We need to turn around entrepreneurism in Indiana

The Indiana Chamber of Commerce released “Indiana Vision 2025” in 2012, born of a statewide task force of leaders, and recently updated it with a progress “report card.” Our numbers concerning entrepreneurism come directly from the Kauffman Foundation.

The update is not good. As the report card notes, “The overall Kauffman ranking for new entrepreneurs declines once again—with Indiana’s rank falling from 44th to 47th.” Indiana is now nearly last in America in entrepreneurism and also 47th in total employment in firms less than 5 years old—better known as startups. We’re not doing enough to encourage entrepreneurism and startups here, and it is getting worse.

Why does it matter? Kauffman notes that it is startups that create all net new job growth. On average, there are roughly the same number of jobs available in established companies today as there were in 1977, as jobs are created at roughly the same rate others are destroyed. But startups have no gross job destruction—they only create. No startups, no net new jobs.

Availability of venture capital is certainly one of the reasons for our troubles. Kauffman reveals that less than 2% of all startup financing went to women founders, 1% went to African American and Latino founders, and less than 1% went to rural areas. Worse, in 2016, 78% of all venture capital went to just three states: New York, Massachusetts and California.

But that’s not a complete answer. Bill Gross, founder of Venture Studio Idealab, did research on the reasons startups fail to take flight. Surprisingly, lack of funding was the least likely problem, accounting for only 14% of the difference between success and failure. The most common reason was timing (42%), including a bad launch, insufficient market demand or a failed expansion. The second most common reason was the team (32%), including lack of skills or passion, or disharmony.

The shocking thing is that these problems are completely preventable. All of my fellow entrepreneurs can tell you stories about failing to listen to customers, the bad hires they made, or missing the market with their initial product.

We need far more mentorship and guidance for startups. Wouldn’t it be great if all of our state’s experienced entrepreneurs would take budding leaders under their wing and help them avoid the avoidable? Maybe that would begin to turn around a key metric for Indiana’s future that’s going the wrong way.

I asked the researchers from our Indiana Chamber Foundation how many startup jobs we’d need to add to go from 47th to 46th. The answer is 5,977. Just a little less than 6,000 new jobs and we’d move the needle. To get to the middle of the pack, or 25th, we’d have to add 58,171. Top 10? Just a little less than 100,000.

A big hill to climb, but, just like putting together a vision for our state for 2025 way back in 2012 was ambitious, I think this should be our goal: 100,000 new startup jobs by 2030.

Read more in the Indianapolis Business Journal.

Pay Attention to 16 Tech

I just returned from a tour of 16 Tech near downtown Indianapolis, and I can tell you that this is a project that all of us should start paying a lot more attention to.

Tracing its roots all the way back to 2011, the development is nestled into the corner of where Fall Creek meets the White River, northwest of downtown and to the north of the IU Health, Riley, Eskenazi and VA hospital complex at IUPUI. It’s bordered on the north by West 16th Street, from which it gets its name, and the main gateway today is Indiana Avenue as it crosses over the canal towards the Northwest, though one of the project’s signature features is a new bridge over Fall Creek which will extend Wilson Street north from the Riley hospital entrance to the heart of the district.

The project got a significant boost in 2015 when the City of Indianapolis agreed to provide $75 million in tax increment financing to improve roads and reroute underground sewers and water supplies, a significant challenge as much of the southwest corner of the project was formerly the headquarters of Citizen’s Water. The beautiful neoclassical Riverside Pumping Station still stands as an above ground reminder of the complex works below.

The second major boost came in 2018 with a $38 million grant from the Lilly Endowment to fund the initial phase of development. That was key to developer Browning investing $120 million to construct three new buildings and renovate the old Citizens Water headquarters into a “maker space” for startups and more.

Those projects are well underway right now, and the results are already amazing. The most obvious development is “Building One” which topped out on July 11 of last year and was the focus of the “dusty boots” tour I took led by the energetic and delightful Bob Coy. He excitedly described to us the impending move of the units of the Central Indiana Corporate Partnership to the facility, including TechPoint, which serves my industry, as well as the relocation of the Indiana Biosciences Research Institute, the first organization to take root at the site back in 2012.

Speaking of other things we should all be paying more attention to, Bob was recruited from Cincinnati where he led the creation of CincyTech. Way back in 2001, civic leaders in Southwest Ohio realized that their future would be dependent on economic growth through technology, and in 2005, through engagement with entrepreneurs, venture capitalists, business and civic leaders and angel investors, determined that their startups were having trouble raising more than $750,000 in seed stage funding, knowing full well that $2 million is the more likely amount needed for success. One of the problems they also noted was the lack of availability of serial entrepreneurs.

What Bob and his team did was aggregate a fund-service model. They started with a grant from the Ohio Third Frontier, an organization not very dissimilar to our own Next Level Fund here in Indiana, which they used for operating expenses to form the team. Next, they aggregated investors from the private sector, first into CincyTech Fund I in 2007 at $10.4 million, which consisted of fairly small initial investments matched by the State of Ohio. They reopened the fund for investment in 2011 and gathered an additional $4.4 million, and then launched a 3rd effort in 2013 netting an additional $11.2 million. Boosted by a fantastic investment in one of their companies by Sequoia, a large, well-known VC marking their first-ever investment in Ohio, they were able to close a $30 million fund in March 2016, creating over $50 million in aggregate capital as a base for building a tech ecosystem.

Cleverly, they employed a co-invest model where the Fund would generally supply $500k into a deal, and work to bring other co-investors off the sidelines and into the project to build up to the $2M needed for a successful “A-round”. That made the fund a force-multiplier in bringing high net worth individuals off the sidelines and into the tech economy. Indiana desperately needs the same system.

Cincinnati’s loss is our gain, as Bob’s knowledge and experience is exactly what is needed right now. With his leadership and the support of multiple civic visionaries, 16 Tech has fought through countless “brownfield” challenges, and is about to prove the naysayers wrong by moving into a gleaming building which represents more than another technology project – it represents the spirit of Indiana entrepreneurialism leading the way into the future.

Read more at Inside Indiana Business.

Indiana’s future in delivery is delivering

This November, the Indiana Technology and Innovation Association released its 2020 legislative agenda.

In it, the group detailed its support for widespread broadband access and smart technology products and services that would move the state and our cities toward “smart city” status. Increased broadband access in particular would help expand the capabilities and applications of the internet of things as well as the use of smart technology.

Fiscally, with greater connectivity, entrepreneurs would be better equipped to ideate and develop IoT projects that could benefit the state as a whole. In fact, smart cities are projected to add nearly $30 trillion to the world economy by 2025 and up to $11.1 trillion annually.

When I was shopping for holiday gifts this year, I was reminded of ITIA’s goal for building “Smart Indiana,” specifically the role logistics and transportation play in the retail ecosystem. Like millions of shoppers, I purchased all of my holiday gifts online—I never once stepped into a store—and I thought about the trust we place in a retailer’s supply chain to fulfill and ship our orders. Yes, we choose delivery methods and track our shipments, but as consumers, we actually have little control over the delivery process. All we can do is hope our packages are delivered in time.

Especially this year, the heightened popularity of e-commerce and a shortened shopping season have increased demand for next- or same-day shipping. And it’s clearer than ever that autonomous vehicles and things like IoT-enabled delivery solutions would be viable solutions.

As we’ve observed in the past few months, from the chaotic logistics aftermath following China’s Singles’ Day to the recent news of Celadon Group suddenly shutting down its operations, the trajectory a package takes once a consumer hits “order” has the power to drastically affect the bottom line.

Nationwide, Indiana has the most pass-through interstates and is the only state with a port system that gives waterway access to two coasts. This positions our state more strongly than any other to lead the shipping industry, specifically last-mile delivery. This infrastructure makes Indiana a top candidate for autonomous technology deployment.

I mentioned ITIA’s support for broadband access and smart technology because these two things lay the foundation Indiana needs for an initiative of this magnitude. Across the state, entrepreneurs would get the tools they need to develop new products and services for last-mile delivery and solidify Indiana’s position as a transportation and logistics leader.

Proof that we’re already moving in the right direction are Purdue’s food delivery robots and PerceptIn’s decision to move its global headquarters to Fishers. In PerceptIn’s case, the visual intelligence technology company is set to also partner with the city of Fishers to develop short distance, self-driving shuttles for the community. These two developments signal a tremendous economic opportunity for Indiana.

Moreover, Purdue and PerceptIn are shining examples of autonomous “last-mile” technology, or machine learning solutions that can facilitate the last step in a shipment’s journey. In the transportation and logistics industries, last-mile delivery is the final critical step to a positive customer experience.

For example, all those holiday gifts I purchased are now “out for delivery,” but realistically it could be hours before the tracking number shows a completed delivery. As consumers increase their shipping expectations, the last mile becomes more problematic.

Someday, not too far in the future, I’ll order my holiday gifts and know the precise day and time to expect delivery. At home, a robot would exit an autonomous delivery truck, greet me by name and neatly stack my packages at the front door. Maybe I’ll add that scenario to my wish list next year.

Read more in the Indianapolis Business Journal.

The Red Line—a future success or missed opportunity?

When the Red Line transit route officially launched Sept. 1, more than 63,000 hopped on board the first week. Since then, the transit line has averaged about 7,000 riders a day, or roughly 14,000 fewer than that initial week. Ridership did increase in September by 30%. Still, IndyGo remains in the planning stages for its Purple and Blue Line transit systems to connect even more residents within the circle city.

I fully support these changes to improve public transportation in and around Indianapolis and its surrounding areas. But I also can’t help but wonder if we’re missing the mark to advance our transit system in a more technologically savvy and sustainable way.

The public transportation industry is moving toward self-driving and autonomous capabilities at a rapid pace, and I’m apprehensive that these new transit lines will quickly become outmoded.

In February, for instance, the artificial intelligence company May Mobility, a Midwest-based company, received $22 million to fund nationwide expansion of its self-driving public shuttles. The shuttles are already operating in Columbus, Ohio; Detroit; and Grand Rapids, Michigan. Also in 2019, domestic and foreign automakers equipped well over 200 of their vehicle models with semi-autonomous capabilities called advanced driver assistance systems. And by 2021, a key goal for the Ford Motor Co. is to include a truly self-driving experience that requires no gas pedal or steering wheel.

For self-driving and autonomous public transit, May Mobility is well on its way. Are automakers next? They easily could be.

While the Indy community is largely excited about the Red Line, its launch has been a bit bumpy. Riders have reported waiting more than 30 minutes for a bus scheduled to arrive every 10-15 minutes. It’s been further reported that IndyGo doesn’t have enough drivers to staff the Red Line buses needed to stay on schedule.

As the city of Indianapolis looks to solve transportation issues for the 8.8 million people who use IndyGo transit services every year, I encourage leaders to adopt more forward-thinking, sustainable solutions that promote the Midwest tech hub environment we’ve worked so hard to create. The benefits of deploying self-driving and autonomous vehicles alongside traditional means of public transportation shouldn’t be understated.

First, autonomous and self-driving solutions could ease IndyGo’s driver shortage and help ensure departure and arrival schedules. Aside from a lack of drivers in the first place, self-driving buses could compensate for typical human driver challenges—vacations, being out sick, or not having enough resources for something like the Indy 500 or the Super Bowl. IndyGo could even train remaining employees in associated technologies such as programming (for autonomous purposes) or control room monitoring.

Furthermore, as they already are in the trucking and automotive industries, autonomous transit solutions could potentially help reduce cost and human error. From sensors to monitor and report driver behavior, to algorithms foreseeing maintenance and mechanical problems before a bus becomes unsafe or inoperable, these kinds of smart solutions could measurably reduce liability and insurance costs.

Fixed-route shuttles would provide another benefit by bridging longer distances between bus stops in underserved areas that rely heavily on the city’s public transit system. Small, six- to 12-person shuttles could serve individuals with disabilities and people commuting from retirement communities or health care facilities.

Indiana has spent years focusing on our strengths to become a technology hub nationally, and the city’s transit system is one more way we can lead by example. Already, the mass transit industry has begun its move toward autonomous and self-driving vehicles, buses and shuttles to improve ridership and reliability of public transit. The Red Line could easily, and quickly, become outdated if we don’t make the same move.

Read more in the Indianapolis Business Journal.

Let’s change our frame of mind about college degrees

I’d like to invite you to look at the world slightly differently.

You’ve been told that, if your children don’t attend a four-year college and get a degree, indebting them by $29,000 or more (the average in Indiana), you or they are somehow a “loser.”

That’s a lie.

Bill Gates from Microsoft, Michael Dell from Dell Computer and Steve Jobs from Apple. None of them earned a college degree.

They are not alone. Famous founders Jan Koum (WhatsApp), Travis Kalanick (Uber), both Dustin Moskovitz and Mark Zuckerberg (Facebook), both Evan Williams and Jack Dorsey (Twitter), and even Hiroshi Yamauchi—who transformed Nintendo from a card-making company into a video game giant—don’t have college degrees, either. A college degree never was and still isn’t required to be a technologist.

There are many professions where a college degree is really needed (doctors, lawyers, etc.). And, I can’t think of a single profession that isn’t enhanced by a college degree. But to require it? Not in my line of work. Software development, cybersecurity—indeed a whole range of job roles in technology—are now more like technical trades than they are degree programs, something like the plumbers and electricians of the digital economy.

As parents, we need to demand of our high schools that all the pathways to success are arrayed in front of our children, especially technical trades.

Look to Eleven Fifty Academy, driven by technology pioneer Scott Jones, as a fast and low-cost way to a paying job in coding or cybersecurity. Look to Kenzie Academy, led by repatriated Hoosier Chok Ooi, as a way into the tech industry by financing your skills through a rebate to the academy after you’ve landed a job at a high salary through the program that helped you get there.

Look to innovators like Kevin Berkopes at Crossroads Education, innovators who are changing how companies get access to skills like machine learning through employing students to tackle the meatiest analytics problems of our age. Look to Don Wettrick at the StartEdUp Foundation, who has taught many waves of students how to survive and thrive in the economy of personal initiative, where everyone is an entrepreneur. Look to Mike Langellier and the team at TechPoint, who are recruiting and placing high school students in important internship roles across our state to drive technology forward.

Change has come even to our traditional universities. Look to fantastic programs like the Cybersecurity Academy offered by Ivy Tech Community College Columbus at the Muscatatuck Urban Warfare Center. Look to Bryan Ritchie at the IDEA Center at the University of Notre Dame for how Hoosier students can be enabled to take their ideas to market. Look to Purdue Polytechnic, enabled by Head of School Scott Bess, Dean Gary Bertoline and President Mitch Daniels, who are renovating the idea of a technology education by opening their program to self-direction—to involvement with companies like mine, ClearObject, to directly hire and engage students.

These efforts not only are the future of technology education, but also will ensure that Indiana businesses survive and thrive in the digital economy. These people “get it.”

I realize these words are challenging and threatening to the status quo. But our children know already that the skills they are being taught are no longer relevant for the digital economy. Skills of the future are learned on demand, in the context of students’ daily lives, and applied directly to “moving the needle” at organizations that can connect their abilities to customer needs without delay.

We can become a “brain engine” that fuels the future of our state, the Midwest and our country. But we must shed the idea that the only way to succeed is a four-year degree and return to placing value on technical trade education as a valid, parallel, even preferred career path.

Read more in the Indianapolis Business Journal.

Data centers are Indiana’s new factories

At the start of the new millennium, no one would have guessed that the manufacturing-centric state of Indiana would evolve to become a Midwestern tech giant. But it has. Overall, the technology sector accounted for about one-third of our state’s new job commitments from mid-2017 through July of 2018, beating out all other industries.

This shift is rooted in rapid technological advancement worldwide and an industry that’s continuing to be disrupted at warp speed. With more than 175 zettabytes of data expected globally by 2025, data centers will continue to play a vital role in the ingestion, computation, storage and management of information. Therefore, the development of hyperscale data centers in as many locations as possible is the obvious (and ongoing) next step.

In Indiana especially, such data centers are vital to building upon our growing tech sector and sustaining the sector’s momentum over the next several years.

To that end, progress came when Gov. Eric Holcomb signed a bill at the end of June this year providing tax incentives to organizations choosing to build sizable data centers in Indiana. The new law provides exemptions from the state’s sales tax for items including equipment, electricity, construction and build-out for up to 50 years.

These incentives are already gaining traction. Digital Crossroads in Hammond is just one company jumping on board to furnish a lakefront data center in the former State Line Generating Plant on Lake Michigan shores. Going forward, in promoting Indiana as a new kind of technological and industrial crossroads, the state’s incentives are expected to attract other companies looking for similar data center locations.

Another clever idea is repurposing old space. Lifeline Data Centers chose to overhaul the former Eastgate Mall, because along with the facility’s ample space, Lifeline’s CEO cited its central location and our exceptional cost of living as primary factors for choosing Indianapolis for the company’s growth. Data Realty in South Bend built a gleaming new data center on the grounds of the old Studebaker Factory, lifting what was once a brownfield into the digital age.

Why is this so important that we should all want our tax dollars used to incent it? It’s because data centers are the factories of the digital economy. As Indiana’s economy shifts away from parts made in our plants, products moved on our pavement and food grown in our fields, data centers are the new factories, 5G networks are the new roads and schools are the new field where brainpower is grown.

Economically, a CBRE study concluded that—based on a typical state and municipality tax structure, as well as economic and demographic characteristics—a $1 billion data center could generate upward of $200 million in tax revenue over 10 years, including construction and ongoing operations. That’s an impact equivalent to a corporate headquarters creating 1,700 jobs with a $130,000 average salary and making a $40 million capital investment.

Case in point, at least for Google. In February, the company announced its $13 billion investment plan for new data centers in Ohio, Nebraska, Nevada and Texas. The plan also includes the expansions of existing centers in Oklahoma and South Carolina. The jobs count is anticipated to be tens of thousands of new employees.

So why not Indiana? Attracting new data center operations is now just as critical to spurring economic development as attracting a new factory was to the previous generation—a true measure of our dedication to advancing technology.

Read more in the Indianapolis Business Journal.

Should working in IT require a license?

Regardless of industry, every company has an IT team or works with an IT team that manages tasks such as data, security and risk assessment. The amount of customer data available to businesses is exponentially growing every year, and it’s time for tech leaders to begin thinking about professional standards for software and cybersecurity engineers, in addition to other IT-related functions.

One good reason? Significant corporate data breaches to begin with, like the ones Equifax, Capital One, Anthem and other customer-driven companies have suffered recently.

Following any sizable security breach like these, Joe and Jane Consumer’s first reaction is usually to push for new laws and more regulations. It’s a knee-jerk reaction, however. Data breaches can’t be “fixed” or minimized by letting legislators create more rules regulating how the tech industry operates.

In fact, allowing lawmakers to set rules and responsibilities in the IT sector is like allowing them to set the rules of football or say how painters must paint. We would end up with regulations that don’t apply at all to the work IT professionals do every day.

This therefore raises a question: How can the tech sector grow its own workforce while protecting consumers without new government regulation? Other industries have turned to professional standards bodies to answer this question.

For example, careers in real estate, plumbing, cosmetology and even interior design all require a license verifying a baseline of knowledge and ethics agreed upon, and reviewed by, a group of peers. Amazingly, while you need a license to work in those professions, you do not need one to dive into a customer’s sensitive data as a software engineer for a health insurance company!

The Professional Licensing Association in Indiana credibly validates the work for many of the services we use today. Licensing boards are led by leaders in their industries who have worked to advance accountability for employees by establishing clear outlines for job descriptions and a foundation of expectations for workers before being offered a job.

Our industry needs these benefits, too. We need to clarify job descriptions (such as the difference between a software engineer and developer), and set a standard benchmark of skills for all job candidates. Standardized job descriptions would also convey a clear indication of the skills needed to apply for any IT job at any company in Indiana.

Further, these standards would set a baseline for all higher education institutions and trade schools. This would then help them know what companies need and easily determine exactly what skill sets a candidate has achieved in school.

As we look to the future of career paths in IT, it is increasingly vital to think about prescribing a set of trade standards for employees and employers alike. These guidelines would empower employers to make more informed hiring decisions and would likewise help educational institutions better prepare our workforce of the future. Ultimately, Indiana’s technology talent pool and economy would both benefit.

To make this happen, those of us in the state’s technology industry must start by establishing these standards, then help Indiana lawmakers and educational institutions stay informed and make knowledgeable decisions about legislation and programs that will directly affect the availability of talent.

Read more in the Indianapolis Business Journal.