with our friends from the Red River Valley in North Dakota and Minnesota.
By far the Valley Prosperity Partnership (VPP) is one of the strongest industry-led efforts we have seen, both in terms of time and money. In addition to industry, it included two of the region’s regional economic development organizations and, oh yeah, two states. For those who have worked in regional efforts like this, you know it is no small task. Continue reading “Fourth Economy Helps Launch North Dakota-Minnesota Regional Action Plan”
No one will deny that the American and global economies have been in an extended slump. The question is what will lead us out of the doldrums? Right now the big argument seems to be between advocates of clean energy (solar, wind, biomass) and legacy energy (especially coal, oil and natural gas). In certain parts of the country, legacy energy is having an immediate impact, while clean energy remains for the time being a potential boon for some future economy.
In the countless instances where I’ve engaged others on important matters facing our nation, and especially challenges and opportunities critical to African Americans, I cannot ever recall asserting that I have “the” answer to a problem.
This instance, however, is different.
Today, I declare that I have “the” answer to a seemingly intractable problem: What must America do to ensure our continued ability to produce meaningful innovations and successfully compete in an increasingly and uncompromisingly competitive world? Continue reading “U.S. Innovation and Competitiveness Strategy: “All Hands On Deck””
The following article is a post from our guest blogger, Abe Taleb, co-founder of re|work.
This past Labor Day weekend I had the pleasure of visiting Zurich, Switzerland to attend the One Young World Summit. The One Young World Summit (OYW) is a conference for young people (ages 18-30) to meet and discuss global issues, such as business, health, environment, and religion. The summit in Zurich had 1,200 delegates from 160 different countries. I was selected to be a part of the Pittsburgh Delegation of 30, two-thirds of which was from local corporations (PNC, Bayer, Federated) and the other third from local nonprofits.
It was a very exciting experience, with the highlight of the event getting to be up on stage when Pittsburgh was named the host city for the 2012 Summit (getting to stand next to Muhammad Yunus wasn’t too bad, either). While this is great news for Pittsburgh, it begs the question: is the city ready to host a conference for young leaders? And more broadly, is Pittsburgh doing all that it can to attract young professionals?
While the OYW Summit was a worthwhile and unique experience, it had one inherent failure – instead of delegates engaging in meaningful dialogue, we were merely spoken to. The roster of speakers was, as expected, very impressive (Desmond Tutu, Crown Prince Haakon of Norway, Jamie Oliver, and Wael Ghonim, just to name a few); but rather than having a conversation with the delegates, many of the presentations felt as if they were speaking at us. Though I’m sure their intentions were in the right place – with hopes of inspiring us – what they failed to realize was that inspiration was in all likelihood the one thing that the delegates had even more of to offer.
In my view, this failure stems from the leaders of the OYW Summit, Kate Robertson and David Jones. While they are admittedly both very successful and passionate people, they are of a different generation and have a very different perspective than people our age. Though I very much appreciate their foresight in starting OYW, they should have quickly handed over the reins to leaders closer in age to the actual delegates. It had the feeling of your parents throwing you a party for your 16th birthday, and everything that they thought would be fun, ended up being a little lame. At one point during the 3-day summit, during a conversation on the global role of corporations, Kate Robertson grabbed her microphone and reprimanded the delegates for suggesting that corporations are corrupt. This act upset many of the delegates because it clearly communicated that she was more interested in promoting her own agenda than giving a voice to the attendees.
This all applies to Pittsburgh (and other cities facing the challenge of recruiting young professionals) directly. We need more young people leading initiatives that are focused on recruiting young professionals to our city. I have, on many occasions, found myself at an event focused on the recruitment and retention of young professionals, and realizing that the event itself was not being led by someone of the target demographic. One solution is to support initiatives already being started by young professionals and allowing them to flourish.
One such solution is the Business Bout, a local start-up competition put on by six young professionals who are giving away $5,000 that they raised just by throwing a Barbecue. Their reasoning for holding such a competition is because they want to have a positive impact on the region and see giving away $5,000 to a new business as a great way to do that.
An example that I am fascinated with from another city is MassChallenge, an international start-up accelerator based in Boston, Massachusetts. New companies can apply from any field for MassChallenge, and this each year they gather 100 entrepreneurs to Boston for three months to accelerate their businesses (many of them end up staying for longer). This has had many secondary effects, but most important is that young professionals are attracted to Boston (and not just for school) because they want to be around what is happening at MassChallenge, and to be a part of the positive energy. This is a strong example of an organization that was started and is led by young people but has the support many government officials. Most notably, Governor Deval Patrick, who has been so impressed by the work of organizations like MassChallenge that he declared Massachusetts a “State for Social Innovation.”
My hope is that both Pittsburgh and OYW can learn from successes like MassChallenge and find ways to support initiatives like Business Bout, both which allow young people to lead. For OYW the future success of the summits rely on it becoming a more inclusive and curated experience for the delegates. Hopefully with the Summit coming to Pittsburgh, the past delegates will have a greater role in its planning, and this will translate into more success for the city when it comes to recruiting young people. This is a huge opportunity for Pittsburgh to put itself on the map as a place for young professionals, and we will have an audience of 1,500 delegates from around the world to send that message.
About Guest Blogger, Abe Taleb
re|work, a Pittsburgh based social venture.
Utah made headlines by generating more startups in 2009 than MIT on ¼ of their budget. Interest and activity in university spinoffs continues to grow. A number of new initiatives have launched recently to promote the commercialization of university technology and more specifically the development of startup companies.
- Texas is a building a $7 million, 20,000SF accelerator facility, the Center for Research Commercialization. The CRC will provide green and biotech startups with access to Texas State faculty and labs.
- The Auburn Business Incubator, located on the Auburn University campus is a new incubator facility to link startups to a network of services from university and community sources.
- Carnegie Mellon University, a perennial startup powerhouse, recently launched a new initiative, Greenlighting Startups, which leverages their ‘Five Percent, Go in Peace‘ policy to generate university startups. One new twist is the Open Field Entrepreneurs Fund (OFEF) that provides early-stage business financing to alumni who have graduated from CMU within the past five years.
University startups are one of the most visible ways in which academic innovation produces regional economic benefits. Startups, however, require more effort than licensing agreements, and it is not an appropriate strategy for commercializing every technology.
The Association of University Technology Managers (AUTM), which began in 1974 as the Society of University Patent Administrators, provides data on these startups and university technology transfer. As more universities emphasize startups or other aspects of technology commercialization, it will be important to have good benchmarks in terms of the effort required and the expected return.
Institutions emphasize different aspects of the commercialization process and may prefer licenses and patents to startups. The AUTM data doesn’t tell us the strategic emphasis of the institutions, so the average for how many startups you can expect out of a given amount of research expenditure is skewed by including institutions that never attempt to create a spinoff firm. Analyzing the AUTM data from 2003 to 2009, there are 133 institutions that produce less than one startup per year (Table 1). A number of these schools have very small budgets and are not oriented towards creating startups; in fact, only 24 of the 133 (18 percent) have annual R&D budgets above $100 million.
When we look at the institutions that generate at least one or more startups per year, we see why the $100 million threshold matters (Figure 1). It does not take $98 million or $100 million of research to generate a startup, but you can’t tell which research and which technology will lead to a startup, so you need to have a lot of research activity going on in order to find those opportunities to produce a new startup. At less than $100 million in R&D, you will need to be either very lucky or very good to consistently create startups.
As the volume of research increases, institutions become more efficient. At $200 million to $400 million in R&D, institutions can expect only a modest increase in startup rates – getting one startup for every $92 million in research. The very best schools, those that produce more than 4 startups per year, are able to generate one startup for every $77 million in research. For the smaller institutions, implementing the best practices and doing everything you can to be efficient at producing startups might add one more startup every other year.
An improvement in the data collected by AUTM would be to have more specific data on research expenditures and commercial outcomes by sector so that institutions have a better idea of how they stack up. AUTM reports the number of university startups and research expenditures but it does not provide specifics on the technology sectors for those indicators. For example, it is more expensive to develop a technology and launch a startup in biotech versus a web application, but all of those numbers are mixed together in the AUTM data.
There is also a need for more and better data about the quality and performance of university startups. The AUTM data does not distinguish various qualitative factors on startup development, or their ultimate level of success. Is a legally incorporated shell company with no employees, no investment and no revenue equal to, less than or greater than three committed entrepreneurs who have invested $50,000 of their own money to develop a prototype but they haven’t legally filed for incorporation? These are questions that require more long-term study and data collection. A few universities have collected this data for economic impact studies, but the variety of methods employed make it difficult to compare performance.
I am certainly a believer in the power of university based economic development, but I also know that it is not easy to succeed with that strategy and it is not the right fit for every university. With the data currently available, we can’t accurately answer the question of how many startups a university can expect to produce from its research base. If you have thoughts on how to improve the information about university commercialization and specifically startups, let us know by email or leave a comment below.