Monthly Archives: September 2003

Mark your calendars for October

Mark your calendars for October 21. You are going to want to hear Richard Florida. What a funny name. But the impact he is having on economic development across the country, and even across the world, isn�t so funny. Florida is the Heinz Professor of Economic Development at Carnegie Mellon, where he also heads the Software Industry Center. He has been a visiting professor at MIT and Harvard University’s Kennedy School of Government. He is currently a Visiting Scholar at the Brookings Institution in Washington DC. He has a very, very large audience for his off-beat thinking.

His claim to fame is The Rise of the Creative Class, a book about a fundamental theme that runs through a host of seemingly unrelated changes in American society: the growing role of creativity in our economy.

Creativity might be Florida�s word for what Silicon Valley calls �innovation.� But if you look at the roots of the word �creativity,� you will find it means �to bring into being.� Something from nothing. God created man. It�s a big deal.

Just as William Whyte’s 1956 classic The Organization Man showed how the organizational ethos of that age permeated every aspect of life, Florida describes a society in which the creative ethos is increasingly dominant. Because we have the gifts of technology, and we can office virtually, millions of us are beginning to work and live much as creative types like artists and scientists always have. We work at home, we make our own hours, we manage ourselves – with the result that our values and tastes, our personal relationships, our choices of where to live, and even our sense and use of time are changing. We don�t really have to live in Pittsburg or Minneapolis anymore if we don�t want to. We can telecommute.

Leading the shift are the nearly 38 million Americans in many diverse fields who create for a living � the Creative Class. I am one of them, and so are both of my daughters. One daughter works largely out of her home in California, two blocks from a beach. The other is in the process of moving to Amsterdam and telecommuting to a job in New Jersey. Me, I live in a high rise in Phoenix, where I work in a home office with two dogs and a cat. It�s a far cry from when I started at J. Walter Thompson � in the creative department at 420 Lexington Avenue. In those days, if you were a creative type, you had to live in New York.

Most important: the creative class is mobile. It votes with its feet. It can live anywhere. It doesn�t care so much about how much housing costs: look at the giant creative communities in New York, California, and Massachusetts, three notoriously expensive, highly-taxed states. The creative class doesn�t care. It wants atmosphere, convenience, compatibility and it will pay for it.

The Rise of the Creative Class chronicles the ongoing sea of change in people’s choices and attitudes, and shows not only what’s happening but also how it stems from a fundamental economic change (www.creativeclass.org) . Here�s a shocking statistic: the Creative Class now comprises more than thirty percent of the entire workforce. The choices these people make already have had a huge economic impact, and in the future they will determine how the workplace is organized, what companies will prosper or go bankrupt, and even which cities will thrive or wither.

On October 21, Richard Florida will be in Phoenix to help us continue a long-standing dialogue on how to make our downtown more creative. The New Times has rented the entire Orpheum Theatre and has underwritten Florida�s hefty fee. All that remains is to fill the auditorium with people who want to work on making Phoenix one of the great creative cities. Woody Allen said that 95% of life is just showing up. Show up. You can get a free ticket from The New Times at Phoenix New Times
1201 E. Jefferson Phoenix, AZ 85034 Phone: 602-271-0040

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Paradise Lost I’m usually not

Paradise Lost

I’m usually not a fan of economic forecasts, because I get invited
to an awful lot of them and I already know what the general trends
are anyway. After all these years in business, I feel them in my
bones like the weather. But the latest Phoenix Business Journal
Economic Forecast really rocked (for a business breakfast).

Why? Because only one out of three speakers used Powerpoint slides.
And because even he, the real estate development guy, didn’t offer up the usual charts and graphs and percentages that come with those kind of events: percentage of jobs gained, jobs lost, yada.

Instead, three very smart people got the attention of a business
community that thought it was going to snooze through a high-carb
breakfast of French Toast and potatoes and made it do something quite unusual — THINK.

Everyone knows I’m a fan of Michael Crow, or rather, that I’m a
supporter of any change agent that isn’t Hannibal Lechter. But I
think Dr. Crow has now been in our community long enough to add real
perspective to the view of the locals, and to have credibility in
doing so. After all, he has raised about $130 million (that I can
count) so far for ASU since he has been here.

This morning he told us some things that applied first to Arizona,
but I think apply more generally to almost all of the United States.
And they have macro implications, one of them being the way the rest
of the world perceives us, and another of them the way we will
maintain (or not) our economic hegemony in the future.

Dr. Crow said Arizona’s economy is too narrow, with insufficient
diversity of drivers. When you consider the fact that we have lost
many of our manufacturing jobs and even some of our information
technology jobs, I believe he’s correct, but too narrow himself.
Arizona is no worse off than Michigan or Illinois in this respect: we were fat and happy until the jobless recovery jolted us into
considering where the drivers of an economy really come from.

He also said our focus was too American, ignoring such powerful influences on our future as China, which is opening over a hundred new software universities this year alone. Related to that is the fact that our high tech manufacturing successes are built on a platform that will shortly be replaced, rendering many of the current facilities obsolete. At that juncture, it�s just as easy to build a new plant somewhere else as to stay here.

And then there�s the fact that the average personal income in Arizona is � in his own words � �acceptably� mid-range. The key word is the one in the quotation marks; we�re apparently unconcerned that people get paid less in Arizona for the same jobs. In fact, we�re fond of pointing to the climate tradeoff. But not every first-rate scientist or professional will make the sacrifice of a good salary to live in the desert.

Our education system, he pointed out, is underperforming. This is shown in our work force, which is composed of only 8% college graduates, as opposed to other states� 23-25%. Tied to the education system is something Dr. Crow calls the creativity index: the ability to make something from nothing. That, he says, is too low in Arizona.

The whipped cream on this lethal sundae is that we don�t pay sufficient attention to our natural capital, and we will likely put an end to our land price escalation by polluting the environment. And the cherry on top of our state�s bloated, unhealthy future? Insufficient competitive will. We don�t care enough to win. And we don�t realize that the competition is global.

Crow made one further damning point: our economic future and our social future are entwined. Poorly educated people, with no possibility of decent jobs, eventually create social unrest. All we need to do is look at the middle East to see how this plays out. We may not have a nation of martyrs if we don�t take care of our economy, but we may have a nation of marauders.

Michael Crow seems to be the Vince Lombardi of economic development. Winning, for him, is everything. Thank God the keynote speaker, Daniel Burrus, told us how to win. But if you missed it, you won’t find out from me. I’m keeping it as a trade secret.

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I met a man! I

I met a man!

I met a fascinating man yesterday. No, it�s not what you think � unless you think I mean another awesome entrepreneur.

I�m preparing to start my FastTrac progam on October 1, and I�m still filling out the roster of guest presenters. The FastTrac organization called and told me they had one graduate out here who was interested in meeting with me and perhaps helping out, so we picked a Scottsdale Starbucks and called a meeting.

When I arrived, Jim Packard handed me a little white package and a brochure. In it was a �Mouse Bungee,� a nifty device that holds the cord of your mouse up and out of the way while you work at the computer. He told me he recently had an order for 50,000 of them from QVC, which he has been on fourteen times.

I was impressed, but not nearly as impressed as I was an hour later, when after hearing his story and begging him to speak at my Opening Night, I scurried (late) to my next appointment.

Jim comes from Maine, and he sold copying machines as a youngster. But he decided he could give better customer service than his employer, so he started his own business when he was 27, with $500 (which was all he had). Twenty years later, he sold it to Ikon Business Systems. At the time, he had 40% market share in Maine.

As usual in these situations, he stayed on as a consultant for a few years and then became bored. So he cast about for something to do, and he heard about FastTrac. He signed up for the program because he wanted to see how the facilitator did it, to see if he could do it better. Or perhaps he could find someone else�s business to get involved in.

There were twenty-four people in his class. On the first night, the facilitator asked everyone to tell something about themselves and their business ideas. Jim took notes if anything interested him.

The next morning, he got a phone call from a fellow in the class. �I�ve got an idea,� he said, �and you said you had owned a business before, so I was hoping I could show it to you.�

�Sure,� said Jim. �Let�s have a cup of coffee.�
�I don�t drink coffee,� said the other man. �Why don�t you come over to my place.�

When Jim arrived at the apartment where the stranger lived, he was not only stunned, but fearful. When the man opened the door, the one-room apartment was all dark, lit only by a computer screen. The only furniture was a mattress against a wall, one chair, and the table with the computer on it.

�What am I doing here?� Jim thought.

The man explained that he had a product, which he showed Jim, that helped people working with computers. Jim had taken no notes on this product the previous evening at the FastTrac session, because he had no interest in computers. He didn�t even know what a �Mouse Bungee� was for.

But the guy kept on talking. It seemed he had gone to Comdex, and he had a shoebox full of business cards, because Comdex had featured his product on CNN. Among the cards was a note from Sharper Image president asking him to put the product in his catalogue, and a similar note from QVC.

But the guy was out of money and couldn�t go any further.

Jim did some quick due diligence with a couple of friends and jumped in with both feet. The first five years of the business, the other man had grossed about $30,000. In the first year of Jim�s involvement, sales grew to $500,000. QVC became a big channel, both for �Mouse Bungee� and for the company�s other product, a tempered glass mouse pad that can be personalized with photos and drawings.

In the mean time, Jim (who was supposed to be retired), moved to Scottsdale. As he settled in to the new community and Mouse Bungee became a stable company, he began to be asked to help people get on QVC. He was spending hours on the phone every evening advising other entrepreneurs about what it takes to get on, and how to keep your margins when you do get on.

So he formed another company. Guess what this company does? It acts as a representative for people who want their products on QVC.

If you want to be a part of the inaugural Arizona FastTrac program, go to http://www.fasttrac.org.

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The Secret Lives of Dentists

The Secret Lives of Dentists

Sounds like an oxymoron, doesn’t it? I saw the movie “The Secret Lives of Dentists” last week. It was at Sundance last winter, but we couldn’t get into it because it was directed by a big name — Alan Rudolph–and had a cast including Campbell Scott, Hope Davis, and Dennis Leary. Those big “Premiere” screenings sell out to people who know more about buying their film packages early than we do. They’re probably really in the “industry.” We’re trying, but we’re still in the audience.

What an unusual movie, in both the good and the bad sense. First the good: Alan Rudolph really understands marriage. The protagonists are a married pair of dentists practicing in the same office. They have three daughters and a home in the country; it’s the perfect life. But of course she’s unhappy. She has been singing in a community opera production, and she has fallen in love with the idea of romance and theatre. She has also, we think (but are never sure), fallen for some guy in the cast.

Her husband suspects her as well. Nothing special; just a few late arrivals home, and mysterious disappearances from the office. He’s the usual one-dimensional guy who never sees anything until it hits him in the face. When it finally does hit him, he makes an interesting choice. He decides to do nothing, despite a voice in his mind that urges him to more and more aggressive action. The voice materializes in the form of a troublesome patient (which is the movie’s weak point).

The dynamic of marriage is explored with crushing realism in this movie. The Hurst family is a two-income, well-educated, professional family struggling with the almost intolerable pressures of every day life. Nothing more unusual happens to them than a family-wide bout with the flu (in which each child and each adult barfs in sequence), but there is an intensity in the quotidian that gradually builds to a climax.

Every time the husband and wife try to have a conversation, they are interrupted by a child with needs. The youngest child spends the entire duration of the film in a stage of “I want my daddy,” rejecting her mother entirely. This forces the troubled father to spend the entire duration of the film with a three year old in his arms. He has neither the time nor the energy to focus on his relationship with his wife by the time he gets through working all day and being the house husband in the evening.

In bed together, there’s a series of missed moments. She tries to talk to him; he avoids the conversation by feigning sleep. He seduces her romantically; she gives in, but is annoyed rather than flattered by his attention. She thinks he only wants sex; he thinks he can win her away from her lover by being more sexual.

Throughout his wife’s dalliance, David Hurst has his strategy. The strategy, carefully thought out, is to avoid saying anything that will provoke confrontation. In conversations with the personified conscience that urges him to act, he rationalizes that anything he says may force action, and any action may destroy the marriage. His goal: save the marriage at all costs, even his own self-respect.

For years I’ve been saying that marriage is the worst format in which to conduct a relationship. “The Secret Lives of Dentists” is really an exploration of my position. Marriages are so fragile — especially today, when women have financial independence — that they can blow apart with one wrong word. And they are like Christmas trees that we try to hang so many ornaments on that they finally bend and break. This movie explores what we can expect out of marriage, and what we cannot.

I’ll spoil the ending for you to make my point. At the end of the movie, the wife finally stays out all one night, leaving the husband baby sitting. He fixes dinner, he gives baths, he tucks his kids in for bed, all without knowing where his wife is, and when or whether she will return.

When she does come home, early the next morning, her husband says only “are you staying or going.” She says only, “I’m staying.” That’s all he needs to know. Life goes on, and the baby goes into a new stage of calling for mommy instead of daddy. It�s a marriage, and they both want to be married. That�s what it takes. You really have to WANT to be married to stay married.

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Nurturing small businesses Longtime adviser

Nurturing small businesses
Longtime adviser urges unusual measures
Aug. 31, 2003 12:00 AM
Editor’s note: Republic columnist Jon Talton asked prominent business leader Francine Hardaway about the problems facing Arizona businesses. Here are her answers, along with her suggested solutions.
Q. What’s missing from the Arizona business community?
A.True support for business.

I don’t mean big business, I mean support for those businesses that employ most Arizonans and that contribute most to the community: small businesses.

Although everyone says they are reaching out to “small business,” almost nobody cares about its real issues. What happens to the ones on Central Avenue when the light-rail project tears up the streets? How do we make sure small businesses can afford health insurance for their employees? How can we help a laid-off techie get his new idea to market?

Small businesses in Arizona are starved for capital. We talk a lot about the need for venture capital, but do you have any idea how few businesses are appropriate for a venture capital investment? Very few. Yet all businesses need money. If we focus completely on attracting venture capital, we will find that it has nothing to invest in.

Our companies don’t grow quickly enough to the level a venture capitalist would look at. They either die an early death or grow at a snail’s pace by bootstrapping themselves. In the few cases that attract venture capital, it is usually with the proviso that the company move to Silicon Valley or wherever the venture capitalist lives. In other states, money for small businesses comes in several flavors. It can be from a microloan fund for start-ups, a seed capital fund or a public-private partnership. In Arizona, there’s one small microloan fund, no private seed capital fund and no public-private partnership. Maybe I’m exaggerating, but not by much.
Q. How can we fix that?
A.We can call 10 commercial real estate developers, home builders or land investors into a room and tell them that if they don’t start seeding entrepreneurial efforts with capital, they won’t have buyers for their homes or occupants for their office buildings. We can lock them in the room until each one volunteers to allocate $100,000 to a seed capital fund that will be used to make $50,000 to $150,000 investments in a portfolio of start-ups.

Although they are not big players in the entrepreneurial community, real estate people are known as big contributors to charities. Maybe we can configure this fund as a foundation to which they contribute, so they won’t expect a return.
Q. Any other clever ideas?
A.This summer, I became a facilitator for a program called FastTrac, offered by the Ewing Marion Kauffman Foundation in Kansas City. I went to Kansas City with a group of trainees and saw the resources of the foundation, which spends millions of dollars on research into what constitutes true entrepreneurship and how to make entrepreneurs successful. I’m bringing the program back to Arizona, because there are national resources out there to which our entrepreneurs do not yet have access. Only entrepreneurship creates true self-sufficiency. But all businesses need help as they are starting.
Q. If you are so frustrated by Arizona, why do you stay?
A.For the same reason everyone from California is coming here. Lots of bang for the housing buck. A small pond in which to make a big splash. And a Pollyanna-ish optimism about the area’s potential to change for the better. Every summer, I go to Silicon Valley to visit my daughters, who bailed on me for high-paying jobs that don’t exist in Arizona, and I contemplate moving there. But then I look at houses and tally up the cost of gas to commute, and I head home.

My good friend Dick Mallery told me 30 years ago that Arizona was a meritocracy, and that’s still true. You can come into this community and make a difference if you want to. You don’t have to be some kind of Daughter of the American Revolution.
Q. What’s your take on the next few years of business in Arizona?
A.Having been through the downturn of the late ’80s and early ’90s, I know that Arizona stirs itself only in downturns. But then it gins up a lot of activity, and some of it amounts to something. Unfortunately, the “something” from the last downturn was to become the Call Center Capital of the Universe. This time, we have to do better than that. I hate to pin all our hopes on TGen and IGC, because every state is trying to be a biotech center, but I believe if we understand the relationship between those initiatives and our current strengths – health care, semiconductors, software and tourism – we can make something happen.

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