Science in the Triangle

… Continued from Part I of this two-part series:

While it would be impossible to separate the global from the state-level issues discussed at the forum, some of the local business people offered examples for specific challenges to innovation that they faced.

Alexander Macris is the president of Themis Group which is based in Durham, N.C. and is a strong example of the power of a science park like RTP to attract additional tech-based businesses to the region. Macris said that the Triangle region is one of the largest concentrations of gaming companies in the U.S. Most of the innovation potential in gaming is at the gaming engine and software level, he said, and the average median income of someone in the gaming industry is about $75,000. He expects to see about 300 to 400 new gaming-related jobs in the area over the next three to five years, he said, because the industry is growing in the double digits. But at the same time, the cost of game development is going up – whereas a decade ago it may have cost $1 million to develop a game, it costs $20 to $30 million to do so today, Macris said. Foreign countries give more tax credits to their gaming companies, he said, which makes them more competitive in the global field and is hurting U.S.-based gaming companies. “Targeted tax credits are a huge attractant to small and start-up businesses in the gaming industry,” Macris said. “And cool downtowns, the creative class really likes a vibrant downtown too.”

While deeper tax credits may help some start-ups get a toe-hold in emerging markets, retaining the best talent is necessary to sustain them over time. And while uber cool downtowns like the American Tobacco District in Durham are one component of enticements to retain the best brains, it’s a smaller part of the issue. Jennie Hunter-Cevera of RTI said that 50 percent of foreign students who earn a doctorate in the U.S. end up exporting their knowledge by returning to their home countries. “We have a brain drain going on, and we need to make it easier and more attractive for the brightest to stay,” she said. (What do you think will help retain top-graduating foreign students in the U.S.? Leave a comment.)

Tim Toben, who chairs the NC Energy Policy Council, said that certain existing state policies were attempting to tap emerging markets by requiring utility companies to use renewable energy for 12.5 percent of their energy mix by 2021. While critics say the target is too low, Toben said that N.C. has a record of being one of the most progressive southeastern states when it comes to energy and the environment. “The utilities know we are moving into a carbon-constrained future,” Toben said, citing a Duke Energy plan to drop their reliance on coal from 42 percent today t 32 percent in 2030, or even as low as 17 percent. “For entrepreneurs, what resources will replace this ? Wind? Nuclear? Biomass? There’s a lot of opportunity for entrepreneurs in a carbon-limited future and we want N.C. to be the leader in the Southeast in the new green economy.” (Which begs the question: What specifically is the state energy office doing to help start-ups like MegaWatt Solar or BioRxn? I have not looked into this at all, so if you have any insight then please leave a comment down below.)

But even if the policies, foreign visas and the vision of local leaders and educators all align into the perfect climate for innovative business, what sort of characteristics do innovative businesses and visionary business leaders typically have? Clay Thorpe, a partner of Hatteras Venture Partners, shared a list of just such traits he amassed from talking to high-level personnel in Genentech. “I’ve been asked why N.C. has not had a homegrown success, a globally-innovative business develop here,” Thorp said. “And I’ve thought about this a lot. We’re the number three biotech hub in the country, and we’re good at attracting existing businesses to the area.” Thorp said he had an opportunity to meet with leaders from Genentech, widely considered one of the main founding companies of the biotech industry, and he asked them what they thought contributed to their success.

“You have to have a driver, like Bob Swanson at Genentech, who set the cultural tone.” Thorp said. “I hesitate to say it, but it’s almost 5 to 10 percent the quality of the technology and 90 to 95 percent the driver.” In addition to having a visionary and energizing leader, Genentech spent an inordinate amount of time hiring good people, he said. They would court people they wanted to attract, sometimes for years, and chose very carefully. The leaders also fostered an ethic of loyalty and hardwork, which resulted in dedicated employees “going the extra mile” when it was needed. The company was also built upon a foundation of “patient, long-standing capital,” Thorp said, which gave them the stability and time to do proper research. In addition, Genentech required its scientists to publish scientific papers on their research and they held them to such high academic standards that often Genentech papers were cited over papers by ivey-league academic researchers.

While there were no clear answers presented at the Global Innovation Forum on Friday, a lot of conservation was generated. We want to hear from you — what are your thoughts on state or federal policies, or cultural shifts, that will help carve a climate favorable to business innovation with global trade potential? Let us know in the comments section below.