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Norfolk Innovation Corridor Launches New Technology Zone to Attract Start-up Companies, Skilled Talent and Catalyze Growth
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Contact: Giovanna M. Genard Office: 757-683-3152 [email protected]
Norfolk Innovation Corridor Launches New Technology Zone to Attract Start-up Companies, Skilled Talent and Catalyze Growth
Norfolk, VA – (November 19, 2020) – The coastal city of Norfolk, Virginia, known globally for its expertise in resilience and strong entrepreneurship ecosystem, is emerging as a tech hub for companies supporting products, technologies and services in the resilience sector.
Today, Daniel Peterson announced the launch of the Norfolk Innovation Corridor (NIC), an area paralleling the Elizabeth River Trail designated as a “technology zone” to attract and retain qualifying startups and firm expansions through tax incentives. With more than 55,000 college students graduating from Norfolk colleges and universities every year and access to R&D from anchor academic and health institutions, the zone also serves as a magnet for a high-tech, talented and diverse workforce.
“Civic and business leaders in Norfolk are prepared to do our part in reviving our region’s economy and making it work for everyone,” said Charles V. McPhillips, past president of Greater Norfolk Corporation.
The new Norfolk Innovation Corridor will support tech companies specializing in combatting sea level rise and recurrent flooding, green technologies, cybersecurity, supply chain and maritime logistics, population health threats, behavioral health crisis, bioinformatics, advanced transportation technologies and more.
“Anchor academic, research and health institutions clustered close to tech start-ups give Norfolk a strong competitive edge, as entrepreneurs and researchers collaborate to advance the region’s leadership in innovation and economic development,” said Mayor Kenneth Cooper Alexander.
One of the first start-ups that established itself along the corridor, 3DXtremes, combines 3D printing with augmented reality to help inventors and organizations turn their napkin-sketch concepts into real products ready for market. The company was founded by Old Dominion University graduate and tech entrepreneur Blade Taylor.
ReAlta Life Sciences, created by physicians and researchers affiliated with corridor anchors EVMS and CHKD, recently closed on a $26 million series A2 equity financing. The firm advances bio-tech therapies for the treatment of hypoxic ischemic encephalopathy (HIE), a severe birth complication affecting newborns suffering from oxygen deprivation to the brain. It is also exploring treatments for other inflammatory disorders, such as the “cytokine storm” associated with COVID-19.
According to Peterson, who is chairman of the NIC, these vital collaborations deepen the pools of talent, technology spin-offs and supply-chain support that can fuel our version of the innovation districts that have catalyzed economic growth in metropolitan areas ranging from Austin, to Chattanooga, to Philadelphia, to Boston and beyond.
“In the midst of one of the worst global pandemics in history, the launch of the Norfolk Innovation Corridor is a strong example of the resilience shown by anchor institutions and other economic, physical and networking assets concentrated in the Corridor, which today open doors to new opportunities,” he said.
To learn more about the Norfolk Innovation Corridor, visit: norfolkinnovation.com
GNC President’s Report – 2020
GNC Annual Meeting – July 9, 2020 – Charles V. McPhillips Well, after suffering through my harangues for six long years, you have to survive only this, my final 10-minute flight of oratory. My microphone is about to drop. First, let me thank you. It has been a great honor to lead one of the most consequential organizations in this region, replete with so many of our community’s finest leaders. As our Mayor wrote recently, for 42 years GNC has been “a major catalyst in propelling [Norfolk] forward by improving the competitiveness, vitality and resilience of our City.” I have struggled for the past six years to find my footing on the shoulders of the civic giants who have labored at GNC over the years to make Norfolk a still greater city. I have tried to follow the lead of these giants by envisioning a city that could be more enterprising, more beautiful, more innovative, more vibrant and more inclusive. They, like I, loved Norfolk so much that we wanted to change it. And change it we have done over the past few years. We were in the vanguard in challenging the old economic development model that simply wasn’t delivering for our city and our region. It was – and is – a losing strategy to focus exclusively, or even primarily, on recruiting companies from out of town to relocate or open their next branch here – all by hawking our relatively cheap real estate and cheap labor while striving in vain to compete against the extra helpings of incentives that more cash-rich communities can spoon out. Instead, we have argued that talent is our destiny. And we have control of our destiny! Developing, attracting and retaining the best innovative, entrepreneurial, diverse and creative talent are the true keys to our future success. And one of the best ways to achieve that success is to build upon our competitive advantages stemming from a rich cluster of physical, economic and networking assets arrayed in productive density along the Elizabeth River Trail. That’s why converting a 10.5 mile bike path into the most iconic urban riverfront trail in the country – one to which Millennials and folks of all ages are beginning to flock – is pivotal to recruiting and retaining the talent we need to diversify and power our economy. Likewise for the Norfolk Innovation Corridor, the business overlay on that Trail. The Corridor will attach entrepreneurs to Norfolk because it is where they will find what they need – be it talent, technology spin-offs, mentors, influencers, capital, broadband or a small dollop of incentives – in order to grow their businesses in America’s most resilient city. The Corridor and the Trail will help us attract and retain the talent we need. But, friends, let’s be honest. We need to do much better in developing our homegrown talent base. Amazon and Microsoft are not investing heavily in Northern Virginia because of its quality of life or the incentives they have been awarded. They could do better on both fronts elsewhere. No, they are going to Northern Virginia to find the talent they need. So why can’t we develop that kind of talent here? Why do they have a Thomas Jefferson Governor’s School for Science and Technology and we do not have (yet) the Governor’s School for Innovation and Entrepreneurship that we have long advocated and most of our region’s senior business and political leaders have endorsed? And, for our students who do not necessarily aspire to four-year and graduate degrees, why don’t we have (yet) the state-of-the-art career and technical education that will inspire and prepare them for the well-paid and highly skilled positions that, pre-COVID, so many of you could not fill, and that post-COVID, we will need to rebuild our economy? It’s too long a story to answer those questions here. Suffice it comes down to money and political will. But we cannot give up our long-term pursuit of either of these game changers. In the meantime, however, here are some cold, hard facts that we at GNC simply must confront. One-third of Norfolk’s schools are not accredited and several rank among the lowest in the state in reading and math scores. Lindenwood, for example, a school I have visited on multiple occasions (and whose fourth grade class has visited me), has not been accredited in 12 years. Twelve years – that’s practically an entire generation of students we have failed to prepare for a 21st Century knowledge-based economy! You know what I am about to say is true – when your companies recruit talented new employees who bring their families here, they are told, perhaps not by you, but by just about everyone else, that they will need to live in the suburbs if they want an acceptable public school option for their families. In Chesapeake and Virginia Beach, after all, every single school is accredited. It doesn’t have to stay this way. We brought David Osborne here last year to show us a proven, equitable way out of this predicament. Here is what he told us that no one has refuted. New Orleans: Before Hurricane Katrina, the New Orleans public schools were among the worst in the country. Almost half of New Orleans’ students dropped out, and 62% of students attended schools rated failing by the state. Now that almost all (98%) of public school students attend charter schools of their choice, New Orleans boasts the most improved educational system in the country. Almost three-fourths of its high school students are now graduating within five years (vs about half before), and only 8% of New Orleans’ students now attend failing schools (vs 62% before). Denver: Not too long ago, almost 1/3 of its 98,000 school seats were empty. Denver Public Schools lagged the state by 25 percentage points in English and math scores. The Democratic Mayor, John Hickenlooper, brought in a new Superintendent (current U.S. Senator Michael Bennet, another Democrat), to make changes. 56 out of Denver’s 204 public schools were converted to charters, while another 47 schools were re-structured similarly as “innovation schools”. The dropout rate has now fallen from 11% to 4%. Pre-charters, only 39% of Denver’s students graduated from high school within four years; now, two-thirds graduate on time. And the 25 percentage point gap in English and math has shrunk to four percentage points. Indianapolis: In 1960, Indianapolis Public Schools sported an enrollment of 100,000 students; by 2005, it had about half that number. A restive business community and a Democratic mayor demanded change. Now, charters currently educate one-third of Indianapolis’ public school students. Although charters in Indianapolis serve a poorer population and receive $4,200 less per pupil than district-run schools, charters outperform district schools in tests of English and math proficiency by whopping margins. The Compounding Effect in Urban School Districts: On average nationwide, students who remain in urban charter schools for at least four years can expect their annual academic growth to be 108 days greater in math and 72 days greater in reading, compared to their demographic twins in the old-model district schools. That’s 108 days or 72 days of more academic growth out of a 180-day school year every year! As investment professionals would tell you, the compounding effect of these annual gains is simply off the charts. Our students in Norfolk are therefore falling further and further behind. Waiting Lists: You may not remember any of these statistics. But here is a number you will remember: there are over one million students on waiting lists for admission to charter schools across the country! That’s what I call a buying signal from those who should know what’s best for their kids! Racial Disparities: We must take note of this moment in which our nation is convulsed over racial inequities. Rather than recycling platitudes, we need action to extend the promise of the American Dream to everyone, from all walks of life, from all races. We know that a good education is a passport into the mainstream of the American economy. However, significant racial disparities in educational opportunities and outcomes stubbornly persist. If children do not become proficient in math in school, they will be locked out of many of the highest-paying careers. Likewise, if students do not proficiently comprehend, write and speak the English language, they too will be excluded from many of the most lucrative professions in our economy. We simply must close the racial achievement gap in our schools! Here’s the good news. Charters can do that! The proof can be found in the Big Apple. In New York City, where the waiting list for charter schools is 50,000 souls, there are 65 charter schools located in the very same building as a traditional district school. The demographics of the two types of schools – race, family income and the like are essentially identical. The charter students are chosen by lottery, so there is no cherry picking the best students. Here is what you need to know: (1) the charter students outperform their demographic twins in the same school building by a wide margin, often by multiples; and (2) the Black and Hispanic students in these and other New York City charters are outperforming white students statewide. These results put to the lie any suggestion that minority students can’t be empowered to compete with white students. Given the school environment of their choice, they not only compete but win! Norfolk No more excuses. Unlike with the Governor’s School or CTE, money is not a valid excuse for failure to act: nationwide, charters get, on average, 28% less funding per pupil than the old-model district schools. It all comes down to political will. When the business community rises up, in tandem with courageous elected officials, the pleas of our families for a better future can finally be heard. Like many of you, I have been affiliated mostly with private schools. Perhaps the crowning achievement of my life will prove to be the founding of Saint Patrick’s. I confess it is tempting to write off the public schools and focus all of my attention on that excellent 400-student Catholic school in which so much of my life is invested. But that would mean turning my back on the 30,000 students who depend on good public schools for their future. Their future is a large part of our City’s future. If Greater Norfolk Corporation is not willing to speak up for the change that these kids and we so desperately need, then perhaps we should pack it in as an organization. But quitting on our City and shrinking from necessary change is not what GNC has been about for the past 42 years, so I pray and believe that we will be the agent for further changing a City we all so dearly love.
2018 GNC President’s Report
GNC Annual Meeting, May 30, 2018 - Charles V. McPhillips We are grateful to Mayor Andy Berke of Chattanooga for flying in this afternoon. So he and I probably have different cities in mind when I rejoice that we woke up this morning in the greatest city in America. Don’t laugh: some of you had to drive here. I look forward to hearing from Mayor Berke about the incredible progress Chattanooga has achieved in recent years in harnessing the power of innovation, the power of technology, and the power of talent and places densely located in an innovative district to generate new business opportunities and new career opportunities for Chattanooga’s citizens. Of course, we have made great progress in Norfolk over many years, and of late, in leveraging our history and our historic assets to build a better looking future. Speaking of leverage, The Virginian-Pilot ran a story the other day about our City being in debt. The article suggested that this debt may impede our progress on important civic projects, including some near and dear to our hearts at GNC – for example, the CTE School and the re-development of the St. Paul’s Quadrant. The article also warned that we may face future tax increases even beyond the 10¢ hike in a real estate tax rate just approved by City Council. Although I am not looking forward to receiving next quarter’s tax bill from the City Treasurer, I applaud the courage of our City Manager, this good Mayor and his colleagues on City Council in doing the hard but right thing – that is, to pay our bills, and that includes answering the capital calls for past and current investments in our City’s future. For the most part, these investments have paid off handsomely for the Norfolk taxpayer. (I didn’t see any mention in the article about how our tax base in downtown Norfolk has vaulted from $318 million in 1999 to over $1.5 billion today. There would be a lot more potholes in our neighborhoods without the tax revenues these investments have generated.) Having lauded our City’s leaders, I must respectfully plead for no more tax increases that might damage our City’s competitive position in incubating, accelerating and attracting new businesses. To the full extent we can afford to do so, we must continue to invest in our future, but we also cannot afford to be known as a high-tax or anti-business city in the eyes of the entrepreneurs and employers we must count on to invest private dollars and thereby employ our residents. A successful businessman himself, the Mayor certainly agrees with me on this score. Knowing him and his colleagues as I do, I have great confidence in their stewardship of our City’s finances. But let’s face it -- we at the Greater Norfolk Corporation have also accumulated quite a debt since our founding in 1977. We owe a debt to the legacies of former Mayors Roy Martin, Vince Thomas, Joe Leafe, Mason Andrews and Paul Fraim – all of whom looked to GNC as an essential partner in making that progress happen in Norfolk. Similarly, we are in debt to business and civic leaders such as Henry Clay Hofheimer, Frank and Jane Batten, Josh Darden, Harvey Lindsay, Harrison Wilson, Father Joseph Green, Reverend John Foster, Arnold McKinnon, Bob Stanton, Vince Mastracco, Tommy Johnson, Harry Lester, Ulysses Turner and many others for the legacies they have left us by dedicating so much of their professional and personal lives toward improving Norfolk. Heck, even though some of them ended up living in Virginia Beach, their dedication to Norfolk was profound, and we must repay the debt we owe to their examples. So I stand on tall shoulders indeed when I thank you for the great honor of leading GNC for another year. Mercifully for you, Charity Volman and Ed Amorosso have agreed to get in the chute to replace me soon. My remaining time is therefore short, and I beg you to support me on this last lap of a race against the very little time we have to leave our own legacy to the future of Norfolk. The first turn on this last lap must be St. Paul’s Quadrant. A year ago I stood before you and implored my good friend, our fine Mayor, to take down the inhumane, the dehumanizing projects located in St. Paul’s Quadrant, a mere 15 minute walk from where we gather. Not so that the business community could make a buck, but so that the poor long quarantined there could build better lives for themselves, freed from the crime, the drugs, the grinding poverty, the debilitating dependency and pervasive hopelessness afflicting so many warehoused in these projects. Mayor Alexander: I salute you and your colleagues on Council for your leadership in offering a better future for our neighbors currently trapped in these projects, and I pledge that GNC will be a dependable partner to you and the City in turning those 200 flood-prone acres of poverty and despair into sunnier uplands of opportunity and inclusion. On the second turn of their lap, we must continue to do everything within our power to develop, attract and retain the talent necessary to spur economic opportunity for everyone in Norfolk. We simply must reverse the brain drain that has sent too many of our sons, daughters and grandchildren to seek careers and raise families elsewhere. This is important to all of us, and it is especially important in our African-American and other minority communities. We need all of these good folks to complete their educations and then come home to build a greater Norfolk. On the third turn of this final lap, we simply must complete the work started by Maurice Jones and carried forward by the grit and savvy of Tommy Johnson, with the support of this Mayor and his predecessor, to stand up a world class Career and Technical Education School that will prepare many of our youth to pursue the lucrative and fulfilling careers that 21st century employers are dying to offer them. We also must stand ready to support our potential partners in bringing a Governor School-quality institution to the greater Norfolk area so that our most ambitious and academically accomplished youth have educational opportunities comparable to what their peers in Northern Virginia and Richmond enjoy today. And on the final turn of this lap, we must bring alive the Norfolk Tech Trail – our innovation district -- for reasons that will be better understood after you hear from Mayor Berke about the early success and future plans for Chattanooga’s innovation district. Of course, the Norfolk Tech Trail connects St. Paul’s Quadrant to our most important academic, medical and business anchors, while straddling an Elizabeth River Trail that will soon become, thanks to your support, the best, most iconic urban riverfront trail in the country – a local treasure of national significance. (But enough on the Elizabeth River Trail, as I pray that it will soon be the subject of a victory lap.) Finally, in my dash to the finish line, I am haunted by the fact that this great City, teeming with opportunities, culture, history, beauty and civic devotion, is also home for the 3 in every 10 Norfolk children who dwell in poverty. Most of these poor children are born into single-parent households headed by a single mother, lacking the education or other resources essential to propel their dependent children into an adulthoods of independence. And the fact that up to 17 of our 45 schools lack accreditation, while none in Virginia Beach are so poorly regarded, is simply unacceptable. Progressive school districts in New Orleans, Denver, Indianapolis, Camden, New Jersey and even Washington, D.C. have turned their public schools around in face of demographics just as daunting as ours, by moving to a 21st century model of decentralizing control, curtailing bureaucracies while investing school principals with the autonomy to run their schools, giving families real choices, and making school leaders accountable to the public authorities that charter them and the parents empowered to choose where to best educate their children. Fortunately, we do not need to raise taxes or defer important civic projects in order to address these twin problems of poverty and poor schools. These are business problems we can tackle, not by spending more money, but spending what we have more wisely; not by simply feeding a man with a fish, but by teaching a man to fish; and not by consigning great swaths of our people to futures of dependency, but by equipping them to make well educated decisions about their personal futures and the futures of their families, and in doing so change the future of Norfolk. So, like you, I love this City, and like you, I love this City so much I want to change it -- by building on the progress we have made together over the past 40 years. By continuing to invest in our future, while being good stewards of our current resources. And by paying the debts we all owe to those individuals I named earlier, among others. So, just as they did, we must work together, and selflessly, to give everyone in this City a chance to succeed. Indeed, let’s make every child born in this City the odd’s on favorite to win the race.
2017 GNC President’s Report
GNC Annual Meeting, May 24, 2017 - Charles V. McPhillips Over the last several years, this organization and our allied thought leaders have coalesced around some big ideas, which, if implemented, would build upon the momentum Norfolk currently enjoys and make a significant difference in our future. These big ideas have been vetted in various task forces convened by the GNC and in a couple of cases, these ideas have been further validated by the Hampton Roads Community Foundation’s blue-ribbon Workforce Development Study Group and then established as regional priorities by Reinvent Hampton Roads under the able leadership of Jim Spore. As you know, most of these initiatives are centered around one essential big idea – that our future depends less on recruiting companies to move here and more on attracting, developing and retaining the talent that will create and fill the highly-skilled, high-tech, high-paying jobs our region sorely needs and currently lacks. Through this work we have developed enough good ideas – enough good big ideas – that I am now declaring a moratorium on new big ideas until we fully implement the ones we have on our agenda. I say this not to disparage what we have accomplished thus far. Winning the battle of ideas marked a necessary milestone in our march toward victory over an economic malaise that recently put our region in last place among the 100 largest metropolitan areas in the country in recovering from the Great Recession. (I am proud to acknowledge that we have risen to the dizzying height of number 89 in these standings.) We have fought this battle of ideas because we still have fewer jobs in this region than we did in 2007 and for the past 15 years we have ranked dead last in job growth among metropolitan areas our size; we continue to suffer an out migration of college educated workers; and our region starts-up fewer businesses per capita than these other regions. These lackluster results require BIG ideas.
As we know from reams of data, metropolitan areas boasting vibrant innovation districts are growing faster than we are. So our first big idea to fully implement must be to bring our innovation district fully alive. We have had some initial success. At our request, the City Council made our innovation district official by designating the area along the Elizabeth River stretching from Norfolk State University to Old Dominion University, a “technology zone” under state law, thereby qualifying start-up tech firms located there to receive certain City tax incentives. Further, our very own Steve Van Leeuwen has donated his time and considerable talents to branding this innovation district as the Norfolk Tech Trail. But to be brought fully alive, the current incentives need to be augmented and our Tech Trail requires a proper headquarters space where economic developers, their guests and other interested visitors will see early-stage companies clustering to exploit the well-documented benefits of the “knowledge spillover effect” and the power of “network connections” that multiply exponentially when entrepreneurs are densely located in innovation centers such as the American Underground and American Tobacco Campuses in Durham. Think of it as a highly curated d’Art Center for Entrepreneurs. Here are the lessons we have learned from successful models in Austin, Boston, Chattanooga, Durham, Nashville and Washington, D.C.:- Well-managed innovation centers unleash the power of authentic, cool spaces in a historic downtown to attract clusters of talented entrepreneurs and innovators;
- They also foster a culture of entrepreneurship in which a community celebrates risk-takers and does not shun failures borne of taking risks;
- These centers create a culture of inclusion that unlock opportunities for residents in surrounding neighborhoods, many of which are struggling (at the American Underground in Durham, of the 260 companies clustered there, 48% are minority or female led);
- A mix of start-ups and established companies located side-by-side helps participating businesses to "scale";
- Accelerators are crucial for whipping entrepreneurs and their start-up companies into condition to attract angel and other early-stage funders;
- Skilled mentoring in these innovation centers contribute to the success of the start-up entrepreneurs; and
- Innovation centers can be structured as public-private partnerships in which the public sector provides the facility and the private sector operates the program and recruits the necessary sponsors, mentors and funders.
- Sea-Level Resilience
- Cybersecurity
- Health Care Data Analytics
- Life Sciences / Biomedical Technologies
- Logistics / Maritime Technologies
- Place Making
- Attracting and Retaining Talent
- Developing Talent
- Miscellaneous
- Opportunity for All
2016 President’s Report
GNC Annual Meeting, June 7, 2016 - Chuck McPhillips This afternoon I will take just a few minutes to talk about GNC's role in devising a new economic development game plan for Norfolk and the region. I am proud of the leadership that GNC has exhibited in first calling for a debate over our region's economic development strategy and then, I believe, in winning the debate over necessary course corrections in that strategy. Indeed, something is rising in Norfolk beside the sea level. We are rising to the challenge of retooling ourselves into a more diverse, more innovative and less federally dependent economy. Truth be told, we started this movement five or six years ago groping around in the dark for a way out of the economic mulligrubs we suddenly found ourselves in. At a retreat, many of you remarked on how your children were not returning to this region because they found better job opportunities or living options elsewhere. We knew military‑related spending and employment were in a profound decline; we also knew that out-of-town or foreign companies were not locating plants in our region like they once did; that our rate of new business startups was lagging behind other regions in Virginia and the Southeast; that few of our early stage companies were getting funded by private equity or venture capital; and that, save for Norfolk-Southern and Dollar Tree, our mainstay employers were increasingly controlled by parent corporations headquartered elsewhere. But little did we realize that we were sliding toward a historic collapse in local economic activity to the point that Hampton Roads is now dead last among the 100 largest metropolitan regions in the United States in recovering from the Great Recession. Indeed, from 2011 to 2014, employment growth in this region averaged only .46% per annum. To put that meager number in context, in the same period Richmond's employment growth rate has more than tripled ours, Raleigh's was six times greater and Austin's eight times greater. So it turns out that all of you were right to be concerned and we were right to call for a departure from our region's traditional economic-development strategy which featured, as far as I could tell, only two tactics. Number one, trying our best to recruit out of town companies to move or invest here and, number two, lobbying to keep as much federal military spending in this region as we could. We needed more of that strategy like we need more rain this Spring. Now, to be fair, our leaders in Norfolk had been making and were continuing to make significant investments in our downtown that would play a large role in brightening our future—more about that in a minute. But first, back to that dimly lit room where we stumbled around five years ago, when we decided to try something new, to explore a long term strategy to reverse a brain drain we perceived as weakening our region. We asked Shurl Montgomery to work with our best and brightest Millennials to identify initiatives that would attract and retain their peers in our City. We also resolved to move forward with major new educational initiatives to internally develop the brains and skills our region would need to compete in the future – thus our long term campaigns to establish a STEM-oriented Governor’s School for Innovation & Entrepreneurship as well as a national caliber Career/Technical School. We then brought in an array of outside experts, consulted the best thinkers in this region, and took a deep dive nationally to discover and validate the best practices adopted in more rapidly growing regions such as Nashville, Chattanooga, Durham, Raleigh, Charlotte, Richmond and Austin, among others. The Brain Drain task force soon morphed into a full-fledged blue ribbon panel of regional thought leaders led by Shurl Montgomery and Thom Crabtree to devise a game plan by which our home team would rally from behind in the second half of this decade. This game plan was intended to diversify (not replace) our traditional economic development strategy by focusing on cultivating, attracting and retaining talent – entrepreneurial talent, innovative talent, risk-taking talent, high-tech talent, engineering talent and talent armed with the skills necessary to compete for work in a global 21st century economy. This talent would create and staff new and existing companies in the region preparing to export their products (hardware and software) and services to non-federal customers located around the country and the world. We have learned that the talent require to pull this off must be developed here or drawn here, and kept here, by the magnetic force of clusters. Clusters of other creative, talented people of all ages, especially the Millennials who are marrying later and demanding places to live and work in authentic downtowns. Clusters of Higher Ed, research institutions and other world-class educational institutions; clusters of medical institutions in an economy that is almost one-fifth health care; clusters of skilled workers coming out of our great high schools and community colleges; clusters of start-ups found in business accelerators and co-working spaces; clusters of physical assets to include vibrant, diverse, bikeable, walkable and transit-connected urban spaces and places that excite creative people of all ages; clusters of funders providing patient equity capital to early-stage growth businesses; clusters of mentors who guide and support early stage entrepreneurial startups; and clusters of entrepreneurs who seize upon the advantages of an open-source environment and knowledge spillover among firms concentrated in compact innovation districts where all these economic, physical and networking assets are densely clustered. Now you know why the City's investment in downtown was warranted. ADP was but one return on that investment. ADP wanted a particular type of environment for its 1800 employees. So what have done and what have we accomplished at GNC beyond tweeting our brilliant insights? First, we recognized the need to more equitably fund our public institutions of high learning in Norfolk – EVMS, Old Dominion and Norfolk State – so that they will eventually be able to do for us for what VCU has done for Richmond, Virginia Tech for Blacksburg, the University of Pennsylvania for West Philadelphia, and so on. To that end, GNC convened a group of regional heavyweights to lobby the Governor, leaders of the General Assembly, the Hampton Roads delegation and the money committees to treat our three state schools better, more fairly. Although we were certainly not alone in advocating for more equitable treatment, the fact that we were not acting as employees, lobbyists or board members of these institutions, but as business leaders primarily looking out for the future of our region, was found to be instrumental to the considerable success these institutions enjoyed in the last General Assembly in improving their operational funding and in funding a number of their key capital projects. We have been vigorous supporters of Paul Hirschbiel and the others associated with Hampton Roads Community Foundation's work to improve the availability of private equity capital for early stage companies, which has taken off through the growth of 757 Angels. A group of us from GNC (we are calling ourselves the GNC Investors) has invested in 757 Angels and we have begun to invest in some of the promising early stage companies they are supporting. We have also worked to bring CIT more prominently into Hampton Roads so that your tax dollars are not merely funding cyber startups and other high-tech startups in Northern Virginia, but also technology companies in Hampton Roads. I got an email from Maurice Jones just yesterday reporting on his efforts to help us increase the connection between CIT and Hampton Roads. Third, we have pushed for the establishment of the Norfolk Innovation Corridor stretching along the Elizabeth River from Old Dominion to Norfolk State as a place in which anchor institutions in education, health care, the arts and business, together with a cohort of young entrepreneurs, are densely located, exemplifying the innovation district phenomenon that has catalyzed the economic surges in Chattanooga, Nashville, Boston, Seattle and other more prosperous regions. We seek to build upon the concentration of these assets in the Norfolk Innovation Corridor in order to foster the startup and growth of more technology related businesses and thus employment opportunities for citizens throughout the City and region. In this regard, please allow me to recognize Deputy City Manager Peter Chapman for his great work side by side with our GNC team in developing this concept and then City Manager Maurice Jones and Deputy City manager Sabrina Joy-Hogg for crafting the ordinance that officially designated the Norfolk Innovation Corridor as a "technology zone" under Virginia law, enabling the City to incentivize the growth of technology businesses with a multi-year BPOL tax exemption and abatement program. This ordinance was unanimously approved by City Council in adopting the 2016-17 budget. The BPOL tax incentive program will be complemented by the new Norfolk First Loan programs for which companies locating in the Innovation Corridor/Technology Zone will be given priority consideration. We congratulate Peter Chapman and his colleagues at the City for their success in winning a $19 million authorization from HUD to help fund some of the more capital-intensive business investments to be made in our Innovation Corridor and City. Please make sure you have a representative of your firm at our briefing this Friday at 8:00 a.m. on these new loan programs, especially the opportunities created by the HUD program. As a further incentive, we also propose rewarding businesses located in our Innovation Corridor that succeed in obtaining a U.S. patent for inventions incorporated in their products or services to be exported from the Norfolk Innovation Corridor. This patent reimbursement incentive will boldly, crisply and clearly communicate to entrepreneurs and innovators that the Norfolk Innovation Corridor should be home to them. How will we fund this program? To get there, we must first take the Elizabeth River Trail to the next level if we desire to capture the recreational, health-related, social and economic development benefits that cities such as Columbus, Chattanooga and Greenville have enjoyed from their vastly improved urban river trails. Indeed, Columbus recently announced the construction of a 25-floor Millennial Tower brought to their downtown because of its proximity to their wildly popular river trail. We have in Norfolk – what, 144 miles of shoreline? But how much access do we give the public? We need kayak and canoe let-ins and water access generally to grace the necessary improvements to this Elizabeth River Trail, which in turn will become a great physical asset and economic development asset for the City of Norfolk. Again, I thank City Manager Marcus Jones and Deputy City Manager Sabrina Joy-Hogg, and our City Council, for their support of the 2016-17 budget funding design work on a prototype quarter-mile stretch of our Elizabeth River Trail, as brought up to the standard of these other successful urban river trails. Once we have that prototype design in hand, we will cost out the amenities and other improvements needed, and then we will turn to all of our respective firms to each adopt a quarter mile stretch of the Trail, branded in the name of your companies. Your sponsorships will fund construction of these amenities and improvements as well as your pro rata contribution to the privately funded patent reimbursement program I mentioned a few minutes ago. Let me also take this opportunity to thank Mel Price, Kevin Murphy, Rachael McCall, John Garrett, Joe LaFond and Peter Johnston for their hard work in getting us to this critical juncture. There are other accomplishments but lastly I mention our partnership with the Downtown Norfolk Council and the City. Through Barry's and our partners' hard work, we have tripled the size of the LiveNFK summer intern program. The 2016 LiveNFK intern program kicks off later this week with a welcome lunch with the City Manager and approximately 90 interns/summer associates participating. This program is now a talent recruitment tool, enabling college students to establish relationships and learn their way around what we hope will become their future homes. Their exposure to senior business and government leaders make them feel like insiders and help them perceive Norfolk and the region as the place where their best opportunities lie. Our next step must be to elevate this program to the regional level. So in closing, let me quickly tick off some unfinished business that we need to get on with:
- First: we must brand and market the new Norfolk Innovation Corridor - Steve Van Leeuwen will lead that effort. We must implement the Adopt a Quarter Mile Program for the Elizabeth River Trail. We must fund the patent reimbursement program.
- Second: We must continue to push for the Career/Technical High School and the Governor's School for Innovation and Entrepreneurship together on the same campus as a transformational Center for Excellence for Norfolk and the region.
- Third: Like Durham, Boston, Chattanooga and Nashville, we need to open an iconic, magnetic flagship building in the heart of our Innovation Corridor; i.e. a mixing bowl where entrepreneurs and their support system come together in co-working spaces, a business accelerator, and other collaborative activities. Think of it as an aquarium where we can take people to see our entrepreneurial ecosystem at work.
- Fourth: Persuade CIT to establish a local presence for funding early stage technology companies in Norfolk and the region.
- Fifth: Work to expand broadband connections throughout the Innovation Corridor and City - Dave Iwans will lead this effort.
- Sixth: Take the Elizabeth River Trail to a new level.
- Seventh: Continue to work with our partners in Higher Ed, in hopes that they will spin off graduates, new technologies and new companies which will provide great jobs and satisfying careers for folks from all walks of life.
2015 President’s Report
Over the past two years, GNC has guided a conversation, indeed a debate, about the future of economic development in Norfolk and the surrounding region. We brought an impressive array of advisors into the conversation, including (via his research and writings) Bruce Katz of the Brookings Institution, the author of The Metropolitan Revolution. We concluded that we still needed to compete for Stone Brewery and other out-of-town companies potentially interested in coming to our City and region. But when a majority of new jobs in the U.S. economy are created by local start-up companies, followed next by expanding local businesses and with businesses relocations a distant and statistically insignificant third, we concluded that Norfolk and this region can no longer rely on an economic development strategy consisting entirely of whale hunting, i.e., harpooning businesses from out of town. From Bruce Katz and others, we learned that a remarkable shift is occurring in the geography of innovation and economic growth. A new urban model is now emerging, the “innovation district,” a compact geographic area where leading-edge anchor institutions and growing companies cluster and connect with each other. Those metropolitan areas that have embraced this new model are performing better than regions such as ours which have drifted out to sea, searching for Moby Dick. Innovation districts are emerging in dozens of cities and metropolitan areas in the U.S. near anchor institutions in the downtowns, midtowns and historic industrial areas of cities like Boston, Nashville, Chattanooga, Durham, Seattle, Pittsburgh, and St. Louis. They are wired for digital technology. They feature public and private spaces in which smart, creative people collide. They host companies – start-ups, early-stage growth companies and large companies alike -- that share labs, offices, building lobbies and other facilities. They draw millennials who enjoy the infrastructure of late-marrying, tech-oriented, urban lifestyles -- coffeehouses, music joints, bike paths, light-rail, co-working spaces, mixed-use districts and the like. They also retain baby boomers who want to live near their doctors and hospitals, but also close to the arts scene, restaurants and, in surprisingly many cases, a pool of qualified workers for their post-midlife-crises start-up venture. The bottom line is that Innovation Districts are all about aggregating and concentrating 21st century talent. Developing that talent. Recruiting that talent. Retaining that talent. Talent that innovates. Talent that takes risks. Well-educated talent that can work productively in an increasingly high-tech economy. Some skeptics might question whether a nonprofit organization, even one blessed by the high-caliber membership of GNC, can really act to “move the needle” of economic outcomes in a metropolitan area such as Norfolk. If history is a guide, however, civic leadership can make a difference. For a moment, let’s assume we are Austin, Texas 35 years ago. Our population is barely that of Norfolk, Virginia. We are coming out of a severe recession caused by an oil bust and savings and loan scandal. We have the fourth highest commercial vacancy rate in the USA.br> So we civic and business leaders go to work on Austin’s entrepreneurial ecosystem, first by building out our entrepreneurial infrastructure. For example, the Austin Technology Incubator is opened, resulting in several major success stories among the start-ups it spawns. In our next phase, we intensify our efforts to diversify the Austin economy into new industry verticals, including life sciences. We persuade the Austin city government to establish a $200 million fund to seed emerging companies in these industry verticals. And in the third phase of our strategy, we focus on “scaling” the businesses established during phases one and two. Eventually, large corporations such as Google and Facebook move large operations to Austin, building on the base of Dell Corporation and the University of Texas. Throughout all three phases, we zealously promote the “Austin” brand -- “South by Southwest”, “Keep Austin Weird”, Mecca for “Hipsters”. Moreover, we create a culture that drives successful business owners to reinvest in local start-ups – and to mentor them. After implementing these initiatives, Austin goes from brain drain to brain gain: 50% of the computer science majors who graduate from UT-Austin and 25% of the UT-Austin engineering grads now stay to work and live in Austin. Our population has doubled that of Norfolk before we need to annex surrounding lands to accommodate our growth. Our population one generation after we started is triple Norfolk’s. We found that Austin and other metropolitan regions that have fostered a successful entrepreneurial ecosystem have no less than 10 common elements. They all involve drawing entrepreneurs into the ecosystem. Without them, the ecosystem is stillborn. So what do entrepreneurs want and need? 1. The culture of a community is pivotal in fostering development of an entrepreneurial ecosystem. The local culture needs to affirm the value of innovation, risk taking, second/third chances, etc. 2. A sense of “place” is a key part of an entrepreneurial culture: i.e., it is increasingly found in environments that are authentic, urban, mixed-use, walkable, socially vibrant, entertainment-rich, diverse, welcoming, affordable, youthful, differentiating, creative and risk-taking. The living/work environment must take into account today’s demographic conditions: i.e., as young folks marry later and the baby-boomer generation retires, married couples with school age children now represent just 20% of American households, down from 40% in 1970. 3. A deep talent pool of skilled workers, without which entrepreneurs will go elsewhere. 4. Universities and medical schools can feed entrepreneurs by producing talented graduates; by creating and spinning-off leading-edge technology and other research discoveries (e.g., bio-medical or pharmaceutical advances); by providing faculty to serve as technical advisors to start-up firms; and by using their purchasing power and employment power to support local companies and residential communities. 5. Mentors are needed to guide and support entrepreneurs. 6. Investors: the availability of patient equity capital to support the early-stage development of an entrepreneur’s firm is paramount. Firms that receive such investment hire more workers and generate more sales than comparable firms which do not attract such investment. Communities such as Nashville, Austin, Charlotte and Richmond with these resources grow faster than those areas (like us) lacking them. 7. Government can either promote or retard the climate for entrepreneurs.Incentives can make a positive impact for them on the margin. On the other hand, red tape can stymie them. Crime and poor public schools eventually scare them away. 8. Successes need to be celebrated, as they stimulate activity and reinforce the value of entrepreneurs in the ecosystem. Use of both traditional and social media to achieve this effect must be intentional. A communication strategy is essential. The City and its innovation district must be branded. 9. The ecosystem needs an iconic or magnetic physical space, serving as the “hub” where entrepreneurs and their support system can come together, facilitating the establishment of a dense social network among the participants, resulting in the “knowledge spillover” attributable to so-called the “proximity effect”. * For example, the Entrepreneurial Center in Nashville serves as a threshold between start-ups and the angel community. It is also where entrepreneurs, mentors, investors and other stakeholders come face to face. It is the “front door” for aspiring entrepreneurs in the community, a meeting place for all members of the ecosystem. **In order to convert an old trolley barn into the Entrepreneurial Center, Nashville raised $5 million in funds from the State of Tennessee ($700k), the City of Nashville ($300k), the private sector ($1.5 million) and the U.S. Economic Development Administration ($2.5 million). **The Entrepreneurial Center in Nashville has a mentor network close to 250,replete with professional service providers, investors, fellow entrepreneurs and Vanderbilt professors. 10. Networking Assets Must be Generated * By utilizing anchor meeting places and sponsoring frequent gatherings of entrepreneurs, a dense network of entrepreneurial allies can come into being. Successes and failures are shared (both of which are educational). *Networking assets include “innovation cultivators” such as incubators, accelerators, “proof-of-concept” centers, tech transfer offices, shared working spaces, and the like. Millennials, especially, want to share these experiences. WHAT IS THE PAY-OFF WE WANT?1. Scalable Businesses and Exportable Products: We should focus our financial, mentoring and other resources (e.g., incubators and accelerators) to favor early-stage and existing businesses that are scalable, with a market for its products/services outside the region, bringing new money into the local economy from customers located outside the region. Indeed, suchcustomers are more important than a business plan. 2. Industry Clusters that will diversify our economy away from dependence upon federal military spending. Although we should not attempt to over-engineer this process, we need to recognize that these industry clusters will grow out of existing areas of strength, opportunity, need and investment, not out of thin air. * They can be helped along by customized training programs, targeted funders and industry support/collaboration organizations. Now it is time to implement. A 20-member Coordinating Committee met in April. It includes senior representatives from the City, ODU, EVMS and the business community as well as a sprinkling of young entrepreneurs. It will meet three more times to provide counsel to those of us responsible for implementing the initiatives. A 7-member Steering Committee will have responsibility to keep the process rolling between meetings, and small work groups have been recruited to address each individual initiative. Daylight is burning and we must more with a sense of urgency. As a City and a region, we cannot afford to dawdle as military spending continues to nosedive and other regions out-compete us for talented entrepreneurs, talented workers and their high-growth companies. So in closing, here are the five specific initiatives we seek to implement: First: Establish the Norfolk Innovation Corridor to connect our existing clusters of innovation: ODU, EVMS/Sentara/Fort Norfolk and Granby Street, with an ambition and plan to expand by bringing new employment opportunities to a redeveloped, mixed-use St. Paul’s Quadrant. We are working on a package of proposed incentives and services that will encourage business to start up or locate in the Norfolk Innovation Corridor. Within the Norfolk Innovation Corridor, we must open an iconic central gathering place -- the working title is the Granby Innovation Center -- to host an array of networking assets: e.g., an incubator operated by the ODU Center for Enterprise Innovation; TCC Workforce Curriculum Specialists; co-working spaces for entrepreneurs such as found in Richmond and other fast-growing markets; meeting spaces for mentors and entrepreneurs; special project suites to which large and middle size companies can dispatch teams working on special innovation projects for their companies; marketing and public relations functions to celebrate success; space for funders such as CIT Gap Funding, 757 Angels and the Norfolk Innovation Fund; and ground level retail. Second: For the sake of developing, attracting and retaining talent: continue to push for the establishment of the Governor’s School for Innovation and Entrepreneurship and the Career Technical High School. Expand the higher education summer intern program we began in 2014; take it City-wide and, with the help of HREDA or the Chamber, take it region-wide as soon as possible; and explore the possibility of creating an internship program such as the ORR Fellowship Program in Indiana. Third: Help our anchor institutions help us. Launch a concerted regional advocacy effort on behalf of equitable funding for Old Dominion and EVMS (and Norfolk State) and access available federal monies for community health care (as identified by Dr. Rick Homan) in order to enable those anchor institutions to have the impact in our community that universities and medical schools are having in other regions (VCU, Penn, UT-Austin, etc.). Fourth: Improve the availability of early stage capital in the Norfolk Innovation Corridor and beyond by strongly supporting 757 Angels. Recruit state-owned CIT (headquartered in Herndon) to establish a local presence for funding early stage technology companies in Norfolk and the region. Support the Norfolk Innovation Fund being launched by the City. Finally, push for the preservation and enhancement of HREDA as a critical regional asset to market our region. But going forward it should market our region not just to corporations, but to talent. Talent graduating from UVA, Va Tech, W&M and ODU. Well-trained talent exiting the military. Enterprising baby boomer talent bored with the suburbs or retiring from the big-city rat race. Let’s strive for a market share of such talent that rivals what Austin has achieved one generation after they started doing what we need to start doing right now.