Innovation Matters

Act Concerning Technology and Economic Growth - Testimony by Matthew Nemerson

Testimony of Matthew Nemerson, President of the Connecticut Technology Council
Speaking on March 3, 2009 to the Commerce Committee
Raised Bill No. 1067

Distinguished Chairmen and Members of the Committee, I represent a statewide community of over 2,000 technology oriented firms employing over 200,000 individuals whose jobs are related in some way to innovation and technology.  We also work with another 500 smaller firms just starting and hoping to plant roots here in Connecticut.

This morning I wish to speak in favor of Raised Bill 1067, an Act Concerning Technology and Economic Growth. The next few years will be difficult ones for all of us and the economic slow down will put tremendous pressure on public leaders such as all of you to make very difficult budget decisions about what is the proper and required role of government.

It is my hope that you and your fellow legislators will support in some small but significant ways the critical responsibility to foster and accelerate the creation of new jobs for the state through high potential fast growing, start-up technology firms.

Bill 1067 would provide for $200,000 for activities that could be the continuation of a very successful program that has been funded through the Department of Community and Economic Development for the past three years through an allocation of Manufacturers Assistance Act funds as part of the larger “cluster programs” allocation.

Across the country states have been working with non-governmental organizations such as technology councils and innovation centers to create a process that can identify, analyze, assist and provide early stage angel investments for the very most promising high growth potential firms. 

While it is important to offer some assistance to any entrepreneur who wishes to start a new business, in these times of severe economic hardship it may be even more important to focus some special state resources on those very few firms, perhaps no more than 3 or 4 in one hundred which stand a chance of adding not one or two new jobs to the economy, but hundreds or thousands. These firms and start-ups are out there, any many states now have concerted plans to snag them for own economies.

It has been shown over many years of monitoring the best practices of economic development that high potential tech start-ups need a realistic expert yet outside perspective to be able to move forward for initial funding. They also profit from a rich and dense network of allies who can make connections that will eventually lead to major strategic investments in lieu of having to go through a rare and unlikely initial public offering.

Slow economies are a time when ideas and talented people are often set loose outside of the limitations of large corporations and academic institutions.  With more people trying to make their fortunes, the chances that great companies will be created are large. Last year the Council worked with over 250 would be start-ups – more than one a business day – and found $932,000 in matching cash and services to add to the $200,000 it received from the state specifically for the innovation pipeline program to provide services that no other group provides in Connecticut.

Groups like our and programs such as those described in 1067 use skilled mentors – we have about 70 of them working with our high tech start-ups. Most are unpaid, but most represent tremendous talent, that also needs to be engaged in Connecticut. Some are looking for new top jobs, others have been very successful and want to give back, others are in-between jobs.  Most important the companies in this program predict that they could create over 10,000 new jobs and create businesses bringing in ¾ of a billion dollars.
 
Having one place that knows about technology, the latest trends in the market place and has close connections to angel capital networks in the state is critical.  We cannot expect the public sector to offer these kinds of services and across the country almost no governments do.

New York City just announced a similar grouping of offerings worth well over many millions of   dollars.

Over 25 states have programs similar to what we are proposing.

Let me close by noting that Connecticut thrives on high value added jobs. We are a rich state, we have tremendous productivity, high education levels for our workforce and we want to maintain or increase the tax yield from people who are doing well and earning a lot.

And yet we have little or no population growth and we have created very few jobs through internal growth.  Attracting and helping top entrepreneurial ideas, even if they bring new top management into the state with them, must be a very high priority.

In Connecticut Technology Council’s case we stop receiving funding from the state last September, and yet we have continued to fund this program out of our own fund balance. We have not dared suggest to the hundreds of firms we work with that there is any problem or to infer that we all do not think that helping these high potential start-ups is not a top priority. 

Thank you for your time and attention on this matter.  I urge you to support SB 1067 and to send it on to Appropriations with a joint favorable.

Faster trains are needed

Advocates say faster trains are needed
<http://www.norwichbulletin.com/news/x2094359081/Forum-Advocates-say-faster-trains-are-needed>
Norwich Bulletin - Norwich,CT,USA

Rail would boost the quality of life in Norwich and similar cities, according to Matt Nemerson of the Connecticut Technology Council. ...

View Matthew's Slideshow on the topic.

Rail Conference January 9 2009 Tax Plan

View SlideShare presentation or Upload your own. (tags: technology nemerson)

A New Year's Message from Matthew Nemerson

I  just spent a week in Washington DC.  The majesty of the place and the excitement of the upcoming inaugural, was enough to make me forget the economic malais that we all find ourselves in.  Coming face-to-face with the documents, icons and memorials of earlier challenges –  the resolve to fight England for our freedom, the horrors of a civil war, the decade-long great depression, the forty years in the nuclear cross-hairs of the cold war – reminded me that our nation’s greatest advances and leaders surfaced when we were pushed to seek extraordinary solutions to overwhelming problems.

Read the full post on CTC's blog

Special for Connecticut Magazine, January 2009

The battle for jobs is not about tax rates, parking lots or more efficient government. It is about Connecticut becoming known as North America’s best location for high potential entrepreneurs.

Start by attracting the special people who are skilled at starting and building firms capable of fast growth. Build a few exceptional programs that answer key needs for workforce, innovation support and global connectedness.

Entrepreneurs will be impressed if we build a state magnet grade 6 to 12 school system that produces extremely talented science oriented graduates – as good as any in the world. Attract parents to move here for these science academies and they will also expand our immediate pool of world-class workers.

Offer free tuition and summer internships through our state higher Ed institutions for students who take a rigorous STEM curriculum, do well and agree to work in the state for five years after graduation. Pay for training and higher salaries to new math and science teachers in our public schools.

Support innovation by making entrepreneurs happy and comfortable here. For those who qualify, offer space, fellowships, seed funding, expert mentors and a version of “tech clinical trials” at established large firms for new products.  Provide grants to those who can commercialize unused ideas within our largest companies. Always link people and companies to promote emerging Connecticut clusters that are based on established industries such as aerospace, business services and clean energy.

Brand a few locations as “tech transfer zones” designed for new tech firms. Locate them near rail lines for commuting and access to New York and airports, walking distance from a range of housing types and close to our research universities and hospitals.  Consider a “tech hostel” for recently graduated students and affordable incubators for startup companies.

Finish the whole package off with a well designed web 2.0 tech community innovation portal and a “funky” international campaign by the Governor touting us as hungry for innovation.

Ten years from now other states and countries will look at us with envy.

Cool, Spiky and Connected.

If the economy wasn’t reason enough to make us anxious this holiday season, Tom Friedman’s latest opus dedicated to the systemic weakness of humanity, Hot, Flat and Crowded will surely do the trick.  So, it got me to think about the kind of “out of the box” steps we could take to make New England the place to be by 2020.

So let’s turn the future on its head, by being cool, the place for people with choices to be, spiky, better technology and talent than other places and connected, building our infrastructure and schools to be a region that is close to the rest of the world.

For most of this decade New England has been adding great jobs and producing wealth for those at the very top end while stagnating and losing opportunity for most everyone else.  Now, with the country – and maybe the world – losing its footing, what could we do to move us back to our rightful position as the leading region in America?

Can we use our small size yet dense population to reprise our role during the first industrial revolution, as the region of entrepreneurship, innovation, great schools and advanced infrastructure? 

Consider a bitter pill that, taken now, will give us unique strength when things get really messy worldwide in 10 or 20 years. Instead of focusing on our financial problems of the next two years, we should aim at preparing for the coming systemic shocks from environmental, global competition and demographically driven pension and health care problems. 

New England should become a cross between the gleaming infrastructure and free education of northern Europe with the state supported R&D and business development systems of Singapore and South Korea.

So here is the deal (children close your ears): The six New England states – in a coordinated master plan – could create a set of new energy taxes many times higher than at present, creating a common floor, higher than the rest of the nation, for the cost of gasoline, home heating fuel, natural gas, and so on through out the region. 

If we can collect an extra dollar just on gasoline we would great a revenue stream that could fund an authority with over $6 billion in new annual dollars for regional education, better infrastructure, clean energy business R&D and investments in energy savings.

Think what we could do. First, we will raise enough money that needs-based subsidies could address real issues of hardship for people and legacy businesses who can’t pay the taxes. But let’s be real, $4.00 gas and home heating fuel is coming back, so let’s build a region that is battle-tested and ready to compete by getting there first. 

to the new funds would create a superb New England-wide bus, rail (and even a trolley) system, offer energy saving investment loans for businesses and homes, reduce tuition in our community colleges and other schools for students who live here and want to take technology related classes and provide more risk capital for new businesses.

New England would have the money to build a clean energy cluster that could lead the nation. We would not only build better fuel cells better, we would be the living laboratory for the energy-scarce world that is coming. 

I hate to think what is going to happen to New England if we spend 10 years cutting budgets and hoping that our energy costs and infrastructure needs take care of themselves by magic?

Crazy and politically impossible?  Maybe. But don’t we want the world to beat a path to our door? Entrepreneurs, investment capital – like sovereign wealth funds in Asia -- and the talented youth of the world will want to be here. Let’s make the New England brand about quality and preparing for the reality of the future,  because we cannot ever be cheaper than China or Florida and we can be as good as Singapore or Denmark.

We may not like the look of the future, but its coming.

More than nostalgia: The New Haven Railroad "fan" club understands something important

One of my favorite events of the year is the annual gathering of the New Haven Railroad Historical and Technical Association http://www.nhrhta.org/.  This is a collection of perhaps 100 hard core railroad buffs who come together to remember the days when our state was the center of one of the most important transportation corporations and systems in the country.  Yes, much of the activity is reduced to swapping old magazines, comparing modeling techniques about how to create the perfect dirt on a 1938 reefer car and remembering an old FA9 Engineer who has passed away.  Still, underneath the alumni functions for a school that no longer exists, is a group of guys and a few gals who have a great understanding of the value and importance of the community and connections that the rails provided to Connecticut from the mid 19th century to the 1960s.

Last Saturday the 2008 version of the reunion featured the usual assortment of tables stuffed with model trains, shirts with NH and NHH&NY logos plus a growing quantity of short run specially books on every railroad, engine and trolley car line that ever existed. One of the features of digital technology and boutique publishing is that there are probably more books available on the golden age of railroads today than ever before. Wanting a gift for a friend with a vacation house in Vermont I had a choice of probably a dozen books covering every line and just about any mile of track that ever ran in the Green Mountain state. A decade ago I would have been lucky to find a few blurry pictures.

The highlight of the day for me was a bit bizarre even by Association standards.  Some old home movies shot from the cab of one of the last trips by a train from Bridgeport to Pittsfield on the old Housatonic line had been rediscovered, and, although technically the shots had been taken aboard a train from the post New Haven "Penn-Central" short-lived era, they were deemed worthy of inclusion in the Associations archives. So, for an hour about 40 grown - very grown - men watched with fascination the rails and overgrown trees flash by along an ancient piece of New England transportation infrastructure.  The stations and the track still exists for much of the run, but this group was both celebrating the memories and morning the death of the connections when people could go North and South in western New England without a car. What a good thing to have available today, more than one person was heard to mutter, and why on earth are we forced to carry on in this fashion of relishing 40 year-old super 8 movies when any other culture would have maintained and preserved the actual link between communities and people. Why indeed.  

Man and nature in the middle kingdom

We spent the last four days traveling up the Yangtze River from city of Yichange to the inland gateway to western China, Chongqing. The trip was taken on a fun, but somewhat worse for wear, river cruiser known as the Victoria Catherine. The VC is park of a six boat fleet that travels up or down the mighty Yangtze system every few days for eigh months of tthe year. The crew of more than a hundred lives on the ship and gets an afternoon off every week while the ship is swapping passangers at one oend of the four day trip. The were very cheerful, some spoke wonderful English and our waiter turned out to double as a magician, Genghis Kahn line dancer (don't ask) and drummer in the talent show band. That, and his bottomless coke and beer glasses earned him a good tip from all of us (20 RMB a person or about $3 for his three days of work).

But I'm getting ahead of myself.  The point of leaving the big name cities and all those Ming temples the for the equivealent of a St. Louis to Minneapolis upstream run is all about the world famous Three Gorges. Or more correctly what used to be these 3 incredibily steep cuts with rapids at the bottom of 1,000 foot cliffs that thwarted river traffic for 4,000 years and annual floods that wasted thousands of square miles of farm land in much of Chinese heartland. The same named dam project that put all of this on the front cover of many a Natinonal Geographic magazine for several decades rendered the rapids to the place of history and replaced what remained of white water with a lake and a lot of people who had to be moved to higher ground, 1.3 million officially and perhaps 2.0 million in reality.

The dam was dreamed of by western engineers for a century, talked about Mao and finally done beginning in the 1990s when money and sheer hutzpah to do surfaced in China.  The bill was $45 billion with half the money to make people happy and half to build the largest concrete thing on the planet.  Lots of electricity now flows and the water is up about 300 feet from where is would flow in now flood months.

Anyway, we were on the river and soon heading up the five gigantic locks and through the the 3 Gorges themselves. I have never been in a ship lock before. The concept is deceptively simple. You float in, close the back door, flood the chamber with water from above, rise to the level of the lock in front of you and then open the front door and sail forward.  Still, when you see the massive3 doors, the huge pipes, the side moorings six feet high and then watch eight very large ships magically life up to the mountains on either side of you...well, its pretty neat. I guess if you rang the locks up and down four times a day you could get bored in a few days.

Well, we are flying back now and I'll have to finish the last week of the trip from New Haven.

Is that a dumpling in your pocket or are you just glad to see me

We finished up in Xi'an last night in another five story 5,000 person restaurant. This time the specialty was the famous 17 course dumpling feast. Very good, very filling and a few of the stuffings very mysterious. Still except for the fact that Marian would have been happier at the Muslim Halal joint next door (half the dumplings were "pork and...") it was the usual delight ful scene with happy servers and travelers as far as the eye could see.

Next about 15 of us went to one of the very common foot massage joints where four of us in a small room were descended upon by four well trained giggling 20 year old girls in matching yellow jump-suits who kneaded us into relaxation. Very  rated and yet very exotic.  You can see how this kind of a place could be remade into something x rated for weary male businessmen far from home...but this was just good wholesome fun.

Off to the airport and a long bus ride to our boat for the Yangtze...Gambai!

Perhaps I was wrong about the Red Sox...sorry Steve. But its not over yet right...hard to keep the day straight. Its Wednesday morning now.

Smog, students and suks

It is now Tuesday afternoon. A rare few hours off during the day as we relax before partaking of the famous 17 course Xi"an Dumpling Dinner experience. I admit - you can too - that you never heard of this, but enough people on our trip have so I expect this evening will be fun. 

We took a walk at 7:00 in a pretty thick coal smog, typical of the city but amazingly this lifted in a few hours. We have had sun and clear weather for most of each day we have been in China, something the guides admit is very unusual.

I just learned that the Dodgers lost and well as the Football Giants. With the Yankees out rooting for Joe Torre is all we have left and that seems to be about to end.  The Red Sox beating the Phillies which now seems inevitable will have little appeal except for the Constitutional Convention crowd who will read something into it relating to the election at hand. Who are the modern day Federalists anyway?

Yesterday we visited the Qin Dynasty's first (and only) Emperor's tomb suburbs w here the life-sized Terracotta army is shown off in one of the most amazing museums anywhere.  A good friend from back home who was here recently just Skyped me with the news that he is convinced that the exhibit of soldiers is just too perfect to be real. The ones on display must have been made in Xi'an back alleys just as the ones for sale for a few hundred dollars around town. Take a look at the pictures and you decide if this so called 8th Wonder of the World is the true world heritage site it has been proclaimed or if its a "Sinowood" set of epic proportion. Seriously, whether the 1,200 of 8,000 soldiers and horses on display have been enhanced or not it seems clear this was created by 750,000 workers sometime around 220 BC.

In a remarkable display of national self control the Chinese have not dug up the actual Qin tomb nor have they even finished 70% of the excavation of the warriors themselves. One reason is that warriors were originally painted and it seems when excavated the paint flakes off within hours, so leaving them under 15 feet of dirt until a better method of preservation is found makes sense.

Now, it is important, and perhaps comforting to learn that as soon as the first Qin Emperor died a large majority of the workers and a sizable contingent of tax payers rose up, crushed his son and pretty much leveled anything above ground left by him. The clay soldiers, 15 feet below the surface, may have been bashed or may have been smashed when the football field sized roof collapsed...e either way the Qin Dynasty (which did build roads, modernized language and defeated six warring tribes) was history. The pique of spending most of the middle kingdom's GDP to prepare dad for the afterlife just did not sit well with the Chinese people. Very sensible...are there road blocks on the way out to the Hamptons yet? Just kidding.

Anyway, the tourist traffic now amounts to more than 15 million visitors a year and has put Xi'an back on the map after a millennium in the shadows.

Last night we visited a section of town that dates to the 8th century, the Muslim quarter.  The other great thing that the town is famous for is being the start of the Silk Road. So it is sort of the St. Louis of China given that towns role as the start of the Oregon Trail. The difference here is that The Silk Road was a two way highway and so it was more than a place to load up your wagon. Until the sea routes got going this was the way that riches, goods and people from the west met those from the west.  With the desert and mountains in between it was Tashkent or bust once you set out from Xi'an...

So in 750 AD Muslim traders needed a Mosque and paid local workers to build on in the local style. The Mosque has been in use of 1400 years and has an entire community around it.  We wondered off the typical hotel and museum circuit last night and went to a local restaurant with a few other couples. The food was great and the night life in the back streets of the quarter was teaming and global...in the way that back alleys in Indonesia, Afghanistan, India and Brazil can be.  Last night it felt like little had changed in 1,000 years and that travelers from Arabia or Delhi had just brought their wares.

We also visited a foreign language and business university yesterday and were taken around the campus by a group of fluent and charming students.  My guide came from Inner Mongolia, a 48 hour train ride f our times a year. Studying English and foreign trade he was up o American politics but polite enough to not ask me any questions about the election.

Today we went to the other building still standing from 700 a tower on the edge of downtown and we went to a museum of Chinese carved tablets dating from 1100 AD but representing Confucius's work from 600 BC. Given the propensity of Emperors to destroy books and works that predated them the survival of many key Chinese texts are due to this collection.

We are off to our Dumpling dinner now and tomorrow will be flying to the Yangtze River for a three day cruise to the Three Gorges Dam. I am not sure we will have internet connections until Friday so until I connect again I am signing of from the end of the silk road.

Palaces, Protoges and Make Believe People

Today we left Beijing and flew to the ancient dynastic capital city of Xi'an.  Our guide noted that between 200 BC and 700 AD this was one of if not the greatest city on earth with millions of people, a size 9 times bigger than it is today and tens of grand palaces .  Unfortunately the loss of water due to deforestation and new dynasties leveling the city repeatedly did it in.  Today there are a few buildings from 700 AD but all else has been plowed under...except for what was hidden or still remains underground waiting to be discovered.

When you drive in from the Xi'an airport there are literally tens of huge mounds along the highway where emperors or princes are buried...the government won't allow them to be dug up until they have more money, security and technology. But, you have no doubt heard of the one that did get dug up. A farmer was digging a well and found what turned out to be several football fields worth of life sized Terracotta warriors in his back yard 10 feet down.  His backyard is now one of the most popular tourist sites in the world. We are going there tomorrow.

So you never know what you will find when your farm is on the site of an 8th century world capital.

Last night we all went out to dinner and Marian invited five of her former Forestry students who are now in interesting and important positions in China to meet with the Yale group. It was fascinating and gave great meaning to President Levin's desire to make Yale into a true global institution. Seeing how far these young people had gone and the impact that Yale had had on their careers was impressive and humbling to everyone there.

Yesterday we also visited the Qinq Summer Palace...a combination of Central Park and Versailles. Built in the 1860s and then several time rebuilt after it was burned to the ground by the invading European and Japanese forces during the Boxer Rebelian in the early 1900s, it is now a favorite place to enjoy a family outing in the midst of a very crowded city.