One win. One loss.

The new Pittsburgh Dataworks consortium announced last week is the start of what can be a big win. Of all the good things happening in Pittsburgh economically, this has the potential to be the biggest. Yes, bigger than gas extraction from the Marcellus shale.

Big data is where it's going. It's moving very fast however and Pittsburgh is merely "on trend", maybe even behind the curve. The Bay Area and Boston are years ahead. But it’s very important here that IBM is involved. That's huge given the history of what happens when IBM stakes a claim.

Consider the Silicon Valley. Admittedly it was first a plucky company called Fairchild Semiconductor that basically "started" the Silicon Valley. But when IBM put down roots a few years later and eventually transferred some hundred engineers from New York, the Valley really took off. That was now over 50 years ago.  A more recent example is Austin. IBM established its engineering group for PCs, in conjunction with the Micro Chip Consortium [MCC] in the late 70s, taking off in the early 80s. IBM is still in Austin with a massive campus just north of town. The rest is history, as they say. That was approximately 30 years ago.  Big [bang] economic development takes time, but it's gotta start somewhere.

It will take some time for Pittsburgh’s efforts and technology has a much shorter "half life" these days. That does concern me. But big data probably isn't going away. And the folks that work in big data are geniuses; PhDs in mathematics mostly. Big data people make big money. They supply high value add and are rewarded as such.  This is a big win.

 

A big loss was recorded this week when Texas A&M University with Texas Gov. Rick Perry announced GlaxoSmithKline, headquartered in Pennsylvania by the way, will partner with A&M to build a $91million flu vaccine facility.  Seems to me that Pitt and UPMC had been exploring a drug development and testing facility in Pittsburgh but gave up saying there wasn’t enough government subsidy for the project.

I am sure there were differences in the proposals and maybe even the configuration of the two facilities.  I remember that Pitt’s facility was estimated to cost well north of $100 million.  But was private sector involvement by a pharmaceutical firm ever considered? Note too that MD Anderson Cancer Center is also involved in the Texas site.  I believe UPMC’s Cancer Center is ranked top 10 in the US but MD Anderson is usually considered number one.  OK, but, putting the pieces together to make this happen is a huge boost for biomedical jobs in Houston [the big city close to A&M at College Station] but also central Texas as well.  Both places are already enjoying the nation’s best economic growth rates.

The oil and gas sector won’t grow forever.  But healthcare and pharmaceuticals will always be a part of human existence.  Pitt and UPMC should have worked harder for something like this facility.  I suspect however there is great need for others.  Pittsburgh should make sure it’s next up to the plate.

 

Easy Pickin's

A story this week in the “Austin Business Journal” features Silverton Partners and their recent success with moving Pittsburgh incubated start ups down to Austin. Hey, that’s the great thing about America and the capitalist system: mobility as a component of economic advancement.  But by using “Pittsburgh” as a stand-in punching bag for its self promotion, the ABJ got me thinking: why does Silverton have multiple successes luring Pittsburgh bred high tech to central Texas?

To level set, as best I can tell, Silverton has done this twice.  Once with a company named BlackLocus and another with Insurance Zebra.  Let’s acknowledge that two data points make a line but not a long term trend.  Silverton has had a couple winners this way and being smart they are making public relations hay with the story.

Both companies came through Pittsburgh’s South Side-based Alpha Labs organization.  Obviously Alpha Labs is in business to nurture and grow technology centric companies.  But according to their own Web site, helping the Pittsburgh region grow the number of those companies is also a goal.  This from the Web site:

“Do we have to stay in Pittsburgh after the program ends?

Companies are expected to remain in the Pittsburgh region after the end of their program. Our goal is to help you build a successful technology company while adding to the critical mass of flourishing tech companies in the region.

We believe that Pittsburgh is a great place to build a company and after your experience at AlphaLab, we're confident you'll agree.”

Hmmmm, seems like Alpha Labs track record is spotty.

I’ve got a couple of concerns.  First I have to question Alpha Labs work.  C’mon, Silverton wasn’t the only smart guys in the room when the “beauty contests” were being staged in front of VCs.  [Both BlackLocus and Insurance Zebra presented their business plans at nationally recognized conferences for venture capitalists.]  I have a hard time believing that folks at Alpha Labs didn’t know they had a couple of startups in their midst with good prospects for “events” such as a sale or a public offering.  Where’s the vision at one of Pittsburgh’s top incubators?

But I also have to question the work done by one of Alpha Labs sponsors, Carnegie Mellon University.  I have a dog in this hunt for a lot of reasons.  CMU is a bedrock of Pittsburgh’s growing innovation reputation.  My baby brother, as well as his wife, are CMU grads.  And I contribute annually to CMU’s gift giving campaign.  [For full disclosure, I’m a Pitt alum and it is the love of my life.]  So it pains me to see that CMU has done a less than stellar job of not only keeping its talent in Pittsburgh, it also has not pulled its weight in term of local economic development, in my humble opinion.  Stanford doesn’t let their incubated companies stray too far from the Bay Area.  Heck even the University of Texas has been wildly successful in retaining startups in Austin.  But CMU?  They’ve practically acknowledged defeat in Pittsburgh with their new Silicon Valley campus.  From the looks of it, that West Coast beachead is a one way street out of Panther Hollow for the sunny shores of San Francisco Bay.  [Albeit next to the 101.]

There’s a good piece in a recent CNN online edition written by a Harvard MBA student telling Boston powers-that-be why so much Boston area talent heads to New York or Silicon Valley upon graduation.  Dated March 18, 2013, authored by Jon Lai, and featured on CNN.com or “Fortune” magazine’s Web site, the piece could be a list of issues any American city faces, other than New York, San Francisco and to a lesser extent, Austin with its currently high “cool” factor.  Retaining talent and their output is not easy.  But Pittsburgh needs to get better at it.  BlackLocus is but one example of what happens when it goes right.  By the way, they were bought early on by the Home Depot Corporation.  They are now a software development center for Home Depot.  That development center could have located anywhere.  It should have been Pittsburgh.  It’s now another feather in Austin’s cap.  Don’t make the pickins so easy next time.

Access to Talent

Progress is often made at the margins and in small ways.  Today’s “Pittsburgh Business Times” reports that a New Jersey company, Ness Technologies, is opening a development center in Southpointe, Washington County.  I believe the key phrase in their announcement is the following:

”In a news release, Ness said it was drawn to the Pittsburgh region by its proximity to the region's colleges and associated talent pool.”

This is what we want to hear: a talent pool associated with local universities.  It’s the phrase you read over and over in places like Denver, Boston, Seattle and Austin.  Those of us working in high tech know that the San Francisco Bay Area has an overabundance of both talent and higher educational institutions pumping out that talent; that’s uncontested.

But the wagon Pittsburgh should hitch to is the one where operations from higher cost locales look to lower cost areas where the quality of life and the brainpower provides a natural place to co-locate and grow.  Obviously I believe Pittsburgh has offered that for a long time.  There’s always need for more efforts to get the word out because there are unlimited opportunities to tap into that need.

That Vision Thing

 

I was in Park City this last weekend and was thinking how small that town is to host fifty thousand film people. [The locals told me it is horrible during Sundance.] That may be why hundreds of condos have spouted up in the hills just within the two years since last I visited, even in this economic climate. There's money to be made hosting visitors, even if only for a couple weeks a year.

My baby sister was with me and she and I agreed on an observation: when you look at Park City you realize it really is just a redone mining town in a narrow hollow. Admittedly it’s a mining town with 8,000 ft peaks surrounding it, all subject to “the greatest snow on earth”.  But except for the well tended houses painted in fashionable colors, it could be any old mining town in western PA. My sister's comment was interesting.  She noted that while Elrama, Elizabeth or Monesson [and we hale from that part of the world so I'm not picking on those towns] are not going to sprout 5-star resorts any time soon, maybe a "little vision" is what some of these places need.

Ya, that vision thing.  You have to imagine it, dream it, before you can make it into reality.  Many small towns in the South and Texas [two different places and perspectives for those who don’t know] seemingly overreach when it comes to Chamber of Commerce boasting.  On many drives through the South you will note billboards advertising “charming shops and restaurants” or “antiquing galore”, when the reality is a local diner and some used furniture or second hand stores.  But that’s OK; they're trying.

And sometimes they succeed, even mightily.  For example, glossy upscale travel journals have touted places like Fredericksburg and Salado, Texas.  These towns really are nice places to spend a long day or a weekend.  They have both developed points of historical interest, very good restaurants, charming B&B’s and “boutique” [sort of] inns.  A main street with one or two dozen shops for the well heeled can provide jobs and enough cash flow to fix up the overall look. And that's often enough to make the most hardened factory or field worker come to expect a great cup of coffee in the morning or a decent restaurant meal on the weekend.  It raises everyone’s standards and expectations, even if it doesn’t and is not meant to, change their overall lifestyle.  It’s hard work to grow income organically [that’s what big city ecosystems are for].  It’s a lot easier to attract and capture income that’s been generated somewhere else.

But ya gotta have the vision first.  You have to have the desire to bring others into your world.  I hope it’s coming for many places in western PA.