Prov chamber ponies up for knowledge economy

re: Prov chamber ponies up for knowledge economy

Ian Donnis — Tue, 28 Oct 2008 13:09:33 GMT

This from Wayne Franklin --

The Chamber is doing some great things. What we need from them, the city and the state are the frameworks and tools to enable more investment and action from the private sector.

Encourage micro-investment in local companies. Some great ideas just need a little bit of money. This is where a good framework could come into play -- then let the private sector do the rest.

Promote and attract the mobile workforce! There are millions of freelancers, programmers, designers, etc... who work from their laptop and cell phone... RI can generate startups by getting these people in rooms talking to each other. Geeks will cluster around geeks. Providence has everything here to attract them from Boston, New York and other cities -- they just don't usually know it - until they actually visit! Let's reach out to these people... through the Web of course.

As Andy Cutler noted, there are great things coming out of the new "what's in it for us" behavior in Rhode Island. We need more of these types of events, organizations, and places that bring people together. Small rooms with lots of interesting people are pretty cheap incubators.

Integrate high school and college interns with startups and entrepreneurs. I have found that this is a huge need for both parties...

Seed Providence.

Wayne Franklin

re: Prov chamber ponies up for knowledge economy

Corey — Tue, 28 Oct 2008 00:29:50 GMT

***Tangent Alert***

I've been following the struggle of this sector of the local economy for a while, although I don't claim to know the first thing about IT. I've also been studying Providence's amazing historic architecture for several years, and (as I grew up here), bore witness to the entirety of Providence's architectural and cultural renaissance up to the present. I've often noticed the conflict between the city's modern and historic architecture, and the contention that arises over it, as was made evident by Ian Donnis' recent blog entry on the subject. It's hardly an argument that's unique to Providence, but it's of particular importance here. I've often asked myself why it is that with all this incredible technology at our disposal as a society, why none off it was really being used to make the reproduction of historic building materials easier. There seems to be a strong desire here to revive and reinterpret correct classical architecture. We're in the process of getting a fab lab, and we have this great community of techies, and the desire to build this stuff at a price that's not absurd. It seems like a no brainer to me, and something that Rhode Island can easily patent and export to the myriad other towns that are struggling with the destruction of their historic cores.

re: Prov chamber ponies up for knowledge economy

Ian Donnis — Mon, 27 Oct 2008 20:36:36 GMT

This from Ken Block --

My business employs 12 very highly compensated software engineers, and generates almost $2 million of direct economic activity every year (payroll, benefits, rent, taxes, insurance….), most of it spent locally. My business has long term contracts, over half of which encompass work from out of state. My software business has spun off a manufacturing startup which is selling specialized traffic signals for recreational trail/public road intersections around the country.

RI is ideally situated to have a much larger tech economy than it does. Our proximity to Boston and New York, combined with our relatively more affordable housing market should make RI an obvious option for tech businesses. Alas, we are not for several reasons:

1) Rhode Island’s tech economy does not have the critical mass to sustain its own growth. With critical mass, tech companies beget more tech companies. The vibrant mini-economies of Research Triangle, RT 295/495 in Boston, Silicon Valley, etc. fuel their own growth as tech companies are attracted to these areas due to the presence of so much tech talent. We do not have enough tech companies for critical mass to a large extent because….

2) Rhode Island is extremely business unfriendly and the tech marketplace is very price sensitive. My business must compete with software engineering firms in Massachusetts, Idaho, India, Poland, Ireland and just about anywhere else people with the proper educational background can sit together in an office tied into the Internet. My business-related taxes are close to 20% higher in RI than if my company and residence (residence because my ‘S’-Corp profits flow down to my personal income taxes) were located in Mass. This difference places my company at a competitive disadvantage with similar companies based in Mass, as well as those overseas or in lower tax areas of the country.

How can we grow a specific industry like tech? (I chose tech because I know the industry. The same principles laid out below should apply to most other industries that RI decides to target).

The bottom line is that if RI is to attract a lot of tech businesses in an effort to attain critical mass, RI must be better than cost competitive with our neighboring states. If businesses can save money by moving their operations to RI, they will do so. This is the exact opposite effect of what is happening to the RI manufacturing industry, which continues to lose jobs while businesses move out to less expensive areas.

One idea I have would be to provide, after equalizing RI’s tax burden for businesses and owners with MA, state income tax rebates to companies for their in-state payrolls for any new jobs created in the industry. This would provide a positive financial reason for businesses to locate an office and personnel in RI. Since RI would not have these jobs with our current tax scenario, the state is not really losing any revenue by offering the income tax rebate. New jobs would mean an influx of new residents to the State, with a fairly high income level. These new residents would buy homes, easing our housing debacle and spend money locally, boosting the overall local economy. The new businesses would need office space, which would help to alleviate the overabundance of business space for lease in the State.

Also, the State, if it really wants to attract new business, needs to provide incubator space for these businesses. An effort needs to be made to convert some of our abandoned mill space not into yet more condo developments, but incubator space appropriate for the type of businesses that we are trying to attract.

I have had discussions with some folks who claim that the income tax rebate idea is essentially a money grab, but this is just capitalism at work. In the same way that the average person will usually choose a less expensive item when faced with the choice of buying two items of similar function and quality, businesses must consider the financial aspects of any move, and more often than not will choose the least expensive option when deciding on an office location (although the educational level of the workforce is also a very critical factor, especially for tech).

All of the above is predicated on equalizing the State’s business tax load with Mass, which is predicated on getting control over the State’s out of control spending. In effect, Rhode Island has been deficit spending for close to a decade now, only ‘balancing’ the books by using accounting gimmicks or completely exhausting windfall monies like the tobacco settlement funds to pay for ongoing, annual expenses.

To truly attract new businesses, RI needs to clean up her act.

Ken Block

President, Simpatico Software Systems, Inc.

Chairman, Moderate Party of RI

re: Prov chamber ponies up for knowledge economy

Ian Donnis — Mon, 27 Oct 2008 19:11:49 GMT

Andy Cutler responded—

I believe that this is yet another step in the right direction. Alignment between our creative communities, public sector and academia will be the key ingredient for our future success in creating new knowledge-based economy companies and jobs.

Groups like RI Nexus (www.rinexus.com), Providence Geeks (www.providencegeeks.org), Connect Providence (www.connectprovidence.org), BIO Tuesdays (www.tech-collective.org/Events/UpcomingEvents/Register.asp?EventID=89&Group=TechCollective) and the Industrial Designers Society of America's Rhode Island chapter (www.idsa-ri.org) are a few of the fantastic examples of alignment that is going on within our state's IT and digital media, design and life sciences communities as well those focused on welcoming our city's new residents. This is a new "standard of behavior" that is not based on a "what's in it for me" logic, but rather "what's in it for us." We are already seeing that this connectivity is yielding new business opportunities, new job opportunities, and furthering this new standard of behavior. No entrepreneur shall be left behind should be our collective chant.

Additionally, the focus on our city/state's young entrepreneurs is also an essential ingredient in future new company creation and retention of our young talent. We have been fortunate that so many students from Rhode Island colleges and universities have decided to stay in our state, but a strategy based on luck, is no longer an appropriate option. Our colleges and universities along with our public sector and business community must make a concerted effort to reach out to these students from Day One (and not wait until their senior year, if that, to create a meaningful dialogue). Students entrepreneurs need access to mentors, internships, information and early stage funding that will serve to expedite their ultimate success (or failure); and failure should not be looked at with disdain, but rather an opportunity for learning. Even for those students who ultimately move away, they need to know that they can always return "home" to Rhode Island.

We must find new ways to embrace our state's next generation of entrepreneurs earlier and the Chamber, its partners and all those involved in these strategy sessions to date should be applauded for recognizing (and ultimately acting on) this issue.

We have many of the ingredients in place to make Providence an entrepreneurial powerhouse (great schools, talent, companies, quality of life and culture). The only thing that is needed now is for us to bring all these ingredients together in a coordinated way and find out what is missing from the equation and fill that gap. After all, what other city or state could do that in short order (and has the same assets as we do)?

I say now is the time to get in the game and help support these types of initiatives.

re: Prov chamber ponies up for knowledge economy

bjepson — Mon, 27 Oct 2008 16:20:09 GMT

This sounds promising, and I look forward to hearing details on how the resources will be targeted. I'm glad to see some emphasis on the youth, because one of the biggest problems facing IT (not just in RI) is hiring people. The key is to get young people engaged and interested in IT, and that's got to start very early.