Financing Economic Development in New Mexico
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Financing Economic Development in New Mexico
 
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Dear Friam-Listserve Members,
Per our moderator's encouragement, I'd like to introduce myself. I'm Michael Shuman, a lawyer and economist based in Washington, DC, who specializes in community development. I've written 100+ published articles on the subject and six books, including most recently "Going Local: Creating Self-Reliant Communities in a Global Age" (Free Press, 1998). I have given invited lectures and engaged in paid consultancies in eight countries, 26 cities, and at 27 universities. Last April I received a grant from the Pond Foundation in New Mexico to study ways of developing the state economy by creating new ways of bringing equity capital into small business. One result has been a partnership with Rob Rikkoon, one of the top investment advisers in the state, to launch a venture capital fund. A week ago, I was invited to present my preliminary findings to the New Mexico Association of Grantmakers, which is deeply interested in rethinking economic development in the nation's second most impoverished state. A story on the talk appeared in the Santa Fe New Mexican last Sunday, and was reposted on this listserve by Owen Densmore. In the course of doing my research, I interviewed two dozen people in the state who I thought might have interesting perspectives to share. One of them was Randy Burge. I asked him to continue sharing ideas, and sent him one draft paper two months ago to get his feedback. His nasty note to this listserve, forwarded to me by a concerned contact, is the first I heard from him. Hence this open response . TO: Randy Burge FROM: Michael Shuman RE: Financing Economic Development in New Mexico What a disappointing set of comments about a talk you didn't even attend. Just to be clear, I welcome a serious debate with you and other players in New Mexico about the right direction for economic development in the state. I do not welcome immature insults ("Going Loco") and ungenerous innuendo about my motives ("his theories [are] unfounded concoctions that he created on the fly to sell his books"). When we last spoke during the summer for about two hours, you had agreed to provide me with feedback on drafts I shared. I then duly sent you a draft prospectus of the Gulliver Fund in December. Rather than share your critical feedback with me directly, you are now trying to undermine my efforts behind my back. Not very civil, respectful, or fair-minded. Rest assured I will not respond in kind. I will respond to your ideas, not speculate about your motives; and I will respond to you directly so that we can have a real discourse. I never asked you for "support or leverage." I got together with you, as I did with many others in the state, to gather information about new ways to help New Mexico and other impoverished states to revitalize themselves through small business. When we had coffee together, I came with a list of 20 or so questions, and I emerged with many pages of notes. You did nearly all the talking. That helps explain perhaps why you have so many misunderstandings about what I'm actually advocating. I would be grateful if you came to one of my talks or read a little more of what I've written before shooting so carelessly from the hip. A couple of clarifications: - I never said the state was "not doing anything" in small-business assistance. In my talk I pointed out that there were myriad lending and technical assistance programs, and that Invest New Mexico was a very positive step forward. Your web links just underscore this observation. My main point was there was very little overlap between the NM small-business universe and equity capital. - I do not wish "to convert the normal borrowing functions used by local businesses at banks.and replace that.with local venture capitalists." You mistake my desire to create new options for small business as advocacy against the old options. I favor more lending to small business, more local banks to provide such lending, and more use of the CRA to further augment lending from large banks. None of this contradicts the case for more equity options for small business. - Import-replacing development does not mean cutting off imports and exports, and I'm very clear in my talks and in my book that I favor a community having robust connections to the global economy. I argue, however, that import-replacement development leads to more natural, numerous, durable, and prosperous set of global links than the export-led development strategies you apparently favor. The theories of import-replacing development I promote are neither new nor unproven, and they certainly aren't mine. These ideas have been written about extensively by Jane Jacobs over the last 25 years, and elaborated by economists such as Thomas Michael Power (Chair of the economics department of the University of Montana) and Wim Wievel (University of Illinois). I especially encourage you to read Power's "Environmental Protection and Economic Well-Being" (M.E. Sharpe, 1996). Chapter seven presents multiple studies that challenge most of your views about development. Your view is that the export part of the economy is the only one that contributes to real economic growth. That's the classic view of the "economic base theory of development." But as Power demonstrates, most of the empirical evidence suggests that import-replacement and export growth play equally important roles; the remainder of the evidence favors import replacement. Thus, he concludes, "The traditional economic-base view of the local economy is not a theory of economic development. It guides local policy in the opposite direction, toward dependence and instability. It tends to trap the local economy in a primitive, underdeveloped state." Moreover, "As Jane Jacobs has pointed out, economic development takes place around import substitution, not exports. Export-oriented economies remain primitive, suffer through booms and busts, and go nowhere. It is only when an area begins making for itself what it once imported that a viable economic base begins to grow. Production for local use is what begins to weave the connections between local individuals and businesses that make them parts of a productive and stable economic community. The development of local dependencies is what economic development is all about. The strength of our economy is tied to the richness and diversity of what we can do for ourselves and our neighbors, not what we export or import." Further strengthening the multiplier linkages of a business to a community is local ownership. In Austin a group of economists found last summer that $100 spent at a Barnes & Noble chain store led to $13 being recycled into the local economy; for a local bookstore, $100 spent led to $43 being recycled. In other words, local ownership more than tripled the resulting multiplier and, of course, proportionally increased the tax contributions to the public sector. You're absolutely right in saying that I encourage leaders to skip outside business recruitment - you're just wrong about the reason. Empirically, homegrown businesses contribute much more to economic development, much more to the multiplier, and much more to the tax base. A further data point: A recent study of economic incentives in Lane County, Oregon, found that each $1 spent on expanding a homegrown business, instead of recruiting an outside business, led to 15 times more job growth. I could cite a dozen other studies, but let's turn the debate around: Where is your empirical evidence that outside recruitment leads to greater income, wealth, or jobs? Home-grown, locally owned businesses are far more than just "retail, wholesale, and service sectors." This is your bias against small business. In point of fact, small businesses constitute more than half of the New Mexican economy (by jobs and by output), and have a significant presence in every sector. I pointed out in my talk that flexible manufacturing networks, thriving in Northern Italy (now one of the richest regions in Europe), enable small-scale companies to produce even highly complex goods and demonstrate that larger economies of scale can still be met through well-organized webs of local business. With respect to the financial part of my analysis, you assert that the "capital and resource gap [Shuman] purports exists is being met in a number of different ways to grow local business, mostly by banks and other lending organizations and incubators as appropriate, but also including via the angel or venture capital method he says is missing." As I noted earlier, I agree with you about the lending side, though everyone in the field concedes - even Alan Greenspan - that banks continue to resist lending on the basis of gender, race, and income. But empirically there is very little angel, venture, or other kind of equity capital that is going to New Mexican small business these days. Where's your contrary evidence? I'm not "trying to defy the market logic of capital." I'm trying to remove market barriers that prevent the efficient investing of capital into small business. Those barriers include poor information among entrepreneurs about the opportunities for raising capital through 27-J (the state law governing small stock issues), poor information amount investors about 27-J issues available for investment, and the complete absence of any intermediaries - angel funds, venture funds, mutual funds, pension funds, underwriters, broker dealers - that might tie investors interested in local business with relevant businesses. Underlying these barriers are problems in securities laws and biases among fund-managers against local business (not unlike yours), all of which have little to do with the underlying efficiency or potential profitability of small-business investments. You apparently can't decide whether the notion of venture capital my partners and I are developing, aka the Gulliver Fund, is "without precedent" or "nothing new." (Why not throw both criticisms at the wall, however contradictory, and see which sticks!) What we're really doing is adapting the VC model to small business. We're focusing on existing ma & pas (not future Microsofts), looking for a modest doubling of earnings over five years, and exiting through direct public offerings intrastate. Most VC fund managers we've talked with are intrigued with what we're developing and don't share your hostility, but clearly we have much learning and fine-tuning to do. That's why I sincerely asked for your feedback. The answers to many of your questions about how investors get their pay-backs are in the prospectus I sent you. Generally, we assume that half our deals fail and that the exit through DPOs can be achieved at 7 times earnings (about half what's available in conventional stock markets). This yields to investors who stick with the fund for seven years at >25% per annum rate of return. Again, I welcome your reading the paper and offering specific criticisms of specific assumptions. You should know that we have not asked any foundations to support the Gulliver Fund, and we are well on our way to securing the necessary private capital to get it up and running. But if our concept works and pays a competitive return to private investors, I would hope that foundations would consider putting some of their capital into the fund, along with churches, unions, pension funds, smart investors, the state's funds, and anyone else committed to a double bottom line. In my view, nothing would be a bigger waste of money - whether it's from foundations, private investors, or state agencies - than continuing to support the outsider-operated, export-oriented enterprises you embrace in the name of economic development despite their miserable track record. It's the homegrown alternatives that we've only begun to explore. As Francis Bacon once wrote, things that never have been done can never be done except by means that never have been tried. Sincerely, Michael Shuman <mailto:[hidden email]> [hidden email] 202-364-4051 P.S. - For Owen Densmore: You're right that my suggestions for reform with the state - a tax credit for local reinvestment of pension funds, for example, like the Canadians have - are hard to imagine right now. I suspect that once New Mexicans realize that four times more money from the land trust and severance funds are being invested in third-world countries than is being invested in homegrown businesses - just one of the findings I presented last week - you may well more than a few politicians and activists eager to review the details. Go local and prosper! Michael H. Shuman Executive Director Community Ventures 3713 Warren St., NW <http://maps.yahoo.com/py/maps.py?Pyt=Tmap&addr=3713+Warren+St.,+NW&csz= Washington,+DC+20016&country=us> Washington, DC 20016 USA [hidden email] tel: fax: mobile: 202-364-4051 202-318-0756 202-669-1220 <http://www.plaxo.com/signature/> Powered by Plaxo <http://www.plaxo.com/signature/> Want a signature like this? -------------- next part -------------- An HTML attachment was scrubbed... URL: http://constantinople.hostgo.com/pipermail/friam_redfish.com/attachments/20040123/266237b3/attachment-0001.htm |
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Message
Last weekend, I sent an email to Michael Shurman in response to his general email to FRIAM last week, responding to Randy Burge's thoughts. Michael's reply encouraged me to share my thoughts with the email list. SFEDI facilitates a program we call The Santa Fe Plan: The Cluster Approach to Economic Gardening. The clusters we have identified as emerging in our community are Biotech, Publishing, Information Technologies (informatics in particular), Medical Practioners (traditional and alternative) and Woodworkers. Our goal is to see these clusters identified as businesses emerging in Santa Fe, contributing to our economy and in need of support from the community. While we strongly feel that a community needs to give strong support to existing businesses before attempting to relocate new businesses to town, we do recognize that outside companies are interested in a community with a strong business base. In the "old model" of economic development, all energy was put on attracting new business, perhaps because that was what received the headlines in the paper. When a local entrepreneur adds two new jobs to his company, coverage in the press is non-existent. SFEDI understand that it is not the public sector economic developers that are creating jobs, it is the entrepreneur. Santa Fe itself faces a big challenge when it talks about importing jobs - we have a high cost of living, a high cost of housing, high cost of land, poor public education and very limited water. This leaves us with very few recruitment tools. So focusing on our "new" clusters is important - the clusters, as they grow stronger and more widely recognized, are attracting similar businesses to Santa Fe, with little or no support from the public sector. What Santa Fe needs is more growth capital to support the clusters. My thoughts on Michael's "Going Local" ideas. If you haven't read his book, "Going Local" I recommend it. Catherine E. Zacher, President Santa Fe Economic Development, Inc. 624 Agua Fria (87501) P.O. Box 8184 (87504-8184) 505.984.2842 505.989.8614 (fax) www.sfedi.org [hidden email] Never doubt that a small group of thoughtful, committed citizens can change the world....indeed it's the only thing that ever has! -----Original Message----- From: [hidden email] [mailto:[hidden email]]On Behalf Of Michael H. Shuman Sent: Friday, January 23, 2004 12:28 PM To: [hidden email] Subject: [FRIAM] Financing Economic Development in New Mexico Dear Friam-Listserve Members, Per our moderator's encouragement, I'd like to introduce myself. I'm Michael Shuman, a lawyer and economist based in Washington, DC, who specializes in community development. I've written 100+ published articles on the subject and six books, including most recently "Going Local: Creating Self-Reliant Communities in a Global Age" (Free Press, 1998). I have given invited lectures and engaged in paid consultancies in eight countries, 26 cities, and at 27 universities. Last April I received a grant from the Pond Foundation in New Mexico to study ways of developing the state economy by creating new ways of bringing equity capital into small business. One result has been a partnership with Rob Rikkoon, one of the top investment advisers in the state, to launch a venture capital fund. A week ago, I was invited to present my preliminary findings to the New Mexico Association of Grantmakers, which is deeply interested in rethinking economic development in the nation's second most impoverished state. A story on the talk appeared in the Santa Fe New Mexican last Sunday, and was reposted on this listserve by Owen Densmore. In the course of doing my research, I interviewed two dozen people in the state who I thought might have interesting perspectives to share. One of them was Randy Burge. I asked him to continue sharing ideas, and sent him one draft paper two months ago to get his feedback. His nasty note to this listserve, forwarded to me by a concerned contact, is the first I heard from him. Hence this open response . TO: Randy Burge FROM: Michael Shuman RE: Financing Economic Development in New Mexico What a disappointing set of comments about a talk you didn't even attend. Just to be clear, I welcome a serious debate with you and other players in New Mexico about the right direction for economic development in the state. I do not welcome immature insults ("Going Loco") and ungenerous innuendo about my motives ("his theories [are] unfounded concoctions that he created on the fly to sell his books"). When we last spoke during the summer for about two hours, you had agreed to provide me with feedback on drafts I shared. I then duly sent you a draft prospectus of the Gulliver Fund in December. Rather than share your critical feedback with me directly, you are now trying to undermine my efforts behind my back. Not very civil, respectful, or fair-minded. Rest assured I will not respond in kind. I will respond to your ideas, not speculate about your motives; and I will respond to you directly so that we can have a real discourse. I never asked you for "support or leverage." I got together with you, as I did with many others in the state, to gather information about new ways to help New Mexico and other impoverished states to revitalize themselves through small business. When we had coffee together, I came with a list of 20 or so questions, and I emerged with many pages of notes. You did nearly all the talking. That helps explain perhaps why you have so many misunderstandings about what I'm actually advocating. I would be grateful if you came to one of my talks or read a little more of what I've written before shooting so carelessly from the hip. A couple of clarifications: - I never said the state was "not doing anything" in small-business assistance. In my talk I pointed out that there were myriad lending and technical assistance programs, and that Invest New Mexico was a very positive step forward. Your web links just underscore this observation. My main point was there was very little overlap between the NM small-business universe and equity capital. - I do not wish "to convert the normal borrowing functions used by local businesses at banks.and replace that.with local venture capitalists." You mistake my desire to create new options for small business as advocacy against the old options. I favor more lending to small business, more local banks to provide such lending, and more use of the CRA to further augment lending from large banks. None of this contradicts the case for more equity options for small business. - Import-replacing development does not mean cutting off imports and exports, and I'm very clear in my talks and in my book that I favor a community having robust connections to the global economy. I argue, however, that import-replacement development leads to more natural, numerous, durable, and prosperous set of global links than the export-led development strategies you apparently favor. The theories of import-replacing development I promote are neither new nor unproven, and they certainly aren't mine. These ideas have been written about extensively by Jane Jacobs over the last 25 years, and elaborated by economists such as Thomas Michael Power (Chair of the economics department of the University of Montana) and Wim Wievel (University of Illinois). I especially encourage you to read Power's "Environmental Protection and Economic Well-Being" (M.E. Sharpe, 1996). Chapter seven presents multiple studies that challenge most of your views about development. Your view is that the export part of the economy is the only one that contributes to real economic growth. That's the classic view of the "economic base theory of development." But as Power demonstrates, most of the empirical evidence suggests that import-replacement and export growth play equally important roles; the remainder of the evidence favors import replacement. Thus, he concludes, "The traditional economic-base view of the local economy is not a theory of economic development. It guides local policy in the opposite direction, toward dependence and instability. It tends to trap the local economy in a primitive, underdeveloped state." Moreover, "As Jane Jacobs has pointed out, economic development takes place around import substitution, not exports. Export-oriented economies remain primitive, suffer through booms and busts, and go nowhere. It is only when an area begins making for itself what it once imported that a viable economic base begins to grow. Production for local use is what begins to weave the connections between local individuals and businesses that make them parts of a productive and stable economic community. The development of local dependencies is what economic development is all about. The strength of our economy is tied to the richness and diversity of what we can do for ourselves and our neighbors, not what we export or import." Further strengthening the multiplier linkages of a business to a community is local ownership. In Austin a group of economists found last summer that $100 spent at a Barnes & Noble chain store led to $13 being recycled into the local economy; for a local bookstore, $100 spent led to $43 being recycled. In other words, local ownership more than tripled the resulting multiplier and, of course, proportionally increased the tax contributions to the public sector. You're absolutely right in saying that I encourage leaders to skip outside business recruitment - you're just wrong about the reason. Empirically, homegrown businesses contribute much more to economic development, much more to the multiplier, and much more to the tax base. A further data point: A recent study of economic incentives in Lane County, Oregon, found that each $1 spent on expanding a homegrown business, instead of recruiting an outside business, led to 15 times more job growth. I could cite a dozen other studies, but let's turn the debate around: Where is your empirical evidence that outside recruitment leads to greater income, wealth, or jobs? Home-grown, locally owned businesses are far more than just "retail, wholesale, and service sectors." This is your bias against small business. In point of fact, small businesses constitute more than half of the New Mexican economy (by jobs and by output), and have a significant presence in every sector. I pointed out in my talk that flexible manufacturing networks, thriving in Northern Italy (now one of the richest regions in Europe), enable small-scale companies to produce even highly complex goods and demonstrate that larger economies of scale can still be met through well-organized webs of local business. With respect to the financial part of my analysis, you assert that the "capital and resource gap [Shuman] purports exists is being met in a number of different ways to grow local business, mostly by banks and other lending organizations and incubators as appropriate, but also including via the angel or venture capital method he says is missing." As I noted earlier, I agree with you about the lending side, though everyone in the field concedes - even Alan Greenspan - that banks continue to resist lending on the basis of gender, race, and income. But empirically there is very little angel, venture, or other kind of equity capital that is going to New Mexican small business these days. Where's your contrary evidence? I'm not "trying to defy the market logic of capital." I'm trying to remove market barriers that prevent the efficient investing of capital into small business. Those barriers include poor information among entrepreneurs about the opportunities for raising capital through 27-J (the state law governing small stock issues), poor information amount investors about 27-J issues available for investment, and the complete absence of any intermediaries - angel funds, venture funds, mutual funds, pension funds, underwriters, broker dealers - that might tie investors interested in local business with relevant businesses. Underlying these barriers are problems in securities laws and biases among fund-managers against local business (not unlike yours), all of which have little to do with the underlying efficiency or potential profitability of small-business investments. You apparently can't decide whether the notion of venture capital my partners and I are developing, aka the Gulliver Fund, is "without precedent" or "nothing new." (Why not throw both criticisms at the wall, however contradictory, and see which sticks!) What we're really doing is adapting the VC model to small business. We're focusing on existing ma & pas (not future Microsofts), looking for a modest doubling of earnings over five years, and exiting through direct public offerings intrastate. Most VC fund managers we've talked with are intrigued with what we're developing and don't share your hostility, but clearly we have much learning and fine-tuning to do. That's why I sincerely asked for your feedback. The answers to many of your questions about how investors get their pay-backs are in the prospectus I sent you. Generally, we assume that half our deals fail and that the exit through DPOs can be achieved at 7 times earnings (about half what's available in conventional stock markets). This yields to investors who stick with the fund for seven years at >25% per annum rate of return. Again, I welcome your reading the paper and offering specific criticisms of specific assumptions. You should know that we have not asked any foundations to support the Gulliver Fund, and we are well on our way to securing the necessary private capital to get it up and running. But if our concept works and pays a competitive return to private investors, I would hope that foundations would consider putting some of their capital into the fund, along with churches, unions, pension funds, smart investors, the state's funds, and anyone else committed to a double bottom line. In my view, nothing would be a bigger waste of money - whether it's from foundations, private investors, or state agencies - than continuing to support the outsider-operated, export-oriented enterprises you embrace in the name of economic development despite their miserable track record. It's the homegrown alternatives that we've only begun to explore. As Francis Bacon once wrote, things that never have been done can never be done except by means that never have been tried. Sincerely, Michael Shuman [hidden email] 202-364-4051 P.S. - For Owen Densmore: You're right that my suggestions for reform with the state - a tax credit for local reinvestment of pension funds, for example, like the Canadians have - are hard to imagine right now. I suspect that once New Mexicans realize that four times more money from the land trust and severance funds are being invested in third-world countries than is being invested in homegrown businesses - just one of the findings I presented last week - you may well more than a few politicians and activists eager to review the details. Go local and prosper! Michael H. Shuman Executive Director Community Ventures 3713 Warren St., NW Washington, DC 20016 USA [hidden email] tel: fax: mobile: 202-364-4051 202-318-0756 202-669-1220 Powered by Plaxo Want a signature like this? -------------- next part -------------- An HTML attachment was scrubbed... URL: http://constantinople.hostgo.com/pipermail/friam_redfish.com/attachments/20040127/c51808fc/attachment-0001.htm |
Financing Economic Development in New Mexico
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Administrator
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Cathie: Thank you for the clear and considered response.
My interest was sparked by a SF New Mexican article a while back that focused on the disappearing local small business. At the time, it occurred to me that the disparity between the large chains and local businesses, both newly starting and old and struggling, could be eased by some fairly simple local shared facilities. The large businesses have advantages brought about by sharing infrastructure costs among a large number of stores. Their phone costs can be negotiated, getting discounts for their large volumes. Their use of a common IT infrastructure, from cash registers to credit card validation machinery/accounts to web presence to networks .. all are volume sensitive and thus costs per store reduced. And when you factor in newly emerging technologies such as RFID tagging and supply chain optimization, you can see the small guy is going to continue to suffer significant cost disadvantage. So, what to do? Well, I'd like to see how we could structure some sort of infrastructure support for local businesses, again both old and new. Think "IT Co-op" so to speak. (I suspect there is some attempt at this already, but I don't know of specifics.) So for example, if a large number of businesses could pool their access to credit card validation, they could bring themselves to within cost parity of the corporate stores in that area. Ditto for the others. An obvious example would be very low cost web presence using shared servers with help from local technologists to reduce cost of managing the sites. Many folks are surprised to see, for example, that RedFish pays only $9.00/month for their web site! Owen On Jan 27, 2004, at 2:29 PM, cez wrote: > Last?weekend, I sent an email to Michael Shurman in response to his > general email to FRIAM last week, responding to Randy Burge's > thoughts.?Michael's reply encouraged me to share my thoughts with the > email list. > ? > SFEDI facilitates a program we call The Santa Fe Plan: The Cluster > Approach to Economic Gardening. The clusters we have identified as > emerging in our community are Biotech, Publishing, Information > Technologies (informatics in particular), Medical Practioners > (traditional and alternative) and Woodworkers. Our goal is to see > these clusters identified as businesses emerging in Santa Fe, > contributing to our economy and in need of support from the community. > ? > While we strongly feel that a community needs to give strong support > to existing businesses before attempting to relocate new businesses to > town, we do recognize that?outside?companies are interested in a > community with a strong business base. > In the "old model" of economic development, all energy was put on > attracting new business, perhaps because that was what received the > headlines in the paper. When a local entrepreneur adds two new jobs to > his company, coverage in the press is non-existent. > ? > SFEDI understand that it is not the public sector economic developers > that are creating jobs, it is the entrepreneur. > ? > Santa Fe itself faces a big challenge when it talks about importing > jobs - we have a high cost of living, a high cost of housing, high > cost of land, poor public education and very limited water. This > leaves us with very few recruitment tools. So focusing on our "new" > clusters is important - the clusters, as they grow stronger and more > widely recognized, are attracting similar businesses to Santa Fe, with > little or no support from the public sector. > What Santa Fe needs is more growth capital to support the clusters. > My thoughts on Michael's "Going Local" ideas. If you haven't read his > book, "Going Local" I recommend it. > ? > > Catherine E. Zacher, President > Santa Fe Economic Development, Inc. > 624 Agua Fria (87501)???????? P.O. Box 8184 (87504-8184) > 505.984.2842????505.989.8614 > (fax)???????????????????????????????????www.sfedi.org???cezacher@sfedi. > org > > Never doubt that a small group of thoughtful, committed citizens can > change the world....indeed it's the only thing that ever has! Owen Densmore 908 Camino Santander Santa Fe, NM 87505 [hidden email] Cell: 505-570-0168 Home: 505-988-3787 AIM:owendensmore http://complexityworkshop.com http://backspaces.net |
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Owen,
The SFEDI Board is now going to be revising the cluster groups we met with several years ago to talk with them about their needs for growth. I think that your ideas are outstanding and make much sense for Santa Fe's small businesses. We definitely need to talk further. Cathie Catherine E. Zacher, President Santa Fe Economic Development, Inc. 624 Agua Fria (87501) P.O. Box 8184 (87504-8184) 505.984.2842 505.989.8614 (fax) www.sfedi.org <http://www.sfedi.org> [hidden email] <mailto:[hidden email]> Never doubt that a small group of thoughtful, committed citizens can change the world....indeed it's the only thing that ever has! -----Original Message----- From: Owen Densmore [mailto:[hidden email]] Sent: Wednesday, January 28, 2004 11:37 AM To: cez; [hidden email]; The Friday Morning Applied Complexity Coffee Group Subject: Re: [FRIAM] Financing Economic Development in New Mexico Cathie: Thank you for the clear and considered response. My interest was sparked by a SF New Mexican article a while back that focused on the disappearing local small business. At the time, it occurred to me that the disparity between the large chains and local businesses, both newly starting and old and struggling, could be eased by some fairly simple local shared facilities. The large businesses have advantages brought about by sharing infrastructure costs among a large number of stores. Their phone costs can be negotiated, getting discounts for their large volumes. Their use of a common IT infrastructure, from cash registers to credit card validation machinery/accounts to web presence to networks .. all are volume sensitive and thus costs per store reduced. And when you factor in newly emerging technologies such as RFID tagging and supply chain optimization, you can see the small guy is going to continue to suffer significant cost disadvantage. So, what to do? Well, I'd like to see how we could structure some sort of infrastructure support for local businesses, again both old and new. Think "IT Co-op" so to speak. (I suspect there is some attempt at this already, but I don't know of specifics.) So for example, if a large number of businesses could pool their access to credit card validation, they could bring themselves to within cost parity of the corporate stores in that area. Ditto for the others. An obvious example would be very low cost web presence using shared servers with help from local technologists to reduce cost of managing the sites. Many folks are surprised to see, for example, that RedFish pays only $9.00/month for their web site! Owen On Jan 27, 2004, at 2:29 PM, cez wrote: > Last?weekend, I sent an email to Michael Shurman in response to his > general email to FRIAM last week, responding to Randy Burge's > thoughts.?Michael's reply encouraged me to share my thoughts with the > email list. > ? > SFEDI facilitates a program we call The Santa Fe Plan: The Cluster > Approach to Economic Gardening. The clusters we have identified as > emerging in our community are Biotech, Publishing, Information > Technologies (informatics in particular), Medical Practioners > (traditional and alternative) and Woodworkers. Our goal is to see > these clusters identified as businesses emerging in Santa Fe, > contributing to our economy and in need of support from the community. > ? > While we strongly feel that a community needs to give strong support > to existing businesses before attempting to relocate new businesses to > town, we do recognize that?outside?companies are interested in a > community with a strong business base. > In the "old model" of economic development, all energy was put on > attracting new business, perhaps because that was what received the > headlines in the paper. When a local entrepreneur adds two new jobs to > his company, coverage in the press is non-existent. > ? > SFEDI understand that it is not the public sector economic developers > that are creating jobs, it is the entrepreneur. > ? > Santa Fe itself faces a big challenge when it talks about importing > jobs - we have a high cost of living, a high cost of housing, high > cost of land, poor public education and very limited water. This > leaves us with very few recruitment tools. So focusing on our "new" > clusters is important - the clusters, as they grow stronger and more > widely recognized, are attracting similar businesses to Santa Fe, with > little or no support from the public sector. > What Santa Fe needs is more growth capital to support the clusters. > My thoughts on Michael's "Going Local" ideas. If you haven't read his > book, "Going Local" I recommend it. > ? > > Catherine E. Zacher, President > Santa Fe Economic Development, Inc. > 624 Agua Fria (87501)???????? P.O. Box 8184 (87504-8184) > 505.984.2842????505.989.8614 > (fax)???????????????????????????????????www.sfedi.org???cezacher@sfedi. > org > > Never doubt that a small group of thoughtful, committed citizens can > change the world....indeed it's the only thing that ever has! Owen Densmore 908 Camino Santander Santa Fe, NM 87505 [hidden email] Cell: 505-570-0168 Home: 505-988-3787 AIM:owendensmore http://complexityworkshop.com http://backspaces.net |
Financing Economic Development in New Mexico
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In reply to this post by Michael H. Shuman
Friamers and Michael:
I have not been paying as close attention to the communications on the list as I should have been following my errant comments, read in hindsight, on Michael Shuman's new capital and economic theories as he had shared with me and for his ideas as reported on in the SF New Mexican and noted by Owen. I visited with Cathie Zacher this week and she alerted me to the ongoing conversation and Michael's reply to my comments. The FRIAM list is not typically directed to these types of discussions, though perhaps they have been educational and generally beneficial to suggesting ways for helping current and prospective FRIAM type businesses thrive in the region, per my, Cathy/SFEDI's, Red Fish, Commodicast, and others investments in this important new-money-into-the-local-economy cluster. I cede to Michael that my comments were offensively satirical and presented unfairly on the FRIAM list to which he was not a subscriber, with most of the contexts missing for the full understanding of his work by the FRIAM subscriber. My righteous comments have elicited Michael's straight-up, well-articulated clarifications to the FRIAM list and to me directly, providing ample defense of his positions, research, credibility, and ideas, giving each FRIAMer the chance to reach his/her own opinions and enthusiasms for his ideas, and to correct the damage of my misguided attack. Clearly Michael's intents are not as narrow as I projected them to be and for this erroneous and hurtful encroachment on his credibility I am sorry. I apologize to you, Michael, for my blind rashness, written more in a moment of larger system-frustration rather than in a reasoned way. My outburst was far from reflecting my more normal mode of openness and problem solving, a style which defines your calling and purposes. I do stand by my observations, challenged a bit by Michael, on the importance for new monies coming into the economy as being the primary driver for an economy. I do not dispute the research that suggests a dollar spent in a chain book store, for example, leaves town faster than one spent in a local book store, but if the new dollar is not coming into town it cannot be spent in either book store. New or "old" dollars re-circulated longer in a community would have the effect of extending the economic impact of that dollar, true, but this a question of efficiency not creation. Michael's point, if I understand it, is that this increased efficiency results in a notable increase in economic activities in a region, a point with strategic merits. Though, a dollar spent in a book store is woefully short in sustaining wealth-creating informatics business cash flows. Perhaps, an interested FRIAMer could create a model of this economic exchange, based on inputs from the studies available, some of which are cited by Michael in his reply below. (For the record, I am a big fan and supporter of local bookstores, Garcia Street Books being my favorite). I also have obviously strong opinions and belief in the free market to provide or adjust to funding opportunities as required by enterprises, VC or otherwise, the main point of my last rant. Many subsidies of effort, monies, and other resources exist to amplify or augment this free-market base of money, for which I pointed out only a few in my last comments. However, these opinions did not warrant nor justify my strong response to Michael's perspectives. My meal of humble-email-crow-pie is downed and I hope you accept my apologies, Michael and FRIAMers. My lesson has been learned. Continue the exploration and incorporation of ideas, including Michael's, as the community works to address the economic challenges...Going Local is part of the solution. The impact of my words has caused Michael's work to be further discussed/clarified than otherwise would have been if I had not lit the fuse, perhaps one positive resulting from this exchange to Michael's credit. To our continued growth...in opportunities as well as the spirit in which we pursue them. Randy From: "Michael H. Shuman" <[hidden email]> Organization: ProgressivePubs Reply-To: [hidden email], The Friday Morning Complexity Coffee Group <[hidden email]> Date: Fri, 23 Jan 2004 14:27:36 -0500 To: <[hidden email]> Subject: [FRIAM] Financing Economic Development in New Mexico Dear Friam-Listserve Members, Per our moderator?s encouragement, I?d like to introduce myself. I?m Michael Shuman, a lawyer and economist based in Washington, DC, who specializes in community development. I?ve written 100+ published articles on the subject and six books, including most recently ?Going Local: Creating Self-Reliant Communities in a Global Age? (Free Press, 1998). I have given invited lectures and engaged in paid consultancies in eight countries, 26 cities, and at 27 universities. Last April I received a grant from the Pond Foundation in New Mexico to study ways of developing the state economy by creating new ways of bringing equity capital into small business. One result has been a partnership with Rob Rikkoon, one of the top investment advisers in the state, to launch a venture capital fund. A week ago, I was invited to present my preliminary findings to the New Mexico Association of Grantmakers, which is deeply interested in rethinking economic development in the nation?s second most impoverished state. A story on the talk appeared in the Santa Fe New Mexican last Sunday, and was reposted on this listserve by Owen Densmore. In the course of doing my research, I interviewed two dozen people in the state who I thought might have interesting perspectives to share. One of them was Randy Burge. I asked him to continue sharing ideas, and sent him one draft paper two months ago to get his feedback. His nasty note to this listserve, forwarded to me by a concerned contact, is the first I heard from him. Hence this open response ? TO: Randy Burge FROM: Michael Shuman RE: Financing Economic Development in New Mexico What a disappointing set of comments about a talk you didn?t even attend. Just to be clear, I welcome a serious debate with you and other players in New Mexico about the right direction for economic development in the state. I do not welcome immature insults (?Going Loco?) and ungenerous innuendo about my motives (?his theories [are] unfounded concoctions that he created on the fly to sell his books?). When we last spoke during the summer for about two hours, you had agreed to provide me with feedback on drafts I shared. I then duly sent you a draft prospectus of the Gulliver Fund in December. Rather than share your critical feedback with me directly, you are now trying to undermine my efforts behind my back. Not very civil, respectful, or fair-minded. Rest assured I will not respond in kind. I will respond to your ideas, not speculate about your motives; and I will respond to you directly so that we can have a real discourse. I never asked you for ?support or leverage.? I got together with you, as I did with many others in the state, to gather information about new ways to help New Mexico and other impoverished states to revitalize themselves through small business. When we had coffee together, I came with a list of 20 or so questions, and I emerged with many pages of notes. You did nearly all the talking. That helps explain perhaps why you have so many misunderstandings about what I?m actually advocating. I would be grateful if you came to one of my talks or read a little more of what I?ve written before shooting so carelessly from the hip. A couple of clarifications: - I never said the state was ?not doing anything? in small-business assistance. In my talk I pointed out that there were myriad lending and technical assistance programs, and that Invest New Mexico was a very positive step forward. Your web links just underscore this observation. My main point was there was very little overlap between the NM small-business universe and equity capital. - I do not wish ?to convert the normal borrowing functions used by local businesses at banks?and replace that?with local venture capitalists?? You mistake my desire to create new options for small business as advocacy against the old options. I favor more lending to small business, more local banks to provide such lending, and more use of the CRA to further augment lending from large banks. None of this contradicts the case for more equity options for small business. - Import-replacing development does not mean cutting off imports and exports, and I?m very clear in my talks and in my book that I favor a community having robust connections to the global economy. I argue, however, that import-replacement development leads to more natural, numerous, durable, and prosperous set of global links than the export-led development strategies you apparently favor. The theories of import-replacing development I promote are neither new nor unproven, and they certainly aren?t mine. These ideas have been written about extensively by Jane Jacobs over the last 25 years, and elaborated by economists such as Thomas Michael Power (Chair of the economics department of the University of Montana) and Wim Wievel (University of Illinois). I especially encourage you to read Power?s ?Environmental Protection and Economic Well-Being? (M.E. Sharpe, 1996). Chapter seven presents multiple studies that challenge most of your views about development. Your view is that the export part of the economy is the only one that contributes to real economic growth. That?s the classic view of the ?economic base theory of development.? But as Power demonstrates, most of the empirical evidence suggests that import-replacement and export growth play equally important roles; the remainder of the evidence favors import replacement. Thus, he concludes, ?The traditional economic-base view of the local economy is not a theory of economic development. It guides local policy in the opposite direction, toward dependence and instability. It tends to trap the local economy in a primitive, underdeveloped state.? Moreover, ?As Jane Jacobs has pointed out, economic development takes place around import substitution, not exports. Export-oriented economies remain primitive, suffer through booms and busts, and go nowhere. It is only when an area begins making for itself what it once imported that a viable economic base begins to grow. Production for local use is what begins to weave the connections between local individuals and businesses that make them parts of a productive and stable economic community. The development of local dependencies is what economic development is all about. The strength of our economy is tied to the richness and diversity of what we can do for ourselves and our neighbors, not what we export or import.? Further strengthening the multiplier linkages of a business to a community is local ownership. In Austin a group of economists found last summer that $100 spent at a Barnes & Noble chain store led to $13 being recycled into the local economy; for a local bookstore, $100 spent led to $43 being recycled. In other words, local ownership more than tripled the resulting multiplier and, of course, proportionally increased the tax contributions to the public sector. You?re absolutely right in saying that I encourage leaders to skip outside business recruitment ? you?re just wrong about the reason. Empirically, homegrown businesses contribute much more to economic development, much more to the multiplier, and much more to the tax base. A further data point: A recent study of economic incentives in Lane County, Oregon, found that each $1 spent on expanding a homegrown business, instead of recruiting an outside business, led to 15 times more job growth. I could cite a dozen other studies, but let?s turn the debate around: Where is your empirical evidence that outside recruitment leads to greater income, wealth, or jobs? Home-grown, locally owned businesses are far more than just ?retail, wholesale, and service sectors.? This is your bias against small business. In point of fact, small businesses constitute more than half of the New Mexican economy (by jobs and by output), and have a significant presence in every sector. I pointed out in my talk that flexible manufacturing networks, thriving in Northern Italy (now one of the richest regions in Europe), enable small-scale companies to produce even highly complex goods and demonstrate that larger economies of scale can still be met through well-organized webs of local business. With respect to the financial part of my analysis, you assert that the ?capital and resource gap [Shuman] purports exists is being met in a number of different ways to grow local business, mostly by banks and other lending organizations and incubators as appropriate, but also including via the angel or venture capital method he says is missing.? As I noted earlier, I agree with you about the lending side, though everyone in the field concedes ? even Alan Greenspan ? that banks continue to resist lending on the basis of gender, race, and income. But empirically there is very little angel, venture, or other kind of equity capital that is going to New Mexican small business these days. Where?s your contrary evidence? I?m not ?trying to defy the market logic of capital.? I?m trying to remove market barriers that prevent the efficient investing of capital into small business. Those barriers include poor information among entrepreneurs about the opportunities for raising capital through 27-J (the state law governing small stock issues), poor information amount investors about 27-J issues available for investment, and the complete absence of any intermediaries ? angel funds, venture funds, mutual funds, pension funds, underwriters, broker dealers ? that might tie investors interested in local business with relevant businesses. Underlying these barriers are problems in securities laws and biases among fund-managers against local business (not unlike yours), all of which have little to do with the underlying efficiency or potential profitability of small-business investments. You apparently can?t decide whether the notion of venture capital my partners and I are developing, aka the Gulliver Fund, is ?without precedent? or ?nothing new.? (Why not throw both criticisms at the wall, however contradictory, and see which sticks!) What we?re really doing is adapting the VC model to small business. We?re focusing on existing ma & pas (not future Microsofts), looking for a modest doubling of earnings over five years, and exiting through direct public offerings intrastate. Most VC fund managers we?ve talked with are intrigued with what we?re developing and don?t share your hostility, but clearly we have much learning and fine-tuning to do. That?s why I sincerely asked for your feedback. The answers to many of your questions about how investors get their pay-backs are in the prospectus I sent you. Generally, we assume that half our deals fail and that the exit through DPOs can be achieved at 7 times earnings (about half what?s available in conventional stock markets). This yields to investors who stick with the fund for seven years at >25% per annum rate of return. Again, I welcome your reading the paper and offering specific criticisms of specific assumptions. You should know that we have not asked any foundations to support the Gulliver Fund, and we are well on our way to securing the necessary private capital to get it up and running. But if our concept works and pays a competitive return to private investors, I would hope that foundations would consider putting some of their capital into the fund, along with churches, unions, pension funds, smart investors, the state's funds, and anyone else committed to a double bottom line. In my view, nothing would be a bigger waste of money ? whether it?s from foundations, private investors, or state agencies ? than continuing to support the outsider-operated, export-oriented enterprises you embrace in the name of economic development despite their miserable track record. It?s the homegrown alternatives that we?ve only begun to explore. As Francis Bacon once wrote, things that never have been done can never be done except by means that never have been tried. Sincerely, Michael Shuman [hidden email] 202-364-4051 P.S. ? For Owen Densmore: You?re right that my suggestions for reform with the state ? a tax credit for local reinvestment of pension funds, for example, like the Canadians have ? are hard to imagine right now. I suspect that once New Mexicans realize that four times more money from the land trust and severance funds are being invested in third-world countries than is being invested in homegrown businesses ? just one of the findings I presented last week ? you may well more than a few politicians and activists eager to review the details. Go local and prosper! Michael H. Shuman Executive Director Community Ventures 3713 Warren St., NW Washington, DC 20016 USA <http://maps.yahoo.com/py/maps.py?Pyt=Tmap&addr=3713+Warren+St.,+NW& csz=Washington,+DC+20016&country=us> [hidden email] tel: fax: mobile: 202-364-4051 202-318-0756 202-669-1220 Powered by Plaxo Want a signature like this? ============================================================ FRIAM Applied Complexity Group listserv Meets Fridays 9AM @ Jane's Cafe Lecture schedule, archives, unsubscribe, etc.: http://www.friam.org -------------- next part -------------- An HTML attachment was scrubbed... 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Financing Economic Development in New Mexico
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In reply to this post by Owen Densmore
Owen,
This is a great idea. Generally, smart local businesses have realized that they can overcome most larger economies of scale (in the diminishing number of instances where they really exist) through clever networking. Thus, ACE and TRUE VALUE hardware stores are really locally owned stores bound together in a national producers' cooperative. This has enabled them to compete quite successfully against Home Depot. The creation of similar networks of other niches that wish to go head-to-head against Wal-Mart, Office Depot, and the like could be quite promising -- and lucrative to whoever spearheads it in an entrepreneurial fashion. Generally, truly large economies of scale for business are shrinking -- that's the essence of a new book I'm working on. Among the reasons: Even where global production is efficient, global distribution often isn't. These inefficiencies are being compounded by rising oil prices. Oil prices are being further inflated by legitimate environmental concerns. Global products are being undercut by niche producers who deliver just the right products to consumers they know, just in time. Computers enable small businesses to look more and more like Fortune 500 companies (with multiple departments and multiple functions all coming from their laptops). Workers, especially younger ones, are looking for more satisfying work experiences in smaller and home-based businesses. And homeland security is making all of us think more seriously about smaller scale and self reliance. The bottom line is that local small business, already roughly 50-60% of most regional economies, is likely to increase its market share in the coming years. Which makes it all the more imperative that smart investors figure out how to connect with these enterprises in new, innovative ways -- the main point I made to the New Mexico Network of Grantmakers. Michael Shuman -----Original Message----- From: Owen Densmore [mailto:[hidden email]] Sent: Wednesday, January 28, 2004 1:37 PM To: cez; [hidden email]; The Friday Morning Applied Complexity Coffee Group Subject: Re: [FRIAM] Financing Economic Development in New Mexico Cathie: Thank you for the clear and considered response. My interest was sparked by a SF New Mexican article a while back that focused on the disappearing local small business. At the time, it occurred to me that the disparity between the large chains and local businesses, both newly starting and old and struggling, could be eased by some fairly simple local shared facilities. The large businesses have advantages brought about by sharing infrastructure costs among a large number of stores. Their phone costs can be negotiated, getting discounts for their large volumes. Their use of a common IT infrastructure, from cash registers to credit card validation machinery/accounts to web presence to networks .. all are volume sensitive and thus costs per store reduced. And when you factor in newly emerging technologies such as RFID tagging and supply chain optimization, you can see the small guy is going to continue to suffer significant cost disadvantage. So, what to do? Well, I'd like to see how we could structure some sort of infrastructure support for local businesses, again both old and new. Think "IT Co-op" so to speak. (I suspect there is some attempt at this already, but I don't know of specifics.) So for example, if a large number of businesses could pool their access to credit card validation, they could bring themselves to within cost parity of the corporate stores in that area. Ditto for the others. An obvious example would be very low cost web presence using shared servers with help from local technologists to reduce cost of managing the sites. Many folks are surprised to see, for example, that RedFish pays only $9.00/month for their web site! Owen On Jan 27, 2004, at 2:29 PM, cez wrote: > Last?weekend, I sent an email to Michael Shurman in response to his > general email to FRIAM last week, responding to Randy Burge's > thoughts.?Michael's reply encouraged me to share my thoughts with the > email list. > ? > SFEDI facilitates a program we call The Santa Fe Plan: The Cluster > Approach to Economic Gardening. The clusters we have identified as > emerging in our community are Biotech, Publishing, Information > Technologies (informatics in particular), Medical Practioners > (traditional and alternative) and Woodworkers. Our goal is to see > these clusters identified as businesses emerging in Santa Fe, > contributing to our economy and in need of support from the community. > ? > While we strongly feel that a community needs to give strong support > to existing businesses before attempting to relocate new businesses to > town, we do recognize that?outside?companies are interested in a > community with a strong business base. > In the "old model" of economic development, all energy was put on > attracting new business, perhaps because that was what received the > headlines in the paper. When a local entrepreneur adds two new jobs to > his company, coverage in the press is non-existent. > ? > SFEDI understand that it is not the public sector economic developers > that are creating jobs, it is the entrepreneur. > ? > Santa Fe itself faces a big challenge when it talks about importing > jobs - we have a high cost of living, a high cost of housing, high > cost of land, poor public education and very limited water. This > leaves us with very few recruitment tools. So focusing on our "new" > clusters is important - the clusters, as they grow stronger and more > widely recognized, are attracting similar businesses to Santa Fe, with > little or no support from the public sector. > What Santa Fe needs is more growth capital to support the clusters. > My thoughts on Michael's "Going Local" ideas. If you haven't read his > book, "Going Local" I recommend it. > ? > > Catherine E. Zacher, President > Santa Fe Economic Development, Inc. > 624 Agua Fria (87501)???????? P.O. Box 8184 (87504-8184) > 505.984.2842????505.989.8614 > (fax)???????????????????????????????????www.sfedi.org???cezacher@sfedi. > org > > Never doubt that a small group of thoughtful, committed citizens can > change the world....indeed it's the only thing that ever has! Owen Densmore 908 Camino Santander Santa Fe, NM 87505 [hidden email] Cell: 505-570-0168 Home: 505-988-3787 AIM:owendensmore http://complexityworkshop.com http://backspaces.net |
Financing Economic Development in New Mexico
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In reply to this post by Owen Densmore
Owen,
What if a business was started that would take care of all the back office support including HR, order processing including credit card, manufacturing, server housing, email, etc. Basically everything that isn't core to developing and selling a product, including staff. When I was at Cisco I was constantly amazed at how many people were there in support positions. Positions that were generic to most companies. What if you could extract this section of a company and outsource the whole thing. What if a service company existed that could handle all the administrative functions. I'm not talking about the EDSs of the world. I am thinking more locally with little shops, 50 or less employees. Santa Fe might be able to support this kind of a company especially with the boutique nature of a lot of the startups. The startups don't have the time, resources, or money to properly set up their back office. By offering this kind of company, it could be easier to get startups off the ground. John > > So, what to do? Well, I'd like to see how we could > structure some sort > of infrastructure support for local businesses, > again both old and new. > Think "IT Co-op" so to speak. (I suspect there is > some attempt at > this already, but I don't know of specifics.) So > for example, if a > large number of businesses could pool their access > to credit card > validation, they could bring themselves to within > cost parity of the > corporate stores in that area. Ditto for the > others. An obvious > example would be very low cost web presence using > shared servers with > help from local technologists to reduce cost of > managing the sites. > Many folks are surprised to see, for example, that > RedFish pays only > $9.00/month for their web site! > > Owen > > On Jan 27, 2004, at 2:29 PM, cez wrote: > > Last weekend, I sent an email to Michael Shurman > in response to his > > general email to FRIAM last week, responding to > Randy Burge's > > thoughts. Michael's reply encouraged me to share > my thoughts with the > > email list. > > > > SFEDI facilitates a program we call The Santa Fe > Plan: The Cluster > > Approach to Economic Gardening. The clusters we > have identified as > > emerging in our community are Biotech, Publishing, > Information > > Technologies (informatics in particular), Medical > Practioners > > (traditional and alternative) and Woodworkers. Our > goal is to see > > these clusters identified as businesses emerging > in Santa Fe, > > contributing to our economy and in need of support > from the community. > > > > While we strongly feel that a community needs to > give strong support > > to existing businesses before attempting to > relocate new businesses to > > town, we do recognize that outside companies are > interested in a > > community with a strong business base. > > In the "old model" of economic development, all > energy was put on > > attracting new business, perhaps because that was > what received the > > headlines in the paper. When a local entrepreneur > adds two new jobs to > > his company, coverage in the press is > non-existent. > > > > SFEDI understand that it is not the public sector > economic developers > > that are creating jobs, it is the entrepreneur. > > > > Santa Fe itself faces a big challenge when it > talks about importing > > jobs - we have a high cost of living, a high cost > of housing, high > > cost of land, poor public education and very > limited water. This > > leaves us with very few recruitment tools. So > focusing on our "new" > > clusters is important - the clusters, as they grow > stronger and more > > widely recognized, are attracting similar > businesses to Santa Fe, with > > little or no support from the public sector. > > What Santa Fe needs is more growth capital to > support the clusters. > > My thoughts on Michael's "Going Local" ideas. If > you haven't read his > > book, "Going Local" I recommend it. > > > > > > Catherine E. Zacher, President > > Santa Fe Economic Development, Inc. > > 624 Agua Fria (87501) P.O. Box 8184 > (87504-8184) > > 505.984.2842 505.989.8614 > > > (fax) > > > org > > > > Never doubt that a small group of thoughtful, > committed citizens can > > change the world....indeed it's the only thing > that ever has! > > Owen Densmore 908 Camino Santander > Santa Fe, NM 87505 > [hidden email] Cell: 505-570-0168 > Home: 505-988-3787 > AIM:owendensmore http://complexityworkshop.com > http://backspaces.net > > > > Applied Complexity Group listserv > Meets Fridays 9AM @ Jane's Cafe > Lecture schedule, archives, unsubscribe, etc.: > http://www.friam.org |
Financing Economic Development in New Mexico
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Sounds like a business incubator without walls. The concept has been
tried and works. Also, building around networks of businesses with a central unit providing marketing and other services at the same time it identifies and obtains useful resources. Denmark and Italy are good examples. Gus Gus Koehler, Ph.D. Principal Time Structures 1545 University Ave. Sacramento, CA 95826 916-564-8683 Fax: 916-564-7895 www.timestructures.com -----Original Message----- From: [hidden email] [mailto:[hidden email]] On Behalf Of John Hellier Sent: Tuesday, February 03, 2004 12:36 PM To: The Friday Morning Applied Complexity Coffee Group Subject: Re: [FRIAM] Financing Economic Development in New Mexico Owen, What if a business was started that would take care of all the back office support including HR, order processing including credit card, manufacturing, server housing, email, etc. Basically everything that isn't core to developing and selling a product, including staff. When I was at Cisco I was constantly amazed at how many people were there in support positions. Positions that were generic to most companies. What if you could extract this section of a company and outsource the whole thing. What if a service company existed that could handle all the administrative functions. I'm not talking about the EDSs of the world. I am thinking more locally with little shops, 50 or less employees. Santa Fe might be able to support this kind of a company especially with the boutique nature of a lot of the startups. The startups don't have the time, resources, or money to properly set up their back office. By offering this kind of company, it could be easier to get startups off the ground. John > > So, what to do? Well, I'd like to see how we could > structure some sort > of infrastructure support for local businesses, > again both old and new. > Think "IT Co-op" so to speak. (I suspect there is > some attempt at > this already, but I don't know of specifics.) So > for example, if a > large number of businesses could pool their access > to credit card > validation, they could bring themselves to within > cost parity of the > corporate stores in that area. Ditto for the > others. An obvious > example would be very low cost web presence using > shared servers with > help from local technologists to reduce cost of > managing the sites. > Many folks are surprised to see, for example, that > RedFish pays only > $9.00/month for their web site! > > Owen > > On Jan 27, 2004, at 2:29 PM, cez wrote: > > Last weekend, I sent an email to Michael Shurman > in response to his > > general email to FRIAM last week, responding to > Randy Burge's > > thoughts. Michael's reply encouraged me to share > my thoughts with the > > email list. > > > > SFEDI facilitates a program we call The Santa Fe > Plan: The Cluster > > Approach to Economic Gardening. The clusters we > have identified as > > emerging in our community are Biotech, Publishing, > Information > > Technologies (informatics in particular), Medical > Practioners > > (traditional and alternative) and Woodworkers. Our > goal is to see > > these clusters identified as businesses emerging > in Santa Fe, > > contributing to our economy and in need of support > from the community. > > > > While we strongly feel that a community needs to > give strong support > > to existing businesses before attempting to > relocate new businesses to > > town, we do recognize that outside companies are > interested in a > > community with a strong business base. > > In the "old model" of economic development, all > energy was put on > > attracting new business, perhaps because that was > what received the > > headlines in the paper. When a local entrepreneur > adds two new jobs to > > his company, coverage in the press is > non-existent. > > > > SFEDI understand that it is not the public sector > economic developers > > that are creating jobs, it is the entrepreneur. > > > > Santa Fe itself faces a big challenge when it > talks about importing > > jobs - we have a high cost of living, a high cost > of housing, high > > cost of land, poor public education and very > limited water. This > > leaves us with very few recruitment tools. So > focusing on our "new" > > clusters is important - the clusters, as they grow > stronger and more > > widely recognized, are attracting similar > businesses to Santa Fe, with > > little or no support from the public sector. > > What Santa Fe needs is more growth capital to > support the clusters. > > My thoughts on Michael's "Going Local" ideas. If > you haven't read his > > book, "Going Local" I recommend it. > > > > > > Catherine E. Zacher, President > > Santa Fe Economic Development, Inc. > > 624 Agua Fria (87501) P.O. Box 8184 > (87504-8184) > > 505.984.2842 505.989.8614 > > > (fax) > > > org > > > > Never doubt that a small group of thoughtful, > committed citizens can > > change the world....indeed it's the only thing > that ever has! > > Owen Densmore 908 Camino Santander > Santa Fe, NM 87505 > [hidden email] Cell: 505-570-0168 > Home: 505-988-3787 > AIM:owendensmore http://complexityworkshop.com > http://backspaces.net > > > > Applied Complexity Group listserv > Meets Fridays 9AM @ Jane's Cafe > Lecture schedule, archives, unsubscribe, etc.: > http://www.friam.org ============================================================ FRIAM Applied Complexity Group listserv Meets Fridays 9AM @ Jane's Cafe Lecture schedule, archives, unsubscribe, etc.: http://www.friam.org |
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