by Rob White
As my last regular article for the Vanguard, I wanted to leave you with one important thought – if the Davis community can do any one thing to move towards creation (and growth) of an innovation ecosystem, it should focus on attracting, developing and supporting entrepreneurialism.
This seems like a simple concept, but it is very difficult to get critical mass. A spirit of creativity and innovation has not been something that most people wear as an advertisement, most likely because past industrialization and the evolution of modernity seemed to force our communities into a sense of sameness.
But those attitudes are changing as technology, creativity and communications unshackle our traditional way of invention. We have moved from questioning norms (like government and service delivery) to reforming complete industries.
An easy example is the change in the way people communicate. Literally in the lifetime of our oldest generation, we have moved from written letters, to telegraph and telephone, to cellular communication, to email and texting, to the “holy grail” of instant communication – providing video capture and pictorial representation of our lives.
Never before has the world population been able to realistically capture each important (and sometimes not so important) event in each of our personal and collective lives, cataloguing and instantly sharing photographic evidence of our humanness. In my mind, it’s the modern version of cave painting, which allows us to tell our story and depict our personal view of the world for public consumption.
I am sure you can think of other significant changes over the last 150 years in how we see and experience the world – trains to mass transit, wagons to cars and typewriters to computers.
Not all of our inventiveness has resulted in positive outcomes. The realization that crude oil could be extracted, refined and used as a cheap source of energy has led to some negative outcomes for our world. From vast oil fields that are contaminated with brines, rain forest and habitat destruction, leaks and spills in our oceans and waterways, the generation of greenhouse gases that have created cities filled with smog and destruction of our ozone – these are some negative aspects of our technological growth.
Interestingly, these same issues will (and are) being solved by new technological advances. Like renewable energy, electric vehicles, and a trend towards more mass transit. And as we develop the tools to ever more rapidly understand science and the application of research, we will find more and better ways to achieve the same outcomes that previously led to less than desirable results.
A great example is the growing industry of biologics, of which a significant amount of research and development is happening here in the Davis area. We know that chemically derived pesticides create less than desirable issues – like toxic residues and increasing pest resistance – for our agricultural production. But companies founded in Davis like Marrone Bio Innovations, Bayer Crop Science and BioConsortia are researching and developing new ways to fight pests and nuisance by using organic, naturally occurring substances and microbes.
So for Davis, our world class research university (which is gaining in global prominence) is a primary driver for our culture of innovation. The new ideas from faculty, researchers and students are a crucible for opportunity. Opportunities to feed the world, save the planet and even grow our local economy.
And that is why I posit that it starts in our core. It’s the core of UC Davis’ research, the core of our city (downtown) and the core of our drive to move towards sustainability.
To help frame this point, a recent article posted on the CitiesSpeak website (from the National League of Cities) discussed how cities are the leaders for creativity and economic prosperity. The article was written by Brooks Rainwater and titled “Cities Lead on Entrepreneurialism and Economic Opportunity.”
http://citiesspeak.org/2014/05/12/cities-lead-on-entrepreneurialism-and-economic-opportunity/
Rainwater leads off with “America is a country of entrepreneurs, inventors, and idea creators. From this nation’s founding, new ideas have driven our grand democratic experiment with commerce providing the underpinning for a strong and growing body politic. The city has been the unit of government most conducive to experimentation and commercial growth precipitated by those that take risks to form new businesses, grow those businesses, and help whole communities thrive.”
He goes on to state “entrepreneurs create jobs, grow the economy, and enhance the well-being of our communities. With twenty-three million small businesses in the U.S. generating 54% of all sales, it is imperative to create an environment that encourages this growth. Additionally, sales tax revenue from small businesses expands local governments’ capacity to provide high-quality city services to all residents. This is what city leaders are doing by working collaboratively with business owners to create the space for small business to prosper.”
The author then makes an interesting observation about how innovation ecosystems are being created in other cities across the US. He opines that “any discussion on how cities connect their residents to economic opportunity must include the role that small businesses play in incubating innovation and helping communities succeed. One of the most successful ways to connect people to economic opportunity is by increasing economic growth. Two specific ways that cities are working to connect residents to opportunities are by creating incubator spaces and supporting microlending.”
What’s telling about this comment is that Davis’ local, small business community has started those activities. Exemplars include the opening of Davis Roots a few years ago, the newly created JumpStart Davis Meetup for young entrepreneurs, the soon to be opened Downtown Co-Working Space, the work by the JumpStart leaders to create a local angel investment fund, the a attraction to Davis of other angel investors and the locating of several small (and growing) startups in the downtown.
These activities seem to support Rainwater’s contention that “Small business thrives in a supportive ecosystem. Cities are uniquely able to connect entrepreneurs to mentorship, streamlined regulations, skills training, and funding.”
And the Davis community benefits from the success of these efforts. Rainwater points out that “city leaders want to celebrate the success of small businesses in their cities and the foundations they build for a resilient local economy by providing jobs to residents, contributing to sales tax revenues, and attracting visitors. By doing this, small businesses directly contribute to the tax base and employ community residents from all walks of life, while serving as central economic and social drivers in communities nationwide.”
So, I would encourage you to not sit on the sidelines, nor just applaud the work of others. It is time to take the creative spirit that embodies so much of Davis’ past and present and make it doubly true for the future. Our individual efforts harnessed collaboratively are the mechanisms by which successful communities take their own prosperity into their collective hands and manufacture success.
It is not an easy process, but it is one that is deserving of our time and attention. And who knows what will come out of this new rush to entrepreneurialism and innovation – cures for disease, new mechanisms for sustainability or even new forms of social policy? It is exciting to see what can happen when a community focuses on success, instead of debating what failure looks like.
Thanks for letting me have a little of your time each week over the last 18 months. As the opportunity arises, I will try to float an article or two into the Vanguard on an occasional basis. But I will most certainly be reading, using your ideas and input to help me better understand the community of Davis.
I encourage you to also consider writing your own article for the Vanguard. This helps build civic interactions and provides multiple views on the topics that will most certainly shape our future.
Thanks again! My email is rwhite@cityofdavis.org if you choose to email me directly or you can follow me on Twitter @mrobertwhite.
Author’s Note: Due to shifting needs and workload at City Hall, I will not be able to continue to contribute regular weekly articles to the Davis Vanguard after the holidays. I will be spending much of my foreseeable writing time working with the City Manager and staff on a strategy for the Council’s Goals and Objectives for 2014-2016. Though I have enjoyed engaging this online community, there are limited staff resources and my priorities right now must shift. As my last regular article, I am hoping to inspire collaboration, building of community and innovation. Thank you for your support in my writing over the last 18 months and I hope to still occasionally provide articles as time allows. Please feel free to contact me now or in the future to share your thoughts or ideas.
it was nice while it lasted. i appreciated your thoughts and contributions, even when i disagreed. i think the city makes a huge mistake cutting off you from the public. but i guess it was to be expected with the new regime.
Why was it expected? What are you implying?
i’m implying that there was a power struggle in city hall and some people ended up losing.
What power struggle? Who specifically “won” and who “lost”? It would seem to me it is time to give the new city manager and the newly formed City Council a chance, before announcing doom and gloom. Just my optimism showing. For the first time, in a very, very long time, significant and exciting economic development is on the horizon which has the potential to raise significant tax revenue. I call that a huge win!
would have loved to have given the city manager and new council a chance. what i’m not willing to do is turn the clock back on several years of progress. people who i trust tell me to watch closely the next few months, it will be very telling.
“It is exciting to see what can happen when a community focuses on success, instead of debating what failure looks like.”
Excellent observation. So often those with an underlying political agenda make a practice of focusing on the glass half empty because they in essence and fundamentally do not want change. It is imperative that those of us who support positive change in the form of well – planned innovation parks, put out a positive message loud and clear that the proverbial glass is half full – with the potential to overflow with good!
How about half the volume of the glass contains water?
Positive thinking is a dangerous process; I realize that goes against current societal fads obsessed with “The Secret”, and using the tactic to silence critics; for the record, negative thinking is a dangerous process as well.
Let’s take the so-called Yolo County Rail Relocation project for example. Lots of positive thinking by the cheerleaders of that mega-cluster. To the point that actual challenges, costs and funding issues are minimized or outright ignored — even to the point that vastly cheaper solutions to the flood-control issue are ignored because it would take away from the scheme of stealing mass-quantities federal transportation and/or flood-control dollars for the purpose of opening up mass-quantities of land for development. “Positivity” is taken to point that the cheerleaders of the scheme are actually lying. Shameful.
I am in favor of the business parks, all of them . . . so far. But don’t tell me to think positive about business parks, and don’t lie to me by leaving out the issues and challenges, or I’ll suspect there’s something afoul. Life on this planet isn’t all positive, any more than a magnet is all positive.
I have no problem with the half the volume of the glass containing water.
Let’s keep it real, Baby . . . . .
. . . . . or get a bigger glass.
From the Harvard School of Public Health: http://www.hsph.harvard.edu/news/magazine/happiness-stress-heart-disease/
You are that unique positive curmudgeon… outside the standard deviation of the studies’ data-sets.
Happiness is overrated.
Hm, I don’t know anything about “power struggles”, “turn the clock back several years”, etc. That all seems at odds with what I see occurring right in front of my face. Exciting things are happening, companies are forming, entrepreneurs are putting capital at risk and creating jobs. People are actually doing things instead of just talking about doing things. Rob’s piece here is reflective of this dynamic. If this all constitutes turning back the clock, bring it on!
-Michael Bisch
I only know that some small businesses are a lifelong dream of many people, and then they finally spend their retirement nest egg on a business only to fail.
I met a man who was saying goodbye to California, with as many of his 50 employees that wanted to come. He said he bought a bigger house, more land, and doubled the employment in his company for the same costs as he had in California.
When you address that, the City might also have a chance. Innovation is only encouraging big time stuff, where the buy-in is Venture Capital, not citizens who start a small business. I am sure Mr White is familiar with all the Public-Private partnerships that benefit the principals and not the City. Why did Monsanto and all the seed companies locate in Woodland?
“Rainwater leads off with “America is a country of entrepreneurs, inventors, and idea creators. From this nation’s founding, new ideas have driven our grand democratic experiment with commerce providing the underpinning for a strong and growing body politic. The city has been the unit of government most conducive to experimentation and commercial growth precipitated by those that take risks to form new businesses, grow those businesses, and help whole communities thrive.””
Nice press release. What is wrong that Davis has to make these great sink or swim gestures? One winner, many losers?
I just have questions, I hope you can enlighten me.
I agree about the venture capitalist. We won’t be seeing small business start ups. And I agree about the dubious benefit of public private partnerships. The public allows private interests to make a profit off public services. They say they can cut costs but that isn’t the way I see it and not the way it has played out in communities across the country. Communities with experience find they are better off and have better services when pubic services are provided by public entities.
I respectfully disagree DavisBurns. The recent history of the technology companies in Davis shows a very different reality. The graphic below shows the 2012 Regional statistics for Technology companies gathered by SARTA. The 59 Technology companies in Davis at that time clearly did include some large companies like DMG Mori and Schilling Robotics, but the vast majority of the 59 are indeed small business start-ups, or were small business start-ups very recently (for example DMG Mori and AgraQuest).
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… and those technology companies are well spread in various business sectors.
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I find the phrase “Public – Private partnership” interesting. It seems to be used by those who want a public entity to do something to aide private profits. This is often used by those who criticize government at every opportunity except when it is subsidizing business. I am not seeing it so much when the discussion is about the needs of those living below the poverty line because of the inability to find a job paying a living wage for full time work. Where is the “partnership” part for these folks ?
It seems to me a little insulting to imply that nothing has been happening in Davis “for a long time”. Do we consider Schilling Robotics, or Mori Seiki, or Marrone Bioinovatons or any of the younger businesses just starting up “nothing”. I am all for innovation. I am all for business. I am not for the trumped up idea that “we” have to support people who are doing just fine on their own. I am much more interested in seeing public-private partnerships that help those who are in need of help in a more organized fashion that just what ever a philanthropist happens to be willing to give at any point in time which is clearly an unsustainable strategy. If you doubt that, then why do we have and accept as inevitable, people living below the poverty line who are working full time ?
There is room for both. The public side does some things well and exclusively. But the incentives for peak performance and high-end service delivery are broken when compared to the private side. A lot of the private business that partners with the public side are non-profit (or not-for-profit… which is really the same). Now hold that thought for a minute because it is the main theme of my plan for saving the world.
First understand that there is both, not-much different and a lot of difference, between a for-profit and not-for-profit business. A lot of large healthcare companies are not-for-profit. My company is not-for-profit.
My thinking is that government should favor partnership with not-for-profit companies. Not-for-profit companies can be operated in competitive industries. They can have incentives for motivating peak performance and top-shelf customer service. The primary difference is that the earning over expenses (net excess), after paying all salaries, benefits and bonuses, needs to be reinvested into the company or used for community development.
The way I look at it, if your business benefits from the soft money of government, you should be a not-for-profit and give back the net excess (profit) back to the community… instead of being able to stuff your pockets with it.
The challenge here is that the lack of ownership. Non-profits are not owned by anyone. They are governed by a board of directors and possibly a larger membership body… and there are operated by managing officers… usually an Executive Director as the CEO-level manager. And because not-for-profits are not owned, they don’t generate equity for owners. And because they don’t generate owner equity, they do not easily attract start-up and expansion capital.
So, to make my idea work there are a couple of things we would need to change.
1. Allow a new class of non-profit that allows some classes of ownership. Some states are already heading in this direction. But there would need to be IRS tax code changes too. This would be a new class of stock having governed returns. For example, maybe it can pay dividends up to a limit but only appreciate in a maximum valuation not to exceed some inflation index.
2. Government would need to pitch in providing start-up capital in low interest loans to help supplement the lack of private-side capital due to the lack of returns.
And if we could make more not-for-profit private-side business that partners with government, we can get the best of both worlds. Excess returns from the business going back to the community and fast-better-cheaper service to the public.
The primary reasons we don’t move in this direction is that Republicans tend to support those that prefer to pursue profit they can retain, and they like doing so using the soft money of government; and Democrats like the soft money of government to run their giant tax and income redistribution charity machine. They don’t like non-profits because they would prefer they get all the warm and fuzzy feelings from charitable giving… even if it is other people’s money.
Frankly
I was right with you until the point that you started your psychologic assessment of why people of various political stripes do what they do. Too simplistic from my point of view which includes the belief that people have many and complex, not cartoon character versions of their motivations. However, I do see some hope with Kaiser as just one model for the type of enterprise you seem to be espousing. However, just imagine how much more we could do, if for example in the health care industry, instead of hoarding our best ideas and best practices, we were to share freely with all. If we were to all collaborate instead of completing for what we perceive as limited dollars in the hopes of maintaining our share, just imagine what we could accomplish in terms of health of individuals and our communities !
You have a point here but only from a short-term superficial perspective. You are failing to accurately assess the long-term development of best-practices in a competitive space. If my competitor is doing something unique that is working, I will eventually find about about it and do the same to eliminate his competitive advantage. I will also be striving to do better so that i can grab the competitive advantage. But more importantly, if I don’t keep up I will lose market share and eventually go out of business… because the customers tend to go where the service and value is the best.
Over a decade ago I worked for VSP. VSP was a non-profit until about 5 years ago when they lost an IRS battle to force them out of non-profit status (the IRS really hates it when billion dollar companies are non-profit). VSP was and still is the 800 lb. gorilla in the eye care industry. They were the most innovation and the most focused on customer service. Any competitor that wanted to win contracts away from VSP had to do the same. Competition motivates companies to always strive for faster-better-cheaper. In you collaborative communal business utopia model there would be MUCH LESS URGENCY to push innovation to do things faster-better-cheaper.
And that, in a nutshell, is the single major problem with public-sector business models. There is never enough urgency to do things faster-better-cheaper. They might do one, or maybe two… but never three.
I don’t see a big difference. For profit companies are governed by a board of directors (who are usually on many different boards and are paid large salaries for not much work–maybe greasing the wheels with the other companies on whose boards they sit. For profit is operated by managing offices. So investors make a profit…they are run the same way. The only difference is raising capital.
Michael Bisch: “Hm, I don’t know anything about “power struggles”, “turn the clock back several years”, etc. That all seems at odds with what I see occurring right in front of my face. Exciting things are happening, companies are forming, entrepreneurs are putting capital at risk and creating jobs. People are actually doing things instead of just talking about doing things. Rob’s piece here is reflective of this dynamic. If this all constitutes turning back the clock, bring it on!”
Tia Will: “It seems to me a little insulting to imply that nothing has been happening in Davis “for a long time”. Do we consider Schilling Robotics, or Mori Seiki, or Marrone Bioinovatons or any of the younger businesses just starting up “nothing”.”
Thank you for these positive, reasonable and accurate comments. It is about time Davis moved towards more well planned and suitable economic development.
Alan Miller: “But don’t tell me to think positive about business parks, and don’t lie to me by leaving out the issues and challenges, or I’ll suspect there’s something afoul…”
There will always be challenges and downsides to anything. When I promote optimism, I do not in any way imply that the city and its citizens do not need to address the challenges and downsides to any proposed project. But if one does not stay positive about a proposal, the challenges and downsides will never be overcome, especially not with constant carping and negativity.
” if one does not stay positive about a proposal, the challenges and downsides will never be overcome, especially not with constant carping and negativity.”
Though I’d use different terms, I believe I understand your point, and you probably understood mine.
Anon
“But if one does not stay positive about a proposal, the challenges and downsides will never be overcome, especially not with constant carping and negativity.”
The first thing that must be accomplished before deciding whether to be “positive or negative” about any proposal is to decide first if it is needed in the broader vision of what is best for the entire community. I am not yet convinced ( but remain open minded ) that either of these proposals ( Nishi aside) is in the best interests of Davis.
I see us as already having had a lot of economic development ( in the companies I cited and in the new startups ). I am not sure that adding one to two more huge “innovation parks” is necessary or best policy for us at this point in time.
Tia: “I see us as already having had a lot of economic development ( in the companies I cited and in the new startups ).”
Given the R&D engine (both in pure research and applied research) that is UC Davis, the track record of companies that have settled in Davis, grown and thrived there is a miniscule proportion of the total UCD capability. Part of that (pretty dismal) historical record is because UCD wasn’t committed to or organized to acheve efficient and effective technology transfer into the private sector. That is very clearly no longer the case.
Further, when the UCD graduates who formed their new company (that ultimately merged with Mori Seiki and brought Mori Seiki to Davis) they had to do so in West Sacramento rather than Davis because of a lack of commitment to innovation in Davis at that time. Schilling Robotics’ history also contains its initial roots outside Davis (IIRC San Diego). Pam Marrone fits your model.
Matt
“Given the R&D engine (both in pure research and applied research) that is UC Davis, the track record of companies that have settled in Davis, grown and thrived there is a miniscule proportion of the total UCD capability.”
You see this as dismal, I see it as neutral. I do not think that the purpose of the university is to only partner with Davis, but to be an integral partner in the region. I have stated on a number of occasions that I believe that Davis is a great venue for the small start ups, but that there are other communities in the region that are better venues and whose core values are more compatible with the larger proposals. I prefer to think in terms of regional well being than in direct competition between Davis and our surrounding communities for these larger businesses.
Yes, we act as if we can do something it is okay to do it. Someday we have to learn to ask “Should be do this? Do we need it? What will the consequences be?” I’d like to see civil conversation around the question, ‘Should be do this?” What I see is anyone asking those questions are labeled no-growth and berated. There are options other than growth. If we took the time to look at the cost of growth we might find our services degrade, our taxes still go up and our quality of life diminishes. Maybe we would find the opposite but this forum is hostile to simply asking the questions.
“I see us as already having had a lot of economic development ( in the companies I cited and in the new startups ). I am not sure that adding one to two more huge “innovation parks” is necessary or best policy for us at this point in time.”
I get that you want to keep Davis small and don’t want to change its “character”. But the reality is the city is unable to fiscally sustain itself. How do you propose to address the city’s financial problems, if we do not embrace the idea of tax generating revenue innovation parks? What services would you like to cut; how high are you willing to raise taxes; and how many Davisites are you willing to drive out of town who cannot afford higher taxes?
Frankly
“You have a point here but only from a short-term superficial perspective. “
I believe that you are failing to appreciate what the Kaiser model has already demonstrated. We have become one of the biggest players in Northern California health care delivery not through a competitive, but rather through a collaborative model operative not in the short term, but over the past 20 years. Rather than pitting doctor against doctor for patient care dollars, we are salaried. We all get raises ( and bonuses when earned) not by being better than our colleagues, but rather by meeting very specific goals. In order to meet for example certain screening targets, we are more likely to meet the goal not by competing against one another, but rather by helping each to meet their individual targets and thus our group target. One very small example. One of my partners is on vacation. Instead of delaying visits from her patient’s until her return which would lessen her chances of making goal, I will work as many of them into my own schedule as possible thus benefitting us both and the entire group as well.
This is true not only in the area of direct patient care, but also in terms of research. One of our partners has become an internationally known researcher in one specific area of cancer prevention. He was able to do this because the group as a whole supported his efforts. His own gyn oncology partners picked up the slack when he was involved in research, teaching and speaking and the entire group enabled his efforts by providing pooled data and sometimes slightly changing our previous practices to conform to study protocols. We did all of this, not to make more money. We get paid exactly the same amount whether we are doing research, teaching residents and students, seeing patients in the office, operating or delivering babies. We do this because of our strong belief that collaboration rather than competition provides the best care for our patients and the most supportive environment for us in which to work.
If you feel that 30 years within this progressively more collaborative and progressively more successful group has left me with a short term, superficial view, I suspect that I will not be able to change your mind. But I would respectfully submit that you also may be missing some of the picture.
See following website: http://www.kaiserbadnews.com/home/
As in all things, no entity or model is perfect.
Anon
“ But the reality is the city is unable to fiscally sustain itself. How do you propose to address the city’s financial problems, if we do not embrace the idea of tax generating revenue innovation parks?”
1. First I would not make the assumption that we are going to be able to grow ourselves into fiscal sustainability. I know this claim is being made, however, it is being made without considering the impact of increased need for still more services, increased population, ( there I committed the grievous sin of mentioning financial and population growth in the same sentence. ) I am well aware that they are separate concepts, and I am not so naive as to believe that they are not inherently related.
2. I would like to see us focus more on small local and start up companies than expand into the huge business parks that are being proposed unless there are much more “innovative features” to the “innovation parks” than I have seen to date. ( And yes, I have been to the presentations and forums that have occurred so far.
3. I would favor taxing more heavily than we do. So, what would I see us tax. Property is up for an increase. Sodas. Automobile tax in the form of toll roads, perhaps with some offset for those in the lower economic groups for transport to work. I have a firm belief that we should be willing to pay as we go for the amenities that we choose. This does not mean that we could not make some provision for those who are actually unable to pay. But it does not seem to me that this point is being made by those who actually would “be forced to leave” but rather by those who simply do not want to pay more but rather prefer that someone else pay for their choices. Please show me your data if you have evidence that I am wrong.
4. You ask me how many people I would see be forced out of town. I would ask you how much increased population you are willing to see forced on those of us who have already watched the town we love far exceed our population preference. And this is not only the older folks amongst us. I was mentioning the issues of both business and population growth to my millennial aged son who was appalled at the thought of Davis potentially growing into the 100,000 range. Not everyone in his age group is wedded to the more is better lifestyle of larger cities.
5. Finally, I would like to see the city much more organized in taking advantage of volunteer efforts. We have a wealth of knowledge and experience here in our community. While there is some involvement in the form of commissions, there is very poor organized utilization and coordination which is by and large left up to individual community, religious and charitable groups . I think there is much potential that we simply are not choosing to engage.
Tia, your bolded words made me smile when I read them. I could be wrong, but I don’t think innovation parks are called innovation -parks because of how they are built, but rather because of the innovative ideas that are engendered by the types of companies that choose to locate there. Said another way, it is the concentration of the intellectual capital of innovation rather than innovation in the way that the bricks and mortar are assembled.
3&4. You want to raise taxes. But then you are a doctor with I assume a healthy income, and can afford higher taxes. Many cannot, and it would literally force them out of town. Tolls are a highly regressive tax, that punishes the poor far more than the wealthy.
5. Some people are working long hours to make ends meet, and do not have time to volunteer. And how “fair” is volunteerism? Some will volunteer numerous hours, while others volunteer no time and enjoy the fruits of others’ labors.