Log in
updated 2:54 PM CDT, Jul 28, 2018

FlynnsHarp logo 042016

Port of Seattle plan, Department of Commerce Spain agreement key step toward Land of OZ

yellowBrickRoad

Lisa BrownLisa Brown

As states begin to compete to create the most attractive Land of OZ to lure investors and create new businesses and jobs, the state of Washington and the Port of Seattle have taken key steps in the past few weeks that could put them at the front of the pack employing the benefits of new federal tax law.
 
OZ refers to what is officially called Qualified Opportunity Zones that come about under the Tax Cuts and Jobs Act of 2017. The QOZ provision in the legislation approved by Congress will permit those owing capital gains tax to delay, reduce or even totally avoid those taxes by investing in special funds designed to start businesses and provide other steps to help economically distressed communities.
 
Virtually every major accounting or law firm or wealth management company in the country has been inviting clients and prospects to learn all about the details of what have become known simply as Opportunity Zones, or OZ.
 
And while the message in many of those explanatory sessions by professional firms has been the prospect to create funds for investment in real estate projects, funds could be particularly appropriate for energizing the prosperity of small and diverse firms that have not had access to equity capital to grow and expand.
 
And that's where the recent separate initiatives by the State Department of Commerce and the Port of Seattle come into play in a manner that gives this region a leg up in that competition among states for attracting new investment to job creation.
 
Ralph Ibarra 
The development for the state was Spain's first-ever Memorandum of Understanding with a state to promote economic cooperation to benefit trade relations and boost business opportunities for small and medium-sized businesses in both Spain and Washington State.  
 
The agreement was signed in Madrid March 1 between Lisa Brown, the new director of the state Department of Commerce, and Maria Pena Matcos, chief executive officer of the public agency attached to Spain's Ministry of Industry.
 
The Port of Seattle's initiative was issuing a "Request for Qualifications" for a $200 million renovation of 29 acres near Pioneer Square in Seattle to provide for the port's fourth cruise ship berth that would accommodate super-size cruise ships.  
 
That parcel, for which the Port is seeking a partner, is located within an Opportunity Zone that extends across the property on which T-Mobile Stadium and CenturyLink Field are located and extends into the International District.
 
The Port's Request for Qualifications intriguingly contains the sentence: "It should be noted that Terminal 46 is located within a Qualified Opportunity Zone," suggesting it intends to use the tax-break incentive in seeking to attract a wide array of businesses to develop on the site, or nearby.
 
So what kind of developments are being created in other regions with Opportunity Zone funds? A potentially appropriate example was the announcement by a Scottsdale, AZ, based wealth development company called Caliber of plans for a new hotel development at Tucson Convention Center, which is in a designated OZ.
 
For Ralph Ibarra, president of DiverseAmerica Network, the agreement with Spain and the Port's announcement represent important steps to dramatically benefit small and diverse businesses.    

Ralph IbarraTo Ibarra, a consultant to the public and private-sector corporations and institutions who has brought long-standing support of small and diverse business to his consulting activities,
the agreement with Spain and the Port's announcement represent important steps to benefit small and diverse businesses.  

He sees both developments as important steps"particularly appropriate for energizing the prosperity of small and diverse firms that have not had access to equity capital to grow and expand."

In fact, Commerce Director Brown said her immediate priorities include helping address the sustainability of infrastructure financing programs and enhancing the agency's outreach activities - especially with rural and underserved areas - to ensure communities in need can access Commerce programs and services.
 
The statement put out following the signing of the agreement noted that it 'builds on a foundation of approximately $9 billion in trade activities currently taking place between Spain and the State of Washington. It acknowledges common strengths in aerospace, information and communication technology, cybersecurity, clean energy technology, life sciences, maritime, agriculture, and other sectors, and formalizes plans to explore opportunities for Washington companies in the Spanish market and establish future opportunities for Spanish companies to create jobs in Washington."

Ibarra, who chairs the Washington District Export Council, suggests Opportunity Zones "hold great promise to accentuate and expedite beneficial outcomes" from the Agreement with opportunities for Washington companies in the Spanish market and for Spanish companies to create jobs in Washington.

Ibarra brings some awareness of the extent of potential represented by the state's agreement with Spain since some years ago he prepared and escorted an aerospace manufacturing firm from this state to various meetings with Spanish aerospace companies at a U.S.-Spain Aerospace Industry Summit.

"And now, whether its Spain or Washington State, any individual relationship that comes about is going to need some sort of facility, whether distribution or manufacturing, in place and that's where Opportunity Zones can come into play to facilitate those relationships," Ibarra said.
 
Continue reading

Recalling eastside business journal's impact - 20 years on from launch

bellevue_cityscape3

A LinkedIn entry from my son, Michael, noting the 20th anniversary of the launch of 
eastside business journal brought back memories of the effort to create the "local" business voice for Bellevue and other Eastside communities as they were starting to emerge as economic entities more independent from Seattle.

Eastside Business JournalEastside Business JournalMy decision, as publisher of Puget Sound Business Journal, to create a separate weekly business publication with its own staff, readership and highly focused coverage of business on the Eastside, as well as involvement with its business community, was a realization that a Seattle-based and focused publication couldn't build close relationships east of the lake.

Michael was an experienced young public relations and marketing professional when I convinced him to leave the public relations firm, The Fearey Group, to become general manager and overseer of a weekly start-up business newspaper.  

Microsoft was already more than a decade along in turning out young millionaires with its stock, as well as new software and computer products from its Eastside headquarters, and in fact, that year spun out its Expedia division into a separate Bellevue-based public company.

And the Eastside had become the global mecca for the rapidly growing telecom and cellular industry as home to not just McCaw Cellular and Nextel but also Western Wireless, which in 1999 spun off its star telecom subsidiary, VoiceStream, which has since become T-Mobile.

Willows Road, along with the west side of the Redmond Valley, had actually become the region's high-tech highway more than a decade earlier with a number of companies like Physio-Control and Rocket Research building their headquarters along the west hillside above Willows Road.

And of course, Kemper Freeman had already, for a couple of decades, been scaling the retailers' mountain and reigned as the most prominent retailer developer in the region.  

By 1999 he was on the way to creating a retailing center that would make his Bellevue Collection of Hotels, retailers, and restaurants leap past Seattle as a destination for shoppers and diners.

Of course, the EBJ launch came two years after Amazon's IPO changed the nature of Seattle's ability to compete with the tech growth on the Eastside, and soon surpass all in growth of revenue, profits and employment. Of course, now Amazon seems intent on possibly turning the Eastside into a second headquarters now that New York has been jettisoned.

Thus 1999 was an interesting time to seek to create a successful and impactful special-interest (business) publication in Bellevue and the Eastside, a time when two Seattle daily newspapers, The Times and Seattle P-I, made life difficult for the much smaller and profit-stretched Eastside Journal in the quest for readers and dollars from the Eastside.

So I told Michael to come up with some events that EBJ could put on to attract visibility and support and promised to make sure PSBJ didn't do the events as a counter to keep EBJ from gaining a foothold, which interestingly PSBJ adverting and editorial leadership hoped to do. It was a competitor, after all.  

Thus I took the unusual business role of holding the big dog back so the puppy had a chance to grow.

For a newly minted young newspaper executive with a twenty-something staff and seeking to carve out readers and advertisers from a young, partly tech, audience, the logical event for Michael to create was one honoring youth.

So he launched Eastside 40-Under-40, geographically designated even though there was no other 40-Under-40 event in the Northwest. In fact, I don't think there was one on the West Coast at that time.

That eventually became the regional event run by PSBJ, with the "Eastside" dropped from the 40-Under-40 name.

One day in summer of 1999, I wandered over to Bellevue from my PSBJ office to check in and found folks on the staff en route to a day-long Going Public seminar that attracted a large audience of entrepreneurs, prospective investors and wealth managers to listen and learn from a panel of experts Michael had assembled.

Then Michael came up with a CEO interview breakfast event he dubbed Eastside Executive Forum, with his first interviewee being the region's then Beer Master, Paul Shipman, creator of Redhook.

Another CEO interview featured HomeGrocer.com CEO, Terry Drayton. Do you remember that Bellevue based company that sprang into existence with the first fully integrated Internet grocery that grew across the West and across the south before being forced by tight cash for growth to sell out in the fall of 2000 to competitor Webvan?

It wasn't long before the reality of having created a direct and growing competitor in basically the same market began to sink in for the parent company and EBJ and its staff were folded into PSBJ. Michael soon departed the media business to focus on a business-development career in other industries.

And with the demise of the P-I and the closing of the Eastside's daily newspaper, by then renamed the King County Journal, in 2006, and the recent dramatic cutbacks by profit-focused Sound Publishing as owner of the area's shrinking pool of weekly newspapers, memories of the local business newspaper that was have been stirred anew.

"A lifetime ago and yet there isn't a day I'm not reminded of something I learned in those years," Michael wrote in his LinkedIn message. "Thanks, Pop and EBJ Peeps."

The LinkedIn message got several thousand views and many comments, including this from the head of an Eastside wealth management firm.

"Michael: you and your team's work had a huge impact on the Eastside at a critical juncture of growth along every path - business, economic, community, stature, maturity, and poise. I miss the voice of EBJ. I relish my fond memories of all of your events and the friendships forged over robust dialogue."

 
Continue reading

Biotech veteran Rhonda Rhyne guides growing & innovative cardio-diagnostic company

Rhonda_Bryne_Banner

Rhonda Rhyne, whose leadership as president of an innovative cardiovascular medical device company made her one of the most honored biotech CEOs in San Diego for over a decade until she guided the sale of the publicly traded company, may be headed for a repeat performance, this one on Seattle's Eastside.
 
Rhyne is now CEO, president, and director of Prevencio Inc., a Kirkland company that has developed a test that is purported to be "significantly more accurate than stress treadmills for diagnosing obstructive coronary artery disease." She has guided the company since August of 2013, a few months after its conversion to a C corporation.
 
Rhonda RhyneRhonda RhyneRhyne's San Diego honors over 12 years at the helm of publicly traded CardioDynamics included the 2003 Entrepreneur of the Year award for medical products and Deloitte's Fast 50 Award for 50 Fastest Growing Tech/Life Science Companies in Southern California for nine consecutive years from 1999 to 2007. It was exactly a decade ago that she led CardioDynamics into a sale to Bothell-based SonoSite at a 69 percent premium.
 
This past year was one of the significant developments for Prevencio, with major presentations on its series of cardio-related tests in which Prevencio's focus has been on demonstrating improved diagnostic accuracy and helping keep patients from undergoing unnecessary, expensive, and invasive tests.
 
This year is a key one for the company as Rhyne has just returned from major presentations at a Biocom event in San Diego where Rhyne says she had an opportunity to advance discussions with potential partners and to "educate the biotech, medical device and venture capital worlds on what Prevencio is doing to advance cardiac medicine."
 
Now she heads to New Orleans late this week for sessions at the American College of Cardiology where researchers from Europe and from a major U.S. healthcare system will present accuracy studies which she says "further validate the robustness of our AI-driven, multi-protein novel HART blood tests." HART is the company's trademarked name for Heart-related ARtificial Intelligence-driven, multiprotein Tests.
 
The studies, Rhyne says, 'help drive awareness and adoption, partnerships, and eventual exit."
 
In the short term, the American College of Cardiology sessions will pave the way for the company's next fund-raising round in April when its B-1 round of $7-$9 million, which will include conversion of a $4 million note that is part of Prevencio's total to-date $11 million funding, is planned.
 
Prevencio's product explanation is complex to the layman. But Rhyne explains the company "utilizes Machine Learning (Artificial Intelligence) plus Multi-Proteomic Biomarkers plus Proprietary Algorithms to deliver cardiovascular diagnostic and prognostic tests that are significantly more accurate than standard-of-care stress tests, individual biomarkers, genetic markers, and clinical risk scores."
 
Study results announced last year, including by the European Society of Cardiology, credit Prevencio's diagnostic testing with producing promising results for an array of cardio-related diseases, including those relating to kidney disease and to peripheral artery disease (PAD) in diabetes mellitis.
 
The company's lone competitor for diagnosing coronary artery disease was a Stanford spinout whose lab tests had what Rhyne describes as "significant limitations" that led to Medicare canceling coverage late last year and thus the company went out of business after raising and spending more than $300 million.
 
"Our plans for partnering with other companies for licensing and commercialization will keep our burn rates low and facilitate partnerships, widespread dissemination, and exit," Rhyne said.
 
Rhyne's introduction to the medical instruments industry and coronary testing came early in her career when, after quickly tiring of being a pharmacist, she went to work for Quinton Instrument Co., the Bothell-based company that was a pioneering innovator in medical devices.


The devices she sold for Quinton ranged from stress treadmills to cardiac diagnostic equipment.
 
So she sports a smile when she suggests that her company is positioned to replace the diagnostic treadmill systems that were the medical devices with which she started her career in that field more than 30 years ago.
 
I asked Rhonda, during one of our interviews, why she had returned to Seattle after establishing a dominant Biotech presence in San Diego.
 
"My husband was in Seattle so after 12 years of being a couple (met, dated, engaged, and married) and not living together I thought it was prudent for our relationship and marriage," she replied.

Continue reading

Cuomo blasts critics who doomed Amazon deal - "...stupid or liars..."

Amazon_longislandcity

New York Gov Andrew Cuomo has laid to rest any doubt that the political fallout from Amazon's decision, in the face of loud but relatively small opposition, to abandon its plan to bring its HQ2 to New York will drift across the national Democratic party landscape heading toward the 2020 elections.'
 
An open letter released last Sunday on Cuomo's web page was written by New York State Budget Director Robert Mujica who basically derided those whose opposition led to Amazon's decision as either stupid or liars.
 
As Mujica ungently said of opponents of the project who claimed Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation: "This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials."
 
Mujica, whose letter has become fodder for blog comments across the political and economic spectrums, said there were three reasons the Amazon deal fell apart.
 
"First, some labor unions attempted to exploit Amazon's New York entry. Second, some Queens politicians catered to minor but vocal local political forces in opposition to the Amazon government incentives as 'corporate welfare.' Third, in retrospect, the State and the City could have done more to communicate the facts of the project and more aggressively correct the distortions."
 
On the third point is where Mujica took opponents of the project to task for his charge of "blatant untruth or fundamental ignorance."  
 
He explained that "The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits -- a program approved by the same legislators railing against it -- would provide up to $3 billion in tax relief IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue."
 
The fallout from Coumo's withering criticism of Amazon critics, through Mujica's superbly crafted narrative, coupled with the emerging influence of newly elected congresswoman Alexandria Ocasio-Cortez, could make New York ground zero for a major rift among Democrats, and not just those in New York.
 
Those elected officials scorned by Cuomo through Mojika's commentary, included Ocasio-Cortez, who has gathered growing support from elected Democrats on the left as well as left-leaning groups around the country, particularly after she promised that candidates like her will be on the ballot in an array of locations next election.
 
I looked through a variety of political and economic blogs about the Amazon debacle and found several that made compelling reading.

But the one that I found most compelling, though politically partisan, was from an economics blog called Marginal Revolution done by a couple of economics professors at Gorge Mason University in Virginia.
 
"I can only think that this is some sort of cognitive dissonance that prevents people of a certain politics slant from mentally processing words that go against a deeply held stereotype," wrote the prof, Alex Tabarrok. "Amazon is big. Bezos is rich. Obviously then the state gave them unique benefits. That's the only message that the left wing brain is neurologically capable of hearing, even though, in this case, it is the opposite of what happened."
 
His comment made me think his "certain political slant" likely fits both political fringes and it was then I realized it's been exactly a decade since the modern-day Tea Party came into existence, in either February or April of 2009, depending on which event its fans took to be the launch.
 
There obviously isn't going to be a liberal Tea Party, even if "neurological incapacity" can be found far out on either fringe. But what's happening in New York in the Amazon aftermath makes it clear there could be a mirror image of the Tea Party with the mirror folks shouting "yes, taxes!" in reply to the "no on taxes!" Or "more government" to"no government."
 
That's the "balance" of equally potent fringes which, even if each appeals to about 15 percent of their parties, will be reflected in pressures on the middle as the next election nears.
 
And because the liberal "Tea Party" mirror is coming about a decade on from the original, it will be affecting political positions more than in the past for Democrats. And thus it will be interesting to see how the positions of Washington State's two presidential wanna be's, Gov. Jay Inslee among the Democrat hopefuls and Starbucks' Howard Schultz as an independent, might change.

Continue reading

Amazon/New York - Are the days of corporate incentives or breaks coming to an end?

nyc

Watching the free-for-all of analysis and commentary over Amazon's misadventure romance with New York City, we're talking about the company now, now its CEO, over a second headquarters made me think of my senior-sprinter friend and author Steve Robbins. Although he is acknowledged as the most prolific author of management textbooks, he may now have an outline for one he's never written.
 
I'm referring to Amazon's unprecedented suddenly announced decision that it was no longer planning to build a second headquarters in a section of New York City's Queens neighborhood of Long Island City.  
 
I say suddenly announced because no one can be certain that Amazon's decision to turn away from New York was as quickly made as the announcement might suggest. Like the world third's richest company may have begun to have a change of heart soon after its early November announcement that unexpectedly there would another "second headquarters", adding Northern Virginia in the announcement that New York was the pick.
 
Is it possible Amazon execs hadn't thought things through about New York until Gov. Andrew Cuomo and New York Mayor Bill de Blassio pointed out, as they welcomed the company, that New York is a union town? That fact had assumedly already been digested by a company that doesn't go for union organizing.
 
The business fallout from this may simmer for a time but will likely disappear. Bu the political fallout will likely continue for New Yorkers into the next general election and maybe beyond.

Meaning from a business sense, Amazon will likely be able to go on as if nothing happened. As a former top Amazon executive told me, "the world is a very big place. If one doesn't want us, others will."
 
But politically, the rift between the New York Democratic party power structure and the newly emerging powerhouse of left-wing forces, some elected and some not elected, will echo down the coming months.
 
I called my roommate from college days at Marquette, who retired after fashioning a prominent New York legal career, to ask him his thoughts.
 
"A lot of the politicians who were against the Amazon deal didn't represent the district so they had no skin in the game and Governor Cuomo is outraged at the politicians who had no constituent reason to get involved but screwed it up," he said.
 
"Regarding the idea that unions opposed Amazon, a non-union giant, coming to New York: that doesn't make sense," he said. "The municipal employees union was very opposed because they feared the multi-billion dollar package the city had put together for Amazon would come out of their salaries and future raises.
 
"But a majority of the unions are upset that Amazon walked away. Do you think any of the construction-related unions weren't excited about what the future held for them?"
 
The Amazon-New York situation represents the conundrum that areas seeking to attract new business face. If a city or state don't offer the incentives, they are often out of consideration.  If they do play the game, they are open to public pressure to back off.
 
A longtime business leader in this state, when I asked about that conundrum, told me he thinks the days of corporate incentives or breaks are coming to an end.
 
"This movement among millennials to the left is going to reset the political system, including things like corporate incentives," he said.
"The selection process was, in my judgment the height of corporate arrogance in a time when the tide is going the other way," added my business-leader friend.
 
"The variables which help strengthen public support for a company's actions are the goodwill a company builds in the community and the public support they build," he added. "Boeing has been a master at that, something they learned after the 1972 cutbacks from the demise of the SST."
 
So back to Steve Robbins and his management textbooks. I haven't seen Robbins, who moved from Seattle to Cleveland a few years ago and turned 76 last month, for a decade but was caused to recall his leaving me far behind in various 100-meter races in masters and senior games events. But fortunately, I got to talk with him after or over coffee about both writing and running.
 
I'd love to get hold of him now to get his view of the management aspects or lack thereof, that might have been in evidence in the non-dramatic drama of Amazon's decision.
 
I flipped through his nearly three dozen titles, of which he has sold 10 million copies and that have been translated into 20 languages, to see if any of the titles, all available on Amazon, might suggest he's already been there in the discussions and lessons in his management textbooks.
 
Robbins' books focus on conflict, power, organizational politics and interpersonal skills. Which of those were in evidence or absent, and to what extent, would make interesting cocktail lounge or boardroom, discussion.
 
I was intrigued at the title of one of Robbins' books: "Divide and Conquer: The ultimate guide for improving your decision making."
 
It occurred to me that the way Amazon left the New York political scene in taters definitely demonstrated an ability to divide, as was also evidenced in the embarrassing snafu of the Seattle City Council and its aborted head tax.
 
I'll leave the "conquer" to those cocktail lounge conversations.

Continue reading

The Future Role Of Newspapers And To Whom It Really Matters

Ben-Franklin-at-Printing-Press

A most interesting, and broadly important, corporate takeover battle is taking place in full national view but unfortunately, it's apparently attracting only modest attention from the general public, perhaps because of declining numbers of the public view the issue at stake as all that important.

That issue is the future of daily newspapers, framed against the hostile bid by Alden Global Capital, a New York hedge fund that has bought and then proceeded to suck the life from scores of newspapers in this country, to buy Gannett, owner of the country's largest newspaper chain.

If Alden's hostile takeover succeeds, the hedge fund's Digital First Media company would gain control of Gannett's 100-plus local newspapers as well as Gannett's flagship publication, USA Today. Digital First, which has a long record of stripping the staff and assets of newspapers, would become the largest newspaper chain in the country.

In the view of traditionalists, journalism, the kind that presumes investment in people and tools to deliver the kind of information that enables the informed public opinion that some of us believe democratic governance requires, would suffer another grievous blow at the hands of Digital First.

But the intriguing question is: does anyone other than those instilled with traditional journalistic mores, or moral compass, really care in an era of internet and social media and social network platforms that reach audiences with whatever information or messages they wish to receive or share. And there is coming to be an almost limitless number of those information alternatives, well beyond Facebook, Twitter, LinkedIn, and YouTube, each attracting not only customers but also ad revenue in increasingly clever and user-intrusive ways.
 
As far back as the turn of the last century, local daily newspapers were attracting ambitious men who wanted to own a lot of them. First, it was newspapermen like William Randolf Hearst and E.W. Scripps, and a small-town New York newspaper owner named Frank Gannett, who all had a personal zeal to expand their newspaper holdings as much for personal influence as for profit.

Soon companies that owned groups of newspapers, each of which could be expected to post profit margins approaching 50 percent, realized that as public companies they could return dramatic shareholders profits. Thus emerged newspaper companies like Knight-Ridder, McClatchy, Newhouse and Lee Newspapers and a host of smaller, lesser-known chains. And of course Gannett, the nation's largest.

But even the most committed newspaper groups, while pressing to maintain quality coverage for each of the communities they served, realized that delivering continually increasing profits required cost-cutting focus in all areas, not just logical ones like travel and meals and entertainment but also, inevitably, personnel.  

Then as daily newspapers began a long and slow but steady decline in circulation and advertising revenue, both the result of waning customer interest, newspaper acquisitions become appealing for far different reasons than the surging profits that once marked the industry.

So the sharks began to circle and there were a number who created profits by acquiring newspapers and imposing devastating cost constraints, which inevitably meant editorial staff reductions and thus the quality of the news coverage.

And Alden's Digital First found even greater investor appeal, realizing that after they bought a newspaper at a distressed price, they could not only reap the cash flow and lay off employees, but then sell the buildings the newspapers had owned. Thus disappeared or shrank dramatically dailies of onetime major prominence like the San Jose Mercury News, the Denver Post, the Orange County Register or the Oakland Tribune, which Alden merely closed.
At first, readers looked to television to provide news in a much more timely fashion than newspapers. Then social media platforms emerged to provide people with an outlet to feel like they could escape from the real world and interact with people who shared like minds and common interest on one of the web-based communities.   

Suddenly alternatives to conventional media like newspapers provided places to unplug from the grind of corporate America, family or whatever a person needed a break from, which was frequently the onslaught of information about wars, politics, disasters, or combinations of all three.

Meanwhile, most daily newspapers have fallen short in efforts to replace lost circulation and advertising revenue with revenue from digital news and product offerings. Though the device of luring readers to websites and then requiring a subscription in order to proceed beyond the first paragraph is benefitting those with higher-quality editorial offerings.  

So what of that conventional wisdom about the fate of newspapers holding the key to the health of democracy?  

Well, first those engaged in the demonizing of media for political reasons are having an active impact on the declining acceptance of newspapers. In addition, an article in Wired magazine last week included an article entitled "Journalism isn't dying. It's returning to its roots."

"If men like Ben Franklin or Samuel Adams, both newspapermen returned to today, they'd find our journalistic ecosystem, with its fact-checked-both-sides-ism and claims to 'objectivity' completely unrecognizable," suggested the Wired writer. Both founding fathers wrote under numerous pseudonyms and Franklin pioneered placing advertising nest to content.

"We take journalistic objectivity to be as natural and immutable as the stars, but it's a relatively short-lived artifact of 20th-century America," the Wired article continued. "Even now it's foreign to Europeans-cities such as London cultivate a rowdy passel of partisan scribblers who don't even pretend there's an impregnable wall between reportage and opinion."

The Wired article, written by Antonio García Martínez, who worked on Facebook's early monetization team where he headed its targeting efforts, suggests that "While the tone of journalism might be headed back to the 19th century, clearly the business models are not. Revenue-wise, the Great 21st Century Journalism Shakeout will likely end with smaller organizations inventing new business models that the villains-the internet and social media-enabled."
There's a local aspect to this column: it's the observation that this state benefits unusually from the number of local and family-owned daily newspapers operating here, compared to other states.  

But those newspapers in Spokane with the Spokesman-Review, Vancouver with the Columbian and Seattle with the Seattle Times, plus Yakima and Walla Walla that I also include as a local family owned since they are Seattle-Times owned, face dramatic financial challenges that do threaten their survival.

I also include the Lewiston Morning Tribune among the local, family-owned in this state because The Trib serves an audience across parts of Southeast Washington and the Palouse, through its Moscow-Pullman Daily News. And also because two of the stories about the community service that comes with local ownership relate to the late A.L. Alford and his son, A.L. "Butch" Alford Jr., former publisher, now president and chairman of TPC Holdings, an umbrella for the Tribune and Daily News. Butch succeeded his father upon his death in 1968 and passed the publisher Baton to his youngest son, in 2008.

Seems that years ago, The Trib was writing some stories critical of Potlatch, the then locally based lumber-products public company that was a major advertiser, when the CEO one day paid a call on publisher A.L. Alford Sr., and made it clear there would be no more Potlatch advertising in the Tribune unless the critical stories stopped. So the senior Alford, without further ado, asked his assistant to please show their guest to the door and the CEO, true to his word, stopped advertising and the critical stories continued.

A few years after he became publisher, Butch Alford was appointed to Idaho Board of Education and took the occasion to write a front-page column detailing his various business and community involvements and ties, explaining to readers that he felt it important that they be able to be aware if his newspaper's coverage seemed to be influenced at any time by his involvements and interests, so they could call him to account if it seemed appropriate.

Without offense to the journalistic stints of our founding fathers, I'd personally prefer that the future of newspapers was in the hands of those like the Alfords rather than Franklin. I only hope the future is not in the hands of Alden. Or Facebook's Mark Zuckerberg.
Continue reading

WA legislature and Congress in crosshairs over consumer privacy

privacy_banner

Lawmakers in both Washingtons are in the consumer-privacy crosshairs amid a growing awareness, and thus anger, of how little people are able to keep private about themselves.  
 
While both the Washington Legislature and Congress are deliberating bills the lawmakers hope can be crafted to satisfy both tech giants and consumers, there is an increasingly uncomfortable sense among legislators at both the state and federal levels that they had better not rile consumers further on the privacy issue.
 
And interestingly, part of the script for how this struggle between the tech industry and individuals over privacy plays out may be written in Washington state, either with the legislative tax hammer that is almost uniquely available in this state or by an emerging Bellevue company that hopes to take the privacy issue out of the hands of the tech giants.  
 
The tax tool is the state's business and occupation tax, a use tax on gross receipts rather than profits, which can and has been imposed in a punitive manner. The business start-up company is Helm, which has created a relatively inexpensive device, about the size of a router, that lets consumers send and receive emails from their own domain. More on both the b&o and Helm later.
 
At the federal level, Sen. Ron Wyden, D-Ore., is proposing sweeping new legislation that would empower consumers to control their personal information, create radical transparency into how corporations use and share their data, and impose harsh fines, even prison terms for executives at corporations that misuse Americans' data.
 
As Wyden has put it: "Today's economy is a giant vacuum for your personal information - Everything you read, everywhere you go, everything you buy and everyone you talk to is sucked up in a corporation's database. But individual Americans know far too little about how their data is collected, how it's used and how it's shared,"  
 
Washington Gov. Jay Inslee said he expects the state legislature to address privacy in the upcoming session, saying he has begun discussions with tech leaders in the state "about a privacy policy that is consistent with innovation and also consistent with fundamental rights of privacy." And Inslee expressed confidence about getting a policy, probably in this session, that will be pleasing to innovators and consumers."
 
"Pleasing" to the big tech companies like Facebook, Google and hometown Amazon is an almost amusing word for a governor to use when "acceptable" to the tech giants is the best that is likely to happen with any state legislation that constrains the manner in which personal information is being collected and used.
 
That's particularly true with citizen pressure on lawmakers here and in other states after California's Assembly and Senate overwhelmingly passed a far-reaching piece of legislation called the California Consumer Privacy Act of 2018 (CCPA). The measure largely mirrors protections offered to European citizens under the recently implemented General Data Protection Regulation (GDPR), is likely to drastically change the ways that American companies store and trade in consumer information for Californians.
 
The law allows Californians to ask firms collecting and selling data: what do you collect, why and with whom do you share it? And it allows California residents to opt out of the sale of their data and to request deletion of their data.
 
And in addition to Wyden's zeal on behalf of privacy, the passage of CCPA is spurring the tech industry to seek Congressional action on something they could at least reluctantly accept to avoid what they are protesting as a possible "patchwork approach to privacy policy" if each state enacts its own version.
 
So in the event Washington lawmakers approve legislation that makes its citizens happy about new state protections for privacy, and then Congress approves a law that offers dramatically less protection that supersedes what states like California, and Washington, have put in place, how can this state preserve the protections it will have given its citizens.?
 
A suggestion, borne or my political-writing background: The state, led by its Democrat Atty. Gen. Bob Ferguson, could put in place a privacy policy that companies would be told they must comply with or a special B&O tax rate of some compelling amount, maybe even 25 percent, will apply to those firms not honoring our privacy policy.  
 
Would Ferguson have the courage to confront major tech companies either located here, like Amazon or having a significant presence here like Google and Facebook? Given the fact that he'd like to be Inslee successor as governor and that his key role is first and foremost "preserving the rights of the individual," he could fatally impact his political hopes if he failed to follow the public demands on this issue. And in fact, if he failed to take a protective step demanded by citizens, they could use the initiative process to create a special b&o tax rate themselves.
 
This wouldn't be a law, since the federal government if Congress passes a privacy act, would likely have pre-empted states passing laws governing privacy. But legislation imposing a different b&o tax and the significantly higher rate has a long tradition protected by decisions of the Washington State Supreme Court.
 
Would what I am talking about be legal blackmail? Consider that there are almost three dozen B&O classifications with rates often unexplainable, like parimutuel wagering having a rate of .0013 and gambling contests of chance, .015. The latter, incidentally, is the rate for "service and other activities," which includes professional firms like attorneys as well as consultants-the rate I pay.
 
And how law firms came to be taxed at the highest rate is instructive for how lawmakers in Washington can use the b&o. In the 1993 session, lawmakers sought to extend the sales tax to the legal profession but the attorneys brought their lobbyists to the fray and successfully defeated the effort. Presto, came the highest b&o tax suddenly applying to attorneys, just about tripling their tax.
 
I once asked the late Gov, Mike Lowry if that came about as punishment by a Democratic governor (him) and Democratic legislature and he let out one of his classic shoulder bouncing laughs.
 
When I discussed the privacy issue with Bellevue-based research analyst Jim Hebert, he noted that Congress has been through a major privacy-invasion crisis and solution before. He was referring to the reforms in consumer credit law to combat excesses of the credit agencies.  
 
"The agencies collected information on you, kept it and sold it to banks and others, with statistics disclosing that 40 percent of the information was wrong and no one knew it," Hebert said.  
 
The outcome was legislation enacted requiring that all such data the credit agencies collect is now turned over to a third-party organization that polices the data's accuracy and makes it available to consumers.
 
"Credit bureaus weren't put out of business or even really damaged by the corrective legislation," Hebert noted.
 
So back to Helm, the Bellevue company that was the idea of  Giri Sreenivas and Dirk Sigurdson, two entrepreneurs who had sold a security startup and raised a $4 million seed round from top venture capital firms last year.
 
"Right now, nearly all of the data that comprises your online life is stored in a massive data center," Sreenivas wrote in a blog he posted. "You don't own it. You can't see it, you can't touch it - and you don't know who can. That dream of a device that would make data 'ownable' to the individual - not a stranger - is what led to Helm."
 
Their device connects to a home network and pairs with a mobile app that lets users create their own domain name, passwords, and recovery keys. Helm supports standard protocols and works with regular email clients such as Outlook or the Mail app, with encryption protecting the connection between the device and the apps.
 
A key challenge for privacy champions is the apparent uncertainty about the extent to which younger generations will care enough to get into the fray as opponents of the big tech data collectors, although a recent survey I saw said there's growing disillusionment among people in their twenties and thirties surrounding social media.
 
But in a comment that leaders of the privacy battle would find disappointing, one of the millennials in the survey was quoted as saying "I feel like our generation has been raised to not be so worried about online privacy because it just feels like there is no alternative. Ultimately I do value privacy in theory, but it feels like it's a cost of participating in society. Not just online."

-0-

An amusing post-script to last week's column
 
An email from a Russian friend provides a post-script to last week's column in which I suggested the formation of a business that, for a fee, could crowd the fringe in congressional or legislative races, helping ensure the re-election of moderates of either party.
 
Natalia Blokhina, who helps guide a Moscow-based fund management company that invests in U.S. companies, as well as companies elsewhere, sent me an email saying it was an interesting column.
 
Because I sought to help introduce Natalia to companies in which her fund might invest, I emailed her back asking if her fund might be interested in being an investor if the idea of a Save Our Middle LLC took hold.
 
"It would be interesting to tell people we have Russian investors in our company," I joked to her.
 
"We wouldn't want to be involved in a political company," she replied quite seriously.
 
You can search the column I did about Natalia at Flynn's Harp: Natalia Blokhina.

Continue reading

State offers session focusing on new tax break - Opportunity Zones

opportuntiyTax_Banner

The state Department of Commerce is convening a day-long session in Seattle next week to help an army of accountants, attorneys, developers, and investment advisors get a better grasp of the unlikely new Federal tax tool that will allow the wealthy to make money while making a difference.

That tool is the Qualified Opportunity Zone provision in the Tax Cuts and Jobs Act of 2017 that will permit those owing capital gains tax to delay, reduce or even totally avoid those taxes by investing in special funds designed to start businesses and provide other steps to help economically distressed communities.

What's referred to as the OZ act wasn't actually contained in the original major rewrite of the tax reform act that was crafted by congressional Republicans and the Trump Administration. Rather it grew out of a measure filed a year earlier called the Investing in Opportunity Act.

Sen. Tim Scott, R-South Carolina, who wrote The 2017 Investing in Opportunity Act measure that was filed and then forgotten in committee, gathered support from moderates of both parties in a true example of working together to revive the bill as an addition to the major tax bill.

Its inclusion in the Tax Act has attracted comments like "for investors who want to make money and make a difference," and "for investors who want to make money and do good in one fell swoop.'

Governors of the 50 states were brought into the implementation of the act by having the opportunity to designate census tracts where various business ventures would be eligible for the OZ benefits, through investment by Qualified Opportunity Funds.

The program pinpointed more than 8,500 eligible census tracks in the U.S., with 139 of them in this state. Most of the tracts where businesses and projects can be located to attract capital are single tracts but in one area in this state, 11 tracts were put together as a unit.

While the IRS must still announce final details, like who can legitimately invest in projects, interested investors and those who would like to attract investors have been poring over details of the legislation.

Sarah Lee, project director in the office of Economic Development and Competitiveness in the State Department of Commerce, who has been closely involved with Washington State's role implementing the act, told me "listening sessions" in Wenatchee, Spokane, Tacoma, and Clallam County led up to the Seattle session next week.

She invited the Federal Reserve Bank of San Francisco to join the Department of Commerce and the National Development Council (NDC) to plan and put on the day-long event at the Bell Harbor Conference Center.

Lt. Gov. Cyrus Habib, who with the state treasurer Duane Davidson and Commerce Director Brian Bonlender took the first pass at the census tracts to include, then forwarded the list Inslee for final determination, will welcome attendees at the Bell Harbor event, in remarks expected to tout the opportunity the act presents.

Chuck Depew, senior director and West Team Leader at the NDC, said: "In the development world, you don't often meet people with high net worth looking to be involved, but that world is now going to change."

Depew provides technical assistance in project finance, development negotiation and housing finance to communities throughout the Northwest, including Utah and Wyoming and Northern California, for the NDC, which for more than 30 years has worked with local jurisdictions on multiple housing and economic development efforts.

The challenge in the program is how can Opportunity-Zone communities, rural, urban and tribal, encourage mission-driven investors, including private, community and family foundations and social impact investors to be involved.

After Washington Gov. Jay Inslee made it clear to OZ planners in this state that the native-American tribes had to benefit from the program, five tribes participated with six communities in creating an 11-tract zone on the North Olympic Peninsula.

The tribes, along with the key communities in Clallam and Jefferson counties and two port districts, have invited the public to participate and make suggestions for projects that will address economically distressed areas in the two counties in what they have dubbed the Emerald Coast Opportunity Zone.

The project to create the Emerald Coast Opportunity Zone (ECOZ) will be on display at the Bell Harbor event next week and Lee said there is already interest from the Colville Confederates Tribe in Central Washington in looking into the planning that led to the ECOZ.

The Bell Harbor gathering will feature panels of philanthropists, social impact investors, banks and lending entities as well as what is being called a "pitch fest" at which individual entrepreneurs and project innovators will have a chance to "sell" individual projects to the attendees.

Advance billing for the event suggests that Participants "will have the opportunity to work together to engage, inform, and influence key projects in shaping the future of Washington State through investing in local communities with thoughtful leadership and empowering innovative projects.

U.S. investors currently hold an estimated $2.3 trillion in unrealized capital gains on stocks and mutual funds alone-a significant untapped resource for economic development. The QO Zone legislation allows investors to temporarily defer capital gains recognition from the sale of an appreciated asset, but only if they reinvest the gains into a QO Fund.

One analysis of the tax deferral funds suggested: The new QO Funds will "democratize" economic development by allowing a broad array of investors throughout the country to pool resources and mitigate risk. That will increase the scale of investments going to underserved areas and thereby increase the probability of neighborhood turnaround."

It occurred to me that the OZ effort could provide a new recruitment tool for state and local communities since a person owing capital gains can invest those in a qualified census tract in any part of the country.

"While the state hasn't talked about using this for recruitment of companies, it makes perfect sense," Depew said after I told him that officials in Montana told me at an outreach event to Montanans who now live in the Seattle area that they are already seeking to learn how they could make that a state growth strategy.

Thus the logical next step is for states and possibly regions of multiple states, along with businesses and developers, to develop marketing programs to reach out to those seeking to figure out how to invest their capital gains.

The act specifically prohibits any of the approved funds from investing in what the act describes as "sin" businesses, a list that specifically excludes commercial golf courses, country clubs, massage facilities, liquor stores, suntan facilities, and "race track or other facilities used for gambling."

So obviously one business that won't be permitted, particularly where the tribes are involved n an Opportunity Zone, would be a new casino.
Continue reading

One-time phone company exec recalls two memorable political campaigns

packwwodBanner

It was 50 years ago that James Elias, then a local Portland area telephone company manager, suddenly became a political giant killer when he agreed to run the U.S. Senate campaign of a popular Republican legislator and proceeded to guide the defeat of an Oregon icon known as "the tiger of the Senate."

Elias was a 33-year-old Portland district manager for the old Pacific Northwest Bell (PNB) when Robert Packwood, who had been a force in the Oregon legislature since his election in 1962, asked Elias to manage his 1968 campaign, an unlikely quest to topple one of the most respected men in the Senate, Wayne Morse.

Before continuing with the Packwood story, It's important to note the second chapter of this column is the gubernatorial campaign in Washington State four years later when Elias guided the precedent-setting re-election of Republican Dan Evans to a third term.

Ironically, both Evans' opponent in the third-term bid, former Gov. Albert D. Rosellini, and Packwood as a prominent Oregon legislator had served as consultants for Elias in speaking to PNB managers and doing some training about political issues in the two states.

But back to Packwood, whom Elias recalls wasn't even mentioned by name at first in the state's major newspaper, The Oregonian, which merely referred to him as "Morse foe."

After all, Morse was one of only two Senators who voted against the Gulf of Tonkin resolution that basically gave President Lyndon Johnson carte blanche to pursue the Vietnam War any way he wished, without again having to ask Congress. And Morse had remained one of the Senate's most vocal critics of the war.

But he had made enemies over time because of his switch of parties from Democrat, as which he was originally elected, to Independent, for which he proudly claimed for himself the role of the Senate's one-man Independent Party, and eventually to Democrat.

And in facing Packwood, he had an opponent of broad appeal. As Elias recalled: "We had thousands of young people all across the state working for what they viewed as a different sort of candidate, liberal on social and women's issues, although fiscally conservative."

"We put out position papers on any issues anyone could care about, dozens of them," Elias said. "After a while, people couldn't believe anyone was on top of so many issues."

"In the end, The Oregonian did an editorial page column saying, basically, that Packwood seemed to be 'more knowledgeable on more issues than we've ever seen,'" and they began calling him by name. Packwood kept climbing in the polls and eventually won.

Elias recalls that after Packwood's election, the new Senator wanted him to come to Washington as his administrative assistant and when he learned Elias had no interest in going to Washington, D.C., "Packwood wouldn't talk to me for six months."

Taking on the Evans third term campaign brought about one of the all-time strangest political stories when Elias hired a young Ted Bundy, who would later be found to be a serial rapist and killer of young women but was then an intelligent and personable political science student.

"I always hired 'spooks' to hang out with the competing campaign," Elias explained. "They'd pick up things the candidate said more candidly with those close to him, then I could use that information to frame questions comparing private comments with what they were saying in public."

"So Bundy was our 'spook' in the '72 campaign. He was a smart kid and I sent him to hang out in Rosellini's campaign and Al got accustomed to talking with Ted and eventually had Bundy ride along with him and talk," Elias said with a chuckle.

Elias' wife, Ann, a partner in any campaign he was involved with, did the polling research and determined that Rosellini was ahead in the polls and continued so until the two candidates debated.

"As the debate ended, the floor was opened for questions and answers and I had our people, with their prepared questions, hurry to the mike and they were the first dozen people to ask questions," Elias said. "One of them was Bundy and when Rosellini realized the kid he had trusted was actually in the Evans camp, he could only stammer and his jaw clicked in the classic 'Rosellini is upset' reaction."

It was then that Rosellini mouthed his "Danny Boy" reaction to Evans that observers said turned the campaign. Ann's polling showed that Evans climbed from that time on and he won a third term.
 
Jim and Ann Elias were stunned, as were all those who knew Bundy, when he was jailed three years later in Utah as his string of murders of young women began to unfold. 

Elias shared that Ann, his wife of 52 years, played key roles in both the Packwood and Evans campaigns.

"For Packwood, Ann managed all of the county chairmen statewide as well as all who volunteered to work in the headquarters," he said. "After Packwood was elected, he got her appointed to manage the largest 1960 census district in the country."

 "For Evans' campaign, Ann was responsible for the polling. She drew the sample of voters to interview, constructed the questionnaires and supervised the people conducting the research," Elias said.
 
Packwood served four terms in the Senate and was always in the forefront of women's issues, including being an early and ardent advocate for abortion rights and a strong supporter of the Roe vs. Wade decision of 1973.
 
 Thus it was a stunning fall from grace when the Washington Post, in 1992, published a series of articles chronicling accusations of sexual harassment against Packwood, who fought the charges. but more women came forward to make the same claims. After three years of controversy, the Senate Ethics Committee recommended his expulsion and Packwood resigned from the Senate on October 1, 1995.
 
Elias returned to his Northwest management role with the phone company, turning down opportunities to go to New York and Washington, D.C.,(again) but by the early '80s he became part of a new challenge, the breakup of AT&T and the spinoff of the local phone companies that became known as " Baby Bells."

He recalled skiing in Sun Valley when he was notified that "Mr. Smith (Andy Smith, PNB president) was sending a plane to pick him up to return to Seattle.

"Divestiture had been ordered by the Federal Court and Smith wanted Elias to handle the public relations challenge of convincing the public that "just because we were being spun out from AT&T didn't mean we were now adrift in relating to our customers."

But as AT&T sought ways to come back from the breakup, it apparently sought legislation in Congress that might have allowed it swallow its orphaned children.

Elias recalls going to Packwood to get him to kill the legislation, which he did, getting back to Elias with a comment he well remembers: "You just cut the heart out of AT&T."
Continue reading

Could insider trading issue stir conflict of interest in congressional races?

BrianBaird_banner

The insider-trading quagmire in which New York Congressman Chris Collins finds himself may be occurring at the perfect time, in the midst of an election season, to inject an issue of substance rather than merely another political issue into congressional races around the country. The question is the need for closer scrutiny of personal financial involvements of members of Congress.

BrianBairdBrian BairdCollins' troubles stem from charges by Federal prosecutors that he used his seat on the board of a small Australian drug company to tip off his son and others that the company had failed a critical human trial and that the thousands of dollars of stock they all held would be taking a disastrous hit.

That was the first time I knew, the naïve soul that I must be, that members of Congress could sit on boards of publicly traded companies, thinking it beyond question that someone assumedly serving the best interest of constituents who elected them couldn't also fulfill the fiduciary duties to shareholders that a board member has.

Brian Baird, the former Democratic Congressman from Washington's third district whose major impact was his leadership in achieving legislation that now requires members or Congress to abide by the same investor rules that govern the rest of us, thinks it doesn't even deserve to be elevated to the legitimacy of a question.

"Being a member of Congress is a full-time job," said Baird. "I put in 70 hours a week during my time in Congress and the idea that I could also fulfill a fiduciary obligation to shareholders is preposterous."

Thus the issue that Collins' apparent insider-trading transgressions opens up for injection into congressional races is a close scrutiny of all financial activity by incumbents, not just involvement on boards.

One problem is that while members of the Senate are prohibited from serving on corporate boards, members of the House are not, though they can't be compensated for serving in such roles. But while a member of Congress files a financial disclosure report each year, there's no central database where that information is available.

But Baird thinks there should be, and that it would be well if some government-watchdog organization could digest and disseminate it and thus provide the opportunity to evaluate the financial conflicts of those running for re-election. That could be a welcome factual issue to inject into those campaigns rather than merely political rhetoric. And perhaps it would impact some election outcomes, thus frightening others in Congress to shed inappropriate financial dealings.

It might be uncomfortable for some incumbent Republicans to come down too hard on questionable financial activity, given the track record of many members of the cabinet of President Trump who may have made it appear that unseemly financial activity was a requirement for selection.

But lest that come across as a political comment rather than a journalistic observation, I'll add that Democrats could also have a bit of discomfort if they are too critical of the current environment given that the "Queen of the Questionable" may be House Democratic leader and former House Speaker Nancy Pelosi.  

No one who saw her mishandling a question in the now famous 60 Minutes segment relating to questionable investment activities by members of Congress would possibly argue with that characterization of her relating to at least past financial involvements.

Baird spent half of his 12 years in Congress in a frustrated, and futile, effort to gather support for his legislation to make it illegal for lawmakers to engage in the kind of financial transactions that those in the real world know as Insider Trading and for which ordinary people can be sent to jail. Baird and one or two supporters offered it each session but couldn't even get a committee hearing.

Then came the 60 Minutes piece by CBS reporter Steve Croft, which amounted to merely highlighting the replies of then-House Speaker John Boehner and former Speaker Pelosi to his unexpected questions about their stock transactions. Boehner merely like someone hiding from the truth but Pelosi looked, like someone simply incompetent, stuttering ..."I don't understand your question. Um, You aren't suggesting I'd ever do anything that wasn't in the best interest of my constituents...?"

Croft's reporting exposed how members of Congress and their staff traded stocks based on nonpublic information to which they had exclusive access, the very issue Baird's ignored legislation was designed to address.

The news program sparked a public outcry and lawmakers by the dozens scurried like frightened rats to get aboard as supporters of the bill amid the public outcry, and so in April of 2012, the measure titled the STOCK Act (Stop Trading on Congressional Knowledge) was passed.

Despite the passage of the legislation he pushed, Baird said in an interview last weekend: "The whole issue of conflict of interest in Congress is something they have never addressed."

"I'd love to see a study about how often members or Congress excuse themselves from voting on something because of conflict of interest," he added.

And wouldn't it be heartening if the media focus on Collins' legal challenges over his financial activities led to the kind of public outcry, particularly during an election campaign, that could stir a congressional rush to get on board a reform effort as happened with the rush to pass the STOCK Act.

Continue reading

Bellevue company gets rare patent win - suit against tech giants gets agency okay

David_und_Goliath_banner1

A small Bellevue-headquartered technology company has won a landmark ruling from a controversial patent-appeals board that executives and key shareholders of the little company suggest could lead to multi-billion-dollar patent-infringement settlements with some of the nation's largest tech companies.

David vs. Goliath is an overdone metaphor. But in the case of Voip-Pal.com Inc. (Voip-Pal), which has a suite of patents on technologies dealing with what are known as Voice Over Internet Protocol (VoIP) and that have been the focus of its legal battles with the likes of Apple, AT&T, Verizon and now Amazon, it may be an understated metaphor, particularly since there are multiple Goliaths.

Amazon is the latest tech goliath to be sued by Voip-Pal. The small company contends, in its June 15 suit filed in U.S. District Court in Nevada, that Amazon's Alexa calling and messaging services uses Voip-Pal's patented technologies to direct voice and video calls and messages.

The stage was set for the suit against Amazon, following suits against Verizon, AT&T and Twitter, by a decision from what's known as the Patent Trial and Appeal Board (PTAB), which unexpectedly tossed out the combined effort by Apple, AT&T and Verizon to have all or parts of Voip-Pal's patents ruled invalid.

Voip-Pal has now filed $9.7 billion in lawsuits against the major companies mentioned above. And about 60 companies have received "introduction letters" advising them of the VOIP patents and that the companies might be infringing on those patents, more suits are possible. However, execs say they expect that many of those companies will merely decide to license Viop-Pal products rather than face suits, given the PTAB decision.

In fact, according to Voip-Pal president Dennis Chang, "we could make an enormous amount of revenue just licensing our patents since people have been infringing for years." Chang, who joined the company in 2009, helped guide the 2013 share-purchase acquisition of Digifonica, a small private company that built the portfolio of patents now owned by Voip-Pal.

If Voip-Pal's developments were a work of fiction, it would contain most of the dramatic elements, ranging from tension and contrast to conflict, mood and symbolism, necessary to make it a spellbinder attracting substantial interest.  

But the fact that the company is real rather than fictional sets up a different set of dramatic elements of which it is playing a part, all relating to the 2011 America Invents Act that spawned the PTAB. Those elements range from unrest in the investor and entrepreneurial communities to criticism from courts all the way up to the Supreme Court as well as potential Congressional action to change the federal Act.  

And with the proposal now gathering support in Congress that would restore health to what many are referring to as "America's crippled patent system," Voip-Pal could become the leading edge of small-companies' pushback against the perceived inequities in the current "unintended consequences" of a 2011 law.  

I first learned of Voip-Pal and its unprecedented string of patent-infringement suits from Sandy Wheeler, a significant shareholder who was co-founder and key executive of fitness-equipment manufacturer Bowflex that, through acquisition of other fitness companies, became the Nautilus Group Inc.

Wheeler, an Ellensburg resident who was key in building the Bowflex brand into the second most recognized name in the world of fitness equipment. He has since founded several other companies in addition to becoming a significant Voip-Pal shareholder.

Wheeler, a longtime friend, is not a rookie when it comes to patent-infringement legal actions since four years ago he was involved with a case that went all the way to the U.S. Supreme Court, which ruled in favor of Nautilus.

After Wheeler alerted me to the Voip-Pal story, I was intrigued, as I searched for any stories about the company or its various suits against the giants of the tech and telecom industries, that I could find little in the way of coverage and certainly not in major media. That despite the fact that the company's website is rich with news releases, video interviews and YouTube pieces and other efforts to attract coverage.

Voip-Pal stock is traded Over the Counter as VPLM, last traded at .07 and over the past 52 weeks, the stock has ranged from a penny a share to 45 cents, with the high occurring late last year after the PTAB ruling. The company has a market cap of about $125 million but that obviously ebbs and flows with the stock price.  

The Voip-Pal effort to stir greater attention clearly relates to the desire by key shareholders to see the stock begin to reflect what they view as its "true value," as the suits move toward the expected outcomes.  

Emil Malak, Voip-Pal CEO, said in a telephone interview that "given the strength of the patents, and the decision of the of PTAB, I fully expect that the infringing entities will either license or acquire the Voip-Pal technology, bringing major returns to our shareholders."

Malak, a Vancouver, B.C., investor and inventor, and other company executives feel that the PTAB decision means the major tech companies may decide that it is more logical financially to pay the licensing fees to Voip-Pal rather than face the treble damages that would be an option for the company if the infringements continue.

"After the years of developing and testing, and obtaining the related patents, Voip-Pal is ready to license or offer for sale its patented technologies," said Malak.

The three-member PTAB, frequently criticized as a tool of major companies, issued a unanimous 3-0 decision in favor of Voip-Pal's position and thus its patents stay intact, as issued and granted by the U.S. Patent & Trademark Office.

The PTAB, whose image is as a pawn of big companies, made its unexpected decision on behalf of Voip-Pal with the potential consequence of threatening the traditional paternalistic legal interaction that has become the hallmark of patent and trademark infringement actions brought by small patent holders.

Malak, in explaining the suit against Amazon, said: "After investigating Amazon's Alexa platform and Echo line of products, our technical team has concluded that the calling and messaging functions infringe our patents."

"Amazon's foray into communications seems to be part of a larger trend of giant corporations battling for market dominance by offering Internet-based communication products that integrate with traditional telephony networks," said Malak,

The suits all stem from the fact that in 2004, Voip-Pal's now wholly owned Digifonica subsidiary, began developing, inventing and patenting many of what Malak contended are "the same communication methods that are now being employed by today's Internet giants."

It was a revolutionary idea at the time, three years before Steve Jobs unveiled the iPhone, when most people were making calls using landline-based phones or cell phones, with information traveling over phone lines and cellular networks.

Malak said in our telephone interview: "We had the vision that within 10 years, the Internet would become the primary means for telecommunications," adding that his team "realized that, in the future, calls, media, and messages would be primarily routed using the Internet, with a seamless transfer to cell phones, landlines, or computers wherever necessary."

"The PTAB is a 'non-appealable' court and Apple knows that and they are not going to get any traction with their request," Wheeler told me. "They simply know that their letter request delays everything...but their days are numbered."

The PTAB itself is an interesting business story that I was surprised to find hadn't received a lot of media attention, despite negative comments by federal courts all the way up to the U.S. Supreme Court, which, in one case, made reference to what it called PTAB "shenanigans" in its legal actions

The PTAB was formed in 2012 to implement the America Invents Act of 2011, a measure passed by Congress and signed by the president that critics have said transitioned the U. S. from a "first to invent" patent system to a system where priority is given to the first inventor to file a patent application, a system that tends to benefit large companies.

Part of the criticism that has been leveled at PTAB is what has been referred to frequently as "systemic problems," such as judges not having to disclose conflicts of interest when sitting to rule on patent-validity issues that could involve companies they previously worked for or in which they have an interest.

But in Voip-Pal's case, PTAB's apparent growing sensitivity about allegations of those systemic problems may have been beneficial to Voip-Pal's victory against Apple since the original three-judge panel appointed for the case was unexpectedly changed to a new trio of judges without any real explanation. Voip-Pal executives say the new panel, appointed from among the more than 100 patent judges that can be tapped for such cases, "gave fair review on all the merits" of the proceedings.

Meanwhile, bi-partisan legislation titled The Stronger Patents Act, which sponsors say would "restore patents as property rights and give startups a better chance to protect their property from entities with much greater resources," is likely to begin making its way through Congress.

Observers say the act, filed in both the House and Senate, is "designed to strengthen the United States' crippled patent system."

Continue reading

There are still some things left to be said about Seattle's planned head tax

seattleBanner

As reactions to the head tax the Seattle City Council imposed on the city's largest businesses reverberate across the community, there are some realities that both supporters and opponents of the tax either missed or avoided but that may still be considered, particularly with a likely public vote in November looming.

Despite the extensive media and community groups' comments and response to the tax, which is aimed at raising almost $240 million over five years toward dealing with the cost of housing and services for the city's homeless, there were some issues and ideas possibly overlooked amid the heated exchanges between the two sides.

So as friends and associates and readers of the Harp pressed, mostly good-naturedly, with "don't you have any thoughts to share on this issue?" I decided I did.  

One was the ongoing realization during the back-and-forth rhetoric and eventual compromise negotiated by Mayor Jenny Durkan that brought the per-employee tax down to a little over half the $500 per head the City Council wanted to impose, there was no mention of the city income tax now awaiting Supreme Court decision.

So Durkan, who in laughable understatement, said it was "a longshot" as she announced last December that she was going ahead with the appeal of Superior Court Judge John Rule's decision that the tax was illegal, committed the city to pay attorney fees when we now know there are more pressing needs for that money.

Under the tax passed by the City Council last year then ruled illegal by Judge Rule. Seattle residents would pay a 2 percent tax on annual income above $250,000, while married residents who file their taxes jointly would pay it on income above $500,000.

I expected as I listened to the debate, that some business leaders might suggest "we'll accept the head tax if you agree not to pursue the income tax idea." Obviously, many of those business leaders would pay in the tens of thousands of dollars if the income tax were actually imposed. That is if they didn't decide to move from Seattle.  

And as remote as the city's chances of a favorable Supreme Court ruling are in this case, the fact is that at some point a Democratic governor and a legislature that has a sufficient Democrat majority is likely to enact a state income tax. That would likely remove the current legal prohibition against a city imposing an income tax.  

Negotiating an agreement in which the city would agree never to impose both an income tax and a head tax might be a protection against an even more business-challenging future.

But at this point, it's pretty obvious that business and other opponents of the head tax intend to put an initiative on the November ballot to have the electorate decide on the head tax.  

Dozens of businesses, including Amazon, Vulcan, and Starbucks, have already pledged more than $350,000 to a No Tax On Jobs campaign. Intriguingly, those putting up money include prominent Bellevue business leader Robert Wallace, although he has always played a leadership role in the Seattle business community as well.

Meanwhile, Pierce County elected officials have stepped up to announce a sort of reverse head tax. The group, representing a number of cities in the county, said the will be devising a plan to give businesses a $275 tax credit for each family wage job created in the county.

Since the City Council and others are making it clear that the city's ability to find the money to cope with the homeless crisis is a growing challenge, that realization should be accompanied by a commitment not to waste money on other things.

What immediately comes to mind in that money-wasting category is the $250,000-plus the city is paying in legal fees to defend City Council member Kshama Sawant in lawsuits resulting from her intemperate and insulting comments towards those she happens to disagree with.

It's "only" a quarter million dollars. But statistics on costs of providing homeless services would suggest that those attorney fees for Sawant would provide for maybe 25 or 30 homeless peoples' needs, including housing.

How about another initiative that would prohibit the city, which already pays for its own legal department, from hiring outside attorneys when a member of the City Council is sued, particularly when it's within the council members' power to avoid a suit by merely being careful about what comes out of their mouths?  

And when the city wastes millions of dollars on bike-lane overruns and transportation-cost foul-ups, the reaction to the City Council needs to become: "Your ineptitude just left dozens (hundreds) of people on the streets for another year."

When I called a friend of mine this week, he told me as he answered his cell phone that he had been listening to a CD on American history that at that moment was discussing the Stamp Act, which was the final straw for Colonists in their increasingly contentious relations with the King and Great Britain. It led to the revolution.

"Wouldn't it be interesting if the head tax somehow became the today equivalent of the Stamp Act tax in stirring some game-changing response to the city as the equivalent of "the king," he chuckled.

Continue reading

Special honor for Stanton - guides WA's oldest, largest private bank

PeteStantonBanner

When Washington Trust Chairman and CEO Peter (Pete) F. Stanton was honored last week in Spokane as a laureate of that community's Junior Achievement Business Hall of Fame, it was appropriate recognition for the fourth generation leader of the state oldest and largest privately held commercial bank.

It was appropriate in part because, with the Puget Sound Business Hall of Fame event not held this year, for the first time since it was created in 1987, the Spokane event is the only recognition of lifetime business achievement being held in the state this year.

Stanton was honored, along with Jack Heath, Washington Trust's president and chief operating officer, and local business executives Penn Fix and Debra Shultz of Dodson's Jewelers were also honored as laureates at the Spokane JA organization's 18th annual Hall of Fame.

Natalie Vega O'Neil, President & CEO of Junior Achievement of Washington, attended the Spokane event and got her first taste of Hall of Fame events.

"It was wonderful to witness the Spokane community coming together to celebrate those who have given back so much to the region," she said. 

Stanton has guided the fortunes of Washington Trust since Pere's great-grandfather bought the bank, founded in 1902, in 1919.

Stanton was 34 when in 1990 he assumed the role of president, second youngest bank president ever in Spokane, second only to his father, Philip Stanton, who had become president of the bank in 1962 at age 31.

Pete Stanton has been chairman and CEO since 2000, the year he named Heath president.

In an interview we did a few years ago, Stanton explained the success of his bank during the 2008 to 2011 period when many other banks, including three local competitors, fell into disaster.

"When something has been in your family for four generations, stewardship becomes very important," he said.

"That doesn't mean we spend our time looking in the rearview mirror," Stanton added.
"We're focused on the future, but securing that future has always led us to have concentration limits on our lending."

It was that "limit on concentration" that allowed Washington Trust to avoid the disastrous rush into real estate and construction lending that felled a large number of banks, including three of its locally based competitors, although Stanton's bank found itself eating some bad loans.

Sterling Savings Bank, publicly traded and about twice Washington Trust's size, and American West, about half its size, ran afoul of bad loans and wound up eventually being acquired, though Sterling re-emerged under new leadership and returned to successful operation before being acquired by Umpqua Bank.

During that time of financial trauma for many banks, Stanton's bank went on an acquisition and growth path that brought it to a network of branches spread across three Northwest states. including a large and growing presence in the Puget Sound area.

Stanton suggests that Washington Trust's success is built on what he refers to as "our three pillars of real strength: commercial banking, private banking, and wealth management."

Meanwhile, while there has not been any formal announcement of the fact, the Puget Sound Business Hall of Fame is not being held this year. JA's leadership transition that brought O'Neil aboard and budgetary challenges resulted in the halt to the event created in 1987 by JA and Puget Sound Business Journal.

Because the JA organization has become Junior Achievement of Washington, its statewide role has meant that business leaders from across the state need to be considered for inclusion on the Puget Sound Business Hall of Fame. Thus far only Leroy Nosbaum, the CEO of Itron, was a Spokane business leader inducted as laureate.

And that statewide role now has prompted discussion, particularly among members of the laureate selection committee, that the Hall of Fame event, if and when it re-emerges, should be rebranded as the Washington State Business Hall of Fame.

O'Neil has indicated the array of events that JA puts on each year will be evaluated over the next few months, presumably to determine which will continue.

But she did announce that a new Puget Sound Business Hall of fame display will be unveiled soon at the World Trade Center in Seattle.

As co-founder of the event, with JA, 31 years ago and part of the selection committee since then, I've been on hand each year as the business community leadership has looked on while a new class of their most admired and successful predecessors was welcomed to the laureate ranks. Thus it's difficult for me to imagine that there won't be a 2019 JA Hall of Fame banquet.

Continue reading

Bastyr, Founding First President Marks 40 Years of Naturopathic Impact

Bastyr_banner

As Bastyr University celebrates its 40thanniversary and gives special recognition to the man who founded the naturopathic school and served as its president for 22 years, there will undoubtedly by some reflection on the decades-long struggle by naturopaths for recognition and acceptance by conventional medicine.

But the growing awareness of the importance of holistic healthcare, and the expectations a more health-savvy populous has come to have, and will more so in the future, accelerate the demand for integrative medicine, a phrase that means the convergence of conventional and alternative medicines.

In addition to celebrating its founding and its founder at the May 10 luncheon at the Fairmont Hotel in downtown Seattle, Bastyr will be introducing its new president, Harlan Patterson, who was chosen by the Bastyr Board of Trustees last month to guide the school after the six-year board member stepped in as interim president last July.

Dr Joseph PizzornoDr.Joseph PizzornoPatterson brings a mainstream higher-ed background to his new role, having been Vice-Chancellor for Finance and Administration at UW Tacoma, and former Executive Director of the Washington Vaccine Alliance.

Back in 1978, with Portland-based National College of Naturopathic Medicine (NCNM) deciding to close its Seattle branch and the legislature considering the elimination of the naturopathic license, Dr. Joseph Pizzorno Jr. and two other naturopathic physicians viewed the challenges to their profession as an opportunity.

Thus the three, Drs. Lee Griffith and William Mitchell Jr. and Pizzorno, all graduates of NCNM, moved to create a new naturopathic school in Seattle, a step that not only protected the licensure in Washington State but opened doors in the naturopathic field by building the school's curriculum on a science-based foundation.

Much has happened with Bastyr as it has grown in impact on the 51-acre wooded campus on the Eastside to which Pizzorno moved the school in the mid-90s, including the launch by now-retired president Dan Church in 2012 of Bastyr's San Diego campus, making it the only naturopathic college in the State of California.

Pizzorno, during his tenure, guided Bastyr to become the first accredited university of natural medicine and the first center for alternative medicine research funded by the National Institutes of Health's Office of Alternative Medicine.

The challenge of acceptance by conventional medicine that naturopaths still often face is pointed up by the absurd encyclopedic entries by Wikipedia, entries on naturopathy. Bastyr and Pizzorno that contain not information but tasteless and ridiculous putdown. Phrases like "pseudoscience and quackery" for Bastyr and, describing Pizzorno, one of the nation's most recognized and respected naturopaths, as "promoting dangerous and ineffective treatments."

Such intentional inaccuracies apparently aren't surprising to that who note that Wikipedia not only accepts but solicits large donations from organizations or individuals who may wish to have specific entries written to their liking and approval.

"Looks like the 'Quack Busters' got to write up the Bastyr Wiki," Pizzorno told me with a chuckle. "Those of us who are advancing this medicine use the number of times they go after us as a measure of success."

"There is a small posse (some NDs suggest "army" rather than "posse") of traditionalist doctors fighting the relentless march of alternative medicine into the mainstream," he added.

Pizzorno, honored numerous times over the years, travels worldwide, consulting, lecturing and promoting science-based natural medicine and collaborative health care and is obviously quick to do pushback of those who denigrate or fail to understand his approach to healthcare.

Thus he is unabashed in his summary of the struggles of naturopathic medicine, summing it up as: "The big challenge is that natural medicine and our foundational concepts have been actively suppressed by the vested conventional medicine interests for over a century. This has meant that the social and fiscal standing of NDs has always been under attack and patient access impaired through discriminatory licensing laws and blocking insurance reimbursement."

With respect to insurance coverage, former Washington State Insurance Commissioner Deborah Senn told me that while the number of states requiring insurance coverage for alternative medicine is growing, implementation and policing remains in the hands of the State Insurance Commissioner. 

After Washington lawmakers passed a law requiring insurance coverage, insurance companies went to court to challenge the requirement and Senn, an attorney and supporter of naturopathy, went to the 9thCircuit Court to uphold the law.

An increasing awareness of the importance of diet, exercise, and lifestyle on health has drawn a growing number of people, and not just millennials, to alternatives to conventional medicine and its practitioners. And for many, the search for alternatives leads to naturopathic medicine.

It was as I pursued all my options in deciding how to deal with my prostate cancer in 2011 that I visited a naturopathic physician, Dr. Eric Yarnell, on the Bastyr faculty, and learned of artemisinin, an extract derived from an ancient Chinese herb.

I had known a little about alternative medicine, but learning of artemisinin and the fact that it was being viewed as a cancer-fighting agent caused me to want to learn more both about the herb and about Bastyr, even though I finally decided, with advise from Yarnell, interestingly, that I should have a prostatectomy.

I wrote about artemisinin (search Flynn'sHarp: artemisinin) two years ago when the 85-year-old Chinese herbalist who discovered its ability to fight malaria won the Nobel prize for medicine. It's now also being viewed as a possible agent to fight, or possibly prevent, certain cancers, attracting National Institutes of Health and state funding to explore the possibility.

I've grown more focused, in recent years, on seeking the best practices and practitioners from conventional and alternative medicines for my personal healthcare, coming to understand that I make the final decisions on my healthcare and who provides it. But I have maintained a high respect and regard for my MDs, including my long-time internal medicine doc, who knows I tell people she once saved my life, and my prostate surgeon, for whom my respect has become friendship.

In addition, I look forward to regular breakfast or luncheon meetings with a couple of the most respected medical-practice leaders in the region.

But on the alternative-care side, I have an array of healthcare providers, each highly regarded in their specialties, ranging from acupuncture to high-intensity training (search Flynn's Harp: high intensity), to Reike to Feldenkrais, all attracting increasing attention from those growing ever more attuned to health issues ranging from performance enhancement to personal awareness.

I've been intrigued by the number of friends and associates who have come to take a similar approach to their own healthcare.

And in conversations about that fact, there's inevitably been a shared frustration that our conventional docs frequently put down the value of our alternative docs and we wish that they would come to understand the value each brings to healthcare, in other words, integrative medicine.

Perhaps promisingly, conventional medicine has come up with an alternative to alternative medicine. It's called Functional Medicine and some medical doctors are rushing to get certified for the new practice model that actually borrows much from the philosophy and practice of naturopathic practitioners.

Prominent physician and New York Times best-selling author Mark Hyman calls Functional Medicine "the future of conventional medicine, available now." He notes that "it seeks to identify and address the root causes of disease, and views the body as one integrated system, not a collection of independent organs divided up by medical specialties."

But back to old-reliable Wikipedia, which sums up Functional Medicine as a "collection of totally nonsensical gobbledygook."

Intriguingly, Pizzorno has been a leader of the Institute for Functional Medicine since its beginning, serving on the board since the organization was formed, including several years as chair and now as treasurer.

Pizzorno, who also is editor in chief of Integrative Medicine, a Clinician's Journal, has for decades been advancing the healing side of medicine and advancing naturopathic medicine in an array of venues.

Building on its science-based foundation, Bastyr has been the recipient of a number of multimillion-dollar research grants from NIH. 

Grants from the NIH tied to projects involving both conventional healthcare facilities and alternative ones are likely to help move the integrative medicine needle.

An interesting one, the kind that inevitably draws chuckles from some, is a grant that teams Bastyr with UW Medicine and the University of Minnesota in a $2.5 million grant to study the potential impact of Turkey Tail Mushrooms on certain types of cancer, specifically breast cancer but also prostate cancer.

Turkey Tail mushrooms are one of the most researched and highly regarded medicinal mushrooms, with a long history of curative and medicinal use in China and Japan, having a long list of medicinal properties and health benefits. But researchers prize them most as a natural source of the anti-cancer polysaccharide (PSK).

PSK is said to fight cancer and halt tumors by inhibiting the growth of cancer cells and "stimulating a host-mediated response."

One of the best tools naturopaths have toward achieving broad acceptance is the Bastyr grads who have moved into highly prominent positions that demonstrate the effectiveness of integrative medicine, though all also have Ph.D. in addition to ND after their names.

Those include:
  • Heather Greenlee, Director of Integrative Medicine at the Fred Hutchinson Cancer Research Center.
  • Patricia Herman, Senior Behavioral and Social Scientist at the RAND Corporation.
  • Wendy Weber, acting director of the National Center for Complementary and Integrative Health.
  • Laurie Mischley, whose research into Parkinson's Disease, including her exploration of the novel mechanism of introducing glutathione, the brain's primary antioxidant, to the central nervous system for Parkinson's patients, has brought her attention and respect on a global level (Flynn's Harp: Laurie Mischley).

Many NDs, in seeking to establish greater acceptance with a savvier patient population, may play to the growing public realization that quantity and quality can't be effective partners in healthcare, meaning any professional who has quotas for the number of patients can be viewed as challenged to also achieve the highest quality of service.

Pizzorno says he believes that integrative and functional medicine becoming more popular "helps validate NDs. But he adds "NDs must work politically to level the playing field."
Continue reading

Arizona fatality pushes discussion on autonomous vehicles

Autonomous_Vehicles_banner

The unfortunate accident in Tempe, AZ, March 18 when an Uber autonomous Volvo SUV struck and killed a woman who was walking a bicycle across a darkened street has stirred a strong reaction, in this state and elsewhere, from both sides in the discussion about the national push toward a likely autonomous-vehicle future.

One the one hand, supporters who have fed the vision of that possible autonomous future point to what some see as Uber's effort to produce an autonomous fleet "on the cheap," employing too few lasers and radar sensors. They argue that the careful use of sensor-device clusters to detect objects in front of and around the autonomous vehicle is a key to the safety of the driverless cars.

On the other side are those who, for a variety of reasons, would love to slow the pace of progress of the autonomous-vehicle movement. Some are obviously concerned about safety, a group more likely to be from the older generation. But others don't want the disruption of existing transportation plans, i.e. progress on rail commute.

More than a few in the Puget Sound area, for example, are fearful that the move to autonomous vehicles could have a negative effect on their "train," the network of commuter rail lines that are part of the $54 billion ST3 transit package approved by the voters in November of 2016 as an environment-protecting alternative to increasing traffic congestion. To many of its apostles, the ST3 project is like the "Holy Rail," not merely a device to slow traffic congestion.

And thus one of the concerns among autonomous vehicle (AV) advocates is that ST3 and the Sound Transit board that oversees it will come to view autonomous vehicles as a threat to completion of the rail-based plan for the region and use its power and influence to delay or stall progress. After all, most predictions about AV's are that they could come to dominate commute-hours traffic even before ST3's projected 2041 completion date.

And in fact, national transportation officials have made it clear that if autonomous vehicles move as rapidly as anticipated toward a ubiquitous presence on streets and highways, there will be an impact on planned and existing rail-transit programs.

But at this point, Gov. Jay Inslee has put the full weight of his office behind an AV future. Inslee not only moved forcefully last summer to seek to put Washington State at the forefront of states welcoming an autonomous future and issued an executive order to allow and support testing of autonomous vehicles but reiterated that commitment last week.

Inslee told leaders of technology and business at the 20th anniversary of the Alliance of Angels investment group that "The future of transportation will be in Seattle," and he elaborated by saying the region is going to be "the autonomous vehicle center of the U.S."

Inslee seemed to be pushing back not only on those seeing the challenge for the future of autonomous travel in the Tempe fatal accident but also on an op-ed piece in that morning's Seattle Times by a think-tank "fellow" named Daniel Malarkey for an organization called Sightline Institute.


In the article, Malarkey referred to the governor's support as "ill-advised" and added, "the state gains little by allowing tech companies to test on public roads and put motorists and pedestrians at risk." He said: "The governor and state legislators should focus on developing policies to enable the rapid scaling of autonomous electric fleets as soon as we know they work."
It's frankly head-scratching to figure how Malarkey's thought process led him to his conclusions about "ill-advised."

And while I'm not a fan of putting down people you disagree with, I think the Times, in providing op-ed space for an individual to share thoughts over multiple newspaper inches, should share the background of the writer to provide reader perspective.

The Times either avoided sharing or lacked the institutional memory, to include that Malarkey's initial claim to fame in Seattle was as finance director of the ill-fated Seattle Monorail Project, from which he resigned in December of 2003 after revenues fell dramatically short of his projections and costs were underestimated. He resigned and the voters in November of 2005 said by a margin of 65 percent to 35 percent that they didn't want the project to continue.

It's from among the investment community that some of the most thoughtful support for an autonomous future for this state comes.

Madrona Venture Group, Seattle's best-recognized venture firm, issued a report last September sharing the prediction that autonomous vehicles won't merely play a major role in the region's transportation future but that AVs would come to dominate travel on I-5 between Seattle and Vancouver.

The report, issued by Madrona's founder and managing director Tom Alberg and Daniel Li, predicts that AV's will first share an HOV lane, then progress to having dedicated lanes and eventually be the sole mode of transportation on I-5 during major commute hours.

It's likely that the first formal program in the state will be in the City of SeaTac, the municipality that includes Seattle-Tacoma International Airport, where the city council will be asked next month to approve a plan that would launch autonomous mini-vans on city streets.
 
The man who conceived the SeaTac program, John Niles is executive director of an organization called Center for Advanced Transportation and Energy Solutions (CATES). He is well known in the region as an opponent of Sound Transit, which he views as spending "vast sums of taxpayer money to make mobility worse," but now he wants to help SeaTac residents gain easy access to nearby light rail stations after 8 AM when the park-and-ride lots have no more spaces.
 
Niles, who helped produce the plan that he hopes the Sea-Tac City Council will endorse, as well as seek federal funding for, may be the most believable autonomous-vehicle proponent when he insists on safety first.
 
As a seven-year-old, he was run down in a crosswalk and almost killed. Thus when he says "slow speed is the way to go right now" with autonomous vehicle projects, he is totally credible.
 
"I'm not interested in testing but in deploying something," says Niles of the Sea-Tac project, which will involve vehicles already tested elsewhere and whose travels around the city will be at relatively slow speeds and constantly monitored in what he says will be "the most cautious first step possible."
 
In fact, Niles shared the conviction that Waymo, the Google autonomous-car development company, also has remote workers watching the on-street operation of its cars.
 
Waymo was spun out of Google's parent company, Alphabet Inc., and claims to have tested its autonomous vehicles in Kirkland, but more prominently in California and most recently in metro Phoenix, Arizona where more than 600 Chrysler Pacifica vans are planned to be operating by year-end in commercial robo-cab service.

One group that might be expected to be in push-back mode over the emergence of AV technology is the insurance industry as possibly expecting to lose business, but PEMCO Insurance President Stan McNaughton says he's hopeful accidents will be reduced by the AV technology.

Meanwhile, McNaughton said the Insurance Institute for Highway Safety, on whose board he sits, "is putting a pile of money into the various systems, with the insurance industry building its own test centers, since at some point we will be rating these systems and we have to have a good understanding of them."

Autonomous-vehicle development has some powerful support in addition to the auto industry and tech companies who would benefit. One is Mothers Against Drunk Drivers, which points to another Arizona accident, this one involving a Google autonomous vehicle, as particularly relevant.

It was an accident in Chandler, AZ, in which a 25-year-old driver was arrested on suspicion of driving under the influence after he ran into the rear of the Google car, whose driver was treated for a concussion.

The national advocacy group said the Chandler accident shows why the group supports the development of autonomous vehicles.
Continue reading

Shabana Khan shifts focus: Creating a western-tournament squash tour

shabana_banner

Shabana Khan weathered opposition from the U.S. squash establishment when she put on the Men's World Squash Championship for the first time in this country in 2015 in Bellevue. So she knows she will face a perhaps even stronger pushback when she launches West Coast Squash, designed to bring a stronger and more convenient focus on youth squash in the West.

Khan, one-time national women's squash champion and a distant cousin of the most respected squash family in the world, plans to launch her new series of western youth squash tournaments next month.

Shabana Khan and YasmineShabana Khan and YasmineKhan's YSK Events, her company that put on the Men's World Squash event and followed that with creation of a Bellevue stop on the national professional squash tour that is similar to the pro golf tour and an event to showcase the nation's top high school squash players, is becoming a 501c3 to oversee West Coast Squash.

In fact, YSK Events is hosting a US Squash Gold tournament May 18-21 and will have the West Coast College Squash showcase for top student talent that will run concurrently with the pro event.

And she has also made her events an opportunity to showcase the Boys and Girls Club in Bellevue's Hidden Valley. 

But the reality that community and sponsor support has been lacking for Khan, despite the participant enthusiasm and parental involvement, may mean she can't afford to continue either the proof high school showcase events.

That will leave her to focus on the development of West Coast Squash for which she has had interest from teams in Washington, Oregon, California, Nevada, Arizona, Texas, Colorado, Utah and Vancouver, B.C. in hosting tournaments.

 "We see a great opportunity to vastly increase participation numbers across all of these states by creating a program focused on providing a platform that allows them to thrive in Squash and school while not spending a ton of money on travel," Khan said.

Khan says West Coast Squash (WCS) is a competitive Junior Squash series that stresses education, sportsmanship, and competitiveness while offering a tournament structure that provides a limited amount of time away from school and multiple paths towards gaining a WCS ranking. 

"WCS will provide a platform for youth to achieve success in competitive Squash with a path to playing for Squash teams at top colleges around the country," she said.

"Because it is much easier to accrue points and enter large tournaments being located on the East Coast, where most of the tournaments are held, it puts kids who live in the East at a huge advantage to gain points, spend less on travel, and not miss as many school days," she added. 

"On the other hand, a family located on the West Coast is at a large disadvantage due cost of travel and school missed. We believe it is counterproductive for children to tell them that they must do well in school and a sport that requires them to miss multiple school days to play in a high-level tournament," said Khan. 

Squash, which is a racket sport similar to racketball, played by two or four players in a four-walled court (glass walls for most international events that are broadcast globally) using a small, hollow rubber ball. 

Squash for decades was a sport played mostly in New England, New York City and a handful of cities in the West with Seattle in the forefront of those. Squash players and fans represented a highly targeted and sought after demographic of men and women with median incomes of more than $300,000 and an average net worth of nearly $1,500,000.  

But in recent years the U.S. has been one of the three countries in the world where squash has been growing fastest in popularity. And that growth in interest has coincided with a decline in racketball, thus leaving the courts available for squash more numerous at YMCAs and sports clubs.

Khan has bitten off a challenge with West Coast Squash and will need some substantial help in meeting her financial goal.

"The target would be $100,000 to get us going but $500,000 is our ultimate goal to achieve our staffing and to have more clinics and offer scholarships to kids who will need assistance for travel and entry fees for a couple of years," she said.

But she has some innovative ideas, like "naming rights," naming tournaments after families for sponsorship fees, and using technology that would, for example, allow students to use an app to locate tournaments they might like to enter,

Her track record includes not just the men's world event in 2015 and the Bellevue pro and student events but the first-ever-in-the-US Women's World Championship that she and her father, Yusuf, put on in Seattle in 1999. 
   
Her father was nine-time squash champion in India before coming to this country to be head pro at the Seattle Tennis Club, soon thereafter establishing the Seattle Athletic Club and building it into one of the key squash locations in the West.

In fact, YSK Events, which she founded in 2015 to focus on squash events, is a family affair in several ways. She serves as chairman while sister Latasha, who was women's national champion when Shabana defeated her to take the crown, sits on the board.

It's also a family affair in that the "Y" in YSK stands for both her 11-year-old daughter, Yasmine, who was 14th in the country in her age group last year and her father, Yusuf. The "S" and the "K" are her initials.  

A search of the internet for squash and Khan turns up the fact that the list of champions over the decades is replete with those named Khan.

One entry notes: "The great Khans are the kings of squash with all of its greatest champions not only from one nation but from one single family in the nation--the Khans of Pakistan.

"That is where all this crazy stuff comes from for me," Shabana chuckled. "I am not scared of this effort I'm undertaking--well, maybe a little bit--but the family that I come from can't back down very easily."

Continue reading

The Harp Turns 10! Reflections on a decade of notes on people, politics, and life

BirthdayBanner_10

A decade of harping, actually producing a weekly email column under the title "Flynn's Harp" most every week for the past 10 years, is cause for pause and reflection.

For nearly a quarter-century guiding the fortunes of Puget Sound Business Journal, my creative outlet from the business challenges was the weekly column that permitted me to share thoughts on people and issues with PSBJ's readers.

It was the spring of 2008, two years after my retirement from PSBJ, that my friend Pat Scanlon, whom I now refer to as my digital guru because of his background in digital media with national media companies, said to me: "You should have an online column." To that, I replied: "Why?" So he said: "Let me show you what I've put together" and lo, the layout, and format of both email and web versions, missing only a column title, was there on my computer, causing me to muse: "So what would I write about?"

Because it was a general-election year, I had already written a piece reflecting on the 1968 presidential campaign in which I had been fortunate enough, as a young political writer for UPI, to be immersed. The 1968 campaign was one that had high-visibility roles for four people from Washington State and I had put all of that into a piece without knowing where I would try to place the article.

When I began thinking of the "what would I write?" I realized that I could divide that 1968-campaign article into four parts, one for each of the four people I had included as key players in that long-ago campaign. Then, presto, I'd have a month's worth of columns! Then I'd be four weeks on the way to have time to think of a fifth and a sixth column, etc.

Thus then-Gov. Dan Evans, who was 1968 GOP convention keynoter, mountaineer Jim Whittaker, who became like a brother to Sen. Robert Kennedy, Egil (Bud) Krogh, a young Seattle attorney who became a Watergate figure, and author Kitty Kelly, a high school friend, became the first four profiles of the
Harp.

Since we are coming up on what, now that 2018 has dawned, the 50th anniversary of that campaign, detailed 40 years on in a reflective piece in a national magazine in 2008 on Robert Kennedy's quest for the presidency as "the last good campaign," I decided to revisit those four columns in this 10th year of The Harp.

So over the coming weeks, I will be inserting those columns into the flow of
Harps, repeating the recollections from a presidential campaign now half a century removed but one in which all four of those personalities I wrote about remain active today. But I will also during the coming months be reprising other columns that had particular and special meaning to me.

I figured the best way to get the column going as an e-mail offering back in 2008 was to send the first one to about 600 of my closest friends and contacts (some I hadn't touched base with for several years), hoping they would either read it or ignore it but not tag me as SPAM.

Over time, as I've met new people in my "retirement" activities and consulting, I've added another 1,000 names.

So it now goes weekly to about 1,600 recipients whom I describe as business leaders, mostly Washington State but 100 or so in California, Hawaii and a few other states, as well as current and former state and local elected officials, and four college presidents.

Doing the column regularly, with the personal requirement that it be original material, in other words, facts and information not yet brought to the public's awareness has provided a satisfaction.

But even more so have been the responses from many to the emails, some moving, some laudatory, some critical. I have specifically always acknowledged the latter.

I like to tell people the column has resulted in more friendships than I had as PSBJ publisher because then, business people who read my columns and editorials were merely part of a mostly faceless audience of readers. Now the "readers" are those who are kind enough to let me into their email box weekly and most proceed to open long enough to see if that particular one is interesting.

So over the course of 500 columns, I have come to know people and their successes and challenges, and issues that impact them, in ways that would never have been the case except for the column.

I have now become an evangelist for doing email columns, urging my friends and business associates to create columns, advising "not weekly!" and admonishing "if you do it, it needs to be not about yourself or your business but about the knowledge you can impart from your experience."

A couple of friends have taken me up on it, the first being Don Brunell, retired president of the Association of Washington Business, who recalled in an email to me this week the occasion for the launch of his column that now appears in a number of weekly newspapers.

"We were at the Coeur d' Alene Hotel for AWB's Executive Committee retreat and we were having a beer in the lobby bar in 1995, bemoaning how we got our butts kicked by Mike Lowry in 1993. The D's controlled Olympia and Lowry would chastise business:  'you mean to tell me you guys can't afford a latte a day to pay for health care for your workers.'"  

 "We were talking about getting our message out and you said:  'why don't you write a weekly column?'  So I gave it a try. That's now almost 23 years ago."

The other is Al Davis, a friend and former longtime client, who is a founder of Revitalization Partners, a noted Seattle-based business management and advisory firm. Early last year he packaged the columns he and business partner Bill Lawrence have written bi-weekly over the last three years into a book.

When Al and I met for me to get a copy of the book, he told me to open the cover and read what was printed on the facing page. There was a thank you to several people, and to me for convincing him he could write a column!

Continue reading

Durkan faces decision on tax-ruling appeal that may help define her as mayor

SeattleTax_banner

It's quite likely that Jenny Durkan won't get through her first day of business after she is sworn in tomorrow as Seattle's first woman mayor in more than 90 years before she has to make a decision that could help define how she will be perceived as Seattle's chief executive.

The issue is the ill-framed and now court-rejected Seattle city income tax and whether or not the city will appeal the decision made by King County Superior Court Judge John Ruhl late afternoon of the day before Thanksgiving, giving those involved a long weekend to think about what now with the case.  

And those thinking about "what now" undoubtedly includes Durkan, who has said she favors the income tax but is also on record, the day she announced her candidacy last May, that while she views the state's tax system as too regressive, she doubts that a city income tax is the right solution.  

But that was before the city council that she will have to work with approved the income tax measure in July, enacting a resolution supporters called a "wealth tax," amid cheers from those in attendance of "tax the rich!"  

It was actually referred to as a tax on high incomes, 2 percent of the amount above $200,000 for an individual or $500,000 for those filing jointly. Perhaps spurred by the cheers from the gallery, the amount was boosted to 2.25 percent, a move criticized by opponents as an action driven by little more than a whim.

Judge Ruhl found that the city had no authority under state law to impose the tax, in fact, was in violation of two state statutes, and rejected the city contention that what was called an income tax was actually an excise tax for the privilege of earning a living in Seattle. A cynic might suggest that if you are trying to sell a pig, and call it a stallion, it might bring a better price.

As Ruhl wrote: the City's tax, which is labeled 'Income Tax,' is exactly that. It cannot be restyled as an 'excise tax' on the ... 'privileges' of receiving revenue in Seattle or choosing to live in Seattle."

Within minutes after Judge Ruhl issued his 27-page decision, one viewed as thorough and comprehensive, and well beyond the detail that at least appellant attorneys expected, the office of Seattle City Attorney Pete Holmes said they will be appealing the decision to the state Supreme Court.  

Since there was no instant need for the city attorney's office (there was no indication that the statement came from Holmes rather than from someone in the office late day who was asked by the media, "are you going to appeal?"), it surprised many that there was no indication of intent to consult the soon-to-be mayor.

It may come as a surprise, and irritant, to members of the city council that they have no say in the decision of whether or not to appeal. That decision rests on the mayor and the city attorney, but it's impossible to envision the decision would be made without consultation between the two, and approval from the mayor.

From the time the measure was passed, there was acknowledgement that the goal was to get the issue of an income tax before a state supreme court that, proponents hope, will ignore court rules as well as its own precedents that a net income tax is unconstitutional and quickly seize this case as an opportunity to open the door for a state income tax.

So despite the fact that constitutionality of the city's income tax was not part of Judge Ruhl's deliberations and decision, the forces viewing the income tax as vital to correcting a regressive state tax system are hoping the court will decide the case offers an opportunity too good to pass up, regardless of its rules.

Durkan is universally regarded as a smart and courageous attorney. Deciding what to do about an appeal of Ruhl's decision will give her opportunity to call on both qualities.
The reality is that continuing to needlessly stoke the fuels of anger over economic distinctions that the "tax the rich" mantra has brought is of little long-term value to the city.  

Any law school graduate knows that in Washington State, among many states, a losing party can ask the supreme court to review the lower court decision, but unless some glaring error leaps out, the high court procedure is to tell an appellant "take your issue to the court of appeals."  

So since Durkan is well aware that there is little likelihood the state high court would agree to bypass the state appellate court and grant direct review, she would have to be pandering to the city council's loudest voices to seek supreme court review, at the expense of smoothing over the Seattle political divide. And perhaps enlist a broad coalition in a goal of working to change the state's tax structure, a goal that will require support across the political spectrum.

There is no doubt that Durkan will clash with the council's loudest voices, or more accurately loudest mouth, since Kshama Sawant prides herself on not having any Republican friends and Durkan has friends across the political spectrum, including a brother who is a Republican lobbyist.

Intriguingly, as it relates to any mayoral concern about smooth relations, members of the city council didn't wait for Durkan to shed her "Mayor-Elect" title before they thoughtlessly planned to cut her budget by $1 million, or 17 percent, in their search for dollars after the idea of a business head tax failed.

Fortunately, Mayor Tim Burgess, whose 71 days as interim mayor end when Durkan is sworn in, convinced the council it was unfair to the incoming mayor to cut such a chunk out of her budget, so they decided trim by about $500,000 the amount they were diverting. It's difficult not to be amused by the attack on a part of the mayor's budget given the fact the legislative branch budget is about twice the size of the mayor's but no one suggested that a portion come from both the mayor's and the council's budgets.

Oh, and it's amusing also that the amount being cut from the mayor' budget is about what the city has agreed to spend for legal expenses defending Sawant in suits for defamation over unfortunate outbursts in two separate cases.

But as to the point about Durkan helping define herself in how she decides on seeking a direct appeal, or any appeal on behalf of an obviously illegal Seattle statute.

She is likely to find broad support, including many in the business community who opposed the city tax because it was enacted despite it being obviously illegal, who would join in a legitimate campaign to change what most agree is a regressive state tax system.

But to begin such a broad-support effort she first has to move the City Council away from its goal of punishing the wealthy and instead focus on enlisting all segments of the population in creating a fair state tax structure.

Continue reading

Autonomous vehicles will drive WA state's future

acars_banner

There is a growing conviction among influential leaders in Washington state, ranging from the governor through local elected officials and business executives, that autonomous vehicles will play a key role in this state's transportation future.

If 2016 was the year of the train in the Puget Sound area with discussion and debate over the nation's most expensive transit ballot measure ever, the $54 billion ST-3 to build a regional rail infrastructure over the next 25 years, then 2017 could be the year of the first meaningful steps toward a future of reinvented highway vehicles.  

But the first actual, autonomous "wheels on the road" project in this state could get underway in early 2018 in the City of SeaTac, the municipality that includes Seattle-Tacoma International Airport.  

But as meaningful steps toward what I'll call - aCars, or even what's being referred to as semi-autonomous vehicles that will have a driver at the ready, begin emerging, proponents will need to develop a plan to deal with the inevitable pushback from the disruptive idea of vehicles without drivers.

Gov. Jay Inslee, whose support will be essential to overcome the objections that emerge, set the stage for a strong focus on autonomous vehicles when he issued an executive order in June to put the state behind autonomous vehicle development efforts, including allowing companies to test drive them on state roads.

A month later his office welcomed the robot vehicle from a Virginia company that was spun out from Virginia Tech after it was safely driven, as a semi-autonomous vehicle, across the country, and through Washington state without incident.

Nothing is as far along in this state as the Virginia company, called Torc Robotics, but a couple of noteworthy efforts are underway that could attract increasing attention, and not just in this state. One is in Bellevue, where a focus on autonomous vans (we can refer to them as A-vans,), paid for without public subsidy, is occurring. The other is in the City of SeaTac, which would be a project logical by the proximity of airport-related businesses and the amount of traffic they and the airport itself generate.

The focus on autonomous multi-passenger vans is the brainchild of Steve Marshall, manager of the City of Bellevue's Transportation Technology Partnership, and Charles Collins, who has been active in exploring transportation and commute issues since his days as the second director of King County Metro in the late 1970s. Collins created the King County vanpool system that has become the most successful in the country.

The transportation experience and expertise of Marshall and Collins have probably put them at the peak of the pyramid from which to envision what lies ahead for autonomous vehicles. And from that perspective, both see a van-focused future of autonomous vehicles

Before taking the Bellevue post on May 1, Marshall was executive director of the Center for Advanced Transportation and Energy Solutions (CATES). He has more than 30 years of experience working on energy and transportation issues, including serving as chief outside legal counsel to Puget Sound Power & Light as a partner at the law firm of Perkins Coie.  

It is CATES, now under the executive leadership of John Niles who replaced Marshall, that is helping guide the City of SeaTac through evaluation of a program employing driverless shuttle mini-buses or vans on City of SeaTac roads, providing supplementary service between Sea-Tac Airport and hotel locations.

Another example of what could emerge City of SeaTac activities would be small, quiet, electric shuttles connecting light rail stations and transit centers with residential neighborhoods.

Niles told me he is putting together recommendations that he calls an Action Plan that, once accepted by the staff of the SeaTac City Council, likely by the end of the year, would be available for review by citizens to make it ready for action by the council, probably in January.  

The effort by the City of SeaTac, which has charted for itself the goal of becoming a Center for Municipal Excellence, has gotten advance approval by both South Transit and Metro.

Approval by the SeaTac council would, as Niles explains it, be "steps on how to proceed on automated first-last mile small vehicle, driver-less automated transit for citizens to use to reach light rail stations, employment sites within City of SeaTac, and community centers and services."

"There will probably be a phase one pilot serving only part of the City," he added. "I am aiming for deployment of proven technology already tested elsewhere and proved to be safe."

In a comment directed at those concerned about driverless vehicles, Niles offered that the way his robotic micro-transit vehicles would work in SeaTac is with a control center keeping an eye out for trouble and dispatching help when needed."

Niles' comment addressed one of the key roadblocks to be overcome by the forces arrayed on behalf of an autonomous future, the concern of many drivers about the pervasive presence of vehicles without a driver. But other hurdles are already emerging in other states, concerns that will play out here, from forces restless about lost jobs like cab or truck drivers, auto repair and service businesses who won't have cars to repair and even insurance companies fearful of providing a product eventually not needed.

Part of the pushback could come from Sound Transit's board which is bound to see the early hints of buyers' remorse on the part of voters who approved ST-3 in King, Pierce, and Snohomish counties last November grow as new unexpected costs emerge while development of the autonomous van fleet takes hold.

By 2022, almost two decades before ST-3's rail network is completed, clues to its obsolescence will be offered as that's the year the first van test for 100 autonomous vehicles is scheduled, likely opening the way for thousands of such vehicles on area highways, without public cost.

And the betting is that those who can summon a van to take them where they want to go for a small fee will likely not opt to queue up for a train, thus further diminishing the modest passenger-use expectations of Sound Transit.

Those whose reaction to ST-3 was a "how can they vote for this? Do they really think it's required of those who care about the environment to vote to create a network of trains?" may well react with amusement to the cost of ST-3 beyond just dollars becomes clear.

The fact that was never shared with voters but will be shared as the reality sets in is that the greenhouse gas generated over the years of construction will never be paid back by people riding a train rather than driving or being conveyed in a vehicle.

An intriguing development for emerging use of autonomous vehicles is the fact that Kemper Freeman's Kemper Development Co. and its Bellevue Square expects to begin next year offering customers, many assumedly loaded with purchases, an autonomous-vehicle ride back to their cars parked on site.

Marshall offers a whimsical view of past as prologue to public acceptance of autonomous travel. One is the case of his grandfather who, after working his Palouse fields on horseback all day, tied the reins to the saddle horn and slumped over to sleep on the way home, confident his horse could "drive" itself back to the barn.

Plus he offers the example of elevators. When the years of people greeting the operator as they entered for the ride up began to give way to elevators without operators, there were some passengers who fought off discomfort. Then automatic elevators became universal, to the point when, if a person is operating it, some people may wonder "is something wrong with this elevator?"

Continue reading

NOT 'some white dude' - The New Face of Biotech in Washington

LEENNaws_banner

As M3 Biotechnology Inc. launches clinical trials on its therapy for Alzheimer's that is expected to halt the progression of, or even reverse, the disease, it's a satisfying development for those who have been believers in the role of the company and its CEO at the leading edge of the new field of regenerative medicine.

So when Melinda Gates lamented, before a large audience of women in computing, that the technology industry was dominated by a "sea of white dudes," one group who heard the message could be forgiven if its members, mostly men but including a couple of talented women, shared a knowing smile.  

Leen KawasLeen KawasThey knew that, despite the general accuracy of Melinda Gates comments, the CEO who has become the face of biotech in this state and even beyond is a 32-year-old woman from Jordan named Leen Kawas.  

And although several members of the group were key women investors guided in part by the fact Kawas is a woman, the male supporters seemed far more focused on their belief in her ability to get the drug to commercialization then concerned about gender.

Thus Kawas was the beneficiary of believers who came to her aid as investors, mentors, and supporters because they were convinced that she had the ability to bring to market a drug that would alter the course of neurodegenerative diseases like Alzheimer's and Parkinson's and perhaps reverse them.

The manner in which Kawas, in just under four years as president and CEO of M3 Biotechnology Inc., took the young company from the lab toward commercialization and has ascended to virtually the top of the visibility pyramid in her industry is storybook material. But it's a satisfying example to many who are convinced that no doors remain closed to those who refuse to accept rejection.

When I first met Kawas in late summer of 2013, she had yet to know anyone in Seattle and was merely the chief scientist for M3, a company still immersed in the labs at Washington State University, where its drug was undergoing animal trials to test its seeming ability to spur cellular regrowth. That fact naturally led to neurological testing since if a drug could regrow cells, its future could be assured and, before long, Kawas had her name on several of the patents for the drug.

And soon she was tapped to be CEO by the two WSU profs who then owned the majority of the company because it was still in their labs. So the second time we visited was soon after that when she was seeking help in meeting people who might invest in a promising young company and its young CEO.  

When she returned to Seattle, she shared that the other 63 were all males and her reaction in discussing that fact in an almost dismissive manner was an early indication of how committed she was to overcome the pushback and discrimination and comfortably stand up to it and seek to change it.

As we began a process over the next several months of meeting those who could either invest or introduce us to investors, I told her, partly to see how she would handle the pressure, that I would get the first meeting for her to make her presentation but it would be in her hands for people to agree to a second meeting with us.

Early on we had a meeting in Orange County, CA, with Richard Sudek, perhaps the most important angel-investment leader in Southern California at the time as chair of the largest angel investment group in the country, the five-county Tech Coast Angels. I was hopeful he would be impressed enough to offer Kawas some advice on raising money.

When she finished her presentation, he said, to my pleasant surprise: "I would be happy to be a business advisor for you."

It was in the fall of 2014 that she had her media debut with an impressive interview with Q13 anchor Marne Hughes in which those watching at the studio said she looked like she had grown up on camera.


What followed were major features in local business publications as well as major visibility in the annual report of Association of Washington Business and Life Science Washington as well as participation in an array of panels on the industry as well as membership on Gov. Jay Inslee's committee on life sciences.
 
By then she had outgrown the need for introductions, except for an occasional desire by a major investor to get a friend into the mix.
 
And some of the funds she corralled told their own story of her growing reputation, as she got two grants from the state's Life Science Discovery Fund totaling $750,000, an impressive $1.7 million from the Alzheimer's Drug Discovery Fund and a half million dollars from the Dolby Family Fund.
 
So now almost exactly four years on, M3 has raised more than $17 million from investors who represent a most impressive array of seasoned leaders, both men, and women, from a mix of the world of life science and enthused investors and some who simply have a commitment to changing the world of degenerative disease. And the company has begun initial human trials from which the future will be shaped.
 
And meanwhile, biotech giants are lurking in the wings to reach out to seek major stakes in the young company at the first sign of success.
 
As an aside, M3 is the first company to emerge from either of the state's research universities to reach clinical trials, a fact viewed by WSU as a major biotech coup.
 
So what stirred the interest of investors?

As Biotech icon Bruce Montgomery replied when I asked him why he had become a supporter of Kawas' and a key investor in M3 and a board member, he replied: "It frankly didn't occur to me to dwell on whether she was female or non-caucasian. I understood the science of what she was hoping to achieve and felt she had the ability to achieve it."

It was a sentiment echoed by investor and M3 board, chair John Fluke, no stranger to investing in startup entrepreneurs.
 
Jim Warjone, now retired from his roles as chairman and CEO of Port Blakely Companies, told me some months after deciding to invest, following one of what I refer to as an array of examples of fate helping guide Kawas on her road to success, "She's the smartest person I have ever met."
 
The touch of fate with Warjone came when Kawas was about to present to a group of which I was a member at Suncadia in August of 2015 and I went out to get some coffee, encountering Warjone, whom I hadn't seen in several years, in the lobby of the resort.
 
"What are you doing here?" he asked and when I told him, he asked if he could sit in, which he did, so he was among the half-dozen who heard her presentation, and was one of the two who decided to invest.
 
Michael Nassirian, longtime Microsoft top executive, who watched his father, a business executive in Persia, wither mentally and die of Alzheimer's, told me his goal was to do something "to change the magnitude of that disease. And when I heard Leen present and went to the M3 site and studied their successful step, I believed she and her company could provide a solution to Alzheimer's."
 
As to the women investors, who make no apologies for their financial support of Kawas because she is a female as well as talented CEO, I have found each to be amazing talents attracted to invest in the CEO and becoming her friend.
 
I asked Amber Caska, who has guided family funds for Paul Allen's Vulcan and Alphabet chair Eric Schmidt and is now president and chief operating officer of women-entrepreneur focused Portfolia in the Bay Area, why she had invested in M3.
 
"When I met her at a JPM Morgan Bio Conference dinner, I did further diligence and figured that not only was she extremely intelligent and driven, M3 was a compelling investment opportunity and backed by a very reputable science team and board. I knew that M3 was onto something incredible and I wanted to support her along the way."
 
Carol Criner, who has served as CEO and turnaround executive at an array of companies in various industries, was the second person I introduced Kawas to. When I asked her about her decision to invest, she said:
 
"I was more personally invested in supporting her as a young, female CEO.  I became a business advisor to Leen, both because of your encouragement, and that I was fueled by wanting to see Leen succeed.," Criner said.
 
"Now that she is a celebrity CEO, it's hard to imagine this all began a few short years ago," said Criner. "I witnessed her face the headwinds of giant egos and sexism with resilience. She never gave-up. Her success largely silenced a lot of vocal-doubters. I love it.  She's amazing and strong."
 
 In discussing her much smaller sector of the burgeoning tech industry in the Puget Sound area, I once overheard her compelling reply to a young entrepreneur quizzing her on why it was necessary to distinguish high tech from biotech sectors, as long as tech jobs were coming to the area in large numbers.
 
"Technology is the field that will help us build new devices to be held in the hand. Biotech will help us build a new hand," she replied. "Which would you prefer to be part of helping develop as an industry?"
Continue reading

52°F

Seattle

Mostly Cloudy

Humidity: 63%

Wind: 14 mph

  • 24 Mar 2016 52°F 42°F
  • 25 Mar 2016 54°F 40°F
Banner 468 x 60 px