Minnesota’s New Economic Developer Wastes No Time With Corporate Welfare Agenda

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Minnesota’s new economic development lead under governor Tim Walz is in a hurry to push the State’s corporate welfare agenda onto the tech sector.

Hours after Steve Grove was named Commissioner at the Department of Economic and Employment Development (DEED) last Friday, the Star Tribune published a coordinated opinion piece authored by him.

In it, he talks about how Minnesota’s technology sector needs an “urgent reboot” even a “miracle” under a broad state-sponsored publicly financed spending plan.

The 1,500+ word appeal begins with some nostalgia from our bygone days of Control Data – the supercomputing firm that was big here post-WW2 yet didn’t have enough “innovation” to make it through the 80’s in one piece.

Other references include Honeywell, which has all but left Minnesota by now, and the infamous Gopher Protocol.  The latter was a promising early-stage computer networking technology developed here that successfully managed to live up to its name by staying underground and ultimately earning its place as one the biggest missed opportunities of Minnesota’s tech history.

But hindsight is 20/20 and no-one is an island; without question these examples are part of the industry’s historical fabric and they have contributed in some incalculable ways to the foundation for modern Minnesota tech to prosper as it does so today.

“If Minnesota is going to compete on the global stage in the 21st century, we need to reboot the “Minnesota Miracle” for everyone in today’s technology economy.” – Steve Grove.

In technology, a reboot effectively means to shut down an operating system and restart it from scratch. This typically occurs when something is broken and in need of repair, or perhaps an upgraded version is in order.

However “reboot” is meant to be interpreted in his context, the mere usage does suggest that whatever is happening here and now in terms of growth and trajectory is just not quite right. The subtext “if” further implies that Minnesota is not already competing globally in this 21st century, let alone nationally.

Beyond a reboot, he continues, what Minnesota needs now is a “miracle”.  One that’s delivered at government discretion and financed by all the taxpayer’s who have next to no control over which privately-owned corporations will benefit – and conversely – which ones do not.

His calls for increasing business subsidies directly into Minnesota’s tech sector arrived merely 24 hours after it was ruled in court that the people of Minnesota do not even have a legal right to know what their own government is scheming in cahoots with “public-private” partners who operate in the shadows.

The essay is surprisingly short on relevant industry facts, aside from the often cited but never actually verified DEED claim that Minnesota tech will experience demand upwards of ~75k new tech jobs in the coming decade. Instead, his case relies on some emotional rear-view stories of  “innovation” coupled with a reference to anonymous “complaints” with an undertone of inequality – which is exactly the nature of business and technology. By design:

Whether we choose to accept it or not, there are rules of engagement that reward some and punish others in an open marketplace.  Look no further than Control Data, Honeywell, and Gophernet for some examples of just how unforgiving and ever-evolving this industry inherently is. 

The over-arching premise that Minnesota’s technology industry urgently needs some ‘miraculous reboot’ is worth questioning first-and-foremost, and Grove is now able to answer why? to all the people as the public servant he chose to become.

Everyone knows that there’s always room for improvement. Everywhere in life and all the time.  That is an incredibly obvious and easy thing to say, and really all he’s saying here, is that things can be better. Yes and to what logical extension, under what terms, and for what trade-offs are the real questions we ask must ourselves before considering what, if any, wholesale changes are to be made to this thriving private industry.

Those who effectively make technology understand immediately how to think about changes and can appreciate such broad claims made by ‘the business side’ that X isn’t working and Y should be better.  Okay, how so?  Where are lines drawn and why?   Fortunately, in the world of business, you can always trust that users and customers are best suited to answer these questions.

So to think that any change should be top-down politically driven and publicly funded vs. bottom-up and organically financed by private industry itself is misguided insofar as what’s actually working here right now: letting the market decide winners and losers as it does so fluidly every day.

Just ask the founders, entrepreneurs, and CEOs who live and breath it on a regular basis across some 1,500+ tech companies statewide.  Not just a few, but most, for they know better than anyone how and why the business of technology works.

The good news is that as it stands today:  Minnesota’s technology industry is the best it’s been in a decade, punches well above its weight, and is only growing in scope. Most importantly, it’s all happening with natural forces being led by entrepreneurs, CEOs, and thousands employees of the private tech sector in that’s at risk under any government sponsored corporate welfare agenda.

If the state wants to contribute something to private industry with the goal adding and improving, that’s great.

Focus resources on the things that can make Minnesota be the best place to live outside of work, as the majority of those operating in this industry can exercise their choice to live anywhere in the world.

That, or simply let people keep more fruits of their labor instead of taxing all and giving it back to the few.

Comments

  • John Brownlee

    I don’t think this opinion piece is fair, or an accurate description of the article by @grove.

    Grove isn’t making a “corporate welfare” case. He’s outlining the conditions we need to address in the state to be successful.

    He’s right that we need more qualified talent. Desperately so.

    He’s right that Minnesota’s tech entrepreneurs need increased access to risk capital.

    He’s right that our kids need computer science education (in fact, in my view learning a coding language would be more useful than the years of Spanish my kids will take).

    And he’s right that the inequalities in our state are unfair, unsustainable, and represent an untapped pool of potential talent.

    Minnesota has traditionally been a great place to live and work because have not been afraid to make the investments in our ecossystem that area necessary to keep it that way. Simply lowering taxes won’t make Minnesota, or our tech economy, better. And saying that does not automatically suggest a “corporate welfare agenda”

    Give him a chance.

    • http://tech.mn Jeff Pesek

      Hi John, thanks commenting. Overall, I am in agreement with Steve Grove and others that the challenges outlined are felt and worth addressing – I doubt anyone reading disagrees with that.

      It’s all about the HOW though. Consider some expanded thoughts here and deeper questions:

      “Grove isn’t making a “corporate welfare” case.”

      Corporate welfare means “financial aid, such as a subsidy or tax break, provided by a government to corporations or other businesses. The term is often used to describe a government’s bestowal of money grants, tax breaks, or other special favorable treatment for corporations.”

      Based on that definition, there are multiple corporate welfare methods proposed by DEED Commissioner Steve Grove in his article which are consistent with the prerogative of the ED apparatus by its very nature. Mind you, this department is funded by all of us as taxpayers…yet it re-allocates that money (after overhead) to the few at it’s own discretion…to which the public itself has essentially no control over. Let that sink in.

      “… He’s outlining the conditions we need to address in the state to be successful.”

      Are you/is he suggesting that Minnesota’s technology industry is not succeeding as it stands here today?

      “He’s right that we need more qualified talent. Desperately so.”

      Maybe. Maybe not? Some local tech companies are doing (surprisingly) well in this department as they adapt and grow rapidly by headcount. Others, not so much. It’s a very subjective situation depending on the nuances within each company. I don’t disagree that in general ‘hiring is hard’ in this labor market and in the tech industry overall, especially when venture backed companies can offer such fat salaries and further incentives that smaller bootstrapped/boutique firms simply cannot compete with.

      There’s likely more intra-competitiveness existing among the 1,500 active tech companies here in Minnesota for talent (and a hundred+ outside MN now with offices here) than there are between MN Tech as whole vs. forces beyond our borders. Both factors definitely do exist, but once someone is here and they are employed in tech tech, they tend to become a hot commodity that is in (seemingly) perpetual demand and at risk of being poached 24/7 from a nearby company (as pay increases alongside the benefits of joining this company vs. that company).

      I know the struggle is real. After all, it’s an employees job market right now. Not all companies can meet that new reality for a multitude of reasons and thus they do not attract/keep what they think they can/could/should. But labor is very fluid and exercises it’s right to change. Larger, longer established companies seem to be experiencing this the hardest – but that’s a side topic for another day.

      Hiring friction is normal and natural in such a dynamic industry, especially as more and more tech companies start and scale it only gets worse! There’s a reason, rooted in economics, that such a big number of alternative learning options that have spring up over the years. Perhaps there’s room for more?

      Is it the responsibility of business owners/management to address and solve for their hiring constraints or is it a function of the general public to provide resources to private shareholders in this capacity? That question is at the crux of my retort, not about how hard or easy it is.

      “He’s right that Minnesota’s tech entrepreneurs need increased access to risk capital.”

      It’s trite to think even say “more money” is the answer…for who doesn’t want more money all the time? But where does that stop – how much money and from where does it come? Should products/companies not finding their fit with customers/investors be rewarded with public subsidies?

      The market itself already answers such questions automatically, with more efficiency and intelligence than anything or anyone else can – especially governments who have not themselves demonstrated the same wherewithal of success in the private market (or worse, are unwilling to try).

      ‘If I only had funding’ is like cancer to the entrepreneurial mindset and the most abused excuse, as I have observed it said here for a straight decade now. I am empathetic and supportive of all entrepreneurs around this topic…consider that I do listen, discuss, and report their capital pursuits more than anyone else does in Minnesota. The notion of ‘not enough funding’ is more often than not repeated by those who perceive business to function differently than it actually does.

      No-one is ever owed money from anyone – be it family, customers, investors, government – because they decided to start a company; there’s always a maturation moment when entrepreneurs do begin to realize that money is an effect, not a cause.

      Even so, access to private investment is measurably increasing in Minnesota tech right now as we type! But it’s distribution will never be even or equal or fair – as that’s the nature of capitalism and resource scarcity/allocation, or what some might call “innovation”.

      Why do you think the public should be on the hook for your or my private business risks and outcomes? They don’t share in our profits, yet are being told to subsidize our losses?

      “He’s right that our kids need computer science education (in fact, in my view learning a coding language would be more useful than the years of Spanish my kids will take).”

      Indeed CS should be more integral within the public school curriculum. Fortunately, meanwhile, there are a growing number of out/after school private solutions offered in response to this. Are more needed?

      “And he’s right that the inequalities in our state are unfair, unsustainable, and represent an untapped pool of potential talent.”

      This is a big topic on a broader state level to be sure…but in the context of the local technology industry – could you elaborate on what you consider unfair? Stepping back, do you think technology is fair? Is business fair?

      Thanks for sharing your opinions about these opinions :) I welcome responses to the questions posed here in earnest from anyone…to summarize:

      1) Does DEED treat all entrepreneurs/CEOs/shareholders and their companies (across all sectors/stages) in Minnesota the same or does it treat them differently? Should privately held companies be subject to varying forms of special treatment by their own government or should that be even?

      2) Is it the responsibility of entrepreneurs/owners/management/shareholders to address and solve for their hiring constraints or is it a function of the general public to provide resources to private shareholders in this capacity?

      3) Why do you think the public should be on the hook for your or my private business risks and outcomes? They don’t share in our profits, yet are supposed to assume our losses?

      4) In the context of the local technology industry – could you elaborate on what you consider unfair? Furthermore is technology itself or the business of it fair in you view?

      • http://thebigidea.com/ TheLittleDuke

        The “talent gap” is largely a myth. Most tech companies outsource it to sub-contractors and rightly so. A large payroll is by no means a measure of a companies success.

        Our largest competition for talent here is with the large corporations that have the ability to offer benefits and bonuses. They are good at attracting talent to Minnesota (drive through the parking lot at Target Campus North sometime and check out the license plates) and often those people stay. What we suffer from is INERTIA and a culture that does not encourage the calculated risk-taking needed to launch new ventures.

        To Jeff’s point, it is INEQUITABLE to let other people gamble with taxpayer funds, picking the winners and losers behind closed doors.

        The biggest challenge I see right now is one of simple capital formation education. There are “entrepreneurs” and “wantrepreneurs” some are “for profit” and some are “for vanity”.

        I can’t recall taking any classes at Carlson during my MBA that taught us about capital formation especially for seed stage companies. It is almost as if raising money was just a foregone conclusion when the reality is much more bleak because it is dependent on having a business plan, something few entrepreneurs seem to be capable of producing. The notion that you would take your plan to a banker these days seems laughably quaint. Assuming you even did qualify for an SBA loan (which incidentally is NOT a loan but an insurance policy) — you would still be required to make personal guarantees with hard assets.

        Some people think getting money from an angel investor or a VC is like winning the lottery. It’s a myth. And shows like Shark Tank aren’t doing much to help.

        To be clear there is a role for VC money — when you’re ready to scale. I recently heard one financier describe what he does as “selling jet fuel” — not every company is ready or needs jet fuel.

        This is in part why I call investment crowdfunding a true “democratization of capital” — it lowers the bar to entry and allows more good ideas to get funded. Lowering the bar to entry means lowering the cost of capital. We’re not there yet. We need some changes to the rules here to allow portal operators to charge success fees instead of fixed fees. We will also need a secondary market to make these investments safer as you absolutely have the right to liquidity on your terms.

        There is still a lot of FUD (Fear, Uncertainty and Doubt) being tossed out regarding the risks to having a large cap table. My sentiment is this: solve your today problems. If that angel investor is telling you not to crowdfund because it will create future problems ask them for a check then. If they won’t write one then ask yourself for who’s benefit is their advice?

        And lastly, if someone tells you your deal is too small, tell them they are bad at delegation. They could hire an intern on to babysit an emerging market fund.

        -dvd

      • John Brownlee

        Thank you, JP. Your argument is largely an ideological one related to the role the public sector plays in markets, which we probably won’t solve here. In my view the public sector plays a critical role in assuring an ecosystem where private businesses can thrive. This role includes education, transportation, legal institutions, and in some cases more direct forms of investment in key markets and industries. I would argue that this smart public role in our state is one of our great competitive advantages, both with respect to the business climate, and our quality of life. Any founder of CEO who claims to have done it on their own (without this investment and support) isn’t thinking it through all the way.

        My own healthcare technology business is 7 years old. We have raised no VC. And we don’t hire developers directly (all our dev is managed by our CTO through partnerships). Thus, these issues impact me less than my counterparts running other technology companies (mostly in healthcare) with more challenging capital and technology requirements. But these issues are real, and as CEO’s and Founders we talk about them constantly.

        On a more practical note, I would recommend to you and your readers to an effort I was fortunate enough to participate in last year with Medical Alley. It’s called “Realizing the Vision”. There are two reports you can download (https://medicalalley.org/realizing-the-vision/). One addresses Minnesota Competitiveness, and the other addresses the Early Stage Ecosystem. You’ll find that many of the themes Grove addresses in his piece are addressed by our committee.

        Thank you so much for providing this forum. Tech.mn is a vital piece of our community!

        • http://tech.mn Jeff Pesek

          Hi John – “Your argument is largely an ideological one related to the role the public sector plays in markets, which we probably won’t solve here…” 


          How convenient it is for you to label my words as unfair, then minimize them on grounds of being ideological, not solvable, and thus avoid any questioning.

          Yes, it revolves around the role public sector plays in markets, that’s exactly what we’re talking about here as it relates to Minnesota Tech. Certainly there is a role for it in life, but there’s a big difference in how that plays out – between infrastructure that benefits most/all vs. direct benefit to a relatively small and select number of private shareholders that the public has no say over.

          Don’t you think?

          If your going to call my opinions unfair, but can’t support your own when pressed on the specifics and side effects, what does that say about your own ideology? (Aside from just spamming the comments with propaganda from another corporate welfare lobbying group).

          Speaking of, Frank, you’re obviously reading along and love some corporate welfare, what do you think:

          1) Does DEED treat all entrepreneurs/CEOs/shareholders and their companies (across all sectors/stages) in Minnesota the same or does it reat them differently? Should privately held companies be subject to varying forms of special treatment by their own government or should that be even?

          2) Is it the responsibility of entrepreneurs/owners/management/shareholders to address and solve for their hiring constraints or is it a function of the general public to provide resources to private shareholders in this capacity?

          3) Why do you think the public should be on the hook for your or my private business risks and outcomes? They don’t share in our profits, yet are supposed to assume our losses?

          4) In the context of the local technology industry – could you elaborate on what you consider unfair? Furthermore is technology itself or the business of it fair in you view?

  • http://thebigidea.com/ TheLittleDuke

    Good call out Jeff. It’s worse than “Corporate Welfare” its a “Wealth Transfer System” that robs from the poor to give to the rich.

    I find his suggestion that the state should be giving the money to “fund managers” to gamble with reckless, self-serving and idiotic. From the article: “We should also consider directly placing a portion of the state’s investments into select local venture funds to increase the overall pool of capital available to startups, allowing skilled fund managers to support more entrepreneurs directly.”

    We don’t need to outsource our discernment to marginal gamblers! The “average” fund is going to burn fully 50% of its money on dumpster fires. Then 20-40% of it is going to break even and if they are really lucky they will get a “unicorn” that will make up for the rest of the deadweight and then call in like they were brilliant. It is an unthinking “brute-force” deployment of capital and frankly it has already been shown that drunk monkeys throwing darts at stock charts do better…

    I know that you and I disagree on this point but if we’re going to have ANY public funds disbursement it should be to the companies directly — and not as grants. And yes the lesser of two evils is still evil, but hear me out?

    Why not create a program that offers some kind of MATCHING funds to companies that use MNvest or SCOR exemptions to raise money publicly where there is FULL TRANSPARENCY in the offerings and the state gets to see who did the investments, not just the accredited investors.

    Instead of rewarding rich people for making bad bets, we use the wisdom of the crowd to pick the winners and losers. And every serious investor I’ve spoken too would rather see the company have more runway — it is in their better interest than getting a tax credit. Plus there would be no need for DEED to collect the names and publish them, which has lead to at least one person I spoke to regretting their choice because now they get hassled for money from random people.

    Set some low threshold, say $10,000 — if an entrepreneur can’t raise at least $10K then they likely do not have an investible idea. Pick a number. But treat it like convertible debt. I’m fine with DEED building up a micro-mutual fund stake in MN companies. Any successful exits just powers up the fund for redeployment.

    The OTHER thing that DEED could do is host an actual transparent business plan competition, where the voting is not controlled by vanity nor run by a self-serving organization trying desperately to “transfer its technology” via a beauty pageant.

    -dvd

    • Daren Cotter

      Source needed for this:

      It is an unthinking “brute-force” deployment of capital and frankly it has already been shown that drunk monkeys throwing darts at stock charts do better…

      Your opinion that the state should not invest in VC Funds is just fine on its own… no need to make shit up to support that opinion.

      • http://thebigidea.com/ TheLittleDuke
      • http://thebigidea.com/ TheLittleDuke

        Well this is interesting I responded and got upvoted on a reply earlier today that cited the reference. I would hate to think that i was being censored…

        Darren the original source for my citation is this:

        https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/

        with the caveat that the monkeys did better

        • Frank Jaskulke

          The article says that random monkeys are better at picking stocks then buying a market index (1000 stock market capitalization weighted index to be specific). It does not suggest that monkeys are better than VCs at generating returns. A market index fund, an actively managed stock index fund and a VC fund are quite different.

          • http://thebigidea.com/ TheLittleDuke

            I read it as “better than the experts” and that is the perception around fund managers — that they are somehow the smartest people in the room.

            When in fact on average the failure rate for picking and backing the wrong companies is spectacular.

            https://www.inc.com/john-mcdermott/report-3-out-of-4-venture-backed-start-ups-fail.html

            As I’ve stated recently on LinkedIN — I’m not hater on the role that VC’s play. I recently read a really smart comment by a VC on how he saw his role as “selling jet fuel” — not every company needs what he was selling.

            “you need jet fuel when you need to go as fast and as far as you can in as little time as possible”

            I also liked the sentiment that he said he “sold it” — because that is exactly what VC’s are doing — they aren’t giving you free money, it is not a “gift” or a “grant”.

            Fundamentally, where Jeff’s point is on this, and he and I disagree on many things, we are 100% aligned on this: there is no role for taxpayer funds being used to pick winners and losers. Not privately. Not publicly. And sure as hell not to be given to “fund managers” to gamble with.

          • Daren Cotter

            And I respect your fundamental opinion — that taxpayer money should not be given to Fund managers.

            However, you made the claim — incorrectly and without any evidence whatsoever — that drunk monkeys could do better at investing in startups than Fund managers. Your article references monkeys picking publicly traded stocks. As Frank points out, these are completely different activities.

            I’m not sure what your implication is about your post not showing up. I’m sure you know that the comment platform is run by a 3rd party, Disqus. Maybe follow up with them about your censorship concerns?

            P.S., my name is spelled Daren. Not Darren. Not Darrin.

          • http://thebigidea.com/ TheLittleDuke

            Daren – it’s all “mutual admiration society” from my side…you can call me David.

            That article cited is just one example — my original post that was taken down had a link to a dozen other articles with the same sentiment. That “fund managers” are no smarter and do no better than random selection.

            My role is to be “provocateur” — to encourage dialogue. This town has been too sleepy for too long with a penchant for ritualistic clapping…

            -dvd

          • Daren Cotter

            To be clear, none of the articles support your original claim — that it has been shown that drunk monkeys perform better than Fund managers. Your original claim was made up, which I took issue with.

            I don’t mind provocation, especially about topics like this where there are strong arguments on both sides. However, making up claims to support your argument actually weakens it, not strengthens it. Your opinion that public money should go to startups directly, not thru intermediary Fund managers stands on its own without wrong facts.

          • http://thebigidea.com/ TheLittleDuke

            And that is the beautiful thing about respectful disagreement…

            A “VC” is just another kind of “fund manager” — and more often than not just a glorified accountant for other peoples money.

            I stand by my assertion that drunk monkeys tossing darts do as well or better than “fund managers” do and there is in fact evidence to support that claim.

            Whether you want to agree or admit it is not a me thing.

            “A good pilot does not deny their situation”

            Anyway thanks for engaging in the conversation. We have our regular monthly Third Tuesday meetup tonight and our every Friday morning open office hours. Feel free to drop in anytime. Come see us in the RealWorld/1

            https://www.meetup.com/Silicon-Prairie-Investing/

          • http://tech.mn Jeff Pesek

            David: why do I get the sense that everything you say is just designed to distract and divert attention towards yourself. This pattern has been going on for years now, to no end.

            Your self-assumed role as provocateur here is self-destructive behavior that serves no value to anyone. I’ve been waiting and watching for something useful and constructive, giving you the benefit of the doubt for a long time but to no avail.

            Do yourself and those of us subject to your words a favor and stop acting like this in public, at least in this forum. Seriously, please just stop it.

          • http://thebigidea.com/ TheLittleDuke

            Hey Jeff it’s your blog. Favor granted…

          • abouttime

            the little duke show will be missed said no one ever

          • http://tech.mn Jeff Pesek

            Don’t feed the trolls.

  • Kurt

    So much in here… I’ll focus on a couple of points.

    First, I have been building companies in Minnesota since 1993, have successfully been part of selling three of them, and am have been working on Carrot Health for the past five years.

    Second, We do not live in John Locke’s “State of Nature” where Adam Smith’s “invisible hand” magically sorts things out.

    In fact, we live in a small-market city, with fewer than 4 million people across the region, a region that has historically punched above its weight in Fortune 500 headquarters, making for a surplus of well-trained business managers. Note that this skillset is the opposite needed to over-index in entrepreneurial talent.

    There are many, many ingredients required to create, sustain, and grow a successful innovation hub. There are many players on that stage: corporations, individuals, non-profits, and more. Even the media, like TechdotMN play a role. We entrepreneurs do not create in a vacuum, we do not incubate companies without relying on every part of the ecosystem, including one another.

    Government (in theory representing the collective will of the people) is one of those components. If we as citizens choose to have a robust, vibrant community conducive to growing new business ideas – we are allowed to invest our resources to do so. (And with good reason – these initiatives, if done correctly, provide outside returns to the local economy through jobs, tax base, and other benefits.)

    There are evidenced-based steps that can help us get there. Examples: Education – over-investing in the skills of the community are one requirement (early childhood all the way through land-grant university. Housing – we need affordable places to live for our employees. “Placemaking” – creating livable communities with economic opportunity helps attract talent (see what the people at Motley are cooking up over by the U of MN). Access to materials, transportation, capital, freedom to innovate, freedom of the press… Without those elements, you cut off water from the seedlings – and they die on the vine, before they have enough critical mass to survive in the wild.

    Large corporations are another component. One of the businesses that made a conscious effort to “pay it forward” was, in fact, Control Data. I personally benefited from that ecosystem – one of the many spin offs of CDC resulted in human capital (my business partners in Integral7, and an investor with capital to help fund it, later sold to Pearson Education) and technology that made the company possible. Could this company have happened in other cities? Yes – several companies in other cities created an environment where we could have flourished (Baltimore, Salt Lake City, Philadelphia being three examples, where similar companies arose). But the legacy of Control Data insured that we would be here, in Minnesota, with access the talent pool we needed to be successful.

    Jeff, perhaps we (entrepreneurs) could collaborate with you on a research-based article demonstrating the value of investing in our ecosystem?

    Kurt Waltenbaugh

  • Michelle Chaffee

    It seems there’s a fair amount of assumptions being made regarding what exactly is meant by Grove’s assessment that Minnesota needs to do better when it comes to the tech startup community. It isn’t wrong to say it can be better and should be better, that’s progress and to disagree with that implies we have it all figured out. We don’t.

    I started my tech company in Minnesota four years ago. I had zero business connections, came from healthcare, meaning working directly with patients in healthcare, not as a healthcare executive and I had no money. It has been a struggle and that’s okay, nobody said it would or should be a piece of cake but even with proof of concept and paying customers I have seen “wantrapreneurs” who know the right people or have the right experience get funding and doors opened with little more than an idea. Isn’t there a potential benefit to a community to create an ecosystem that supports real innovation? How many ideas that could create jobs in Minnesota or even save lives never got off the ground because the founder didn’t fit what investors think a founder should be. “You need a big name board” a local angel group told me over and over. I thought I needed customers who pay for my solution and I still don’t have a big name board. Minnesota has somewhat of an inflated view of how innovative it is currently when it comes to technology. It is an ecosystem of FEW measures of and formulas for success and if you don’t say you’re on board with those methods, you have a tough row to hoe. I know, I have had a different method and been told to say it’s one of the formulas or I won’t get investor money.

    There are wonderful individuals here who support tech entrepreneurs in many ways but there is a big problem with local companies being willing to implement new solutions. Without methods of testing technology and learning through real use case scenarios, ideas fail and not always because they are bad ideas.

    There are many ways to create a culture that fosters real innovation. I am a part of such a culture in France where global entrepreneurs are supported with access to services startups need to be successful. Things like discounts on services, education on how to meet stages of growth and yes, the ability to present to investors. Because a tech billionaire and the French government want to become a global leaders in technology, an ecosystem exists that levels the playing field a bit. There’s even a program for founders who are especially disadvantaged who get even more support and have created incredible technology that wouldn’t exist if they had been left to their own, limited resources. It is an incredible environment where creativity abounds because hardship is eased a bit. What’s so bad about that? To say Minnesota tax payers wouldn’t reap the benefits if there was government money utilized for tech innovation, is short sighted. Thousands of Minnesotans benefit from my technology every single day and the technology of other tech founders I know.

    While the US rests on it’s tech laurels and continues to give the bulk of it’s resources to companies that fit a formula (white men who know other white men with money), the world is learning from our mistakes, revolutionizing the process and creating hotbeds of innovation without much thought given to whether or not founders have paid their dues sufficiently or taken enough knocks. Maybe Grove has been outside Minnesota and sees we have great talent but a “reboot” might make us a true national and international leader.

  • Kurt

    So much in here… I’ll focus on a couple of points.

    First, I have been building companies in Minnesota since 1993, have successfully been part of selling three of them, and am have been working on Carrot Health for the past five years.

    Second, We do not live in John Locke’s “State of Nature” where Adam Smith’s “invisible hand” magically sorts
    things out. In fact, we live in a small-market city, with fewer than 4 million people in the region, a region
    that has historically punched above its weight in Fortune 500 headquarters, making for a surplus of well-trained business managers. Note that this skillset is the opposite needed to over-index in entrepreneurial talent. There are many, many ingredients required to create a successful innovation hub. There are many players on that stage: corporations, individuals, non-profits, and more. Even the media, like TechdotMN play a role. We entrepreneurs do not create in a vacuum, we do not incubate companies without relying on every part of the
    ecosystem, including one another.

    Government (in theory representing the collective will of the people) is one of those components. If we as citizens choose to have a robust, vibrant community conducive to growing new business ideas – we are allowed to invest our resources to do so. There are evidenced-based steps that can help us get there. Education – over-investing in the skills of the community are one requirement (early childhood all the way through land-grant university. Housing – we need affordable places to live for our employees. “Placemaking” – creating livable communities with economic opportunity helps attract talent (see what the people at Motely are cooking up over by the U of MN). Access to materials, transportation, capital, freedom… Without those elements, you cut
    off water from the seedlings – and they die on the vine, before they have enough critical mass to survive in the wild.

    Large corporations are another component. One of the businesses that made a conscious effort to “pay it forward” was, in fact, Control Data. I personally benefited from that ecosystem – one of the many spin offs of CDC resulted in human capital (my business partners in Integral7, later sold to Pearson Education) and technology that made the company possible. Could this have happened in other cities? Yes – several companies in other cities created an environment where we could have flourished (Baltimore, Salt Lake City, Philadelphia being three examples). But the legacy of Control Data insured that we would be here, in Minnesota, with access the talent pool we needed to be successful.

    Jeff, perhaps we (entrepreneurs) could collaborate with you on a research-based article demonstrating the value of investing in our ecosystem?

    Kurt Waltenbaugh

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