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updated 2:54 PM CDT, Jul 28, 2018

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End of state's liquor role will bring major competition for Wine World

When David LeClaire conceived and launched Wine World Warehouse in late 2010, his vision was to be the "big dog on the block" of wine stores in the Northwest. But 16 months later, he's hoping to map a strategy to keep his wine superstore successful in the face of the pending arrival of the 900-pounds gorillas of the business.

 
 

The "gorillas" are the two $1 billion players for whom Washington State held no interest because the state controlled the business of selling liquor, which is a key source of revenue for the multi-state operations of Total Wine & More, and BevMo!

 

That lack of interest by the biggest players was part of the impetus when LeClaire decided a couple of years ago to pursue his longtime goal of a wine superstore in Seattle and gathered a team of investors.

 

But the competitive world changed, of course, with overwhelming voter approval last November of Initiative 1183, which puts the state out of the liquor business on June 1. Grocery stores and others with over 10,000 square feet of space will begin legally selling spirits for the first time since the start of Prohibition.

 

The websites of  both Concord, CA-based Total Wine and Connecticut-based BevMo! now tout that Washington residents will soon be able to take advantage of their discount prices of hundreds of brands of wine, beer and spirits.

 

LeClaire's Wine World is no small player, boasting more than 500 wines from Northwest wineries and over 6000 wines from all over the world in its 23,000 square feet of space in a location adjacent to and highly visible from I-5 just north of downtown.

 

And because of its size, it will be one of the few facilities other than grocery stores that will be permitted to sell liquor, as LeClaire intends to do come June 1. The facility will be devoting the back end of the store to a selection of premium and local spirits.

 

But Wine World's size is David vs. Total Wine's Goliath, with each of its stores carrying about 8,000 different types of wine, 3,000 types of spirits and 2,500 different beers. BevMo! Is slightly smaller but similar in its array of offerings.

 

LeClaire had spent more than a decade doing wine-related events around the county and building relationships in the industry with his Wine Events & Promotions company, as well as creating the two largest wine clubs in the Northwest, Seattle Uncorked and Portland Uncorked.

 

But LeClaire seems optimistic that his long-term relationships, as well as new-found ones generated by the type of events he's created, as well as the fact the giants have been suburban-based operations, will put him in a position to continue to have a successful niche.

 

"People in the suburbs are very chain friendly," LeClaire said, "But there's a lot of pushback from the inner cities, where no one really wants a Walmart. Neither has really ever cracked the inner city." In fact, residents of Santa Barbara, CA, put up such a fuss against a plan by Total Wine to locate there that the company cancelled that plan.

 

"We know that both have already signed three leases each with both being in South Center with other locations set for Silverdale, Tacoma, Bellevue and Spokane," LeClaire said.

 

"The challenge these big guys represent is that they will have large campaigns and they'll grind down the competition on price," he added. "We're not going to be able to compete on price. We'll have to continue to do events that make it fun to come to our store," noting that their wine club now has about 3,000 members.

 

"We get a lot of trade groups from around the country and the world," LeClaire said. "We had a collection of wineries from Argentina and have 30 winemakers from Italy next month."

 

He said the visiting wine groups use Wine World as a venue to display their wares for restaurants and other customers.

 

So how has business gone since the December, 2010, opening? "We had a huge surge at first but then things slowed a bit and we underperformed the first year vs. our plan," he said. "But then things started kicking in in October and people came in, and many told their friends about us."

 

So innovative events that attract wine lovers will become increasingly important for LeClaire and his business as the competition begins to heat up. And what kind of innovative new events are in the works?

 

"We have a dog food tasting event next month," he explained. "So while the owners are tasting wine, their dogs will be tasting various doggie offerings."

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Legislature ensures that charter schools will be governor's-race issue

The Washington Legislature ensured that the controversy over charter schools will become a focus in the state's gubernatorial campaign by specifically rejecting charters as part of any education-reform efforts in a bill that creates a handful of what will be called "collaborative schools."

 

The manner in which the legislation was conceived and approved, at the request of Gov. Christine Gregoire after she specifically warned that she would veto any bill authorizing charter schools, has "controversy" written all over it.

 

Passed in the midst of an extended session aimed at resolving the state's budget crisis, the bill is titled "collaborative schools for innovation and success pilot program." It calls for a five-year program involving six elementary schools, each of which will be operated by pairing to-be-determined school districts with colleges of education in the state.

 

The bill basically does two things that, for sure, won't make proponents of dramatic change in the state's education system very happy. It requires, basically, that all parts of the current schools infrastructure -- administrators, teachers unions and what's called "the professional education standards board" - must sign off on any innovative programs conceived for the handful of schools permitted to participate. And it ensures that no wholesale changes would be possible until the five years of testing for those few schools provided for in the bill have been fulfilled and evaluated.

 

One of those left unhappy is Rep. Eric Pettigrew, the respected African-American Democrat whose House district includes some of Seattle's at-risk neighborhoods and who had co-sponsored a bill to permit charter schools in Washington State.

 

"This bill isn't even close," Pettigrew told me in a telephone interview. "We have been doing things the same way for too long and accepting a certain failure rate and I don't think that's acceptable."

 

"Charter schools provide the flexibility to be nimble in seeking education changes," he added. "Probably the most frustrating thing about the entire experience is that discussion of what's best for the kids never seems to really conclude before it trails off into organizations that will need to be involved."

 

The comment frames the reason for controversy over charter schools in this state, one of the last nine in which charters are prohibited. Whether what's best for the kids is the unquestioned number one issue inevitably collides with many teachers and teacher advocates who will insist that even if kids' needs are the priority, what's good for teachers is also an issue. The stronger the teachers union in a state, the more that conflict comes into play.

 

The Seattle Times, in a January editorial on the bill proposed by Pettigrew and Sen. Steve Litzow, a Republican from Mercer Island, said: "Political courage is often lacking in Olympia, making Pettigrew's willingness to buck the Democratic Party's usual fidelity to the Washington Education Association all the more striking."

 

"Expect contentious debate," The Times editorial continued. "In particular, the teachers union sees charter schools as a threat. Yes, Washington state voters rejected charter-school proposals three times. But we know a lot more about these innovative public schools since the last failed measure in 2004."

 

Indicating that his "courage" isn't likely to wane in the coming months as likely Democratic gubernatorial standard-bearer Jay Inslee picks up the education ball his party has crafted for him and runs with it, Pettigrew said "if the unions or even my fellow Democrats want to come after me, fine."

 

Atty. Gen. Rob McKenna, the presumptive Republican gubernatorial nominee who has promised to make education reform and funding a focal point of his campaign, says of the collaborative-schools idea "There is no evidence that they will actually work. Moreover, it will take years before we know if they do."

 

"I support trying new approaches to improve education for our children right now," he added. "And a smarter approach would be to adopt models that have a proven track record of success, like high-performing public charter schools that are working in 41 other states." 

 

McKenna says both collaborative schools and charter schools should be "tools in the toolkit" for those seeking a new education model.

 

Inslee, in a wide-ranging blueprint for education reform to create "An innovative, accountable education system: building a better future for every child and a stronger economy for Washington," called for change in most aspects of the economy that might impact education funding.

 

Thus his plan for educational reform and adequate funding calls for "reinvigorating the economy..." "Reverse the trend of healthcare inflation eating into education spending..." "Sunset corporate tax loopholes that have outlived their purpose..." and "Expand a system of quality improvement to all government agencies..."

 

Inslee says his "vision for an education system by 2020" includes that "achievement and opportunity gaps among students are eliminated."

 

An ongoing challenge for Inslee and Democrats in rejecting the idea of even having charter schools on the education-reform table is that some prominent, long-time Democrat supporters appear reluctant to get aboard.

           

Perhaps most challenging for them is Nick Hanauer, the venture capitalist and avowed "lifelong Democrat and committed progressive," who views Republican positions on social issues and taxation as "misguided," but says "McKenna is on the right track and we are not" on school reform.

 

"We may be headed in the right direction, but we aren't in the right lane," Hanauer told the head of the state teachers' union in a February e-mail exchange. "It is not classroom teachers who are afraid of change and innovation, it is their union." 

 

While charter schools are anathema to teachers' unions, they have gathered supporters from among some of those who toil in the classrooms, including Erin Gustafson, who grew up on Mercer Island but began her teaching career in one of California's poverty pockets.

 

"My path to supporting charters began 16 years ago when I taught fifth grade at a high-poverty school in Vallejo," Gustason told me. "I became disillusioned with the poor teaching, union rules that protected that, and the restrictions of operating in a large system."

 

Gustafson, now married and the mother of children 9 and 7 and a substitute teacher, became involved in a new teacher-created education-reform non-profit called Teachers United, born a year ago with the goal of "giving teachers a voice in policy debates."

 

 She is now policy director for the group, which advocated last session for charter schools as one of the choices that need to be available in Washington State. She was among teachers from the organization who testified before the legislature's education committees on behalf of charter schools.

 

"After doing a lot of research and visiting several public charter schools in California, I have come to believe that successful public charters are an effective way of closing the achievement gap," she said. "We took teachers who were interested to visit high-performance charters across the country and, for those teachers, seeing was believing so they decided to advocate for charters."

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Ellis reflects on the dramatic events that saved Mariner franchise 20 years ago

John Ellis, who was a reluctant CEO looking forward to retirement when he was called on 20 years ago to help find local owners to save the Seattle Mariners' franchise, admits that he wasn't even a baseball fan when he undertook the almost-lost cause of saving baseball for Seattle      

              __________________  

 

        Then-Gov. Mike Lowry recalls  

        legislative solution to fund what

               became Safeco Field 

                         (See sidebar below)  

               ___________________ 

 

 

"I didn't know much about baseball and wasn't really a baseball guy," Ellis admits, reflecting back on the events of late '91, early 1992. And he didn't really understand how deeply

 
 

embroiled he would become when he undertook the role that Seattle Mayor Norm Rice, and subsequently other business leaders, urged on him, a role in which he soon found how challenging saving the franchise would be.

 

 "I'm not sure if, to this day, anyone really knows how close we were to losing this franchise," says Ellis, who eventually served as chief executive officer of the Seattle Mariners and remains, 13 years after retirement, the team's primary representative to major league baseball.

 

It's a tale that deserves to be retold at a time when, rather than preparing a celebratory anniversary event for the Mariners to applaud what was achieved two decades ago, community leaders and baseball fans seem intent on railing against the Mariners for a variety of  perceived shortcomings.

 

It was in the midst of last week's outcry over the Mariners' push back on the idea of a new arena that they legitimately pointed out could bring a couple hundred more traffic-generating events a year to the Sodo neighborhood that I visited with Ellis over lunch. It was a visit scheduled several weeks ago so the controversy itself wasn't the topic of conversation, other than a brief, frustrated reference to it by Ellis.

 

I wanted his reflections on those tense days in late 1991, early '92, when an unlikely alliance of a dramatically wealthy Japanese businessman, a group of wealthy young local tech executives and a couple of senior community leaders was cobbled together to keep major league baseball in Seattle.

 

Ellis, as CEO of Bellevue-based Puget Sound Power & Light Co., had agreed to serve as an advisory board member to Mariner owner George Argyros, then to succeeding owner Jeff Smulyan, both commitments made as a community leader rather than baseball devotee. Thus he was logical member of a special advisory group Seattle's mayor turned to when it became clear Smulyan intended to sell the team.

 

"Norm's idea was for us to go out and find someone to buy the team, which at that point was appraised at $100 million," Ellis recalled. "After poking around for awhile looking for a possible buyer, we finally told the mayor we couldn't find anyone crazy enough to put up $100 million to buy a baseball team."

 

At that point, Ellis figured he could go ahead with his plan to retire as CEO of the  region's largest investor-owned utility, get on his boat and set out on a leisurely cruise to Alaska, as he had long planned to do.

 

But over that late December of '91, Sen. Slade Gorton's own efforts on behalf of saving the Mariners uncovered, to his astonishment, in a visit with Nintendo of America President Minoru Arakawa, an interest by his father in law, Haricho Yamauchi, purported then to be the third richest man in Japan, to buy the Mariners.

 

Ellis was quickly sucked into a furious effort to figure out how to get major league baseball, whose antipathy to any foreign ownership but Japanese ownership most of all, to even consider Yamauchi's offer while averting a sale to someone else that would render meaningless any Seattle effort.

 

After an aborted effort by "a totally naïve local group, led by the most naïve guy of all (referring to himself)" to meet with commissioner of baseball, Ellis found himself summoned to a what he describes as "a secret meeting," a "cloak-and-dagger"-like, assumed-name visit in St. Petersburg, FL, with unnamed major league owners.

 

Ellis arrived at the designated hotel and checked in for a meeting that never occurred with a small group of owners whose identity he never learned. But what did occur told him how close Seattle was to having the team leave before the efforts to save the franchise could even gain traction.

 

"I looked at the hotel shop across from the front desk and saw they were selling Tampa Bay Mariners shirts and hats," he said. "That experience and a couple of others that followed made it clear that the deal to move the team to Tampa Bay was already in the works.

 

"the simple fact is that if we hadn't put this together when we did, beating Smulyan's contractual deadline to get out of his Kingdome lease, the team would have been gone," Ellis said.

 

So as the Seattle-ownership deal began to gain traction, both the group of owners who had been brought together to join Yamauchi and Arakawa, and later, major league baseball executives as their opposition eased, insisted that Ellis be a part of the leadership of the team.

 

"At the June meeting of the owners, after all their conditions for our ownership group had finally been met, they told me they had two remaining conditions," Ellis recalls. "First they said they wanted me to serve as the team's rep to major league baseball, the person each team has who is empowered to act without anyone else's approval.

 

"The other condition floored me," he said with a smile. "They said they expected the owners' rep to have a significant financial interest in the team. I replied 'can you tell me what you mean by significant?' and they all broke out laughing because they had gotten to know me and knew the extent to which I could be involved. My financial role ended up being not very substantial."

 

But his involvement as CEO, between then and his retirement at the age of 71 at the end of the '99 season, was extensive and, as he recalls, every time he thought he'd be able to hand over the reins and head out on that boat trip to Alaska, a new challenge emerged.

 

First task was finding a new manager who would represent a statement. So after convincing Chuck Armstrong to come aboard as president and retaining Woody Woodward as general manager, he asked the two of them who should be the new manager "The guy atop both their lists was Lou Pinella."

 

The events that unfolded between then and his retirement included the Kingdome roof collapsing, the players strike, the memorable end-of-season race to the league championship series in 1995, the struggle to get voter approval for a new stadium, legislative alternative when the vote failed.

 

Although he retired in 1999, the stage had been set with the players and team executives who would two years later set the American League record for victories in a season at 116.

 

Since 2000 he has been the franchise's chairman emeritus, but has remained on the executive committee of major league baseball and has continued to be the Mariners' representative to MLB and on the ownership committee.

 

He remains a one-of-a-kind in major league baseball: as the team's retired top executive who never had more than a tiny piece of ownership but who is still viewed by the other teams' owners as the most important voice of Seattle baseball.

 
             -----------------------------------------


Mike Lowry recalls '95 legislative pact that

cemented franchise with stadium funding 

 

While John Ellis gets legitimate credit for his role in saving the Seattle Mariner franchise in 1992, of equal importance was Gov. Mike Lowry's role three years later when he brought the franchise back from the edge by getting the Legislature to agree on a new-stadium funding package.


A 1995 ballot measure to impose a sales-tax increase to fund construction of a new stadium was pushed from hopeless to near passage by the miraculous late-season dramatics of the Mariners that included a memorable victory over the New York Yankees before a championship-series loss to Cleveland.
 

 

"After that sales-tax ballot issue failed by the razor-thin margin of about one-tenth of a percent, I remember Ellis calling a news conference to say the team would be put up for sale because it was losing a lot of money in the Kingdome," Lowry told me Tuesday in an e-mail exchange.

 

Lowry recalled that he was approached by his longtime friends, public-relations executive Bob Gogerty and Boeing's chief of governmental affairs, Bud Coffey, as well as the mayor and county executive, asking him to call a special legislative session to find a stadium-funding solution.

 

"I frankly wanted to do that," Lowry said, "because they had run a great campaign in their narrow sales-tax ballot loss. It was a media campaign that featured tremendous commercials that had young kids who were playing baseball morphing into the actual Mariner players, like Ken Griffey with a tag line that I think went like 'Heroes need a place to grow and become real.'"

 

Lowry says he called Ellis to ask if the owners could hold off on seeking to sell the team until he had a chance to see if he could get the lawmakers to agree to a brief special session limited to the Mariners' issue.

 

"I frankly got a positive reaction from the legislative leaders," Lowry noted. "I guess they didn't want to lose the Mariners either."

 

Thus in something that could probably have only happened in the political environment of yesterday, Lowry was able to work out a deal with key Democrats and Republicans from both houses on what he remembers as "a totally new funding package that was importantly different from the sale-tax measure."

 

"It was composed of taxes that were mostly on the users and beneficiaries of the new stadium, like admission taxes and sports bar taxes," he said. "As I recall, the only new tax in the package that was a stretch to say it was a beneficiary of the stadium was on rental cars."

 

In recalling his feelings in undertaking the legislative initiative, Lowry said "I simply did not want Seattle and the state to have the image of losing that major sports franchise. That struck me as Rust Belt."

 

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Supporters of crowd funding for startups must await SEC rule-making process

Now that the so-called crowd-funding measure has whipped through Congress with a speed and level of bipartisan support unheard of in recent years, the effort to make it fulfill its promise of creating new companies and jobs begins. And that may prove more challenging than its passage.

 

Before any entrepreneur with a can't-fail idea rushes to the Internet in hope of attracting a crowd of investors, the Securities and Exchange Commission must first set the rules on how provisions of the law will be permitted to play out. The agency has 180 days to fulfill those duties.

 

The legislation, called the Jumpstart Our Business Startups Act (JOBS) will dramatically expand the way new companies can raise money and the reduce the oversight for smaller companies doing initial public offerings.

  

After quick congressional approval last week, President Obama, who admits he first learned about the proposal in early March, will be signing the bill Thursday.  

 

Supporters view it as a major breakthrough for funding entrepreneurial startups and thus eventually creating jobs. Critics are convinced it is a funding disaster in the making. Both will have to wait to see what the SEC comes up with.

 
 

That process that will draw its own critics as it unfolds and the fact it's now in the SEC's hands will likely create some apprehension for friends and opponents alike.

 

More than a few cynics have suggested that the bill's acronym, JOBS,  is a key reason few in Congress dared oppose it despite a lot of whispered reservations.

 

What the bill seeks to achieve is the opportunity for people (crowds) to organize via internet websites to fund companies. Using the internet to raise money is a process that's long been utilized for charitable and entertainment purposes.

 

 The crowd funding approach would open the way for people to invest as little as $500 and up to $10,000 in startups, eliminating the long-time steep financial requirement for investors, other than what's known as "friends and family" investors.

 

The kind of hype that has marked the rapid progress of this legislation through Congress is nowhere better displayed than on the website of Crowdfunding Offerings, which pitches its ability to provide an investment platform for "the crowd."

 

So here's the firm's pitch:

"Crowdfunding investing will allow start-ups and existing businesses to raise funds for their companies directly from the public who will invest small amounts of money in return for shares in the company. Americans will finally have the opportunity to invest in ways that have historically been reserved only for the wealthy. Together, America's entrepreneurs and investors will launch the next great ideas of our time!"

 

When I write occasionally about angel-investing issues, I turn to friends from Montana to California who are leaders among angel investors, with an occasional venture capitalist thrown in. Their collective insights inevitably create a better understanding of the issues, but disagreements among them frequently abound. And so it was with the crowd-funding measure.

 

The most vocal and opinionated among my angel friends on this issue is Bill Payne, who summers in the Flathead Valley of Montana and winters in the Las Vegas area. Payne, who gets to a conviction about his views because of the respect he receives from angel investors across the West and beyond, describes the bill as "a train wreck waiting to happen."

 

"Lots of investors will get scammed," Payne suggests. "Just give it a couple of years and Congress will be asking the SEC how they ever let this happen!".

 

Mike Elconin, San Diego-based leader of the major Southern California angel-investor organization Tech Coast Angels, sums up a concern that even some proponents share.

 

"The danger is that this new law will engender an expansion of boiler rooms in which slick sales people convince unsophisticated investors to put money into companies at highly inflated valuations," says Elconin. "Whether you think this is a problem for government to prevent, or a matter of buyer beware, depends on your political philosophy."

 

Dan Rosen, a respected Seattle attorney-investor and a policy director for the Angel Capital Association (ACA), is among those who supported the legislation and helped author an ACA internet post to help inform angels on the bill

 

Rosen, at the invitation of the White House, will be on hand at the bill signing Thursday. 

 

Liz Marchi, who presides over the Kalispell-based Frontier Angel Network, frames why many supporters have looked beyond those concerns at what many perceive as the underlying importance of the legislation.

 

"While there will inevitably be some hiccups in the execution of crowd-funding, I think it's a major breakthrough for early stage seed capital," she said.  "Congress has certainly allowed some risk with this bill, but it drives private capital down the food chain where it is desperately needed to seed innovation."

 

Tom Simpson, former venture-capital leader who now heads the Spokane Angel Alliance, sees the new law as "not perfect, but a step in the right direction."

 

"But I agree with Payne that the more investors a new company has, the more the likelihood for problems," he added.

 

Republican Sen. Scott Brown of Massachusetts, who conceived the measure, offers perhaps the most compelling argument in favor of it.

 

He explained that the long-time practice of people funding their new businesses by mortgaging their homes is basically no longer possible. So a new source of start-up capital was necessary, particularly in the face of the disappearing hope of bank financing.

 

My own sense is that the typical congressional supporters of the bill went through the following conversation with themselves:

 

"Job creation is so politically important today that if it costs investors a few thousand dollars each down the road, it's worth it. Somebody has to pick up the tab for creating jobs and we certainly can't. Poor people buy lottery tickets all the time taking risk far greater than investing in a start-up company. So let's get on with it."

 

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Reflections on a quarter century of Business Hall of Fame selections

When the Puget Sound Business Hall of Fame was created 25 years ago to recognize business leaders from the past who had contributed to the economic growth of the region, some quietly expressed concern that the event might soon run out of past leaders to honor.

 

A quarter century on, as Junior Achievement of Washington and Puget Sound Business Journal prepare to induct four new laureates into the Hall of Fame, it's become clear that the region had no shortage of business leaders to celebrate.

 

In fact, while the event retains the name "Puget Sound," it has grown in the past couple of years to include Eastern Washington business leaders among those eligible for selection.

 

Thus at a time when the quest for heroes in business is perhaps more important than it has ever been, the number of business leaders chosen over the years to be honored at this unique annual event passes 100 Thursday evening when the following four laureates are inducted:

 

 Jim Douglas, who created Northgate as the nation's first shopping center designed as a mall, helped launch Seafair as part of the celebration of Seattle's 100th anniversary and and became the "pitchman" for the vision that became the Space Needle, symbol of Century 21.

 

Edie Hilliard, A radio pioneer as one of the first female general managers of a major market station, who then built one of the nation's largest independent radio networks.

 

Budd Gould, founder and principal owner, and still president, of Anthony's Restaurants, who brought the essence of waterfront dining to communities from Bellingham to Spokane and Richland to Bend.

 

William Ruckelshaus, perhaps the nation's leading environmental figure of the past half century. who served two presidents as administrator of the EPA and also fashioned a career in the private sector as CEO of Browning Ferris Industries and senior vice president of Weyerhaeuser Co. He now is strategic director at Madrona Venture Group.

 

It was the late Jack Ehrig, Seattle ad-agency head and a key supporter of Junior Achievement, who in 1986 approached me, as publisher of PSBJ, about creating a local event that would parallel the national Business Hall of Fame event for which FORTUNE Magazine was the partner of JA.

 

FORTUNE chose the laureates for JA to honor in those years, producing a special insert in the magazine to introduce them to its readers and JA honored the national laureates at a prestigious annual banquet that cities competed for because it attracted some of the biggest names in business nationally.

 

In a similar manner, laureate selection became the role for PSBJ and JA produced the first banquet to honor those selected in 1987.

 

FORTUNE's rule was that honorees had to be retired from day-to-day involvement with the companies where they had built their reputations. That sounded to me like a good way to ensure there wouldn't be any lobbying on behalf of a currently active CEO so that became our rule as well. That also has changed a few years ago with the induction of Eastside business leader and developer Kemper Freeman, still very much active in his business.

 

From the outset, I populated the selection committee with people who were not only business icons in their own right, but also understood far more about business history than I did. Thus each annual selection gathering became a lesson in local business lore.

 

And it was the insight of those members of the selection committee, including from the outset longtime community and business leader Jim Ellis, who personally knew more than half a century worth of the prospects, that brought forward well-known and not-so-well-known names from the past.

 

Because of the prominence of JA Seattle in the national organization, particularly because we had built what many viewed as the best local hall of fame program in JA, it became logical for the Seattle JA leadership to seek to have the national event in Seattle.

 

That finally occurred in 1992, which happened to be the year that Steve Jobs, then between jobs since he had been edged out of Apple a few years earlier, was a laureate. But Jobs, with typical unpredictability, apparently decided he didn't care to head up to Seattle from Silicon Valley for the event and the word spread the day of the banquet that he wouldn't be there.

 

But by late afternoon, to the relief of all, it was learned that Jobs had changed his mind and would, in fact, be on hand to accept his award. Only a few insiders were aware that FORTUNE publisher Jim Hayes, a high-visibility figure at the national banquet, had telephone Jobs to advise him that if he failed to show up, his name would never again appear in the magazine.

 

The business leaders of JA Washington in 2008, led by longtime venture capital executive Woody Howse and wine-industry leader Michael Towers, began building a case for the return of the national event to Seattle.

 

But it soon became clear, as the Great Recession got its grip on the nation's financial throat, that the world had changed. National gatherings of business leaders for something like a Hall of Fame banquet, and the significant corporate financial support necessary to carry it off, soon seemed unrealistic. None has been held since then.

 

But the JA Puget Sound Business Hall of Fame remains a viable and important reminder each year of the role successful business leaders can play in representing role models for the business leaders of today and the young people of JA who will be the business leaders of tomorrow.

 

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Early lessons helped shape Ayer's style in guiding Alaska's through turbulent times

If a company deserve to be judged by the leader it keeps and leaders by the companies they build, then Alaska Air Group and its chairman and CEO Bill Ayer should be judged well.

 

Ayer, 57, who steered the company for the past decade through an increasingly successful flight while for the rest of the "legacy" airlines the 10 years proved an image-scaring and scary ride, has announced that he is officially turning over the CEO reins to Alaska president Brad Tilden.

 
 

Ayer, who has spent more than 30 years in the industry since launching his own little start-up airline in his mid-20s, offered some reflections this week on his career from entrepreneur through leadership of the nation's seventh largest airline. And those reflections by its leader, shared in an e-mail exchange of questions and answers, indicate why Alaska has remained a favorite of investors, its customers and its communities.

 

Two of Ayer's convictions are that you learn from, rather than make fun of, your competitors and that a small-company feel makes it easier for employees to work together and be open to change, no matter how big the company.

 

The former is perhaps best exemplified by an email exchange we had several years ago after Ryanair CEO Michael O'Leary suggested his lowest-cost Irish airline (frequently also referred to as the cheapest airline) might consider charging for use of airborne restrooms.

 

I suggested to Ayer that it might be time to revive the amusing television ads from years ago that showed the travails of a passenger who needs a 25-cent fee for entry to his plane's restroom and proceeds to try to obtain the quarter for an increasingly high price from passengers on the plane.

 

"You never want to make fun of competitors' actions because you never know what steps you might be required to take yourself," he e-mailed back.

 

I asked him this week about that exchange and his reluctance to criticize competitors.

 

"Sometimes what seems like a lousy idea from a competitor turns out to be pretty

Smart," he replied. "If we have a 'we're better than you' attitude, we won't take the time to evaluate it.

 

"Our focus has been on controlling what we can control and not simply hoping that something bad happens to a competitor to improve our situation," Ayer added. "We were surprised at how controllable our business was once we started to really focus on what we could do differently."

 

The fact that Ayer was an entrepreneur, then executive of a fast-growing start-up airline before joining Alaska in 1995 as vice president of marketing and planning has undoubtedly guided his belief in the need to retain a small-company feel.

 

He was in his mid-20s, a regional manager for Piper Aircraft Co., when he launched Air Olympia, a small commuter serving several Washington cities that operated for two years.

 

He jokes that "we didn't go broke, but probably would have if we had stuck with it."

 

Instead, he was lured to close up his little carrier and join the late Milt Kuolt and his team at the fledgling Horizon in 1982, the relationship that eventually led to Ayer's role atop the parent company of both airlines. Alaska acquired Horizon in 1987, along with Ayer.

 

Bruce McCaw, a Kuolt confidante and one of his key advisors, recalls that "Milt was quite impressed with Ayer, even though he was very young at the time. He knew Bill was smart and had a lot of good ideas."

 

"I liked Bill from the moment we met and we worked well together," McCaw recalled.

 

Ayer remembers Air Olympia as "a great place to start, although it felt like a leap into the

deep end of the pool. That experience convinced me that I had a passion for

this business which I should pursue."

 

He recalls the days with Horizon as "difficult. We were always worried about having enough cash to make payroll. But (it) shaped our conservative approach."

 

The shaping of that financially conservative approach undoubtedly helped guide Ayer's decisions as he steered Alaska basically unscathed through a decade of airline-industry turbulence that saw all of its legacy competitors go through bankruptcy.

 

So now Ayer turns the reins over to Tilden, expressing the conviction that "a CEO can overstay his or her welcome" and "there should be different leaders for different times."

 

He and the Alaska board, which Ayer says he's had involved over the past couple of years in the planning of the transition to Tilden, view him as "exactly the right leader to take us to the next level." The skills that Ayer and others see in Tilden may indicate that a company is also judged by the leadership-successor it picks.

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Healthcare uncertainties retard efforts to expand cancer 'compassionate care'

The uncertain future course of national health care is retarding fledgling efforts to expand what's known as "compassionate care" for cancer patients as hospitals in Seattle and elsewhere are proving reluctant to launch new cancer programs that drain rather than enhance revenue.

 

Matt Loscalzo, who helped develop the concept of "psychosocial" programs as the underpinning of "compassionate care" for cancer patients and their families, laments that major hospitals around the country have been reluctant to incorporate it into their treatment programs.

 

But Loscalzo. executive director of the Department of Supportive Care Medicine at the respected City of Hope in Duarte, east of Los Angeles, is careful not to criticize the major hospitals, including those with highly touted cancer-care programs, for failing to move toward psychosocial treatment programs.

 

"All hospitals and institutions are holding their collective breath over the challenges they face," Loscalzo says. "These hospitals represent a lot of good people under a lot of stress. First they have to keep the lights on, then attract good people, then meet a tremendous amount of regulation, insurance challenges and Medicare cutbacks."

 

Loscalzo is a pioneer nationally in the development of  psychosocial programs and he has guided development of a touchscreen tablet that allows cancer patients to deal with the mental and emotional issues beyond their medical problems.

 

The device, called SupportScreen, is a cornerstone of City of Hope's leading-edge focus on compassionate care. The device, which is programmed specifically for each patient, is designed to electronically record distress levels, through answers on touchpads, by asking cancer patients to identify and rate their practical, social and emotional problems along with medical information.

 

Patients reveal concerns that might otherwise go unrecognized, such as mental health imbalances, stresses over personal finances or insurance coverage concerns, or suicidal thoughts.  The information, which the patient knows will be shared with the entire healthcare team, allows that team to immediately provide integrated treatments and crises interventions.

 

And because of the efforts of a philanthropic couple who maintain residences in both Los Angeles and Seattle, visibility for SupportScreen will be coming to Seattle and, with it, a heightened awareness of what compassionate care actually means to cancer patients' outcomes.

 

Loscalzo's other role at City of Hope is as administrative director of the Sheri and Les Biller Patient and Family Resource Center, created nearly four years ago through the vision and financial support of the Billers to create an international model of compassionate care. His psychosocial program, including, the touchscreen tablet, is a major part of the Biller Center's unique offerings.

 

The reach and influence of the Billers has given Loscalzo's efforts a major boost. Sheri is chair of the City of Hope board and Les is retired vice chair of Wells Fargo and current board chair for Spokane-based Sterling Savings.

 

Loscalzo's goal is to move the psychosocial program concept, complete with the SupportScreen, into the mainstream of cancer care, expanding its reach well beyond the handful of cancer hospitals where the program is now being introduced. The only other one in the West, in addition to the City of Hope, is the Huntsman Cancer Institute in Salt Lake City, which Loscalzo describes as "a fairly new center that is really trying to get is program up and running."

 

"The number of cancer survivors nationally is nearing 12 million and for them, psychosocial is going to be a part of the rest of their lives," Loscalzo says. "There are humanistic and financial costs for ignoring the psychosocial needs of patients and their families, as well as of cancer survivors."

 

In the nearly four years since their philanthropy allowed the Biller Center to open, the Billers have made the City of Hope's focus on compassionate care, including the SupportScreen, their cause.

 

It was because of a friendship with the Billers and a personal interest in the cancer initiatives there that I was able to get a first-hand look late last year at the programs of City of Hope and its almost unique focus on compassionate care. thus I had a chance to meet key players there, including Dr. Michael Friedman, who is president an CEO, and Loscalzo.

 

Because the Billers are givers, they share the willingness of all practiced philanthropists to also be askers, tapping friends, colleagues and associates to support their cause with personal involvement and financial support.

 

For three years, Sheri Biller's "ask" has been on behalf of a team of what she calls "Resource Racers" in an all-women's half marathon in New York City to raise money to augment the basic support for the Biller Center at City of Hope that's provided by the Biller Family Foundation.

 

This year, the call has gone out from both Sheri and Les Biller for "generous" contributions to her Resource Racers, including men as participants for the first time, for the Rock 'n Roll Marathon/Half Marathon in Seattle in late June. The donations this year will go specifically to expand the use and the number of SupportScreens available to City of Hope's cancer patients.

 

That may well bring visibility for the first time to cancer-care supporters in the Northwest, who may legitimately ask "why not here," given the cancer-care reputations of major hospitals in Seattle and Portland.

 

Meanwhile, Loscalzo's vision is to develop a touchscreen specifically aimed at children suffering from cancer. But that may be a ways off.

 

"We want to incorporate things like animation into the software of the SupportScreens we develop for youngsters," Loscalzo says. "A rough estimate is that we'll need about $1 million for development of those children's screens."

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Demise of redevelopment agencies looms in the state of big challenges

There's nothing that could make residents of places like Washington, Oregon or Montana feel better about how their states are being run than to be plunked down for a few weeks in California and get an amusing and bemusing look at the dysfunctional workings of the nation's most populous state.

  

Everything about California is big, and that includes the massive budget deficit that has been the focus of governor-again Jerry Brown since he was sworn in a year ago as the literal political-comeback kid.

  

Now comes what may be the biggest challenge ever faced by local governments and economic-development entities in California. More than 400 redevelopment organizations around the Golden State are scheduled to go out of existence on Feb. 1 and some of their financial obligations will be absorbed into the general funds of local governments in those areas where the EDAs now exist.

  

Part of the predicted fallout will be that states like the aforementioned Northwest ones will be cranking up their California recruitment efforts looking to woo businesses away from a place where they don't seem to be wanted.

  

That would be an unfortunate misimpression about California because local communities and economic-development organizations across the state strive mightily to create jobs in their areas with innovative ideas and initiatives, despite the image the state policies have fostered.

  

Four of the largest redevelopment agencies in California are all in the job-hungry Coachella Valley. Those are La Quinta, Indian Wells, Rancho Mirage and Palm Desert - communities well known to Northwesterners who trek south to the desert each winter in search of sun.

  

Redevelopment agencies provide funding for road, sewer, lighting and affordable-housing projects across the state under a 65-year-old law that allowed a city or county to create a redevelopment area to address urban blight. RDAs receive related property-tax revenue increases, known as tax increments.

  

All this chaos came about because a legislature-approved plan conceived and proposed by Brown sought to coerce the RDAs to give up $1.7 billion in increased property-tax funds if they wanted to continue to exist. It was branded the "pay-ransom-or-die redevelopment system" by the California Redevelopment Association.

  

Part of the reason that the governor and legislature viewed the RDAs as a good place from which to divert revenue is that for all the good works done by the RDAs in creating opportunities for developers to invest in communities and transform downtrodden areas, examples of excess and abuse occurred.

  

To be sure, there have been blatant instances of excess on the part of some RDAs as eminent domain was sometimes used to seize private property that was then transferred to developers along with cash subsidies.

  

But even if sometimes developers seemed to get deals that smacked of favoritism,

many local officials and economic-development leaders would contend that the RDAs usually fulfilled their promise of revitalizing decaying communities and creating jobs.

  

Billions were invested over the decades to dramatically rebuild dilapidated downtowns, creating millions of jobs for Californians and hundreds of thousands of low-income housing units for growing numbers of homeless families.

  

Defenders of the value of redevelopment might logically suggest that killing RDAs is a little like saying examples of Medicare excess or fraud mean that Medicare should be abandoned.

 

During his first stint as California chief executive, Brown's mantra involved a focus on creating lower expectations for his state's citizens. In this new era of spending realities, he's being forced to impose lowered expectations rather than just urge their acceptance.

 

Part of his implementing lower expectations by fiat was to have local development entities settle for less and divert their funds to education, roads and fire departments as he sought to balance priorities while dealing with the $20 billion deficit.

 

The California Supreme Court, in a two-part decision, ruled late last year that the state had the right to kill the agencies. But it didn't have the constitutional right to condition their continued existence on their agreement to pay the state an annual fee based on their portion of property tax revenues.

 

So, unless there's an unlikely 11th-hour reprieve by the legislature, which even the governor's allies say he doesn't seem interested in achieving since it was the RDA organization that took him to court, the RDAs close up next week.

 

So what happens then? The real estate assets of the RDAs need to be sold off. But some obligations of longer-term nature that must be satisfied will become the obligation of city general funds.

 

That's likely to be the start of an extended period of financial uncertainty for cities and counties, as well as for the real estate market that will be flooded with several thousand commercial properties that will need to be sold at fire-sale prices.

 

George Skelton is a Los Angeles Times' political columnist who joined the newspaper the same year Brown was first elected in 1974 and thus has the unusual perspective of having covered both Jerry Browns.  

   

Skelton was a long-ago political-writing colleague at United Press International before he joined The Times so I emailed him last week to ask if we could visit about "the two Jerry Browns."

 

He followed up by writing a column on the subject following Brown's second State of the State address. Skelton recalled Brown's 1976 State of the State as "best remembered for one depressing, if prophetic, line: 'We are entering an era of limits.'

 

The state's current situation is clearly an immersion in an era of limits.

 

The now-73 year old Brown, during his 1974-82 tenure, was tagged as "Governor Moonbeam" for proposing that the state develop its own communications satellite.

 

Skelton says the old "Gov. Moonbeam" still exists. And Brown certainly proved that's true when, despite the financial travails of his state, he made it clear that reduced expectations don't apply to his unwavering support for a $100 billion bullet train from San Francisco to Los Angeles.

 

Brown summed it up with: "government should pursue ambitious ventures even during times of economic strife."

 

Local economic-development leaders might well shake their heads in frustration, agreeing with the premise of a state that needs to be "ambitious" in times like these, but not in pursuit of a bullet train.

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Achievements of deceased astronaut focus of program for at-risk kids

Nine years on from Michael P. Anderson's death on the ill-fated space shuttle Columbia, the fund-raising effort to ensure continuation of the annual program at Seattle's Museum of Flight aimed at inspiring at-risk children of color to dream big dreams is nearing its final stage.

 

In fact, the effort launched for a hometown hero by Spokane business leaders following the Feb. 1, 2003, shuttle disaster, along with the major assist from African-American pilots of Alaska Airlines and a financial commitment from the airline itself represents fulfillment of a big dream in its own right.

  

 
 

 

As the Museum of Flight prepares to host the third annual Michael P. Anderson Memorial Aerospace Program on February 4, final selection is in progress for the group of 10-to-14 year olds who will receive support from a special fund to attend the day-long session.

 

The goal of the program has been to create an enduring memory of Anderson and to make his achievements an object of aspiration and inspiration for young people, particularly the African-American students who would seek to emulate him. It's intended to help inspire an interest in science, technology, engineering and math (STEM) education and careers.

 

Avista Corp. CEO Scott Morris, motivated in part by the fact Anderson's father was an Avista employee, assigned the firm's director of community development, Anne Marie Axworthy, and communications manager Jessie Wuerst lead roles in the project, with a goal of  raising funds for a statue of Anderson in his hometown. That was soon after the shuttle disaster. But with completion of the larger-than-life bronze statue in Spokane in 2005, the vision expanded.

That meant doing something on the west side of the state and that led to a focus on a second statue at Seattle's Museum of Flight, which was dedicated in June of 2009, as well as a program to bring African-American children an awareness of Anderson and his accomplishments. That led to the creation of the Michael Anderson Memorial Aerospace Scholarship for Children of Color, which is administered by the Museum of Flight.

 

The campaign to raise the final $50,000 to ensure that the Museum of Flight program and the scholarships continue will also get a boost next month when the person credited with being the key figure in making the Seattle portion of the program a reality retires from the Air Force and returns to Seattle.

 

Maj. Gen. Harold L. "Mitch" Mitchell, Deputy Inspector General of the Air Force in the Office of the Secretary of the Air Force, retires this month after two years on active duty and will resume his role as an Alaska Airlines pilot, which is what he was doing when he was first approached about involvement.

 

"The goal has been to do more than merely put up a statue," Mitchell explained in an e-mail exchange this week. "It's important to leverage Anderson's legacy to help students have a chance to do similar things."

 

In an effort to put together a group to focus on the goal, Mitchell turned to other African-American pilots at Alaska, then realized "we needed some funding to make this happen so we thought it was an idea worthy of sharing with the company."

 

He says they didn't expect Alaska to be as supportive as it was, but the airline agreed to put up $100,000 as matching funds over four years.

 

"To be honest, we've struggled on our side of the match, but they have been outstanding," Mitchell said.

 

Wuerst of Avista said the campaign has raised $190,000 thus far and needs to raise a final  $25,000 to get the last $25,000 of the Alaska match.

 

Anderson was 43 when he and the other six crew members of the Colujmbia crew perished as the shuttle broke apart on re-entry.

 

But in an interview from space earlier in the 16-day  mission, Anderson expressed a thought that became the quote on the plaque on each statue: "This is what I wanted to do since I was a little kid.  If you apply yourself, work hard to be persistent, and don't give up, you can achieve anything you want to achieve." 

 

It's that commitment that supporters of the Museum of Flight program hope to bring to a growing number of children of color from all parts of Washington State.

 

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Veteran auctioneer Kip Toner says benefit auctions ever more vital for charities

To those who think that benefit auctions for charitable causes may be losing their appeal, Kip Toner, who for more than three decades has been in the business of getting folks to raise their paddles, has news for you.

 

Toner, who's KTBA, Inc. (Kip Toner Benefit Auctions) is 20 years old this year, says auctions have become an increasingly important part of charitable organizations' annual fund raising efforts. And he predicts that the importance and the number of auctions will continue to grow for those non-profits, perhaps even because of the current economic challenges.

 

"Because of what's happened in the economy over the past four years, auctions have become increasingly important for charities because other sources of revenue have declined significantly," Toner observed. "A number of those charities have come to us and said they simply need to have their auctions produce more than in the past."

 

It was in 1991, after 15 years learning all aspects of the auction business with the James G. Murphy Co., that Toner launched his own company in Seattle and proceeded to grow the enterprise into an auction company that does business across the country.

 

Toner sees two trends that he expects will dramatically increase the importance of benefit  auctions in the future. One is the growing use of handheld devices for bidding. The other is the increasing presence of what he calls "consignment items" -- items for which the donor and the charitable organization  split the amount of the winning bid.

 

Referring to the advent of bidding with handheld devices, Toner says: "The trend will increase the bidder pool against a fixed number of items and that will certainly increase the price for each item."

 

The emergence of handheld devices for bidding is part of what Toner sees as "the challenge auctions have in front of them to update their appeal to a new generation." He adds that the way handheld bidding fits into a more fun environment is that attendees don't have to pay as close attention to the front-of-the-room action when they can track bidding on their device.

 

Despite the challenges, the number of auctions is actually growing rather than declining, Toner notes.

 

"Some organizations have stopped doing auctions," he says. "But for every one that is dropped 10 emerge. There is almost an unlimited supply of items for auctions and coming up with new and unusual ones is merely a matter of creativity."

 

Toner's company did 105 auctions last year, with he doing at least one a weekend at auctions extending from New York and Washington, D.C., to Hawaii.

 

Asked about how much money his auctions generate for various charities, Toner said the last year they tried to calculate the total charity take was 2007 when "the auction revenue the charities actually took in was $16 million," he said. "That was the amount actually earned at the auctions from the live and silent segments, fund an item and other sales such as raffles."

 

As a result of the expected growth in auction numbers, Toner says more and more people are seeking to get into the auctioneer game. That has prompted the national auctioneers association to create a recognition of the formal title Benefit Auctioneer Specialist and ask Toner to write the curriculum and teach the classes for those who want to qualify for that ranking.

 

Toner credits the late Dick Friel, who with wife, Sharon, were the beloved team at many Seattle-area auctions, with bringing humor to the auctions.

 

"Dick was great because he taught us all about the importance of  humor in the auction, he showed us how to be entertainers as auctioneers," Toner added.

 

Two items that Toner says are growing in popularity are parties at the local fire station and small-plane flights put up by the owners of the planes.

 

"Firefighters love to have people come to the station both because they inevitably get a few minutes to do a fire-safety talk and because those attending the party usually bring the food, and leave the leftovers behind," Toner said with a smile.

 

"The private-plane trips are frequently bought by people who want to take out-of-town guests up because it's a great way to see the Northwest in all its glory," He adds.

 

Asked about what makes a successful auctioneer, Toner emphasized: "you have to make it about the attendees, not about the auctioneer, and that includes thanking people by name.That isn't really difficult since I have a sheet with a name after each bid number," Toner pointed out.

 

He recalled doing a recent art auction in New York where all the attendees were Spanish, adding that he spent advance time learning how to pronounce each name. "I'm not positive I got each name right, but they appreciated the effort."

 

What's the largest pricetag he recalls for an item? Toner says it was likely the $650,000 paid by an auto dealer who outbid several other challengers for the opportunity take his customers on trip aboard the cruiser of a well-to-do North Idaho business person.

 

"In the end, the winning bidder decided instead to take all the competing bidders," Toner chuckled.

 

When the 68-year-old Toner was asked how long he might continue at his current pace, given continued good health and energy, he said he's done 23 years of auctions for Georgetown Prep in Washington, D.C., and 20 for Pilchuck Glass. "I'd like to reach 25 with each before I think about retiring."

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Clean-energy leader Sue Preston dismisses criticisms of loan-guarantee as 'political'

Susan Preston, whose image as a leader in clean-energy investment has grown in her years overseeing the nation's first angel fund for seed and start-up clean energy companies, has reason to look toward 2012 with optimism. And she dismisses the criticism of those who would deter federal efforts to spur such investments as "purely political."

 

Preston, general partner in the nearly four-year-old California Clean Energy Angel Fund (CalCEF), acknowledges the high-profile bankruptcy of solar-power start-up Solyndra may suggest improvements are needed in federal energy-loan guarantee programs..

 
 

"But you don't throw the baby out with the bath water just because some politicians are using the bankruptcy to make political hay," Preston said.

 

"Overall, the government will show a nice profit on the loan-guarantee program," she says, moving on during an interview to things she'd rather talk about, like the successes of CalCEF and the likelihood that she'll focus next year on raising a new clean-energy fund.

 

And she enthuses about the possible resurrection of a tax-break for start-up investors that she conceived and that was gathering support in Congress before the economy went flat.

  

That "political hay" that Preston calls "purely political" has been made over the last couple of months by Congressional Republicans over the bankruptcy of Solyndra, a Fremont, CA, solar-panel maker. It was treated  by the Obama Administration, including a visit by the President himself, as the poster child for investment in renewable energy.

  

Solyndra was the first beneficiary of the federal loan program and, as a company with new technology and support from a group of venture-capital firms, it seemed to be an ideal candidate for visibility.

  

Thus when the company went bankrupt this past September, defaulting on a $528 million federal loan, Republicans seized the opportunity to make it the poster child for what they viewed as excessive Obama enthusiasm for alternative energy.

  

 "The loan guarantee program from which Solyndra received money has a number of other companies in the program, the vast majority of which are involved with project financing of large, utility-scale facilities with 20 to 25 year power purchase agreements," Preston said.    

 

In fact. the U.S. Department of Energy web site indicates the federal agency has made $35 billion in loans and created almost 65,000 jobs as a result.  

  

"If you want to talk about wasted money, let's look at the billions and billions of dollars spent on defense technology which completely fails," she added.

  

Preston, while a partner in a major Seattle law firm, helped guide the launch of the nation's first women's angel group, Seraph Capital, in Seattle in the late '90s. And in a six-year stint as Entrepreneur-in-Residence for the entrepreneur-focused Kauffman Foundation, she became a widely recognized expert on angel financing, including authoring numerous articles, white papers and books on the topic.

  

It was that angel-financing expertise that resulted in her invitation in 2008 to guide the launch of the CalCEF Clean Energy Angel Fund, for which she proceeded to raise $11 million to invest in early-stage clean-energy companies. The angel fund was launched by the California Clean Energy Fund, a non-profit that hired Preston to create the angel fund and then became a limited partner in the for-profit CalCEF.

  

Preston is confident the political flap won't have a negative impact on either the CalCEF angel fund, or in a new fund she expects to begin raising money for early next year.

  

At this point there has been no official announcement on plans for the second fund, which she says will be "much bigger" than the current fund's $11 million, adding that while "we have not come to complete agreement on the name, it will likely be CalCEF Clean Energy Ventures."

   

Despite the financial challenges that have prevailed almost since CalCEF was launched, it has produced a positive return on investment with its four fundings, which averaged about $750,000, Preston said.   

 

Although Preston emphasizes that there are no geographic restrictions on investments by the CalCEF angel fund, "on a practical basis, and because of the strong prevalence of clean energy companies in the Bay Area, we have not made an investment outside this area."

 

But she notes that she and her partners "have been to several other places in California, and elsewhere in the country, to explore possible candidates for investmernt."

"Clean energy has seen a bounce back in the last 18 months and at a greater rate than some other technology sectors," Preston said, adding that "within clean energy, certain areas are performing better than others when you look at global indexes.  For instance, wind is down, but smart grid related technologies are performing reasonably well."

  

Asked what kind of energy startups are likely to generate the most interest over the next couple of years, Preston responded: "Energy efficiency, smart grid and storage are my bets."

  

"Grid storage will be an interesting area to watch because the problem with wind power is that the wind blows more at night while most of the needs are during the day," she said. "We are really in need of storage technology."

  

Preston is enthused that a proposal she put together about four years ago for an income tax credit for investors in start-up companies, an idea that drew bi-partisan support in both houses of Congress before the economic chaos shunted it aside, has seen a revival of interest in recent months.

  

The Access to Entrepreneurs Act (ACE) may move forward this coming year, she says, but it will have to be without her assistance because the first priority will be launching the new fund while continuing to oversee administration of the CalCEF fund.

  

"Our goal is to do well while we are doing good." Preston says.  "Our first priority is to make money for our LPs, but because we invest in clean energy, we get to do good at the same time."

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Alaska Air's 'Santa One' flight for Spokane area disadvantaged kids is unique fantasy trip

Sixty disadvantaged kids and their personal elves board  Alaska Airlines' flight 1225, dubbed  "Santa One," Dec. 10 at Spokane International Airport for a Fantasy Flight to "the North Pole" on the 737 900 and a visit with Santa. It's an event that could be described as the place where the real magic dust of Christmas has been scattered, because this special trip is unique in the world.

 

The children, between the ages of 4 and 10, are selected from programs for homeless and underprivileged kids in the Spokane and Coeur d'Alene, ID, areas for this once-in-a-lifetime fantasy adventure to Santa's home.

 
 

A number of other airlines, including United and Continental, have been doing the North Pole "flights" in various cities, some for nearly 20 years. But Alaska is the only airline to actually take the kids aloft for their magical trip, in which they pull the window shades down as the flight nears its conclusion, say the magic words that allow them to land at the North Pole, and land at other side of Spokane International Airport.

 

It's there that they're greeted by Santa and Mrs. Clause and an additional host of elves.

 
 

 

"When we send out invitations to the kids, we have them give us a wish list of what they want for Christmas," explains "Bernie" the Head Elf, better known as

Steve Paul, president and CEO of Northwest North Pole Adventures, the nonprofit group that runs the event.

 

 "We take those lists and buy each of them a toy from that list. So as each child tells Santa what he or she wants, Santa can reach into his bag and pull that present out for them," adds Paul "The looks on their faces as he hands it to them is priceless."

 

To ensure that the selection is actually reaching the most deserving children, Paul's non-profit works only with the area's social agencies, which use their selection and screening processes to pull the children who desperately need to create positive Christmas holiday memories.

 

The children are picked up at the Spokane YWCA in the early afternoon and driven to the airport, where each child is given a "passport" to the North Pole and a personal "elf" catering to every need, including a backpack filled with school supplies. Then they board the plane, designated Flight 1225.

 

The flight has priority status with the FAA once it's loaded and ready to fly and "Santa One" comes up on the screen. Then the flight's own personal air traffic controller takes over, Paul said.  "It becomes just like Air Force One in that respect."

 

Paul is an out-of-work tech exec who has made the project his special commitment. As a result of his efforts, what he describes as "the 150 percent support of the community" and the Alaska involvement, the adventure for the Spokane children is brought closer to reality than in any other place.

 

He spends a number of months in preparation for the big day, lining up donations and contributions that this year amount to $150,000 of cash and in-kind, helping get the kids selected and arranging for the elves and gifts for the kids.

 

Brad Tilton, Alaska Airlines president who will be on hand with his wife for the event, says "the Fantasy Flight is an unforgettable experience for everyone involved. It's a

true delight for the children, who don't get to enjoy Christmas like most of us do and who, in many cases, have never had the chance to fly. And our employees,

who eagerly volunteer every year, get far more back than the time they put in."

 

Alaska and Horizon will have more than four dozen employees participating, from various locations on the airlines' systems. Some will be elves. Others will forego days off to work shifts for local Horizon employees so they can be elves.

 

This has been an amazingly off-the-radar-screen event, both during the eight years that United put the kids on a plane that taxied around the airport, and in the four years since Alaska Airlines came to the rescue of the event when United couldn't free up a plane with Alaska proceeding to turn it into a real airborne flight.

 

But that low visibility is changing as the list of kids registered and waiting has grown to almost 250 and media organizations have started to become aware of this special Christmas Season story. And there are some in the Alaska Airlines organization who understand the one-of-a-kind goodwill that this event represents, particularly because neither the company nor the employees has done this for the sake of visibility.

 

Horizon's Spokane customer service manager David Burris admits the visibility has been low key over the years, partly because broader visibility would only bring pressure to make the event bigger.

 

Is there an opportunity for other cities to follow suit with a special North Pole event?  Alaska officials suggest it would be difficult for the airline to take another plane and crew out of regular service during the heavy-travel holiday time. And Paul acknowledges that while he could provide the know-how to another community, he wouldn't have time to actually do another event over the Christmas season.

 

"A lot of people have said we should take this on the road," Paul notes. "I could do that if I could get people to define their non-profit or if our organization were to expand. But this is not some casual party. A lot of planning and time is involved."

 

Paul adds that he is having a movie done "that will in the future characterize the experience. We have a couple of elves who were parents of foster children involved in earlier flights who said the kids were so transformed by the experience that they had to get involved."

 

How real is this trip to the kids? As one elf put it: "If you're a little kid on your first plane ride and your ticket says North Pole, and the shades are drawn, and everyone, including the flight attendants and all the elves are saying the magic words, then who's to doubt that you have landed at the real North Pole? And then you see Santa."

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Access to growth capital could challenge state life-sciences sector's bright future

Washington State's life-sciences sector has remained, through the economic downturn, a jewel in the state's economic development crown. But the challenge of accessing capital that bedevils the industry's emerging companies, including the possible demise of the Life Sciences Discovery Fund, could hinder future growth.

 

The role biotech and biomedical companies have come to occupy as one of Washington's five largest and fastest-growing sectors, generating tens of thousands of high-wage jobs and more than $10.5 billion in economic activity, creates an important anchor for the state's economic future.

 

But as the Washington Biotech & Biomedical Association (WBBA) prepares for its annual meeting next week, in partnership with The Governor's Life Sciences Summit, there's an ongoing focus on seeking to ensure that emerging companies in the industry find the growth capital they need. And that could be increasingly challenging.

 

"With 70 percent of our companies having 50 or fewer employees, access to capital is the greatest challenge we face," said Chris Rivera, WBBA president.

 
 

 

An important part of that funding has been the Life Sciences Discovery Fund (LSDF), the program created by tobacco-settlement dollars that came into existence in 2008 and has been championed by Gov. Chris Gregoire as a key to fostering more biotech innovations and jobs in Washington.

 

But it has taken deep cuts each session as legislators grappled with yawning state budget deficits, and now could face elimination.

 

Rep. Glenn Anderson, the Eastside Republican who is one of four legislative trustees for the fund, says "it's an open question whether the fund will survive" the next session's budget cuts.

 

"The fund has done a good job of encouraging basic science and marketable, actionable, investable outcomes," Anderson said. "But I'd say there's only a 50-50 chance it will survive and if it doesn't survive, I think that would be shortsighted."

 

Rivera puts numbers on the fund's successes to provide definition to shortsightedness.

 

"LSDF awardees have been able to leverage their grants and bring in $9 for every $1 awarded," he said. "These are real dollars from out of state.  This has led directly to job creation, and great innovation in our state.

 

"I believe that LSDF has proven to be a smart investment by our state into a sector of great current economic value and future potential," he added. "Other states have poured hundreds of millions into life sciences, as they see the potential economic value of this sector and are willing to invest strategically."

 

Beyond the fund, WBBA has mounted some initiatives, as have supporting organizations, in seeking to develop alternative sources of capital, given both the now-challenged traditional lending sources and the problems facing the venture capital industry.

 

Bruce Jackson, vice president for business development at EnterpriseSeattle and ex-officio member of WBBA's board, says that despite the success of the biotech and medical-device sector, these are "clouded times" for young companies seeking to ramp up.

 

"In addition to the fact federal regulations can create a headwind for companies, access to capital for some deserving companies can be difficult," Jackson said.

 

EnterpriseSeattle's year-old partnership with the City of Federal Way in a medical-device incubator called Cascadia MedTech Association is an innovative approach to helping grow the industry, though Jackson concedes "the model hasn't been proven yet."

 

"The companies we're supporting must transition from being supported by grants to creating cashflow," Jackson added.

 

WBBA itself touts the program it created called VIP Forums, through which quality investors and strategic partners (VIP's) are invited to Seattle for a showcase of the most promising life science companies and research opportunities.

 

In addition, in spring of 2009 the association formed a non-profit angel network called WINGS, whose role is to close the early-stage funding gap to speed medical-technology innovation "from lab bench to patients."

 

The gathering of industry leaders and others for whom the industry is part of the economic hope for the future will likely hear an upbeat assessment as they review the WBBA's third annual Life Sciences Economic Impact at their gathering on November 18 at Meydenbauer Center in Bellevue.

 

Comments from the governor, who will be attending her last WBBA annual conference, and University of Washington President Michael Young, attending his first, are likely to focus on upbeat prospects for the sector's future. But both may also share concerns about the impact of funding availability on that bright future.

 

And a comment from Rivera during an interview this week could set the stage for some discussion among attendees: "I understand and know that these are difficult times, but I hope that our state leaders are strategic in where they place our precious resources, and help this state maintain its competitiveness nationally and globally."

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Spokane mom's autistic children provided lessons that prepared her for new venture

With her three autistic children as her "classroom" for the past decade, Laura Kasbar learned the unique ways autistic kids learn. Now she is ready to launch a business whose video-based web platform will offer parents, schools and health therapists a new tool to harness that process of learning for a dramatically growing number of kids with autism.

 

Kasbar, a Spokane mother of six, including twins Max, who was severely autistic, and Anastasia, who was moderately so, says the new company, called GemIIni (named for the twins), will launch in the first quarter of 2012.

 

Funding for the launch has come from the Spokane Angel Alliance and its leader, Tom Simpson, and an unusual commitment by Spokane's Inland Imaging and its CEO.

 

It was 11 years ago, Kasbar recalls, "that I walked into the tv room and saw all my kids lined up on the couch watching television and I couldn't really tell which were the autistic ones."

 

"At that time, the conventional wisdom was that the television should be off if autistic kids were around. But that experience was the catalyst that made me realize I should be using video to teach them," she said.

 

So over the next decade, with the help of her oldest son, Nicolas, who was on the autism spectrum as Asburgers, she developed the method embodied in the video. Her special focus was to help Max, who doctors told her, when he was four, would never talk.  She says he is now mainstreamed in school and excels in class without an aide. 

 

Now 14 and featured on a GemIIni video, Max has recently tested as having a college-level reading ability, a dramatic advance from his original diagnosis of being a lifelong non-verbal autistic. 

 

Kasbar says all three of her once-autistic children have now been removed from the autism diagnosis.

 

When Kasbar decided earlier this year she and her husband, Brian, were ready to launch the company, she was introduced to Simpson, who formerly guided a Spokane-based venture fund and now oversees the Spokane angel group.

 

Simpson set up a presentation for the start-up company a few months ago and wound up investing, as did some of the angel-group members. The presentation also drew the interest of Steve Duvoisin, Inland Imaging's CEO, who personally invested as well as bringing his company aboard. 

 

"I briefed our 60 physicians after the presentation and their attitude was: 'You mean we can make an investment that will help a lot of kids and could also provide a return on the investment?'," Duvoisin recalled. "It was an easy decision, but I emphasize their focus was on how much help this would be to the kids."

 

The number of children on the autistic spectrum and who thus need the learning help amounts to one in 38, and is growing at an amazing 17 percent per year.

 

"Autism is a very genetic disorder with an environmental trigger," she explained. "There are things in the environment that are the triggers for those genetically predisposed to autism."

 

The range of the autism spectrum, she says, "suggests a range of susceptibility to the triggers."

 

Explaining the role of video as a learning tool for autistic kids, Kasbar noted that the autistic avoid looking directly at a speaker's face and thus lose much of the normal learning process of mimicking articulation in speech. But, she says, they are not uncomfortable looking on-screen personalities in the eye and watching their faces.

 

"I've spent thousands of hours working with families in Europe and in the U.S. over the past three years to perfect the method," she said.

 

She says Nicolas, now 24, and a salsa instructor, as well as a coach of sales teams, helped with actual interaction between the program and the child, adding:"It was very helpful having someone on the autism spectrum work to refine the program."

 

Materials prepared for the marketing of GemIIni indicate it will use a subscription-based model with online computer-based training platform that Kasbar hopes to sell to families with autistic children, but also school districts, independent therapists and treatment centers and health insurance companies.

 

The business model provides for a charge of  $36 per student monthly, a fee that she says testing and surveys indicate is acceptable to parents, who would thus have a way to leverage home-time into therapy time at a reasonable cost.

 

She estimates the total special-needs market, including children with language-related disorders, at 7.8 million. Her target is to reach 50,000 families the first year.

 

"I expect that the company will become a leading provider of therapies for children with autism and other learning disorders," said Simpson, who is providing office space and consults with the Kasbars on marketing and development issues.

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Support grows for proposals to create jobs by easing some of investor protections

The mounting pressure on Congress and the Obama Administration to find some job-creating ideas to jumpstart the ailing economy is stirring growing interest in a couple of Congressional proposals that would lessen investor protections for the sake of allowing businesses more growth opportunities.

 

One proposal, already filed as a House bill by Rep. Ben Quayle, R-AZ, with the intent of accelerating the growth of younger companies, would suspend for most newly public companies what many view as a costly and troublesome provision of the Sarbanes-Oxley Act.

 

Quayle's proposal would allow a much greater number of public companies to opt out of Sarbanes Oxley Section 404, which requires public companies to disclose the scope and adequacy of their internal-controls structure. The measure would raise the current $75 million market-value threshold for reporting to $1 billion.

 

The other proposal would help entrepreneurial and start-up companies, many currently  hamstrung in their ability to attract growth capital, to reach large numbers of investors for limited amounts of money via the internet in what's being called crowd-fund investing.

 

The proposals have come to center stage only in the last couple of weeks. And each has attracted growing support from those who contend the measures are vital to the goal of job creation. And each is also starting to stir opposition from those who question the idea of setting aside shareholder and investor protections.

 

Each proposal merits an in-depth look and thus in this first of two columns we'll examine the discussions surrounding Quayle's bill, the support being gathered for it and the comments of those expressing concerns.

 

Next week's column will focus on the crowd-funding proposal, including a look at those backing it and the concern it is stirring from many angel-investor leaders, particularly those up and down the West Coast.

 

Quayle's bill would allow public companies with market valuations below $1 billion to opt out of Sarbanes-Oxley Section 404 for the first 10 years after going public. The original Sarbanes-Oxley Act was amended in last year's Dodd-Frank Wall Street Protection and Consumer Protection Act to create the under-$75 million exemption.

 

Quayle and supporters of his measure, including the entrepreneur-focused Kauffman Foundation, contend that the costs for complying with the requirements of this section of Sarbanes-Oxley can exceed $1 million for new companies and can cost them up to $20 million in loss of valuation.

 

Quayle's measure is close to a plan outlined by the Kauffman Foundation a few months ago as "a set of non-partisan ideas to jump-start the ailing U.S. economy and increase job creation by accelerating the growth of startups and young businesses."

 

Kauffman, the nation's largest non-profit foundation focused on entrepreneurs, noted that the role high-growth startups play is vital to assure U.S. economic strength.

 

"Virtually all of the growth in U.S. jobs has been driven by the formation of firms less than five years old, and these new firms have been disproportionately responsible for commercializing the cutting-edge innovations that characterize modern life," the Foundation said.

 

"I believe this bill is an important step as we  try to increase the number of companies that go public in the United States," said Robert Litan, Kauffman's vice president for research and policy. "The ability to raise capital in public markets will be essential as new companies create the jobs required to put Americans back to work."

 

One of the most pervasively visible proponents of both lowering the regulatory barriers for newly public companies and the proposal for crowd-fund investing is a Miami, FL, entrepreneur named Sherwood Neise, who has testified before Congress about both. He was co-founder of a company called Flavorx, which added flavors to medicine, that went public and was later sold.

 

In 2006, he was among those decrying what he called the "unintended consequences of Sarbanes-Oxley on small businesses," saying that meeting 404's requirements "ate up 14 percent of our net income."

 

But among those urging caution is former SEC Chief Accountant Lynn E. Turner, who said in an e-mail that contained the subject line "Short Memories:" "Clearly people have forgotten the hundreds of billions in dollars of losses investors suffered during the corporate financial reporting frauds, and the tens of thousands of jobs lost."

 

Neil McReynolds, a corporate-governance consultant in Seattle, said that while the original Sarbanes-Oxley requirements created some real cost and regulatory problems for smaller public companies, the changes brought about by the Dodd-Frank bill corrected some of those.

 

McReynolds, who has been a member of a number of boards of private companies and consulted with boards of public companies, said that while extending the exemption to $75 million cap companies, as Dodd-Frank did, made sense, "extending the exemption to $1 billion companies may be a bit of a stretch." He added that "there's still value in disclosure and internal controls."

 

Sharon Philpott, managing partner of national accounting firm BDO's Seattle practice, agreed, saying her firm supports the positions of the CFA Institute, Center for Quality Audit and the Council of Institutional Investors, who have all urged caution against further exemptions from Sarbanes-Oxley.

 

In the end, success or failure of expanding the exemption for internal controls may hinge on whether the pressure for jobs trumps the pressure to protect shareholders and investors.

 

 

 

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