TIGR Awards 2000 Keynote
September 29, 2000 - Sheraton Waikiki Ballroom, Honolulu, Hawaii
Ladies and Gentlemen:
In 1993 I left Honolulu Community College to live and work in Palo Alto. Back then, this was not an easy decision. There was no job title for what I did; today it's what's called a "Webmaster". Seven years, two startups, three acquisitions, and an IPO later, I'm happy to return to this sunny island to give you my report.
My, how things have changed.
There are now 200 million Web users globally, as opposed to a few hundred when I left. In California, unemployment has been cut almost in half. Where I've lived, mean household income has doubled. This land of plenty generates 64 new millionaires a day. But I'm sure you've already heard about this sort of thing. 15 year-old CEOs, $200,000 launch parties, $8 million domain names, it's all true.
But real estate prices have gone through the roof. In San Francisco, some rents have increased by as much as 2,000%. Which in turn has meant eviction for almost 8,000 musicians, dancers, and artists in the last six months and could mean eviction for 70% of the city's artistic non-profit organizations next year. In Palo Alto, you're at the poverty level if you're making $50,000 a year, and city council members cannot afford to live in the town they govern. Hold on to those thoughts.
I know that Hawai'i wants to emulate the New Economy successes of Silicon Valley. Over the last six months I've been doing research into the area, listening to people in government, education, business, and finance. I was prepared for the worst. And what did I find?
It's not so bad.
The twenty-four bills that comprise the State Legislature's New Economy Initiatives are something to applaud in terms of their committment and scope. The quality of startups has increased, focusing less on applications and more on infrastructure. These companies have attracted dozens of millions of dollars worth of local venture capital. When I left Hawai'i the multimedia industry was lucky to get 1 percent of that amount from the government.
I believe all the necessary parts are in place to start the motor - awareness, education, drive, and support - but the real challenge will be in keeping the engine going. And that requires two things - cooperation and dedication.
To support a New Economy you need a frictionless business environment. It's all about efficiency, proximity, and timing. What I think Silicon Valley got wrong is that they misinterpreted the word "efficiency" for "really, really, fast". Being efficient doesn't necessarily mean working faster. It does mean working smarter. It means being in contact with your resources, doing more in less time with better information. That requires tight cooperation among the moving parts: government, the education sector, the business sector, and investors.
The path - from education and training to startup to business - has to be as smooth as possible. For instance, ensure that the ideas coming out of the University of Hawai'i's New Economy Research Grant are flowing into their new million-dollar ecommerce and entrepreneurship initiative at the College of Business Administration. Ensure that UH has a policy of doing proper technology transfer so a student researcher with an idea for the next Yahoo! can own their work and grow a startup. Ensure that there are more programs to grow and train entrepreneurs as well as connect them with seasoned management, which is a big problem on the mainland right now. Ensure that there are enough resources for local startups to find employees and interns, inside and outside of college. Retain local talent; attract outside talent.
One exercise to do is for each sector - government, education, business, and finance - list the programs going on in each field. Then connect the dots. For instance, connect a scholarship program to a high-tech intern program. Connect a group of venture capitalists to an entrepreurial program. This can stimulate thinking about how each sector can work with the others. I know that cooperation doesn't come easy in a state where the phrase "my kuliana" is a cliche, but it has to be done.
Proximity is important, too. There are easily hundreds of startups and design firms within two miles of Stanford University. The Valley depends on this density and variety of services. Why is Mililani Technology Center out in the middle of nowhere? Why isn't there an innovation center in downtown Honolulu? When you can walk one block from your startup to get funding, engineers, business cards, and pizza, then you've got a New Economy. Areas such as Kapolei should be planned with that in mind. High densities of mutually-dependent businesses make it easier for rising tides to lift all boats.
When I talk about dedication, well, that's why you're in Hawai'i. You must care at least a little about these islands if you live here and even more if you want to start and retain a company here. I don't think it's in your best interest to watch Hawai'i become the cultureless, communityless, high-priced, and congested - albeit successful - morass that Silicon Valley has become.
So I'll stop talking about the New Economy, as if we want the same thing everyone else wants, which we don't. We want a strong economy, yes, but one that also respects and retains the cultural and environmental spirit of Hawai'i. Let's call it the "New Aloha Economy".
First, I predict that there will be a large rise in philanthropy all around in the next few years. Already Hawai'i has one of the most charitable populations in the United States. You want to ensure that these resources can connect with the organizations that need them most, which is why I'm working with the Hawai'i Community Foundation on a system that will make it as easy as possible to connect local non-profits to potential high-tech contributors.
Second, you want to ensure that there is enough low-cost housing and subsidies for both high-tech workers as well as for smaller local businesses and organizations that make Hawai'i unique. Entrepreneurs must work with and promote businesses and organizations in their community - restaurants, print shops, artists. Palo Alto is full of people from the midwest, the East Coast, and many countries, and as such it's hard for them to find a culture of their own - they don't understand that they're part of an interdependent economic environment, and the Bay Area has suffered for that. I think we can do much better.
Third, work on environmental issues, things affected by overcrowding and the growth of high-tech. Promote a greener high-tech, something Hawai'i can be globally known for. Businesses must encourage recycling, donation, and reuse of old computer equipment, especially lead-heavy computer monitors. Make use of paper recycling and shredding services. Encourage employees to use low or zero-emissions vehicles. If the average driver in Hawaii bought one of the new hybrid-engine cars, they'd only have to refuel twice a month, saving up to $700 a year in gas. Hawai'i would save the equivalent of three Valdez-size tankers of oil per year. And thanks to California's almost three-year old smog laws, Silicon Valley smells a lot cleaner than downtown Honolulu today.
Fourth, make risk a part of the culture. In Hawai'i, people have traditionally been afraid to take economic risks. But one of the keys to a bubbling, lively economy is risk. Of every ten startups, one goes public, two get acquired, and the rest fail. Let me say that again: they fail. Meaning that large amounts of money are invested, office space is rented, people are hired, and it doesn't work out. Failure is healthy; it's how people learn. In the Valley, managers, employees, investors, and landowners accept risk. If you can't afford to take risks, then you can't afford to succeed. It will take a hundred failed businesses to produce one or two Yahoo!s. But one or two Yahoo!s is all you will need to keep the coals burning.
You live and work here for the culture, the community, and the environment. Those are the things worth dedicating yourself to, the things worth cooperating with others to strengthen and preserve, and the things worthy of risk. Growing a business, going public, and making a lot of money is fun, but you can do that anywhere.
In order to make something happen, sometimes it helps to visualize scenarios. The New Aloha Economy, once it's really up and running, should be able to tackle these real-life situations with efficiency and ease:
At HCC I was inspired by a talk Jim Dator gave about the future of Hawai'i. (For those of you not familiar with him, he's the Professor of Political Science at UH-Manoa.) At the end of his speech he said, "What in the world am I doing wasting our time talking? We've got to run off and do some work!" So without any further ado...