Editor’s note: Thom Ruhe, CEO of the NC IDEA Foundation which focuses on economic development across North Carolina at the entrepreneurial level, has different ideas about growing the state’s economy without investing billions to land the Amazon HQ2 project or another large company. This blog includes two posts Ruhe published at LinkedIn and is reprinted with his permission.
DURHAM – We need to flip the script on economic development practices that marshal unprecedented resources to lure large existing companies. For every community that offered billions in incentives to get Amazon’s HQ2,
I would suggest you consider allocating 25% of whatever the economic value of your package was to support entrepreneurial ecosystems and your startup communities.
Need ideas on what to support?
- Entrepreneurial mindset education programs in High Schools and Community Colleges.
- Funding for University tech transfer programs – for students and faculty.
- Mentoring programs and technical assistance at existing accelerators and co-working locations.
- Early stage funding vehicles, angel funds, VCs, debt funds, grants.
- Events that facilitate networking and the celebration of entrepreneurship. Even Amazon was a startup once upon a time.
One ‘lucky’ community will get Amazon and 237 others should turn their focus and enthusiasm towards building the next Amazons.
To be clear, I don’t blame communities for wanting HQ2. Old school (smokestack chasing) economic development practices legitimized recruiting companies from one locale to another, even though it meant a loss and hardship to the community losing the plant. That isn’t applicable here, so this is a better case scenario.
However, for too many, these opportunities are treated like lottery tickets. And like too many, when jackpots get big, people over spend in hopes of hitting the longshot – often more than they can afford. Certainly, some communities put forth proposals that if “won” would put such financial, infrastructure, talent, strains on them, they are lucky not to win. I hope/suspect Amazon will consider those factors in their ultimate decision.
Apparently, our great state of North Carolina offered “Monumental” incentives – as I would suspect most serious responses did.
You can read about it here.
I sincerely applaud their efforts to be creative and put our best foot (or feet) forward. What I want to point out however is that a better strategy may be, for much less ‘monumental’ incentives, invest in ourselves. Instead of measuring our self-worth by what external companies we lured into our state, let us work on the common purpose of making each of our states great for starting and growing exceptional companies.
It’s a better ROI, strengthens the economy and communities at a pace we can manage, and builds a connection between those companies and the communities they live in that is proud, committed and won’t leave for a short-term incentive from another state trying to make up for their failed economic development efforts.
We don’t have to buy big companies, let’s build them!