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Gonzaga basketball coach Mark Few puts to rest axiom that 'nice guys finish last'

Gonzaga basketball coach Mark Few puts to rest axiom that 'nice guys finish last'

One of the most noteworthy accomplishments of Gonzaga coach Mark Few in his team's inexorable march toward the NCAA National Championship game, despite falling short in the finale, may have been the destruction of the oft-quoted axiom that "nice guys finish last."

That "nice guys" comment obviously isn't a reference to the angry Bulldog mascot, Spike. But it is the agreed-on description of Few, who grew up in a small Oregon town, the son of a Presbyterian minister, and who didn't leave behind the lessons of his youth.

Despite the fierce competitiveness    of his players that has been on display for the nation to see during the past few weeks, they are described by a GU trustee who has spent an extensive amount of time with them as "selfless, disciplined, family."

Gonzaga and Few fell short of their quest for college basketball's pinnacle in their Mondaynight loss to North Carolina in the NCAA championship game and the pain will burn for a time for the coach, his players and fans.

But his nice-guy trait was on display, despite the pain of the loss, in the post-game nationally televised interview when Few declined the opportunity to blame the referees for the loss with a couple of calls generally viewed as in error, saying instead "the referees were excellent."

And as Jack McCann, a longtime GU trustee who offered me the above characteristics of the team, said to me in a phone conversation before the final game, "nothing should diminish the joy of the journey that this season represented." He meant not just for Few and his team but also for the family of supporters, fans and boosters.

Indeed McCann, a GU trustee since 1997 and founder of the prominent South King County land-development firm, the Jack McCann Co, and other trustees and close supporters have proven themselves part of the GU family over the years.

That includes hosting the coaches and players at their vacation homes, including getaways to Cabo to McCann's beach home and the neighboring Cabo home of Mike Patterson, prominent Seattle attorney and also a trustee. But Few doesn't use Cabo trips as a recruiting tool!

And McCann was quick to sign off in the early 2000s on the idea the players should travel on charter rather than commercial flights before that idea was on the radar screen of most schools.

As John Stone, a successful Spokane developer who came up with the idea of offering his private plane and convinced two others to offer theirs on away-game trips, explained to me in our phone conversation "it became a way to make sure the players were back home in their beds that night and in their classrooms the next day. They are student athletes of course, not just athletes."

McCann was among the trustees and friends who over the years that followed that first private-plane travel year put up the $100,000 apiece to both pay for the flights and allow the supporters to travel on the plane with the team and have seats near the bench for those away games. By the mid-2000s, that was the routine for travel.

And it was Stone who pointed out the importance of the "family" role played by the Greater Spokane community in chipping in $6 million of the $26 million it took to build McCarthey Athletic Center, the 6,000-seat facility on the campus, competed in 2004, that opposing teams dread visiting. 

The community involvement was in the form of a "seat license" plan where members of the Spokane community committed to $4,000 to $5,000 a year to license certain seats in "the kennel" where the seats come right down to the floor.

Few's Oregon upbringing in Creswell a stone's throw from Eugene and the fact he graduated from the University of Oregon created one of the untold human-interest stories that media usually thrive on but someone missed this time.

With Gonzaga and Oregon in the Final Four, I was surprised there wasn't a lot of focus, at least some focus, on the possibility that if the Bulldogs and Ducks each won the first game, Few would have been trying to beat his alma mater.

In fact, another story is the possibility that Few might have been coaching Oregon rather than Gonzaga in this Final Four, but that story is known only in a close circle.

The conversation in basketball circles, and among Gonzaga supporters, over the years of NCAA tournament appearances, has been when would Few be attracted to a bigger opportunity.

After all, having been at Gonzaga since joining the coaching staff as a graduate assistant in 1989, becoming full-time assistant a year later and becoming head coach after the school's Cinderella 1999 drive to the Elite Eight, Few's tenure has been an unprecedented loyalty to what has been viewed as a mid-level program.

The fact is that McCann, sharing the story with surprising candor, was personally aware of a full-court press Oregon's athletic director and famous alum Phil Knight put on Few several years ago to return to his alma mater. But the effort was unsuccessful in attracting him away from Gonzaga.

Supporters are aware the time may come when Few is attracted to a new challenge at another university, but everyone now knows it won't be the lure of a more respected basketball program.

Only nine schools have matched Gonzaga's 2017 record of 37 victories in a season. And Few is one of a handful of coaches to achieve 500 victories, all at the once lightly regarded Spokane school.

Few and his wife, Marcy, have three boys and a girl and in perhaps the most significant example of the importance of family to him is the story of when Few was once asked by a sports writer if the start and end of each basketball season represented the most exciting and most downer times each year.

He replied that the most exciting time each year was when his kids got out of school and he had a whole summer to spend with them and the most disappointing time was when they returned to school in the fall. So much for the appeal of fame and glory.

Gonzaga's desire for sports recognition actually dates back almost a century to 1920 when the Spokane school, with fewer than 200 students, embarked on a quixotic quest for football fame by hiring a big-time coach, Gus Dorais, who had teamed with Knute Rockne at Notre Dame to perfect the forward pass.

It was a quest, I once referred to it in a Harp some years ago, as an "Ozymandian delusion," that brought Gonzaga an improbable post-season appearance two years later against West Virginia in a 21-13 Christmas Day 1922 loss that earned Gonzaga top visibility in the next day's New York Times sports section.

That was the only moment of national football glory for Gonzaga, though the program continued until the outbreak of World War II in 1941 when it was discontinued and never brought back. During its 20-year run, Gonzaga football produced some players who became nationally prominent and one, Ray Flaherty, went on to become, for a time, the most successful coach in the National Football League in the late '30s with the Washington Redskins.

Gonzaga basketball, however, is secure now as a program nationally respected. And the "Nice Guy" and "family" characteristics engendered by Few, the school and the supporters may well become the most envied part of what Gonzaga has brought to college basketball.

McCann refers to it as "a magic carpet ride" for all the segments of the "family."
                            ----------- 

 (The above column is a personal column since my wife and I are graduates of Gonzaga and some of those I quote, Stone and Patterson, are not only friends but attended the same high school, Gonzaga Prep, and same grade school, St. Aloysius, where Few's sister is law is now principal. It doesn't get any more incestuous than that!) 

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Mariners' 2017 opening day recalls '92 opener and its import

Mariners' 2017 opening day recalls '92 opener and its import

When the Seattle Mariners take the field for their home opener April 10, there will be at least some in the crowd who will recall that it was opening day 25 years ago when there was finally a cautious optimism that the uncertainty about the future of the franchise had been resolved. A team of local owners had been assembled, buttressed by a Japanese businessman devoted to Seattle, awaiting hoped-for approval from Major League Baseball.

And it's on occasions like a quarter-century anniversary of a major event that those involved in creating outcomes like the saving of a major league franchise for Seattle find that little-known facts of the story come to the forefront of memory for sharing.

Thus this Harp will be dedicated to a collection of several such stories related to that Mariners' accomplishment that made opening day 1992 special for not just the 56,000 fans on hand but also for supporters across the region.

There was an appropriate major celebration at Safeco Field last May to recognize Slade Gorton for his essential role as a U.S, Senator in finding local buyers for the Mariners in 1991 after then-owner Jeff Smulyan announced he was planning to sell the team, triggering a clause giving 120 days to find local owners.

It was in December of 1991 that Gorton learned that his effort to convince Nintendo CEO Hiroshi Yamauchi to invest, not as a baseball fan but to repay the community that he felt had helped his company become successful, had paid off.

And it was January 23 of 1992 that the announcement of the group of local investors to be named the Baseball Club of Seattle and led by the Japanese billionaire would buy the team to keep it in Seattle.

But it would be two months beyond opening day in 1992 before The MLB ownership committee would recommend approval of the purchase of the team by the Baseball Club of Seattle. So, as Randy Adamack, Mariner Senior Vice President for Communications, noted to me "While there was more optimism that April about the franchise staying here, the approval issue still had people holding their collective breath."

The 120-day clause and the local-owners search provide interesting memories for those most closely involved, and retired Mariners president Chuck Armstrong shared a couple of them in a telephone conversation this week.

Armstrong was attorney and advisor for George Argyros, the Southern California businessman who had purchased the Mariners in 1981 from the original ownership team, and Armstrong served his first stint as president of the Mariners when Argyros sent him up from Southern California a couple of years later.

The 120-day provision had actually been inserted in 1985 when Argyros and King County Executive Randy Revelle were negotiating a change in the Kingdome lease and Argyros suggested it as a "closer" to get county council approval.

Armstrong recalls that the reason for suggesting the provision was that Argyros "didn't want to go down in history as the guy who sold to a distant owner and thus let the Mariners leave town without providing time to find local owners."

"He was okay with a new owner living elsewhere, as long as he didn't move the team," he added.

Armstrong recalls "George never gets credit for that 120-day clause, but he had learned that nothing happens in Seattle, because of the endless focus on process, until things are in extremis and when something reaches that point the community would respond."

Bur Argyros did become basically loathed in Seattle in 1987 when he sought to buy the San Diego Padres to be closer to his Southern California home after the death of owner Ray Kroc. armstrong notes that it was the suggestion of Baseball Commissioner Peter Ueberroth's, who said he would find someone to buy the Mariners.

Then in 1989 came the offer from Smulyan that set in motion everything that followed.

Armstrong was also involved in trying to help sell the Japanese ownership to MLB, remembering that he called his friend, George W.Bush, then managing partner of the Texas Rangers, explained the challenge and asked if his father, President Bush, might be interested in helping with the issue.

"One day the phone rang and a woman said 'the president is calling.' I asked 'President of what?' and she said a little icily, how about President of the United States.'"

Armstrong said it turned out that Baseball Commissioner Faye Vincent had worked for the elder Bush in the oil fields and they had remained friends.

"I can't honestly tell you what, if any, role the president took in our issue, though both Bushes indicated they had no problem with a Japanese owner" chuckled Armstrong, who as the only one of the new local ownership who knew anything about running a baseball team was brought back as president on July 1, 1992. He retired three years ago.

One of the most interesting stories and one that I've felt should be shared ever since I first heard it, is how new CEO and majority owner John Stanton had wished with all his might to be part of the ownership team in 1992, but told me some years ago "I didn't have the money."

For those who might find that startling or amusing, remember that wireless pioneer Stanton had recently departed McCaw Cellular with Craig McCaw's blessing to launch Stanton Communications with his wife, Theresa Gillespie, and they had sunk all their capital into that venture. The company would in 1994 become Western Wireless, which went public in1996 and spun off VoiceStream Wireless in 1999.

"We had the opportunity to invest in 1992 and passed because we were funding payroll for about 100 employees out of our personal checking account," Stanton emailed me this week.  "In 2000 we had the opportunity to buy John McCaw's interest in the team. And we have been involved since then."

McCaw's 1992 investment had represented a substantial piece of the original commitment by the 17 owners and it wasn't until he decided to sell that he shared the fact he had only invested for the sake of community and that he hadn't really been a baseball fan.

The final recollection truly little known, except for those closely involved with the effort to save the Mariners, is of the legal battle in which Seattle attorney Arthur Harrigan won the right for local ownership to be sought.

I wrote last year, as Gorton's key contribution 25 years earlier was being celebrated, about the role played by Harrigan, whose firm of Calfo Harrigan Leyh and Eakes got into the battle because it represented King County and Smulyan was seeking to abandon the county-owned Kingdome.

The venue for resolving the future of the Seattle Mariners franchise was what amounted to an arbitration hearing before Arthur Andersen, the national accounting firm agreed to by both sides to decide some key issues relating to the lease and the team.

Since it wasn't a court process, which would have gotten large visibility for the battle between attorneys, Harrigan's maneuvering over the meaning of wording in Smulyan's contract regarding an attendance provision and whether it triggered the 120-day clause got little visibility, and is thus little remembered.


Harrigan's argued interpretation of the lease-requirement wording was accepted by the Andersen firm, so Smulyan was required to give the four-month opportunity for a local buyer to be sought.

Of perhaps equal importance, Harrigan successfully argued that there should be a local value lower than the open-market value. 

The accounting firm agreed and set a "stay-in-Seattle" valuation at $100 million, rather than the national open-market value of $125 million that it had determined.

That created the opportunity for Gorton and others leading the effort to keep the team in Seattle to find a local buyer for $100 million, rather than $125 million, within four months. And that led to Nintendo.

John Ellis, the widely respected, retiring CEO of Puget Sound Power & Light, was a token partner, along with retiring Boeing CEO Frank Shrontz, to add business respectability to the wealthy but lesser-known Microsoft and McCaw Cellular entrepreneurs group.

Ellis was picked to lead the group's effort to gain baseball's approval, becoming managing general partner, eventually becoming CEO and guiding the team through the rest of the '90s and setting the stage for the team's 2001 MLB record-tying 116 victories.

The 1992 "opening night" that is actually best remembered was the owner-change celebration on July 16, 1992, billed as a second opening night.
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Alaska's Cuba service recalls Russia Far East venture

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Normal 0 false false false EN-US X-NONE X-NONE It was logical and appropriate that the first air carrier to connect the Western United States to Cuba should be Alaska Airlines, given that carving out new frontiers and seeking new challenges has been the culture of the airline over its eight-plus decades.

“As we kick off our 85th anniversary year, the inauguration of Cuba service marks the latest in some fascinating twists and turns to our route network,” said Joe Sprague, Alaska’s senior vice president for external relations.

Indeed the Cuba service launch brought back particular memories of Alaska’s far-out decision a quarter century ago to begin regular service to the Russian Far East, seizing what was then a thawing of relations between the two countries and the emergence of the Seattle area as a key player in that relationship that was beginning to verge on friendship.

Back in 1991, Seattle had already hosted the Goodwill Games competition between the U.S. and Russia, and business relations were being pursued. So Alaska launched summer service that year to Magadan, a sister city to Anchorage, and Khabarovsk, described as a European-style interior city that was the commercial and industrial hub for Russia’s Far East.

Part of the U.S.-Russia relations that emerged prompted creation of the Foundation for Russian American Economic Cooperation FRAEC), whose then-president Carol Vipperman recalled in an email exchange this week “the Alaska flights to the Russian Far East were very meaningful to both sides.”

The challenges of some of Alaska’s early flights, eventually extending to five cities in the rugged Far East of Russia, could provide comedy-script material, but also confirmed the pioneering spirit of Alaska’s people.

The inaugural flight to Magadan, 400 miles south of the Arctic Circle, turned up the fact the airport had no de-icing service. It was reported the pilot rounded up every bottle of vodka available and sprayed it on the wings with a garden hose.

And when Alaska launched service to Petropavlovsk, the largest city on the Kamchatka Peninsula, as the inaugural flight loaded with dignitaries was about to land, ground authorities told the pilot he did not have landing rights so the Alaska jet was forced to turn around and return to Anchorage.

Alaska was forced to end the service, on which the airline insisted it made money over the nearly a decade of doing business, when the Russian economy collapsed in 1998.

Vipperman recalls being on the next-to-last flight, with long-time Secretary of State Ralph Munro and some Alaska officials.

“We had come from a bilateral meeting, and at the Kamchatka airport we were taken off the plane to meet with the governor of Kamchatka and other officials so that we could talk about the impact the closure would have on their region,” she recalled in our email exchange. “While we sipped vodka, the plane sat on the tarmac waiting for us to come back.”

“I was personally sad to see the service to the Russian Far East end,” she added.

Alaska’s innovative outreach to the Russian Far East actually went back almost two decades earlier, in the early ‘70s, when the still young carrier began charter service to the Soviet Union’s Siberia as a result of what have been described as “secret negotiations” between the airline and Soviet Authorities.

When the U.S. Department of State learned of the deal, it decided not to block the plan, indicating it didn’t want to create a negative response from the Soviet Union. It might also be assumed the agency wanted to avoid a negative response from Washington State’s two U.S. senators, Warren Magnuson and Henry Jackson, then among the Senate’s most powerful members.

I emailed Sprague for some thoughts on the service that began in the ‘90s.

“The service to the Russian Far East was really something,” said Sprague, who was then with an Anchorage-based regional airlines. “It still amazes me to look at the map and think how far away from home base we were flying our old MD-80s for that service.”

Sprague noted Alaska’s long history of connecting communities, with the Russian Far East and now Cuba as key pieces, but also including launch of service to resort cities in Mexico, Hawaii, then points to the East Coast and Midwest.

The latest, of course, being the merger with Virgin America, which will create Alaska linkage of all the major cities on the West Coast.

“Our various moves have been good for the company, but we also like to think they have been good for the communities we serve,” Sprague said.

An example of serving communities is the fact that, despite filling it planes with passengers destined for popular vacation and business destinations, the airline continues to serve a special role in the infrastructure of the state where it was born as an airline connecting remote locations.

As Sprague noted: “We are proud that we still serve 19 points within the state of Alaska, only three of which are connected to the road system.”

 

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Baseler reflects on Ste. Michelle 50th anniversary

Ted Baseler, president and CEO of Far-flung Ste. Michelle Wine Estates, guides what he proudly refers to as the winery “string of pearls” from an office in the French-style chateau that houses what may be the most visited winery in the world and reflects on the 50th anniversary of the brand.

Baseler, who joined Ste. Michelle as marketing director in 1984, marked 15 years as president and CEO last year with a couple of key accomplishments. One was the special award Ste. Michelle Wine Estates received in November in London when it was presented the trophy as 2016 “United States Wine Producer of the Year” in the International Wine & Spirits Competition.

The other was adding the first Sonoma winery, Patz & Hall, to what Baseler proudly refers to as the “string of pearls” to describe the collection of estate wineries that stretch across Washington and into Oregon and California. The string is the Ste. Michelle Wine Estates company that holds the “pearls.”

While Chateau Ste. Michelle, on its 87-acre estate, is the state’s largest winery and has revenues in 2015 of $692 million and profit of $152 million, the role Baseler and his company have played in helping build Washington’s wine industry to more than 850 wineries valued at more than $10 billion is noteworthy.

And he thinks the Ste. Michelle numbers will double in the next decade, adding that he is “bullish on Washington because of both quality and prices,” adding “it’s hard to find a quality wine in the Napa Valley for less than $100 a bottle.”

In additiom, he notes that “America os going from beer drinking to wine drinking, particularly true with millennials.

The birth of the Ste. Michelle brand provides an amusing tale of the value of competition. There was a time when only the wine produced in this state could legally be sold at retail outlets. It was possible to go to the state Liquor Control Board and order a case of wine from California, which would then arrive several days later.

Washington wines were produced by an all-but-forgotten winemaker called American Wine Growers, which produced almost entirely fortified sweet wines, sometimes affectionately referred to as “rot gut.”

Then in 1967, The California Wine Bill was introduced in the Legislature with the goal of permitting wines from California and elsewhere to be sold at retail outlets. Opponents lamented loudly that it would kill the Washington wine industry and proponents countered “let’s hope so.”

But there were others who understood that competition would benefit all and AWG, that same 1967 landmark year for the industry, began a new line of premium vinifera wines under the name Ste. Michelle and contracted with renowned wine expert Andre Tchelischeff to guide production. Within two years, the wines were receiving “good marks.”

In 1972, a group of investors headed by Wally Opdyke bought out AWG and formed a company under the name Ste. Michelle Vintners, which became successful, soon to be bought out by American Tobacco Co., which was acquired by Altria Group in 2009.

Baseler’s business strategy in guiding his company’s growth is to retain the legacy and reputation of acquired properties and allow them to continue to operate somewhat autonomously.

“We’ve observed other big wine companies that have grown and consolidated their operations, and basically destroyed what they’ve acquired as the wineries lose their flair, their personality and their legacy,” Baseler said.

Another part of Baseler’s strategy is to foster the growth of the industry in this state by viewing the hundreds of wineries as family rather than competitors, expressing at one point the conviction that Ste. Michelle Vineyards needs all the other wineries for the state to have an industry.

An example of that support was In 2004, when a rare arctic storm wiped out the grape harvest for a dozen Walla Walla wineries, Baseler stepped up to sell his grapes to keep the wineries from facing ruin. As Baseler was quoted in a profile in Seattle Business magazine a few years ago, “We could have used the grapes, but this was more important.”

It was a key example of his realizing that without the smaller players scattered across the state producing quality wines in a growing number of wine regions (known as AVAs), a Ste. Michelle standing alone would be diminished.

But Baseler’s focus has not merely been on supporting wineries in this state, but also on bringing quality wineries in other regions under the Ste. Michelle umbrella, or string.

I once remarked, somewhat apologetically, to Baseler at an event where we were discussing wines, naturally, that my favorite wine was Pinot Gris and Pinot Noir from Erath Vineyard in Oregon. He smiled and replied “That’s ok, we own Erath.”

But the relationships extend beyond this country with partnerships with two quality European vintners. A partnership with Tuscany’s Piero antinori led to creation of Col Solare, which  Baseler describes as “the most beautiful winery anywhere.” Eroica Reisling is the result of a partnership with Mosel’s Ernst Loosen, a logical relationship for Chateau Ste. Michelle’s role as the world’s leading producer of Reisling wine.

Baseler has demonstrated that his commitment as a business leader is not just to the industry but also to the state, though he laments when pressed that the state makes little financial effort to support the industry.

In 2002, Baseler was approached about establishing a scholarship fund to support high-achieving, under-represented minority undergraduates at University of Washington. The story goes that Baselder said “no.” Then after a pause, the WSU alum and Regen at the Pullman school said: “but I’ll do it for UW and WSU.”

The program expanded in 2009 to include students attending any college or university in the state. Since inception, more than 100 scholarships totaling more than $3 million have been awarded. Students in the program, which is administered by the College Success Foundation, have a graduation rate of 85-to-90 percent.

Among recent achievements, Baseler led fundraising efforts for a Wine Science Center, a 40,000-square foot, high-tech research and education facility that was opened in June of 2015. The Center, located next to the Washington State University Tri-Cities campus, was a $23 million project developed as a public-private partnership.

Baseler’s comment about the Woodinville winery being “the most visited winery in the world” is supported by the fact that visitors to the winery total more than 250,000 but when attendance at the array of concerts held on the grounds is added in, the total reach about half a million a year.

Ste. Michelle has several events planned throughout the year to celebrate the anniversary, with  large public celebration at the Chateau over the Labor Day weekend, serving as a capstone of sorts as well as a grand re-opening of a major renovation that will be undertaken this year.

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Why preclude future voter revisit for ST-3?

When American poet John Greenleaf Whittier penned his memorable couplet "For of all sad words of tongue or pen, The saddest are these: 'It might have been!'" it was an ode to the maiden in the field and the nobleman who rode by, noticed her, but decided not to stop. It was an ode to lost love but has become a reference point to remind individuals or groups about lost opportunity.
 
Thus ever since Puget Sound voters, almost a half century ago, briefly met at the ballot a light rail package from which they turned away, the "might have been" has been dangled like a badge of shame whenever a new rail-based transportation package is discussed.

After all, Atlanta got our federal funds and built a light-rail system.

 

 

The might-have-been lament is being played again this year in the Puget Sound area, among other arguments put forth by proponents of $54 billion ST-3, a proposal that would provide a 25-year basically blank check to Sound Transit to create a system that will connect an array of communities across three counties.

 

As posed at the start of his op-ed piece in the Seattle Times, my friend Charles Collins, whose background as a civic leader and transportation expert provide impeccable credentials for the integrity of his comments: "$54 billion. Really? The sheer size of Sound Transit 3 staggers the imagination. A Google search yields nothing remotely comparable ever asked of local voters...anywhere."

 

Collins went on to point out that Sound Transit's own statistics show it won't reduce congestion, despite its election-season claims. "Buried in Sound Transit's original Environmental Impact Statement is a very different story: their own analysis indicated that there would be no difference in congestion whether the rail system were built or not built."

 

One story for an environmental impact statement and another for the voters might seem dishonest. But the fact is, I and most citizens have a respect for the integrity of individual members of the board, each a local elected official in one of three counties.

 

But I'm equally convinced that as a board, the members' candor tends to give way to the group reality that commitment of major public dollars means major income to an array of contractors, architects, professional firms, and so on. And each makes campaign contributions to those board members when they run for re-election to their local offices, which is obviously the main function of each of those elected officials, with Sound Transit board membership a secondary, or supportive, duty.

 

That's why there should be no surprise in the story this week in the Seattle Times that 62 percent of the money for the campaign on behalf of ST-3 has come from contractors, engineers, suppliers, unions and others for whom the $54 billion would be an income and jobs windfall.

 

There are many who have made the points Collins made but I quote him primarily because his views were so cogently stated in his Times' op-ed piece and because, while others may be assailed for having vested interested in opposing ST-3, even proponents of the plan would concede there's not much way to try to question his credentials.

 

Collins, incidentally, was being a little generous in saying nothing similar has been asked of local voters. The fact is that the amount local voters here are being asked to approve with ST-3 is 25 percent greater than voters in the entire state of California approved in 1968 so 800 miles of high-speed rail lines connecting Los Angeles and San Francisco could be built. So the three-county proposal is greater than even the pricetag on the most costly plan put forward in the nation's largest state.

 

The California plan, naturally described to voters in 2008 as "visionary," is to whoosh riders from Southern California to San Fran in an unheard-of two hours and 40 minutes. The trains would reduce air pollution and ease congestion on the state's famously clogged freeways and construction would create tens of thousands of new jobs. So the voters approved $9.95 billion in bonds of the $43 billion plan to usher in a new era of transit for the Golden State.

 

But times have changed, and the recent past has been a rough time for the project. The latest poll shows that 59 percent of Californians would vote against the bonds if they could do it again. Cost estimates have grown from $43 billion to at least $98 billion, and the completion date of the first phase has been pushed back 13 years.

 

If ST-3 is approved and in a few years it becomes obvious that $54 billion and 25 years are dramatic underestimates, which would parallel what is happening in California, the same inability of the voters in this region to rethink what would have become a very bad idea will amount to the same unfulfillable wish to do it over.

 

In fact, there's a double down on the logic of a voter review somewhere, ideally as stages of the project are completed, and that's what Collins and others point to as it being obvious "that we are at the threshold of the most fundamental transportation revolution since the combustion engine."

 

Autonomous, or self-driving, vehicles may provide a chuckle to some, but to companies ranging from Ford to Google, there's full speed ahead with the knowledge that autonomous vehicles will be here with a prominent if not dominant transportation role.

And, as Collins notes in his op-ed piece, "Opinions vary on when self-driving (autonomous) vehicles will arrive in large numbers on American streets, some say in as little as five years, some say as many as 15. No one says 2040, the year ST3 is complete."

 

"What public policies and investments will be required to take advantage of self-driving technology?" Collins questions. "New lanes? Publicly owned fleets? Contracted services with the Googles, Fords and Ubers? But whatever makes sense, it is clear that approval of ST3 rail system will commandeer all reasonably available local transportation funds for a generation and preclude any chance to advance new technology."

 

That's why I find it intriguing, in a most troubling way, to have people I basically respect being absolutely adamant in insisting there's no reason that voters should have an opportunity to review the progress of a $54 billion quarter-century plan at various intervals.

Never mind that it might be an outdated transportation mode in a quarter century.

 

To echo the most compelling of Collins' comments: "Really?"
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Forman's quarter-century focus on rural development

 

 

Washington has been more attuned than most states to the reality that creating successful economies in rural communities results from helping them grow and nurture what they have rather than merely trying to attract businesses from elsewhere to relocate.

    Maury Forman
Now as Maury Forman, the man who built this state's image of focusing on rural economic development for nearly 26 years, passes the baton, a new program aimed at attracting successful urban entrepreneurs to mentor rural business people is seen by his successor as a "priority program" for the future.

Recruitment and retention, generally in that order, have been the key words that guided the programs of economic development organizations in smaller communities across the country for years, usually with marginal success. But retention has been a generally amorphous patchwork.

But for a quarter century as senior manager in the Washington State Department of Commerce and head of the Office of Economic Development and Competitiveness, Forman has kept his focus on enhancing the success of rural communities by emphasizing the words nurture and growth.
Forman, who has served under five governors, a similar number of department heads and in an agency that has occasionally changed names to connote sometimes different emphasis, is retiring from the role he stepped into in 1991 and soon thereafter began crafting a rural-support image for the state.

And his vision for rural enhancement has grown over the years, coming to emphasize the importance of entrepreneurs and more recently the importance of young people to their communities.
He once shared with me the view that if programs are to enhance local economic development they "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."
"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman told me in an interview last year.
Anne Nelson      
Now Forman is turning over the role of guiding rural communities on successful economic development paths to Anne Nelson, who has started several businesses and worked as a community and economic developer before becoming an instructor at Walla Walla Community College in business, entrepreneurship and marketing.
In an example of Forman's typical sense of humor, he says "she will essentially be serving those rural areas as Executive Innovator and Enlightener of Ideas Officer (or EIEIO as we say on the farm)."
In fact, Nelson shared with me an incident in the Eastern Washington community of Dayton that she thinks may serve as a model for what she hopes will emerge as urban-rural mentoring.

Seems a much-loved bakery in Dayton was closing because the owner was retiring. Nelson heard discussion about it at a local restaurant, was aware of a young woman who was hoping to someday own a restaurant and created a contact with retired Seattle restaurant owner Paul MacKay. The founder of El Gaucho and a chain of other restaurants had retired with his wife a few years ago to Walla Walla to a 100-acre spread to grow wheat and grapes.

But once he learned of the Dayton bakery situation, MacKay soon got the young woman set up as owner manager of the bakery.
"I see the support for that young, aspiring bakery owner from Paul MacKay as a model we can see more and more of across this state," Nelson said. "The key is that rural entrepreneurs are clear about their sense that mentoring is even more important than capital."

The program, called Startup365, has been running for about a year under the management of Greater Spokane Inc., the region's chamber of commerce, aimed at connecting Spokane area business people as mentors for entrepreneurs and small businesses in Asotin and Whitman counties.

But Nelson says Startup 365, created by the legislature, is aimed at retaining the intellectual wealth and economic vitality of rural areas by focusing on entrepreneurship and small business growth. "That will help communities flourish organically and will be a priority program that I can spend more time on, functioning a large part of my time in Walla Walla."

"I do believe that urban-rural mentorship will be a key piece in building rural businesses, especially as I see the urban entrepreneurs being more in touch with the technologies and tools that help businesses be successful," said Nelson.

One of those technology tools, Skype, she hopes will be employed at least once a week in connecting rural entrepreneurs with their urban mentors. The Spokane program is being supported by Avista, the Spokane-based utility that has a long track record of supporting business development in the region.

But before Nelson gets to focus on developing the urban-rural mentorship idea, her first order of business will be overseeing in November the fifth annual Global Entrepreneurship Week activities in all 39 counties.

Although in Washington, the annual celebration of innovators and job creators involving 88 countries last year became Global Entrepreneurship Month. Nowhere is GEW, or GEM in this state, treated as a bigger deal than what Forman put in place in Washington, which is the only state with events in all counties.

Jack Schultz, whose focus on assisting rural economic growth helped him come to be known as the guru of rural economic development as keynoter at more than 400 conferences around the country and author of "Boomtown USA: The 7 ½ Keys to Big Success in Small Towns," credits entrepreneurial support as a key to rural success.

Schultz, of Effingham, IL., whose Agracel Inc. is the largest industrial development company focused on developing projects and creating jobs in rural towns, told me he had not heard of a mentorship program like Startup 365.

But Schultz, who said he has long been an admirer of Forman's, said "I think it makes a lot of sense and is something very innovative."

Referring to findings from his visits to hundreds of small towns to gather information for his book, Schultz said in an email: "Embracing entrepreneurism in communities was a key factor which differentiated great communities from also-rans.  Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."
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'Tipping point' pledge for planned Bellevue arts center

A "tipping point" matching pledge of $20 million, half from the Arakawa Foundation, for the planned Tateuchi performing arts center in downtown Bellevue was announced Wednesday evening at a festive gathering of supporters at the Hyatt Regency Bellevue next to the site for the planned $200 million facility.

The $10 million pledged by Yoko and Minoru Arakawa, to name the 2,000-seat centerpiece of the center the Arakawa Concert Hall, puts the facility $122 million in cash and pledges on the way to the spring of 2018 groundbreaking of the $200 million facility, which is increasingly viewed as serving the region rather than just the Eastside.

Cathi Hatch, chair of the campaign, said the Arakawa gift, matched by $5 million each from the Freeman Family and Microsoft Challenge Matches, means "we need another $58 million to go to groundbreaking." Arakawa is founder and former president of Ninetendo.

While the facility will be the venue for many Eastside performing arts groups, the collection of Seattle arts leadership on the Tateuchi advisory board is evidence that the Center is coming to be viewed by Seattle arts organizations as an asset rather than the threat it was viewed as when it was first announced a few years ago.

The center, when completed, is viewed as complementing Seattle arts venues like McCaw Hall, Benaroya Hall, the 5th Avenue and Paramount theaters while filling a regional need by providing a more convenient venue for Eastside residents while offering an Eastside platform for Seattle arts groups.

Other significant donors were also honored at the Wednesday evening event, including the Tateuchi Foundation, for whose donation the center is named. Tateuchi board chair Alex Smith acknowledged tbe role the Bellevue City Council played with its unanimous vote in May of 2015 to provide $20 million toward construction.

The initial boost, when the center was first envisioned, came from the Kemper Freeman family committed the land where the center will be built.

" Between now And groundbreaking in the spring of 2018, our campaign committee will continue to focus on recruiting Founders Society-level donors," said Hatch, who added that donors at all levels will soon be sought, "including children with their penny jars."

The changing attitude of Seattle performing arts leaders toward a Bellevue concert center is in response to an increasing reluctancd of Eastsiders, who account for more than 50 percent of Seattle arts subscribes and Seattle ticketholders, to face the twin traffic challenges of Lake Washington bridges to Seattle and traffic tie-ups in downtown Seattle.

The strategy of Seattle arts organizations is to use the 2,000-seat center for the double benefit of attracting new audience while helping retain existing ticketholders and supporters.

The way it might work, for example, is a ticketholder for a season of 10 performances of a Seattle play, symphony or opera might wind up with seven of those in Seattle and three on the Eastside.

As I noted in a column last fall, the center isn't being done on the cheap, but its supporters like to talk about how the $200 million pricetag compares with projects like the recently opened Las Vegas center, the same eize, that had a pricetag of $400 million.
 

 
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Sound Transit ballot plan faces emerging challenge

As Sound Transit marks its 20th birthday, it faces the biggest-ever threat to its future in the form of an emerging transportation alternative that may well cause voters in the three Central Puget Sound counties to reject the agency's $54 billion transportation package to allow the alternative time to develop.

Not even in their darkest nightmare would Sound Transit's board and the proponents of its megabillion-dollar ballot measure likely have envisioned the emergence of a growing fervor over a new transportation innovation just as the time for a November voter decision on dramatically extending the rail-based package nears.

The transportation innovation that's attracting increasing attention is autonomous vehicles, previously referred to as self-driving cars, with both automobile and truck manufacturers projecting emergence of fully autonomous vehicles within five years. And the Seattle area is being talked up as the nation's launch region for this development because companies like Google, Car2Go and ReachNow have committed to bring that about.

The challenge facing Sound Transit is that its proposal would put a lock on the region's transportation future for the next quarter century, tying it to a system for which rail is the keystone. By then autonomous vehicles and the congestion-easing result of their emergence might well render rail the transportation innovation of yesterday.

And the uncertainty surrounding the transportation future has created a growing sense, expressed not just by Sound Transit critics but also some longtime supporters, that rather than a full-blown package committing the region to a 25-year plan, a series of packages should be placed before the voters. The most recent example of growing concern over the measure called ST-3 was the Bellevue Chamber of Commerce board's decision Tuesday to oppose it.

Those pressing the idea of sending Sound Transit back to the drawing board would seek ballot proposals in staged packages, with a vote to provide funding for one segment, which would be followed by another vote when that project was completed, and so on. Then at any point, the voters could decide times have indeed changed and no more Sound Transit rail construction is desired.

As one of those longtime supporter put it when I called to get his candid thoughts: "If you are saying the voters should be offered segments of the total plan over a period of years as each prior segment is completed, of course that's logical."

But Sound Transit, officially the Central Puget Sound Regional Transit Authority, formed in 1996 by the county councils of King, Pierce, and Snohomish Counties, is looking to corral all 25 years' worth of funding from voters. There is a clear Sound Transit reluctance to even contemplate going back to the drawing board.

As longtime Sound Transit critic, Bellevue developer and business leader Kemper Freeman Jr., sees it, Sound Transit realizes that ST-3 is likely the last time voters might be willing to consider a mega transportation package with taxes that will hit every property owner in the three counties. Too many things, including transportation alternatives and other uses for that massive property tax amount, are certain to emerge in future years.

Intriguingly, this is the second time in its 20 years that an alternative to Sound Transit's rail focus has been offered. Despite the business and political credentials of the five people who teamed up, a year after Sound Transit began operation, to suggest a lower-cost and more efficient idea than the then-planned $1.6 billion Link Light Rail, the idea was basically brushed aside back in 2000.

The plan was called Ride Free Express, offered by two former governors John Spellman, a Republican, and Democrat Booth Gardner, along with John Runstad and Matt Griffin, two well-regarded business leaders, and Charles Collins, one of the region's long-respected transportation experts.

The plan would have eliminated fares for existing as well an expanded express bus fleet and created vanpools, reducing peak congestion by 5 percent at a price a sixth of the cost of new riders on Sound Transit's Link Light Rail, "even assuming they could build, LINK for the original $1.6 billion," Collins said. A recent Seattle Times analysis showed that in the end LINK wasn't built for that price, actually exceeding its budget by 87 percent.

"All of our projections, including that our plan would attract six times the number of new riders, flowed from well-established and independent market studies or actual transit experience," Collins notes. "Not a single board member except Rob McKenna thought that the issues we raised were even slightly interesting."

"They were committed to a project whereas we wanted to reduce congestion," Collins summarized pointly.

"Nothing has changed," said Collins, whose credentials include having been Spellman's Chief King County Adminstrator, Director of Metro Transit and chair of the Northwest Power Planning Council, the State Higher Education Coordinating Board and the State Commission on Student Learning.

Indeed while Sound Transit operates express bus services in addition to rail and light rail service to the region, there has been little doubt in the community that members of the board view themselves as creators of the region's light rail system.

Sound Transit and its proponents have routinely tried to picture the opposition as primarily Kemper Freeman., since a wealthy Eastside businessman makes an easy target for those Seattlites who view rail as something approaching Holy Grail. 

Collins, with impeccable credentials for public service, business success and transportation expertise, as well as being a decorated Vietnam veteran and retired Army Reserve Brigadier General, makes an opponent who many Sound Transit believers will find it uncomfortable to attack.

"If we are committed for 25 years and a good idea like autonomous van pools takes shape, good luck since the bond attorneys have made sure the money can't be diverted," Collins told me. "And autonomous van pools would be a good idea and could also be an energy answer."

Freeman sought this year to boost his years-long campaign for roads over rails with report he funded called Mobility 21 that outlined a fact-based alternative to the existing long-range plans. He has presented Mobility 21 at an array of speaking engagements around the region. 
Freeman told me the first presentation on the Mobility 21 study was made to officials of the Puget Sound Regional Council, which oversees dispensing federal dollars to the four counties.

"They admitted to us that the idea of autonomous cars had never been envisioned in their 25-year plan," freeman said.

Will autonomous vehicles become an ubiquitous presence on the region's roadways soon? Of course not. But technological advancements, including accident-avoidance devices, in vehicles before that happens will enhance congestion-reductions efforts. And some such technological advances could require commitment of dollars from the public, which would be more difficult to draw out if $54 billion in taxes is still being imposed.

And it's interesting that Daimler Trucks North America CEO Martin Daum talked recently about how he allowed a robotic truck to drive him nearly 25 miles, without his ever touching the steering wheel or brakes. He said his digital pilot used a combination of GPS, map data and sensors to drive the autonomous truck across highways and two-way streets.

And Freeman admitted to me, in one interview, that he has taken a half dozen trips, logging up to 125 miles, both freeway and city streets, with his autonomous Tesla. He said his hands were poised beneath the steering wheel in case his intervention was needed, bur that he never actually had his hands on the wheel.

Freeman and other ST-3 opponents haven't yet been seeking slogans for the final months of their campaign, but given the new realities facing the $54 billion plan, it could be referred at this time as "not a sound plan."
 
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Huntsman World /Senior Games turns 30 this October

Jon Huntsman Sr.’s vision of creating an event that would attract hundreds of seniors to Southern Utah annually to engage in competition with each other in what he named the World Senior Games has become, over three decades, likely the most successful event of its kind in …well…the world.

Fulfillment of the prominent Utah businessman-philanthropist’s conviction that seniors could be lured to a remote but appealing corner of the West to demonstrate that their competitiveness remained strong despite advancing years will be played out again this fall for the 30th time.

Thus the City of St. George, along with officials and volunteers of the event itself, prepare to entertain almost 11,000 seniors during the first two weeks of October with athletes from every state and many nations. In fact, as Michelle Graves, Director of Sponsor Relations for the Games, emailed me: “Our goal this year is to host 10,950 athletes, which is the number of days in 30 years,” a goal only 400 ahead of the participant total for last year. “We also hope to host 30 nations, one for each year.”

I am registered again this October to be among the competitor in the 100 meters, against other “old guys” of my age (competition in all events is on the basis of five-year increments, as in 50-54 on up). But in addition to track and field, others of the thousands on hand will be participating in events ranging from archery, badminton and basketball to cycling, tennis, swimming and softballr.

The appellation “World” that Huntsman’s marketing acumen attached to the games’ name has, without doubt, been a key attraction for seniors willing to travel to a spot that you don’t get to easily so they can have the satisfaction of competing with the best of peers of their age.

I don’t know whether the intent of Huntsman and his wife, Karen, in their commitment to these games was because of the goodwill it has obviously fostered or economic development for the picturesque region known as “Color Country,” or “Red Rock Country.”

But the fact is both have occurred. The population of St. George was about 25,000 when the games were first held and has now grown to more than three times that at just over 80,000.

As long-time readers of the Harp are likely aware, participating in these games has held an appeal for me since I first learned of them in 2002, wanted to be a part of something called “World” games,  and came to run in the 100 meters and 200 meter events a year later, to my surprise finishing sixth in the 100.

It’s what attracted me back in 2011 after colon cancer surgery, needing to prove something to myself, and was amazed to finish third in the 100 meters in the 70-74 group. And again last year, when I finished second in 75-79 100-meter runners.

These games are a success story that Huntsman himself, now 79, probably couldn’t have envisioned. And except for those aware of Huntsman’s life of giving and caring, people might well be surprised that a multibillionaire who was in the process of building the world’s largest chemical company of its kind and developing a noted cancer hospital in Salt Lake City would have the time or interest to worry about it.

This Harp is, in fact, as much about a regard I have for Huntsman, whom I have never met, as the regard I have held for more than a dozen years for the annual gathering of senior athletes he has been committed to fostering and supporting, making it possible for me and others to test ourselves in peer competition.

A person like Huntsman is particularly important at a time when anger and hostility seem to have become what too many people bring to interactions with each other, rather than goodwill and regard.

Huntsman, a leader in his Mormon church, is a two-time cancer survivor who founded an institute with the goal of curing the disease and dispenses his substantial wealth to an array of causes, in addition to having taken the Giving Pledge, the promise taken by the world’s richest people to give away more than half of their wealth.

Huntsman’s philanthropic giving now exceeds $1.2 billion but he suggests he has a long way to go since his stated intent is to give all his wealth away.

Huntsman is wont to sum up his view of the non-giving wealthy thusly: "The people I particularly dislike are those who say 'I'm going to leave it in my will.' What they're really saying is 'If I could live forever, I wouldn't give any of it away.'

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Entrepreneur of the Year event has become community entrepreneurship celebration

In the quarter century since national accounting firm Ernst & Young (now rebranded as EY) brought its Entrepreneur of the Year event to Seattle and the Northwest, the annual black tie gala has represented a community celebration of entrepreneurship. And with that has come a growing awareness of the importance of recognition for those struggling to build businesses and create jobs.

That increased awareness of the role visibility plays has brought with it an array of events, created by firms, organizations and media entities who want to own a piece of visibility value of their own for creating visibility for and thus developing relationships with young companies and the entrepreneurs who guide them.

Indeed all of those other recognition events have brought value to the startup and entrepreneurial ecosystem by allowing individual firms to attract the attention of potential investors and potential new talent.

But the EY event has remained the most prestigious gathering for entrepreneurs, as this year's select group of honorees preparing for the June 17 event at the Sheraton Hotel are coming to learn. Among other things, Northwest winner get to move forward to compete for recognition at the EoY national and world events later in the year with winning entrepreneurs from the 145 cities and 60 countries in which the EoY event is held.

As Dan Smith, managing partner of the Seattle EY office, put it:"We've recognized many remarkable leaders who have disrupted industries, created new product categories, and successfully brought new innovation and technology to traditional industries."

In fact three winners in the local event have gone on to win at the national level. They are David Giuliani, who as founder and CEO of Optiva, won in the manufacturing category in 1997; Zillow Group CEO Spencer Rascoff, who won in the "services" category in 2013, and Zulily CEO Darrell Cavens, who won in the "emerging" category in 2014.

Smith notes that this year's finalists include 21 entrepreneurs from the life sciences, retail and technology industries, adding "we've definitely seen a lot of growth in these sectors compared to 30 years ago when the program started."

This annual Entrepreneur of the Year event has held a special attraction for me because of personal involvement, both before and since the event came to Seattle five years after Ernst & Young launched it in 1986 in Milwaukee.

Part of my regard for the event is having close connection to entrepreneurial honorees for this special recognition. The first was Kathryn Kelly, the president of a young Seattle firm ­­­called Environmental Toxicology, who was among those honored as finalists at the second event in Seattle in 1992.

Then came Pete Chase, CEO of Spokane-based Purcell Systems, who won in the communications category in 2006 and became a judge in the following three years, before guiding the sale or his company and launching a new company, Columbia International Finance, for whom I am doing some consulting.

And Leen Kawas, Ph.D., president and CEO of the promising young life science company M3 Biotechnology Inc., is a 30-year-old Jordanian woman who is among this year's honorees and whom I tout as changing the face of life sciences in this state. I have had the satisfaction of being an investor and providing introductions and visibility since she arrived at the helm of the fast-growing company in January of 2014.

The impact of the honor on the entrepreneurs nominated was evidenced by Kelly's reaction back then when I expressed my regret, having nominated her, for the fact she had been one of three finalists but had not won in her category.

"You have to be kidding! Just being here (including the video vignettes of each finalist shown before the envelope is opened and the winner disclosed) was the satisfaction of a lifetime," she said.

There is also a bit of amusement for me when I think of the Entrepreneur of the Year event in that as publisher of the Business Journal I was involved in two entrepreneur of the year events before Ernst & Young brought its event to Seattle.

That came about because Woody Howse, then a partner in the venture capital firm Cable & Howse Ventures, approached me about partnering in an event we named Entrepreneur of the Year, which we promoted and held in the mid-'80s to honor a single entrepreneur each year. It would be hard to top either of our honorees.

The first was W. Hunter Simpson, who had taken over defibrillator-manufacturer Physio-Control 20 years earlier and guided it into a global-leadership role in its industry. The next year we honored Microsoft founder and CEO Bill Gates, whose company was just then gathering momentum, having gone public a year earlier.

Cable & Howse, then the area's premier vemture capital, had a vested interest in creating visibility for entrepreneurs, as did the Business Journal. We were among many organizations then casting about to determine how best to serve those individuals who held the keys to our future.

In fact, some edginess on the part of the Ernst & Young Seattle leadership would have been appropriate at our having pre-empted Simpson and Gates as the two most impressive names in the local entrepreneur community at the time.

PSBJ and Cable & Howse partnered for several years thereafter with another accounting firm to stage a High Tech Entrepreneur of the Year event, before Ernst & Young Managing Partner Karl Guelich called me to let me know our party was over because the real thing was coming to Seattle.

Guelich had allowed us to go ahead without comment with a Seattle event using the E&Y copyrighted name, partly out of friendship and partly because he likely figured, as it turned out accurately, that our event might even lay visibility groundwork for the arrival of the official awards event of that name.

For perhaps a decade, the Business Journal was part of a process that represented a win for the firm, for the newspaper, and for the entrepreneurs as well. Ermst & Young always scheduled its event for a Thursday evening and provided all the advance detail needed for PSBJ to produce a special supplement with stories on the event and all the honorees, passed out to all attendees as a keepsake as they left the event and then it was inserted in the PSBJ copies that arrived in subscribers' mail the following day.

Since then some of the biggest names among regional entrepreneurs have been in the winners' limelight at the Northwest EoY. They included Mark Britton of Avvo, Jim Weber of Brooks Sports, Inc., Dara Khosrowshahi of Expedia, Inc., Gertrude and Timothy P. Boyle of Columbia Sportswear Company, Jeffrey P. Bezos of Amazon.com, Inc. and Howard Schultz of Starbucks Coffee Company.

So perhaps I'm prejudiced, but it seems clear that EY Managing partner Smith is accurate in suggesting that "the award has acquired a great deal of prestige, and is recognized around the world as an emblem of entrepreneurial success."

text here .

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Arrival of federal crowdfunding gives start-up companies options

Almost four years overdue, federal crowdfunding rules went into effect last week to fulfill a 2012 Congressional mandate to "democratize" the process by which entrepreneurs and small businesses can raise start-up capital from "the crowd" of investors of average means.

Some cynics might view as "Democracy in action" the fact that it took almost four years for the Securities and Exchange Commission to come up with the rules that Congress originally gave it 180 days to enact so the legislation known as the Jumpstarts Our Business Startups (JOBS) Act could go into effect.

But the upside of the years of delay was that almost half of the states, including Washington, were spurred to seize the opportunity to come up with intrastate versions of the crowdfunding concept. As a result entrepreneurs in most states have the choice of federal or state regulations to use in seeking start-up capital from average investors, a choice that would likely not have come to pass without the SEC's foot dragging.

And in fact, the act's regulatory debut of 17 federal filings the first day was characterized as "pretty impressive" by Faith Anderson, the respected Registration and General Counsel Program Manager in the Securities Division of the state Department of Financial Institutions (DFI).

How the individual states have fared in the responses to their crowdfunding legislation has depended on a number of factors. Oregon, for example, because it has a non-profit dedicated to helping entrepreneurs through the process, has had good reviews.

Montana, on the other hand, has an unusual constraint that requires that half of a startups' business must be done in Montana.

"Makes it a pretty small prospective market," quipped Liz Marchi, the Kalispell-based leader of three Montana angel funds.

Before its crowdfunding legislation was approved last year, Montana was already rated the top state in the nation for start-up businesses on the Kauffman Index, the annual state ranking of startups by the Kauffman Foundation, largest entrepreneurship-focused non-profit in the country.

Marchi, who is finding enough entrepreneurs already emerging in the Big Sky Country, is not a big fan of crowdfunding for entrepreneurs, saying "I plan to stay away until all the unintended consequences have been worked out."

Meanwhile, Oregon's non-profit called Hatch Oregon, which travels around the state vetting startups it works with, is getting positive attention from startups there for what amounts to an incubator that seeks to guide entrepreneurs past the financial rocks and shoals of the crowdfunding game.

Hatch, whose platform hosts 10 of the 11 offerings filed in Oregon so far, offers no guarantee to the companies it works with. The incubator also produced a video called "Let's Be Frank" that tries to outline the risks in plain language.

Washington has no such entity to inexpensively help entrepreneurs along the road toward fundraising. But regulators have sought to put in place a program that helps guide startups to produce a document that ensures they are in compliance with securities laws, that investors are protected and entrepreneurs themselves are steered away from possible future liabilities.

The intent is an entrepreneur could be helped through the process without having to necessarily incur the expense of an attorney.

But the fact not all startups want to be so carefully guided is evident by the fact that one of two companies filing under the crowdfunding law got considerable media attention by lamenting that its efforts to get the paperwork done and get to fundraising was being hung up in red tape.

The sense is that what the filing firm viewed as "red tape" was insistence by state regulators that all the requirements be met, and one of the challenges for startup hopefuls is that not all attorneys understand the law and its regulatory requirements at this point.

One nagging aspect of the SEC rules in place that govern the crowdfunding laws of all the states is something known as Rule 147, referred to as the "intrastate offering" exemption, which has strict requirements that intrastate offerings be contained within the boundaries of a single state. In other words, an entrepreneur filing under the Washington State law not only can't take money from the resident of another state, but the resident of another state isn't even to see the offering.

So far, the SEC has been firm in the view that if someone in another state sees the information on the offering, it is no longer intrastate, which would basically nullify the fund-raising effort.

Anderson, chair of the Small Business/Limited Offerings Project Group of the National Securities Administrators Association, produced a report some months ago for the securities departments of all 50 states that was critical of Rule 147 and its impact on entrepreneurs.

The SEC has apparently gotten enough push back from the states on that constraint that, as Michelle Webster, financial legal examiner for DFI, explained, the SEC has several proposals, which are currently merely proposals it will consider that would amend the JOBS Act rules. One that would address that almost universal Rule 147 irritant would allow intrastate visibility for an offering as long as only residents of the filing company's state were permitted to invest.

But the fact is there is no timeline for the SEC to actually act on proposed amendments to rule 147. And some suggest the agency might never act since they do not have a Congressional push to do so.

Joe Wallin, a Seattle attorney with Carney Badley Spellman, who basically wrote the state legislation that created the crowdfunding law in this state, has been critical of the fact that those assisting entrepreneurs to raise funds cannot legally charge a fee representing a percentage of dollars raised unless licensed as a broker-dealer.

That's a federal restriction and Wallin is convinced an easing of that rule would find a lot of individuals and groups stepping forward to provide fee-based assistance based on a percentage of the dollars raised rather high hourly fees.

Washington' Securities Administrator, Bill Beatty, suggested that from now forward, with both federal and state options open to would-be crowdfunders, to be determined is: "will the federal model, which requires the use of licensed portals, or the typical state model, which allows issuers to conduct the offering, be more attractive?"

The sense has been that the cost of using a licensed portal could be a substantial slice of the $1 million that a crowdfunding startup would be permitted to raise the first year. But Beatty said he has gotten the sense of more reasonable pricing from some portal operators.

"If the costs prove to be reasonable, I think federal crowdfunding has a much better chance of gaining traction and being a useful tool for some small businesses," he said.

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Willingness to provide funding key to state's life sciences future

Although this state is home to a world class life sciences and biotech non-profit sector, Washington's Legislature seems to only toy with understanding that being competitive with other states in the quest for pre-eminence in that industry requires demonstrating a willingness to spend state dollars.

That's likely at least part of the reason for the strong bi-partisan support among the lawmakers for a bill that would have put in place the essential final piece of a cancer research fund: an administrative body to begin planning grants, accepting donations and basically letting the fund become operational.

But one of the issues left undone when the Legislature adjourned at the end of March was final action on the bill, HB2679, that would have consolidated the cancer-research fund that was born of a bold idea in the 2015 Legislature into the Life Science Discovery Fund (LSDF). Intriguingly the same legislature left LSDF without a future by defunding it.

The bill was approved overwhelmingly by the Democrat-controlled House and passed out of the Senate committee and sent to the Ways and Means Committee, which has to approve bills that carry an appropriation. The bill languished there in the final days and died with the end of the session.

The LSDF-related bill, sponsored primarily by Democratic Rep. Jeff Morris, was to create a new Center of Excellence for Life Science and Cancer Research, to be overseen by LSDF.

The cancer-research-fund bill itself is designed to provide $20 million a year for the next 10 years with $10 million to come from state funds that can be released only after commitment of a "non-state match" of $10 million. The lawmakers appropriated $5 million to launch the fund, called CARE, which needs a board to oversee it and a contract with a non-profit designated to administer it before it can actually go into effect and begin considering grants.

So the provisions of the legislation creating the cancer fund are still in place, waiting to be implemented, and in fact Gov. Jay Inslee is in the process of selecting the 13-member board required to be named by July 1, according to the legislation.

The LSDF bill died at the end of last session and would have to be introduced again in 2017, in the event Morris should decide to take another run at employing LSDF as administrative entity

A life sciences ecosystem is important for the state and an ecosystem is supported by numerous pillars. In Washington, the approach of the lawmakers has been to take down the pillars, specifically removing the state's R&D tax credit for life science firms and ending the funding for LSDF, which was created a decade ago to provide funding for life-science startups, both in research and in commercialization.

As former Gov. Christine Gregoire put it: "We are in fierce competition with other areas but, unfortunately, as a state, we have gone in the wrong direction by eliminating the research and development tax credit that supports early stage companies and defunding LSDF."

The cancer-research fund is viewed by the life sciences industry as restoring a pillar and all have indicated their support for the fund. But those life science leaders also share the view that the $10 million a year of state funds that it provides is merely a start, particularly given the support other states have stepped up to provide. What could be considered the other end of the state-support spectrum from Washington is Massachusetts, where a 10-year $1 billion dollar plan to support life sciences is now in place.

Gregoire, who as Washington's Attorney General led the fight that brought millions in tobacco money to the states then as governor led the effort to create LSDF as a vehicle to fund life science innovations, called the new cancer-research fund "an essential building block for a vibrant life sciences sector."

Gregoire, newly named to the board of The Hutch and thus soon to make her mark from inside the industry, addedwith respect to the cancer fund: "It can do a lot of good for our researchers and advance the work being done in areas where we have a unique advantage, including immunotherapy. The cancer research fund is just one part of it and the state needs to continue its targeted role or we risk losing our talent and the ability to bring cures to people faster."

Part of the pressure on the states has come about because of what had become, in recent years, a trend of NIH grants that have stayed fairly constant while purchasing power for those grants has declined yearly.

In fact, this state has always had a healthy share of NIH grants, totaling about $230 million the past fiscal year with $94.8 million to Fred Hutchinson Cancer Research Institute, $71.8 million to the University of Washington and $29.3 million for the Benaroya Research Institute.

As to LSDF itself, because it is currently managing nearly three dozen grants toward their completion, it will still be in operation, if greatly reduced in staff and perhaps board, by the time of the nest legislative session, so it remains as a possible experienced administrative body for the board now being appointed to contract with to guide the cancer fund.

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Copyright

© 2016 Mike Flynn

Montana's 'angel' investor sees changing values boosting state's investor appeal

Those who have watched or experienced Liz Marchi's commitment to provide funding for Montana entrepreneurs and startups for a decade might suggest that the term "angel investor" was coined specifically to describe her.

Liz Marchi
Liz Marchi 
It was 2003 that Marchi, who had arrived in Montana with three daughters and her then husband and settled in the Flathead Valley, decided to create the state's first angel fund, Frontier Angel Fund I. The fund closed in 2006 at $1.7 million, $300,000 more than she had hoped.   
     
She eventually guided the Kalispell-based fund, which had attracted investors from around the country who were either fans of or summer residents in the Big Sky Country, to lead three deals and gather a total of 12 active investments and was soon also overseeing angel groups that had sprung up in Missoula and Bozeman.

Because she successfully syndicated her deals with a number of other angel groups outside the state, she jokes that she has become "the grandmother of crowd funding." She's not referring to the formal definition of crowd funding but rather the syndication efforts she initiated that attracted a crowd of angels from numerous groups making small investments.

Now Marchi, who grew up near Jackson Hole, WY, but who had never been to Montana when she arrived here in 2000, says she is looking forward to making the investor-leader handoff to Will Price, whose roots in the state brought him back from Silicon Valley to create Next Frontier Capital, at $20 million the largest venture fund ever raised in the state.

Price, on the board of or a key executive with a number of Bay Area tech companies, did his due diligence on the attitudes of national venture and mergers & acquisitions firms toward Montana before making the move to Bozeman.

Price's fund, which closed last April a year following his decision to bring his family to the state where his father, Kent Price, is well known as Montana's first Rhodes Scholar and University of Montana board member, has already made two investments.

I've kidded Liz and her husband, Jon, who in 1978 founded Glacier Venture fund as the first venture fund in Montana and presided over it for 29 years, about being "Mr. and Mrs. Montana Money." To which she once responded: "We are more like Mr. and Mrs. Montana risk capital since we share a very high risk tolerance...and often share the consequences."

Although Marchi talks about making a handoff to Price, as well as "the next generation of angels, including some members of Fund II in their '30s, who slay me in terms of their abilities," she was completing the formation in August of $2.7 million Frontier Fund II, which has already invested $900,000 with syndication adding $300,000 for a total of $1.2 million already invested.

"We have 48 investors in 10 states and meet physically in Bozeman and the Flathead, alternating with a WebEx option," Marchi said, noting that investors met in Bozeman today, with investors from two continents and four states, including Montana investors from Bozeman and Kalispell to review three Bozeman companies.

That sounds less like "handing off" for the 62-year-old Marchi than welcoming the potential follow-on investment opportunity that venture capital can represent for angel. And she hopes Price's fund will provide.

She says she does have an agreement with Fund II to be the key administrator only for the next two years, but could opt to remain longer. And she is down to business cards representing her current five involvements.

But Marchi is genuinely pleased at the implications of the arrival in Montana of Price, who did his homework before deciding a venture fund could work in Montana.
Price shared with me the research he did with and his thoughts about how "changing values" will benefit Montana's ability to attract capital.

Montana was often dismissed as a "fly-over" state, meaning that the most viable potential investors on the east and west coasts usually just fly over on their way to the other coast.

But Price's SurveyMonkey sampling of both venture and merger & acquisitions firms and found that the appeal of the big sky to many increasingly disenchanted with urban challenges was strong but that direct air access is a challenge Montana must come to grips with.

Fully 70 percent of responding M&A firms said they would consider buying a company in Montana, even though 80 percent said they had never been to the state. And a third of the venture firms said they would consider doing a deal in Montana, although 47 percent said they had never been there.

The import of improved air access to a state that has no direct flights currently to the major markets was dramatically indicated with the response of M&A firms, 90 percent of whom said it was "important" or "Moderately important" to have direct air access to the market of their investment.

"That's something the state is going to have to address," Price said. "But I think it will be addressed."

Among venture firms, almost two thirds sad the quality of the local syndicate partner would determine their involvement.

Although Marchi herself has attracted investors from around the country, she observes that "Being away from the noise of the coasts keeps us grounded in an important way.

"The entire conversation and perception needs to move about rural America, what is going on here and its role in making our economy and our country work better," she said, expressing the principle that has guided her commitment to Montana entrepreneurs.
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A rural economic development strategy focused on entrepreneurs

 

If Global Entrepreneurship Week, the annual worldwide celebration of innovators and job creators, had been a competition among nations, states and regions, Washington State could have laid claim to being the hands-down winner. And that would be appropriate recognition for the man who has guided much of this state's effort to advance entrepreneurship, particularly in rural areas and particularly with young people, for 25 years.

 

 

 

 

Maury Forman, senior manager for the Washington State Department of Commerce, is proud of the fact that in this state, GEW 2015 was actually Global Entrepreneurship Month and extended to every corner of the state with activities in all 39 counties. Four years ago, when Forman plugged the state into GEW activities, three counties participated.Forman says "we are changing the way communities look at economic development." That's an outgrowth of his effort, over much of his quarter century overseeing key economic-development sectors, to develop a culture of entrepreneurism in rural areas.

Global Entrepreneurship week was founded in 2008 by the Kauffman Foundation, the Kansas City-based 501c3 that is the nation's pre-eminent entrepreneur-focused organization, to create an annual celebration of innovators and job creators who launch the start-ups that drive economic growth.

 

Forman, who joined what was then the Department of Trade and Economic Development in 1991 in a career transition from healthcare at the age of 40, says "No other state can claim that every part of the state had at least one event that celebrated entrepreneurship."

 

 

"One of the exciting aspects of this year's celebration of entrepreneurship was the number of high school programs being held throughout the state," Forman said. "In many cases, college isn't the natural next step it was once for high school students so these programs expose them to the idea of starting their own business once they graduate. Or if they do go on to college, they can focus their education on skills that will allow them to start a business in the years to come."

 

 

Forman says he has kept his primary focus on rural economies because "they need the assistance much more than urban communities," as well as because he has become convinced that the strategies for growth of many rural areas that has been focused on recruiting companies from out of state is outdated.

 

 

"That has to change if rural communities are to survive," Forman said. "Communities have to be shingle ready and not just shovel ready."  

 

 

In a recent article in Governing, a national magazine covering state and local government news, Forman wrote about Washington's three-year-old program called Startup Washington that focuses on building local economies "organically" by serving the needs of local startups and entrepreneurs.  

 

 

Forman is likely among the national leaders in the conviction that programs to enhance local economic development "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."

 

 

"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman said.

 

 

One of the ways he is seeking to do that "is by matching those students that are serious about being entrepreneurs with mentors, especially in rural communities."

 

 

Indeed matching students who hope to be entrepreneurs with mentors is becoming the model for successful communities, particularly rural ones, to pursue.

 

 

Some communities have long been employing that model, as chronicled in the oft-quoted book written by Jack Schultz, founder and CEO of Agracel, a firm based in Effingham, IL, that specializes in industrial development in small towns.

 

 

It was in pondering why some small towns succeed where others fail that Schultz set out on the backroads to rural America to find out as he became the nation's guru of rural economic development and wrote of his travels in Boomtown USA: the 7 ½ keys to Big Success in Small Towns.

 

 

I emailed Schultz about entrepreneurism's role in small town success and a possibly emerging role for mentor programs.

 

 

"Embracing entrepreneurism in communities has been a key factor that differentiated great communities from also-rans," he emailed back. "Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."

 

 

Schultz' successes in believing in small-town entrepreneurs and small-business lending is partly responsible for the fact the Effingham-based bank he helped found and now chairs the board, has grown eight fold to $2.9 billion in assets and gone public.

 

 

"At Midland States Bank, we have very much focused on small business lending and it has been a major factor in our growth over the last several years," Schultz said.

 

 

In an unusual and innovative commitment to the dozens of communities it serves, the bank has funded a not-for-profit institute to expand an entrepreneurship class that was started in Effingham eight years ago and has now expanded to 27 other towns.

 

 

Forman seemed intrigued by the details Schultz provided:  The class meets each day during the school year from 7:30 to 9 am; meets in local businesses; is totally funded by local businesses with a maximum contribution of $1,000 per business or individual.  Each class has a business and each student must also start a business.  

 

 

Meanwhile, Forman approaches his 25th anniversary with the department on January 1 having collected numerous regional and national awards for his work and successes. Those include last year winning the international Economic Development Leadership Award and recognitionby the Teens in Public Service Foundation with the Unsung Hero Award for his work with at risk kids.   

 

 

He has authored 14 books related to economic development, and has also designed and developed creative "game show' learning tools, including Economic Development Jeopardy, Economic Development Feud and two board games for the profession.

 

 

Forman credits the directors who have guided the department over his time there for allowing him "to be intrapreneurial," meaning behaving like an entrepreneur while working in a large organization, noting "not many government agencies allow the freedom to take risks in an effort to solve a given problem."

 

 

 

 

Continue reading

Rural economic development and young people

 

If Global Entrepreneurship Week, the annual worldwide celebration of innovators and job creators, had been a competition among nations, states and regions, Washington State could have laid claim to being the hands-down winner. And that would be appropriate recognition for the man who has guided much of this state's effort to advance entrepreneurship, particularly in rural areas and particularly with young people, for 25 years.

https://mlsvc01-prod.s3.amazonaws.com/f9d31d49001/30a3ef8d-4001-4795-971c-0da1ede61b9e.jpg

Maury Forman

Maury Forman, senior manager for the Washington State Department of Commerce, is proud of the fact that in this state, GEW 2015 was actually Global Entrepreneurship Month and extended to every corner of the state with activities in all 39 counties. Four years ago, when Forman plugged the state into GEW activities, three counties participated.

Forman says "we are changing the way communities look at economic development." That's an outgrowth of his effort, over much of his quarter century overseeing key economic-development sectors, to develop a culture of entrepreneurism in rural areas.

Global Entrepreneurship week was founded in 2008 by the Kauffman Foundation, the Kansas City-based 501c3 that is the nation's pre-eminent entrepreneur-focused organization, to create an annual celebration of innovators and job creators who launch the start-ups that drive economic growth.

Forman, who joined what was then the Department of Trade and Economic Development in 1991 in a career transition from healthcare at the age of 40, says "No other state can claim that every part of the state had at least one event that celebrated entrepreneurship."

"One of the exciting aspects of this year's celebration of entrepreneurship was the number of high school programs being held throughout the state," Forman said. "In many cases, college isn't the natural next step it was once for high school students so these programs expose them to the idea of starting their own business once they graduate. Or if they do go on to college, they can focus their education on skills that will allow them to start a business in the years to come."

Forman says he has kept his primary focus on rural economies because "they need the assistance much more than urban communities," as well as because he has become convinced that the strategies for growth of many rural areas that has been focused on recruiting companies from out of state is outdated.

"That has to change if rural communities are to survive," Forman said. "Communities have to be shingle ready and not just shovel ready."  

In a recent article in Governing, a national magazine covering state and local government news, Forman wrote about Washington's three-year-old program called Startup Washington that focuses on building local economies "organically" by serving the needs of local startups and entrepreneurs.  

Forman is likely among the national leaders in the conviction that programs to enhance local economic development "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."

"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman said.

One of the ways he is seeking to do that "is by matching those students that are serious about being entrepreneurs with mentors, especially in rural communities."

Indeed matching students who hope to be entrepreneurs with mentors is becoming the model for successful communities, particularly rural ones, to pursue.

Some communities have long been employing that model, as chronicled in the oft-quoted book written by Jack Schultz, founder and CEO of Agracel, a firm based in Effingham, IL, that specializes in industrial development in small towns.

It was in pondering why some small towns succeed where others fail that Schultz set out on the backroads to rural America to find out as he became the nation's guru of rural economic development and wrote of his travels in Boomtown USA: the 7 ½ keys to Big Success in Small Towns.

I emailed Schultz about entrepreneurism's role in small town success and a possibly emerging role for mentor programs.

"Embracing entrepreneurism in communities has been a key factor that differentiated great communities from also-rans," he emailed back. "Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."

Schultz' successes in believing in small-town entrepreneurs and small-business lending is partly responsible for the fact the Effingham-based bank he helped found and now chairs the board, has grown eight fold to $2.9 billion in assets and gone public.

"At Midland States Bank, we have very much focused on small business lending and it has been a major factor in our growth over the last several years," Schultz said.

In an unusual and innovative commitment to the dozens of communities it serves, the bank has funded a not-for-profit institute to expand an entrepreneurship class that was started in Effingham eight years ago and has now expanded to 27 other towns.

Forman seemed intrigued by the details Schultz provided:  The class meets each day during the school year from 7:30 to 9 am; meets in local businesses; is totally funded by local businesses with a maximum contribution of $1,000 per business or individual.  Each class has a business and each student must also start a business.  

Meanwhile, Forman approaches his 25th anniversary with the department on January 1 having collected numerous regional and national awards for his work and successes. Those include last year winning the international Economic Development Leadership Award and recognitionby the Teens in Public Service Foundation with the Unsung Hero Award for his work with at risk kids.   

He has authored 14 books related to economic development, and has also designed and developed creative "game show' learning tools, including Economic Development Jeopardy, Economic Development Feud and two board games for the profession.

Forman credits the directors who have guided the department over his time there for allowing him "to be intrapreneurial," meaning behaving like an entrepreneur while working in a large organization, noting "not many government agencies allow the freedom to take risks in an effort to solve a given problem."

 

 

Continue reading

Rural economic development and young people

 

If Global Entrepreneurship Week, the annual worldwide celebration of innovators and job creators, had been a competition among nations, states and regions, Washington State could have laid claim to being the hands-down winner. And that would be appropriate recognition for the man who has guided much of this state's effort to advance entrepreneurship, particularly in rural areas and particularly with young people, for 25 years.


Maury Forman 

Maury Forman, senior manager for the Washington State Department of Commerce, is proud of the fact that in this state, GEW 2015 was actually Global Entrepreneurship Month and extended to every corner of the state with activities in all 39 counties. Four years ago, when Forman plugged the state into GEW activities, three counties participated.

Forman says "we are changing the way communities look at economic development." That's an outgrowth of his effort, over much of his quarter century overseeing key economic-development sectors, to develop a culture of entrepreneurism in rural areas.

Global Entrepreneurship week was founded in 2008 by the Kauffman Foundation, the Kansas City-based 501c3 that is the nation's pre-eminent entrepreneur-focused organization, to create an annual celebration of innovators and job creators who launch the start-ups that drive economic growth.

Forman, who joined what was then the Department of Trade and Economic Development in 1991 in a career transition from healthcare at the age of 40, says "No other state can claim that every part of the state had at least one event that celebrated entrepreneurship."

"One of the exciting aspects of this year's celebration of entrepreneurship was the number of high school programs being held throughout the state," Forman said. "In many cases, college isn't the natural next step it was once for high school students so these programs expose them to the idea of starting their own business once they graduate. Or if they do go on to college, they can focus their education on skills that will allow them to start a business in the years to come."

Forman says he has kept his primary focus on rural economies because "they need the assistance much more than urban communities," as well as because he has become convinced that the strategies for growth of many rural areas that has been focused on recruiting companies from out of state is outdated.

"That has to change if rural communities are to survive," Forman said. "Communities have to be shingle ready and not just shovel ready."  

In a recent article in Governing, a national magazine covering state and local government news, Forman wrote about Washington's three-year-old program called Startup Washington that focuses on building local economies "organically" by serving the needs of local startups and entrepreneurs.  

Forman is likely among the national leaders in the conviction that programs to enhance local economic development "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."

"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman said.

One of the ways he is seeking to do that "is by matching those students that are serious about being entrepreneurs with mentors, especially in rural communities."

Indeed matching students who hope to be entrepreneurs with mentors is becoming the model for successful communities, particularly rural ones, to pursue.

Some communities have long been employing that model, as chronicled in the oft-quoted book written by Jack Schultz, founder and CEO of Agracel, a firm based in Effingham, IL, that specializes in industrial development in small towns.

It was in pondering why some small towns succeed where others fail that Schultz set out on the backroads to rural America to find out as he became the nation's guru of rural economic development and wrote of his travels in Boomtown USA: the 7 ½ keys to Big Success in Small Towns.

 

I emailed Schultz about entrepreneurism's role in small town success and a possibly emerging role for mentor programs.

"Embracing entrepreneurism in communities has been a key factor that differentiated great communities from also-rans," he emailed back. "Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."

Schultz' successes in believing in small-town entrepreneurs and small-business lending is partly responsible for the fact the Effingham-based bank he helped found and now chairs the board, has grown eight fold to $2.9 billion in assets and gone public.

"At Midland States Bank, we have very much focused on small business lending and it has been a major factor in our growth over the last several years," Schultz said.

In an unusual and innovative commitment to the dozens of communities it serves, the bank has funded a not-for-profit institute to expand an entrepreneurship class that was started in Effingham eight years ago and has now expanded to 27 other towns.

Forman seemed intrigued by the details Schultz provided:  The class meets each day during the school year from 7:30 to 9 am; meets in local businesses; is totally funded by local businesses with a maximum contribution of $1,000 per business or individual.  Each class has a business and each student must also start a business.  

Meanwhile, Forman approaches his 25th anniversary with the department on January 1 having collected numerous regional and national awards for his work and successes. Those include last year winning the international Economic Development Leadership Award and recognitionby the Teens in Public Service Foundation with the Unsung Hero Award for his work with at risk kids.   

 

He has authored 14 books related to economic development, and has also designed and developed creative "game show' learning tools, including Economic Development Jeopardy, Economic Development Feud and two board games for the profession.

Forman credits the directors who have guided the department over his time there for allowing him "to be intrapreneurial," meaning behaving like an entrepreneur while working in a large organization, noting "not many government agencies allow the freedom to take risks in an effort to solve a given problem."

 

 

 

Continue reading

Washington's only local elected official born in China sees major relationship opportunity

 

Bellevue City Councilman Conrad Lee, the only local elected official in Washington State who was born in China, is convinced the U.S. and China are "on the verge of a relationship opportunity that needs to be seized now to create a partnership that will provide long-term benefits for both nations."

And Lee, 76, a member of the Bellevue council since 1994 and mayor from 2012 to 2014, thinks the establishment of the Global Innovation Exchange (GIX) in Bellevue will make the Eastside "a world center for innovation that will enhance the relations between the two countries in a way that will influence the rest of the world."

Conrad Lee

"China and the U.S., with similar geography and populations that have similar personalities, have been friends for 100 years," Lee said. "We are the two biggest economies of the world, the biggest pools of talent and the biggest markets."

He thinks the Global Innovation Exchange (GIX), a partnership between University of Washington and Tsinghua University, which has been described as the MIT of China, with the $40 million funding from Microsoft, will be a key to the relationship he hopes to see emerge between the two nations.

"The GIX, as the beginning of a commitment on the part of the two vitally important universities and a world-leading company, will help provide a deeper relationship and the exchange of ideas between the U.S. and China and spur economic opportunities across the innovation ecosystem," Lee suggests.

But he cautions that it's important for the U.S. to move rapidly to seize the opportunity to create a special relationship while the current leadership of China is in power and open to that possibility.

And he is concerned that " bureaucrats of both sides are running around talking policy and don't know how to get beyond that to real communication," adding "China doesn't yet have a cadre of people who can understand and communicate with us and the same is true from our side."

"But we are both pushing to find the right connections," Lee added.

"If we are friends in the future, the world will benefit, but if we are enemies, the world won't sleep well at night," added Lee, who was born in Kunming in Southwest China into a family in which his father was founder of a bank and his mother was a high school graduate at a time when few women even attended high school.

Lee was eight years old when his father, who was an entrepreneur and the founder of The Bank of Kunming, died when his plane was lost at sea while he was on a flight from Shanghai to Hong Kong. Lee recalls that "two years later, as Communists were heading for our region, we left for Hong Kong where we had connections because of my father's had business there."

Lee was schooled in Hong Kong, came to the U.S. in 1958 to attend school at Seattle Pacific, but transferred to the University of Michigan to get his engineering degree and received his MBA from University of Washington.

He became a U.S. citizen in 1971. He worked at Boeing where, as an engineer, he was on the team that developed the 747, then worked for Seattle Solid Waste Utility as a project manager on the team that transformed garbage disposal to solid waste management to make Seattle one of the first cities to recycle and compost its garbage.

He was appointed Regional Administrator of the SBA by President George W. Bush, then ran for the Bellevue City Council. He is mid-way through his sixth term, a tenure twice as long as any other member of the council.

Lee sums up the potential that sets the stage for a U.S.-China close relationship noting, "We need their money and they want our creativity and innovation. We have a nation with a culture of creativity whereas China is very structured, which is the opposite of fostering innovation."

"But the Global Innovation Exchange may help turn that around," he added.

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Yakima Valley hop growers benefitting from surge in growth of craft-brewing industry

As craft beer comes to rival quality wine as a palate pleaser for the discriminating, the hop industry whose bitter green cones give the beer its special taste is surging and thus playing an increasingly important role in the economy of the Valley and also Washington State.

 

The fields of grapes for Washington's successful and growing wine industry are spread across the Yakima Valley while the fields where the hops are grown are far less visible and the acres less numerous. But the fact is that hop growers and their industry, by far the largest in the nation, predate the wine industry by several decades.

Now the hop industry, after years of ups and downs that were mostly downers, is riding a growth wave thanks to the surging popularity of craft beer, most of which is brewed with hops from the Yakima Valley.

"The hop industry is booming right now and adding huge value to the Yakima Valley economy," says David McFadden, president of the Yakima County Development Association. "We are seeing hop processors purchase new buildings, add new equipment and boost local payrolls. Agriculture is very strong right now and hops are complementing our farmers' livelihoods." 

Ann George

For comparison, it's important to note that the hop industry's approximately $160 million annual contribution to Washington's economy is only 14th on the state's agricultural-products values and just a slice of the $2.25 billion annual production of the number one apple industry. But as McFadden notes, the industry's surge is bringing other benefits as well.

"The past few years have been an exciting up and thus a nice change for the industry," notes Ann George, who has been the chief administrator for the Washington Hop Industry association for 27 years and also serves as the chief administrative person for the Hop Growers of America.

"The success of the industry in the past few years has attracted back some of the young talent that had moved away from the farms," she adds, noting that many of the farmers are adding hops to their agricultural-product mix, with the acreage dedicated to hops being between one-quarter acre and 10 acres.

George is in Austria this week for the annual summer gathering of the International Hop Growers Convention, the global organization for hop growers where she chairs what may be the most important commission, called the Commission on Regulatory Harmonization. She thus is the global organization's key person in dealing with the trade and pesticide rules that are the primary challenge for craft brewing as the industry becomes ever more attractive globally, thus adding countries into which hops are sold.

George, one of whose duties is tracking statistics for the industry, says 74 percent of the 2014 hop crop will be from acreage in Washington State, 14 percent from Oregon (virtually all of that produced in the Willamette Valley) and 10 percent from Idaho.

Almost 90 percent of the U.S. hop production is exported to other countries, where craft-brewing industries are either already in existence of where the industry is beginning to take shape.

Most hop farmers in the Valley are third or fourth generation and one of the largest and best-known of those is B. T. Loftus Ranches, which began in 1932 when the first five acres of hops were planted by the great grandparents of current owners Patrick Smith, Meghann Quinn, and Kevin Smith.

 

The Bale Breaker Brewery, smack in the middle of the Lofus hop fields, opened in April of 2014 as the latest Loftus venture.

 

Germany, which produces 60 percent of the world's hops, and the Yakima Valley, which produces 25 percent of the world crop and 80 percent of the U.S. hop crop, are the two most noteworthy geographic areas for hop production.

Pete Mahony

 

Thus it's natural that there would be a convergence in some manner for the two most noted hop-producing regions. And the convergence is the decades-long presence in the Yakima Valley of the U.S. arm of the Barth-Haas Group, the world's largest supplier of hop products and services. Barth-Haas, founded in 1794, is now managed by the seventh and eighth generations of the Barth family and has roughly a 30 percent share of the hops market in Germany.

The U.S. arm of the company, John I. Haas, Inc., which owns and operates its own hop farms, warehouses, pellet and extraction plants and has been a fixture in the Yakima Valley hop industry for some 70 years, next month celebrates its 100th birthday.

Peter Mahony, who is Director of Supply Chain Management for John I. Haas, Inc., and has been with the Washington, D.C., based company for 28 years, explains that hops are "the spice of beer," giving the brew its flavor. And craft brewers use about 6-to-8 times as much hops as major brewers and their brews use one of the variety of what are called aroma hops, that magnify the beer flavor, whereas brewing used to involve what is known as alpha hops, still the primary hop for major breweries.

Mahony notes that acreage devoted to aroma hops in the Yakima Valley has become about 60 percent of the annual harvest, which extends from late August to early October and involves about 29,000 acres in the Yakima area with the average size farm about 450 acres on which hops are one of several crops grown.

Mahony, who says the 1,500 acres that Haas farms in the Valley is one planted in hops, expects that the growth of craft brewing and thus the health of the hop industry and its aroma varieties will continue, "but for how long is the million-dollar question."

He points to the attendance at the annual craft-brewers conference as a cause for long-term optimism for hop growers, noting "attendance at this year's crafters' conference was up 40 percent over the year before, to more than 9,000 attendees."

If there is any doubt that craft brewing is attracting a whole new generation of beer consumers around the globe, it should be dispelled by the advise from a beer sommelier at a Barth tasting event in Germany.

To those who might not be familiar with the fact there are beer sommeliers, Ann George makes the point that "more and more hospitality groups have a beer sommelier as well as a wine sommelier."

As the sommelier quotes puts it: "You shouldn't drink our beers when you're thirsty. Our beers should be drunk in small quantities on special occasions."

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Colleges, universities seek to explore ways to serve economic development needs

(Editor's NoteThis is the first of two articles exploring the challenges faced by higher education in coming to grips with the role of four-year colleges and universities in serving the economic development needs of their regions and states.)

 

As institutions of higher education come to terms with the expectation that they should adopt a mission to serve the economic development needs of their regions, some in academia may recall wistfully Thomas Jefferson's view that "education, as a lifelong encounter with the delights of the mind, is an end in itself."

 

But a growing number of leaders in higher education might view a different Jeffersonian observation as more appropriate today: "Education is a highly legitimate claimant on public treasuries."

 

The point of the latter quote, in the view of many within the higher ed system and in other segments of society, is that institutions of higher education provide economic value and should receive financial support accordingly.

 

The issue was brought to the fore in this state in recent days with a report to the board of regents of the University of Washington by the Washington Future Committee, headed by former regent William Gates Sr., which suggested UW could do more despite its obvious and significant economic impact.

 

The group of business and civic leaders Gates chaired urged UW to increase the number of in-state students, keep tuition affordable and increase the number of STEM degrees and do a better job of telling its story to key stakeholders.

 

But well before the Gates report, Initiatives have been under way across the country to explore what role colleges and universities should play, and, how, in helping grow the economies of their states.

 

UW President Michael Young and the regents will now have to digest the report and weigh its relevance to how the state's major research university charts its future.

 

Nowhere is the process of higher ed's role in economic development being scrutinized more than in North Carolina. There a process is under way that has each of the state's college and universities being asked to define their mission and answer how the mission is serving the needs of the state today.

 

"It's basically a hard look at what the state needs to meet its education and economic needs," says Sam Smith, the WSU president emeritus, who has been hired as a consultant to help the North Carolina process.

 

"They got me involved to see how they are using modern technology and online education to meet the needs of the state," explained Smith, who as WSU president from 1985 to 2000, launched WSU's three branch campuses and helped the launch of Western Governors University as an online accredited university. Still a member of WGU board of trustees, Smith guided the launch of WGU-Washington in early 2011.

 

Smith says he is currently advising colleges in a handful of states as part of his role with a Sacramento-based higher-education consulting organization called Collaborative Brain Trust, one of whose focuses is consulting for colleges and universities in dealing with the challenges of change they face.

 

"It's as simple as if institutions are doing a better job of meeting the needs of students, they'll get more students and more pay for what they are doing," Smith said.

 

Smith notes there's a challenge for colleges and universities facing increasing budget pressures and for businesses seeking the educated work force necessary to grow and compete and both challenges need to be addressed by those who would have higher education serve economic development needs of their states.

 

Those who help chart the changes higher education needs to make have to understand that "there's little incentive, from strictly a business point of view, for universities to increase the number of students and there's no reward for them to increase the percentage of graduates or to decrease the time it takes to get a degree," Smith said. "And there's little incentive for a university to see to attract middle-income students since those are the student least likely to be able to afford college."

 

And he pointed out that "many businesses don't feel there's a lack of educated people for them to hire because they are hiring students from other states. In essence those businesses think it's easier and less expensive to have a system where they hire those educated elsewhere.

 

"Higher education institutions who hope to become a more essential part of producing the state workforce of the future need to convince those businesses we're talking about that in-state schools can better tailor their programs to fit the changing and emerging needs of the state's economy," Smith added.

Smith lauded the University of Washington Medical School for the partnering arrangements it has developed.

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Smith suggests that the fastest-growing segment of "the new model" for public universities will be what is referred to as the 2-4, meaning four-year institutions partnering with community colleges, which already have built a reputation of working with businesses to determine their workforce needs.

 

"One of the first things I do when I go into state to examine how things are working is to look at the primary medical school to see if it is a silo or is working with others," he said. "If the medical school is a silo, it tells me that the university isn't involved with others and isn't interested in changing."

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(Next: Elson Floyd, president of Washington State University, brought with him when he arrived here in May of 2007 from Missouri a conviction that economic contribution should be a key measure of how well an institution of higher education is fulfilling its mission.

 

 

And James Gaudino, who became Central Washington University president in 2009, spent 15 years looking at higher education from the outside as executive director of National Communication Association. He says "It would be irresponsible for a public institution to ignore the higher-education need" of its state or region. They share their thoughts on the next Flynn's Harp.)

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Economic development interests bullish on growing financial-services sector

There's a growing conviction among economic-development groups in the Seattle area and Washington State that targeting the financial-services sector could bring dramatic and relatively quick returns for the local and state economy.

 

With the third annual Financial Services Summit taking shape for this summer, California's finance industry is clearly in the sights of many of those who are leading the charge and touting the fact that Washington State has neither a corporate nor a personal income tax.

 

The Economic Development Council of Seattle and King County has a list of industry clusters representing the key pillars of the region's economy and thus the key focuses for growth. Financial services is the newest industry on the list

and is attracting perhaps the most interest.

 

Jeff Marcell
Jeff Marcell

The fact that California didn't just shoot itself in the foot, but in the head, when it imposed a surcharge on the wealthy has raised the benefits bar on a concerted marketing effort aimed at financial firms. Several hedge funds have already moved from the Bay Area to Seattle and that surcharge is seen as the "moving" force.

 

 

The EDC, which has returned to the name it had for more than 30 years prior to being rebranded as EnterpriseSeattle early last decade, held the first summit on that industry sector in May 2011. That gathering dealt with the value of targeting financial firms and showed that Washington State ranks fifth in the nation as a hub for the financial-services industry. The six subsectors the study identified within the financial services cluster include things like banking, accounting, credit and lending.

 

 

Scott Jarvis
Scott Jarvis

 

But the excitement about potential rapid growth is focused on the financial-services subsector. And California's finance industry is the most prominent target for many, though there's a bit of "in-bad-taste" reluctance to talk about specifically targeting California's businesses.

 

David Allen, McKinstry Co. executive vice president and chair of the EDC, agrees the financial-services sector could well provide the quickest and most lucrative returns, if the state's benefits are marketed well.

 

 

Karl Ege, a Seattle attorney at Perkins Coie who served for a time as vice chair of Russell Investments and is heading the Regulatory Task Force, is unabashed about touting the state's tax benefits.

 

 

 

"Why shouldn't we go after 21st Century high-paying jobs for educated people?' Ege asked in an e-mail exchange with me. "Financial services encourages a bigger business base, creates good jobs and their money comes from assets they manage around the world. And really this state's advantage, for high-margin businesses, is that we have no income tax."

 

 

 

Washington is one of only seven states without a business or corporate income tax and the only others in the West are Nevada and Alaska.

 

In addition, the service sector (law, accounting and financial activity) is exempted from the state sales tax, though the 1995 Legislature punished the service-sector businesses for battling against imposition of the sales tax by hammering those businesses with the highest business & occupation tax rate. The B&O tax rate for service firms is 1.8 percent of gross revenue, three times higher than the next highest industry and almost seven times higher than the lowest B&O rate.

 

Jeff Marcell, president and CEO of the EDC, says "one reason we feel it's so important to target this industry is that it yields unbelievable results for the community in terms of fantastic wages and international connections."

 

"Thanks to technology, more and more financial services companies are enjoying the freedom to base operations where it best suits their needs," Marcell added. "And Seattle/King County is increasingly becoming a hub of major financial players who want their headquarters far from the negativity conjured up by Wall Street."

 

I asked Scott Jarvis, recently reappointed by Gov. Jay Inslee as director of thestate's Department of Financial Institutions, if he viewed the financial-services sector as potentially the biggest reward among the target sectors.

 

"I don't know how to define 'the biggest reward,' but I certainly agree that the logistics of a move by one of those firms are relatively simple and the ability to be up and running, literally over a weekend, takes much uncertainly and 'down time' out of the decision to relocate," he replied.

 

And Jarvis is significantly involved in shaping the strategy for financial-services firms, including working with Ege's group to modernize Washington's trust laws, an effort which he explains is "to make them more relevant, modern and attractive to business."

  

 

"Currently, our trust laws are in the same chapter as our banking laws and have not been significantly amended in many years, Jarvis added. "We plan to work during the

 

interim with interested parties to separate out the trust law elements while at the same time ensuring that the elements needed for effective consumer protection remain and are modernized to address current and even future improper practices."

 

"Scott Jarvis been amazing," Marcell replied when I asked about the involvement of the state agency involved with overseeing financial institutions. "It's striking to see a regulator work so collaboratively about growing the industry cluster. He's an ace up our sleeves when we are competing for business."

  

 

 

"DFI has worked hard to foster a regulatory environment that is attractive and responsive to, and supportive of, financial entities while aggressively protecting consumers from improper or illegal behaviors," Jarvis replied when I asked about his department's involvement. "Those two activities are not mutually exclusive. Reduced to its essentials, we assist the good guys who want to play by the rules and go after the bad guys."

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