Here’s an idea for Mayor Sam Adams and PDC

April 15, 2010

NedSpace in Downtown Portland

The Wall Street Journal points out today that there is a growing number of Bay Area tech workers telecommuting from Portland. The combination of Portland’s attractiveness and the acceptance of telecommuting is driving the trend.

Now it is getting more practical for people to live in the Pacific Northwest and continue working for Bay Area-based companies, as more employers loosen their telecommuting policies. Technology also is making it easier to stay connected all the time, and travel between San Francisco and cities to the north has become more convenient, though hard data on Bay Area transplants to the Northwest who retain their local jobs are hard to come by.

In other words, there are a lot of smart, educated people who happen to be gainfully employed (with Bay Area salaries) who want to live in Portland.  That’s great.  The Mayor and the PDC should jump all over this.

In contrast to people, Portland has had a relatively difficult time attracting early stage capital.  Compared to the Bay Area and Seattle, Portland is void of venture capital and angel investment. People want to move here, capital doesn’t.

Portland simply doesn’t have companies like Amazon, Microsoft, Yahoo!, eBay, Google, Facebook, etc. that spin out employees with highly fundable track records.  We all want to get that started.

Portland clearly wants to see the startup community in Portland grow and thrive.  Mayor Adams recently announced that the city will invest $500,000 in early stage companies.  While I 100% applaud the spirit behind this announcement, there might be a better and safer approach to adding to Portland’s employee and tax base, that is, focusing on the relocation trend.  Here’s a simple comparison of the two options:

Option 1: Invest $500K in Portland based startups.

Let’s be honest, investing in startups is a bit of a crap shoot.  Experienced venture capitalists and angels shoot for 1-2 companies out of ten to make it (and that’s great).  The city can combine its investments with those of experienced investors to mitigate risk, but the city isn’t bringing anything unique to the table.  This option is risky and not a major dial mover.

Option 2: Create program to make it easier for Bay Area tech employees to telecommute from Portland.

I haven’t modeled the following example, but assume that the city took the $500,000 and invested it as fifty $10,000 “packages” to Bay Area workers willing to relocate to Portland.  The $10,000 would be paid to the employer.  The employee would agree to move within the city limits of Portland.  The employer agrees to continue paying market rate Bay Area salary to the Portland located worker.  In the end, the city shelled out $10,000 for adding an employee to the city of Portland tax base (likely paid in the range of $100,000).  That’s a development bargain.

The short term economic impact should at least be a draw (again, modeling would need to be done to determine the impact).

The city could make the approach even more attractive by partnering with one or more of the Portland incubator spaces, such as NedSpace to provide work space (and allowing more opportunity for cross-pollination).

Again, people already want to do this.  We just need to make it marginally more attractive to do so.

The long term economic impact could be even greater.  As Portland adds to the pool of talented, experienced tech workers, the funding issue should start to work itself out.  A few years down the road, new companies will be formed here, hiring additional employees.  Bringing this type of experience to Portland ultimately helps with the funding issue.

This could be a great way to invest in Portland.


13 Responses to “Here’s an idea for Mayor Sam Adams and PDC”

  1. sharong Says:

    But… me the revenue stream! I want to see the numbers, how a telecommuting individual makes money for Oregon. And how measly is a few individuals compared to just one company in terms of tax revenues?

    I like you’re thinking outside of the box. Just not sure if this is fiscally practical.

    • Cainos Says:

      The core of your writing whsilt appearing agreeable originally, did not really sit perfectly with me personally after some time. Someplace throughout the sentences you were able to make me a believer but only for a very short while. I however have a problem with your jumps in assumptions and one might do well to fill in all those breaks. When you actually can accomplish that, I would surely be impressed.

  2. Brian Says:

    Sharong, think it through:

    1. The revenue stream is a no-brainer; if residents can stay in Portland, shop in Portland and take transit in Portland, where’s the problem? Half of their daily activities will either be taxable activities in Portland, or paying businesses which themselves pay taxes – not to mention any incidental spinoffs.

    2. I think this post is talking about more than “a few measly individuals.” But even if it was, helping people generate income from Bay Area tech companies while living in Portland increases the odds of tech entrepreneurs with solid experience and connections deciding to start their startups where they live instead of further south.

    3. The best odds for getting a small company to end up with a big corporate HQ in your city is to make sure the small company starts up, and grows from within your city in the first place. By far.

    I’ve linked this on my site (which is, granted, far from Oregon). But more states and provinces need to think like this, instead of wasting millions trying to bribe companies to their markets for the short term.

  3. Joe Says:

    I am an accountant and I was working in Dallas, Texas. When I moved to Portland, my employer wanted me to take my job with me. Now, I pay rent to a local company, utilities to PGE and the city of Portland, transportation expenses to Tri-Met, grocery costs to area supermarkets, and income taxes to the state.

    From a business perspective, the incentive is simple: one of the major considerations for location of a business is the suitability of the local labor pool.

  4. dalas v Says:

    I’ve telecommuted from Portland to NYC for three years now. If Portland could find a way to encourage more employers to allow this, it would be awesome.

    As far as revenue, I’ve always figured that the money I’m bringing in to Portland from NYC is even more “valuable” than local money, because it’s adding cash to the economy, instead of just circulating what is already here.

  5. Tom Turnbull Says:

    Great comments. Thanks.

    The more I think about this idea, the more I like it. The return on investment for Portland is clear: tax base; new money flowing into the local economy; adding to experienced high tech labor pool. Assuming there are takers, the return is guaranteed.

    Portland’s competitive advantage is our livability. Let’s leverage that asset.

    Conversely, investing in startups is highly risky, even for the of best VCs in the best of times. The return on investment is far less certain (to say the least). Most importantly, a small investment by Portland isn’t going to make or break Portland’s future home run tech company.

    Of course, the either or choice presented is a false one. Portland could do both…

  6. Mark Grimes Says:

    Hey Tom. Thnx for the NedSpace mention. Love the idea. I think when rebuilding a stronger economy it takes a multifaceted approach and very much like how you’ve included getting more telecommuters engaged in Portland.

  7. Teresa Boze Says:

    Ladies and Gentlemen and Your Honor the Mayor and the PDC,

    Follow this line of logic, and you make Portland a bedroom community less the capital investment commitment of business. To base a “dial mover” on importing telecomuters is the equivalent of turning property values into junk bonds, and telling Oregonians they are now all baristas for life.

    You can’t import enough of these telecomunters to make a dent, nor would they contributions made be sustainable. Saks would still be closed.

    The whole idea, at the level of exectution required to even be of interest, sounds like a candidate for Darwin Awards nomination.

    And if this blog post is actually considered leadership thinking, what needs to be doner tocorrect Portland’s economy is obvious.

    • Tom Turnbull Says:

      The idea is simply to encourage a few more product managers, engineers, marketers, etc. from Bay Area tech companies to make Portland their home (many want to). In a few years, some of these folks might start new companies here. In the meantime, there’s a bit more money moving around our local economy.

      Capital follows people with track records. Pull versus push always works better.

  8. Mayor Adams: we have a plan. You and the Council and a commission drafted it. The tech community supported it. It’s a good plan. Let’s execute it!

  9. Brian Says:

    …a plan to invest $500k in early-stage companies, which is like throwing a pebble at a train to try to get its attention.

    If liveability and geography is the tool that Portland can use to get bright minds to stay in Portland (and likely to start their own businesses after), then it’s already using a better strategy and a better weapon to change the odds than blowing $500k at startups with 1/100 odds of success ever will.

    San Jose was once a bedroom community. Ditto Waterloo. What changed wasn’t the level of subsidies for startups; what changed was the concentration of geniuses in the right place. The presence of tech-savvy universities was one way to get that result. This is another.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: