Saturday, July 07, 2007

Florida is ignoring the Entrepreneur

Over the past years, I have been pushing my agenda to build a more entrepreneurial spirit in Florida (specifically Sarasota and neighboring communities). My investment of time and money in starting an incubator and angel fund was partly motivated by diversifying our economy and trying to build momentum that the local governments and universities could follow.

When my efforts began, I thought Florida had all the elements of an pre-70's California (before it became the center of universe for entrepreneurial activity). We have great weather, a friendly business environment, a growing base of wealthy investors and three or four universities that are transforming into true research centers.

Case in point here is a recent study by Money Magazine

Florida - Entrepreneurs per 100,000 people: 280
South Dakota - Entrepreneurs per 100,000 people: 310
New Mexico - Entrepreneurs per 100,000 people: 450

How on earth does South Dakota have a more entrepreneurial economy?

See whole study -

So what is lacking? Why can't Florida become a leader of the next generation of great companies?

Here are my thoughts:

1. Our government is being run like we are still in the 80's. We focus on tourism, real estate and thinking "big industry". And what is ironic - is that we invest millions (if not billions) in these three pillars of economic development, and we have very little to show for it. Our real estate is in shambles, with inflated taxes, insurance and bordering a real estate crash. Our tourism industry has been flat and slowly declining over the past few years due to hurricanes and other unfortunate events. And "big industry" has always been a blue bird mentality, trying to get big companies to relocate to Florida is unreasonable - we don't have a strong (Technical) resource pool and "big industries" are dying and not aggressive anymore. Big Industry is down-sizing and trying to find new business models to grow into. The last thing they are thinking is relocating to save a little money on taxes. If anything they are relocating to India, China and Mexico to reduce their burden, not Florida.

2. Our government doesn't show leadership. We expect Venture Capitalists, entrepreneurs and other key people to just migrate to Florida because we have no state income tax and nice beaches. We show no leadership of taking the "risk" ourselves, so why would anyone assume 100% of the risk of transforming Florida into an Entrepreneurial State? We ask VC's to open offices and invest in Florida companies, but Florida itself invests most of its money in VC's out of state and in investments out of state? Is that really consistent?

3. Our Universities are not fueling our economy. Over 3 Billion dollars goes into Florida universities for research, yet the output of quality companies that are being launched from this research you can count on your two hands. It is not the responsibility of our education system to launch companies, but it is the responsibility of our education system to adapt to market demands, and researchers should be producing intellectual property that has relevance to improving our society, and driving their research toward commercialization. Research universities like Standford are a prime example on how they drive research toward the market. Universities need to support the process of commercialization as part of their research and development efforts. For so many years Universities just assume their research would be licensed by the big companies, and that trend is dying. Big companies are no longer willing to buy half-baked technology - they want market-proof.

4. Our Local Economic Development efforts are not investing in the future. It seems every project I read about being launched by Economic Development organizations around the state are very reactionary and short-sited. Nothing seems to be tied to a long-term plan. Even when they hire consulting firms to come to the region and put together a 300-page report on how to improve the local economy - they don't put in place the necessary resources and capital to make it happen.

I hope that over the next five years, our leadership in government (state and local) and our university system realize that ignoring the entrepreneur is the absolute worst thing that you can do to an economy. Everything around us exists because of entrepreneurs, and 90% of our economy is driven by the fruits of labor of entrepreneurs in the past.

The State of Florida needs to shift away from basing its economy on its sunshine and land - and become a creation-based economy. If we do not start supporting the creation of new ideas, new products and new companies - this State will continue suffer from economic paralysis.


Phil Freo said...

Good post. I too would love to see parts of Florida become like Silicon Valley and I do think we have a lot of what it takes. I have seen a good number of talented people from UF and otherwise, and I hope many of them will both decide to stick around in FL and take a risk with a startup.

Rich Swier said...

Phil, thanks for the comment. Good luck this Summer at Google, and I hope you learn everything and come back to J'ville to launch the next best thing.

Tim Raines said...

Some incentive for universities to patent won't necessarily lead to commercialization but is being popularized in Texas by Texas A&M. The incentive is giving tenure for patents in place of publishing. This is treachery for many liberal arts minded educators but is catching on and could make technologies more attractive and ready for the market.