More Jobs, Please

As a complement to this post on job-finding and job-supplying in Pittsburgh, try some Joel Kotkin on for size.  Are cities offering jobs for everyone?

Since the beginnings of civilization, cities have been crucibles of progress both for societies and individuals. A great city, wrote Rene Descartes in the seventeenth century, represented “an inventory of the possible,” a place where people could create their own futures and lift up their families.

What characterized great cities such as Amsterdam—and, later, places such as London, New York , Chicago, and Tokyo—was the size of their property-owning middle class. This was a class whose roots, for the most part, lay in the peasantry or artisan class, and later among industrial workers. Their ascension into the ranks of the bourgeoisie, petit or haute, epitomized the opportunities for social advancement created uniquely by cities.

In the twenty-first century—the first in which the majority of people will live in cities—this unique link between urbanism and upward mobility is under threat. Urban boosters still maintain that big cities remain unique centers for social uplift, but evidence suggests this is increasingly no longer the case.

Kotkin notes that a major source of the contemporary problem is a shift in the dynamics of class mobility.  As in -- it is disappearing; expanded access to education is no longer a sure route to greater prosperity for all.  Jobs and income for the upper class are doing reasonably well; for the middle and lower classes, not at all.  The problem is exacerbated by housing costs, which are extraordinary in places like London.  In the US, one might look at places like Manhattan or the Washington, DC metro area, or just about any large city on the Western edge of California.

Kotkin is talking mostly about the mega-cities of the 21st century, such as London, but his comments resonate even with respect to small fry such as Pittsburgh:

Broad-based economic growth might seem the most logical solution to this dilemma. In the past, socialists, liberals, and conservatives might vigorously have debated various approaches, but generally agreed about the desired end result: shrinking slums and expanding opportunity for the middle or working class. Today, however, many urban “progressives” do not trouble themselves overmuch about the hoi polloi. Instead, they are more likely to devise policies to lure the much-ballyhooed “creative class” of well-educated, often childless, high-end workers to their cities. This goes along as well with an increased focus on aesthetic and “green” issues. ...

Attacking the class gap requires a redefinition of current views about the overused term “sustainability.” This concept needs to be expanded beyond its conventional environmental definition to reflect broader social and economic values as well. It is one thing to consider how, in an era dominated by dispersed work, core cities might still attract those elite workers needing direct “face-to-face contact.” It is quite another to develop strategies so that the vast majority will be able to find work doing anything other than servicing the needs of the upper echelons.

In turning away from the fundamental issues of economic growth and upward mobility, these cities are in danger of permanently undermining the very thing that has made great cities so attractive over the centuries. The ultimate worth of urbanity lies in its ability to deliver a better life, not only to the established affluent and the most skilled, but to that broader population who, like others over the millennia, come to a big city to create a better life.

Read Kotkin's whole essay here.

New Business Opportunities

If you are thinking of starting a new business, then the first and most important question you need to answer is this:

Is there a market for what I want to sell, and is that market likely to be big enough for me to make money selling to it?

Your product may change over time; your market may change over time; you may sell off your business to someone who can do the selling (or the making) better than you can.  At the end of the day, though, if no one wants what you have to offer, then your most brilliant idea, your wonderful patented thing, won't do you or anyone a bit of good.

Often underestimated as a potential customer is the government of the United States of America.  The government gets larger, the government gets smaller, but the government (pace some in the Tea Party, and some Libertarians) is not going away.  If you want to sell a new medical device, for example, then you will need to get your device into the reimbursement systems, not only for private insurers, but also for the government (service-related insurance and non-service related insurance, or both).

If you want to know what the government is buying or wants to buy, and what the government will pay for, then check out this site, and learn to love it: 

The Federal Procurement Data System.

Jobs, Please?

A Pittsblog reader and a student at an elite MBA program in an Eastern city, wants to relocate to Pittsburgh and work in a management position that has the kind of upside that, this person reports, is offered by firms from peer cities (Cleveland, Cincinnati) that are recruiting on campus.  But this person is finding that the doors here are mostly closed to outsiders; there are zero Pittsburgh firms coming to look for graduates of this particular school.  My correspondent writes:

I actually tried looking for an internship last summer but did not find the recruiting infrastructure where it should be - not just compensation but also in terms of communication, role, vision, and timeline.  I had thought, and hoped, that I would be able to find management opportunities [in the Pittsburgh region] with significant growth potential and immediate responsibilities, but I sometimes wonder if being a geographic outsider hurts considering the extremely local business culture that seems to exist.

The short answer is, of course, "yes."  And this is entirely consistent with my current operating premise that the Pittsburghers who are in charge of Pittsburgh cannot change Pittsburgh -- cannot grow Pittsburgh -- cannot evolve Pittsburgh.  Social patterns here are just way too entrenched.  Those of you who are building Pittsburgh 2.0 -- tech entrepreneurs, neighborhood entrepreneurs, social entrepreneurs -- be sure to build "social APIs" into your thinking:  ways that you and your team can connect with folks outside of Western PA and they can connect with you. 

A project for the ExPat Network, perhaps?

Status Update: Vaccine Manufacturing and R&D in Pittsburgh

In 2009, UPMC pitched Congress on the idea that a major vaccine manufacturing facility would be built in Pittsburgh and run by UPMC.  Aside from the strategic / defense-related aspects of this project, and the fact that it would build on existing Pitt expertise at the Center for Vaccine Research, the facility would be a major jobs generator and, because of the expertise that it would attract, a hub for bioscience research in the region.  Last summer, the Commonwealth of PA apparently promised some money to help with the project.

Can anyone help out with information on where this idea stands today?

For an example of another major federally-supported research facility sitting mostly unnoticed in Pittsburgh's backyard, take a look at the website for the National Energy Technology Laboratory, a DOE facility in Jefferson Hills.

Patent Law Wonkery

I take letters to the editor in the Post-Gazette to task once in a great while, and then usually because the argument or the style is so over-the-top that the piece richly deserves a public thrashing.

But today, there is a letter to the editor that deserves an airing for precisely the opposite reason:  Its apparently objective tone gives it a plausibility, a reasonableness, that would otherwise leave it untouched.

The topic:  patent law.

The letter, in full, follows.  I suspect that this was distributed to a lot of papers as part of a PR campaign, but no matter:

Patent settlements get generic drugs to market sooner

Consumers should be very concerned about pending federal legislation that threatens the next generation of life-improving drugs and therapies.

The U.S. Senate is considering a bill that would prohibit court settlements in patent disputes between brand-name pharmaceutical companies and generic manufacturers. The Federal Trade Commission opposes these settlements, arguing they can delay the entry of generic drugs to the marketplace, while in reality they often result in generic drugs entering the market years ahead of schedule.

By banning patent settlements, Congress would force companies to fight protracted legal battles that would not necessarily result in products entering the market any sooner -- and certainly would not benefit patients. In fact, the Generic Pharmaceutical Association says settlements actually help bring generic drugs to market sooner, saving millions of dollars.

The potential impact to our state is great. The bioscience industry in Pennsylvania accounts for 1,900 companies and more than 354,000 direct and industry-related jobs. The success of these bioscience companies depends on research, innovation and a dependable patent system to create new treatments to enhance people's lives.

Pennsylvanians need to let our U.S. senators know that this legislation would hurt consumers and our economy. Without the certainty that patents offer companies, investment into the next generation of treatments will dry up and our state will lose valuable jobs.

Our bioscience companies play a pivotal role in providing access to lifesaving cures and for growing our economy. However, they can only accomplish this if lawmakers make the right choices on patent protection.

CHRISTOPHER P. MOLINEAUX
President
Pennsylvania Bio
Wayne, Pa.
Pennsylvania Bio is a trade association representing biotechnology companies, academic institutions, biotechnology centers and related organizations.

PA jobs!  Biotech!  Who could argue?  But there is more to this story.

What Mr. Molineaux refers to as "patent settlements" are referred to in the industry (and by lawyers) as "reverse settlements."  Why "reverse"?  Because the settlements come out of lawsuits in which drug companies (generally known collectively as "Big Pharma") sue producers of generic drugs for patent infringement.  Typically, when a lawsuit is settled and money changes hands, the defendant pays the plaintiff, and the defendant agrees to stop doing whatever it was doing before.  There is a discount off of the amount of damages alleged in the lawsuit, but the plaintiff puts money in the bank.  In these patent cases, however, when the case settles, Big Pharma pays the generic company.  Why?  Because the generic company has agreed to withhold its generic drug from the market for some period of time.  Big Pharma is willing to pay -- and pay a lot -- for the right to be the exclusive supplier of what are, by definition, very high-priced drugs.

Why would this happen, and why does it concern Congress so much that there is talk of federal legislation to ban the idea?

In all of these cases, the Pharma company has a patented drug.  Like all patents, the patent on this drug will expire -- and often, it will expire sooner rather than later.  There is something of a crisis brewing in the pharmaceutical industry, in fact.  Many of the industry's big money makers are on the verge of going "off-patent," and there is a shortage of new blockbuster drugs (that is, high profit, expensive drugs) in the pipeline. 

It is undisputed that when the patent expires, anyone else is entitled to copy the chemical formula that was subject to the patent and to sell drugs based on that formula.  That legal right is what supports generic drug companies, and that legal right is what makes inexpensive generic pharmaceutical products available to consumers.

Generic drug companies are, however, just as profit-oriented as the next company, and other things being equal they would like to get into the market and sell generic equivalents *before* the patent expires or, at the very latest, the day after the patent expires.  The generic drug companies often argue that the patents owned by Pharma are invalid, and/or that the generic equivalents don't actually infringe the patents.  It's not an unreasonable argument; it is hardly uncommon for patent owners to claim that their patents cover more than the patents actually do.

However, the generic companies, like any other drug company, can only sell products that have been approved by the FDA. 

Years ago, Congress passed what's call the Hatch-Waxman statute to balance the interests of patent-owning drug companies (who want to protect their monopolies as long as they can) and the generic companies and consumers (who want to sell and buy cheap drugs).  The compromise allows a generic drug company to file an application with the FDA that claims that the proposed generic is chemically identical to an existing patented drug (so that new trials are not required) and that the patent in question is either invalid or not infringed.  If this all holds up, then the generic can come to market quickly and cheaply and best of all for the generic maker, it can come to market *before* the patent expires.  Consumers get cheap drugs sooner than they would otherwise.

Still with me?

However, if the patent owner disagrees (as the patent owner is almost always going to do), then the law allows (in fact, requires) that the patent owner sue the generic maker for patent infringement.  This is an unusual thing in the legal world; usually,  a patent owner can't sue an alleged infringer unless that infringer has actually sold or threatened to sell the infringing product.  But that isn't possible here, because the FDA is in the way.

That means that a patent infringement lawsuit is underway.  And if you suspect that this means lots of time and lots of money for lawyers, then you're right -- though you might be shocked (if you're not a patent lawyer) at just how much time and how much money is involved in the suit.  Millions.  Millions of dollars.

So what happens?  Like most lawsuits, these cases get settled.  But they get settled with "reverse" settlements:  the patent owners pay the generic companies to wait at least until the patent expires before marketing their generic equivalents.  In recent years, there have been 12-15 of these settlements per year.  From a basic economic perspective, the results are millions of dollars in increased costs for drugs paid by consumers and received by Pharma.  Consumer groups and the Federal Trade Commission have taken the position that this means that the settlements are illegal conspiracies in restraint of trade -- monopolization that is barred under the federal Sherman Act.  So far, however, the courts have not been friendly to that argument.  Which is why everyone is talking to Congress.

Meanwhile, Pharma's view is that they are entitled to protect the full terms of their patents.  The letter to the editor (remember that?!) is trying to make that point, sort of:  If Pharma can't sell its patented drugs at high prices for the full time of the patents, because it can't pay off threats by generics, then Pharma won't have enough economic incentive to invest in more new drugs. 

You can read that last point in the letter, sort of, but without the relevant background the point either doesn't make sense, or is obviously -- but incompletely -- true.  In fact this is an extremely complex issue; Pharma may, under a variety of circumstances, be right, even if it appears that consumers are suffering the consequences.  But the letter turns the whole thing into a series of slogans.  Which is no way to debate public policy.

Welcome, Pittsburgh Expat Network!

Burgh Diaspora blogger, professional geographer, and Pittsburgh evangelist Jim Russell has co-founded the new Pittsburgh Expat Network. Its mission and activities have yet to take specific shape, it appears, but the idea is excellent: converting the emotional capital associated with the Pittsburgh Diaspora into tangible human and financial capital. From the PEN site: "Part alumni network, part social venture, part economic development engine, we're hoping that PEN offers an alternative to traditional thinking about talent attraction and retention." I think of it as social entrepreneurship on a massive scale. Take a look at the PEN site.


Jim is also part of the next CityLive! event: November 3 2010 at the New Hazlett Theater.

Here's a copy of the announcement for that event:

Choose Pittsburgh!
6:30PM @ New Hazlett Theater

CLICK TO RSVP [click "Events"]

In Spring 2010, the Huffington Post listed Pittsburgh as their #2 pick on their 'Best Cities for the Newly Graduated' list. “Pittsburgh seems an unlikely place for a renaissance but the city escaped the recession relatively unscathed and is moving forward in many areas," the Huffington Post noted. “Besides having bustling education and health care sectors, the city is also generous with arts initiatives.”

What is it that motivates young people to choose a city? Is it employment opportunity, cultural diversity, cost of living or quality of life? What is it that Pittsburgh does well, and what could we be doing better? How do we become everyone’s #1 pick?

Join cityLIVE! as a panel of local experts discuss why we need to be picked, what criteria young (or old) people use when selecting a city to live in, and how Pittsburgh might become more competitive in attracting and retaining young and talented professionals in our region.

Our panelists include Jim Russell, co-founder and chief strategist of the Pittsburgh Expatriate Network (PEN), Regina Koetters, an urban redevelopment consultant who chose to relocate to Pittsburgh, and Luis von Ahn, a professor in the Computer Science Department at Carnegie Mellon University. Jessie Schell, CEO and founder of Schell Games will moderate the anticipated lively discussion.

Don’t be square. Be there.

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

CITYLIVE! IS A NO WALL PRODUCTIONS, HEINZ FAMILY FOUNDATION, NEW HAZLETT THEATER COLLABORATION

SHOW YOUR LOVE! DONATE NOW!

and is sponsored by: The Fine Foundation, The Grable Foundation, The Heinz Endowments, The Heinz Family Philanthropies, The Benedum Foundation, R.K. Mellon Foundation and Anonymous

Law & Entrepreneurship Position at Pitt

The following position was posted the other day at PittSource, the employment site for the University of Pittsburgh:

Title:  Law and Entrepreneurship Program Director

The position ID is 0109293.  The position description is this:

The University of Pittsburgh School of Law seeks an individual to direct a program in Law and Entrepreneurship at the School, currently titled "the Innovation Practice Institute." The Program, which seeks to train law students to work effectively with entrepreneurs and early-stage businesses, includes both academic and nonacademic components.


Reporting to the Dean of the School, the individual will develop and manage relationships and partnerships within the Pittsburgh entrepreneurship community, the practicing bar, funders and local university communities. The Executive Director will work with a Faculty Director of the Program and with additional faculty at the School of Law and the Dean to develop the academic component of the Program, which is anticipated to include both classroom instruction elements and clinical or quasi-clinical learning elements permitting law students to work hands-on with start-up ventures under attorney or faculty supervision, as well as scholarly and other programming to connect the work of law students and faculty with communities devoted to the study of entrepreneurship, innovation, and economic development in Pittsburgh and beyond. The opportunity also exists for the Executive Director, working with the Faculty Director, to develop cross-disciplinary learning opportunities with other schools within the University as well as with other local Universities.

The potential exists for the incumbent to actively teach a portion of the developed classroom, clinical or quasi-clinical learning elements of the program. As part of the non-academic component of the Program, the Executive Director will (i) plan and coordinate one or more events or public programs annually relating to Law and Entrepreneurship (ii) in coordination with development staff, determine and develop opportunities for future funding, and prepare proposals for funding to support the long-term viability of the Program; (iii) serve as the advisor to the student entrepreneurship group; (iv) serve as the liason to other entrepreneurship programs at the University of Pittsburgh and other local universities; and (v) create opportunities for students to interact with local entrepreneurs.

For this position, the School of Law seeks an individual with a J.D. and at least 2-5 years experience practicing law in the areas of technology commercialization, corporate law, corporate finance, and/or advising start-ups. The individual will demonstrate initiative, creativity, entrepreneurial thinking, administrative skills, and a vision of the roles that law and entrepreneurship programming can play in preparing law students to practice and in supporting regional economic growth. The individual must both be able to work independently with little supervision and be able to deal effectively with a wide range of persons, including entrepreneurs, attorneys, students, and faculty. This position is currently funded for a one-year period beginning on the date of hire. Deadline for applications is November 1, 2010.

The "Faculty Director" to which the description refers is me.  I would be happy to answer questions about the Innovation Practice Institute, or IPI (the current website is here), and its future.  Email is usually best.

This Again: Entrepreneurship

When Pop City announced that it would host a forum on entrepreneurship, I was skeptical that the event would offer anything new.

Turns out that I was right.  Just about all the talk was about the importance of creating an entrepreneurial culture, one that promotes risk-taking and accepts the idea of failure.  Where have I heard that before?

If Pop City and its panelists are re-hashing themes that have been on Pittsburgh's plate for years (years!), then clearly something is not right.

It turns out that a community can't create a new culture for itself just by wishing that it were so. 

It also turns out that a community can't create a new culture for itself by promoting its good ideas (Pittsburgh has lots of those) and matching those ideas with investment capital (Pittsburgh has lots of that).

A key variable usually missing from public conversations about entrepreneurship -- and something that either did not come up at the recent session or was spun in an unfortunately backwards way, judging from the PC report -- is the structure of labor markets, and labor mobility.

I mean the following, related things:

One -- All of the talk about persuading Pittsburgh's college grads and grad students to stay in Pittsburgh -- talk that apparently was repeated by the panel -- is misguided.  See earlier posts here, at Null Space, and at the Burgh Diaspora -- three of the wonkiest blogs you will ever read --  trying, apparently apparently unsuccessfully, to banish the concept of "Border Guard Bob" from the local lexicon.  The game plan has to be *attract* people to Pittsburgh. Attract their energy, their enthusiasm, their passion, their ideas, and their money.  Let the college grads go away.  Some of them will come back.  The rest become part of the Pittsburgh Diaspora.

Two -- Pursue public policy reform that frees people to change jobs.  Developing human capital is the route to Pittsburgh's future. 

Three -- If you're considering starting a new company, think hard about labor and employment complications *before* you get started.  The mythos of entrepreneurship is two people with an idea and a sketch of a business plan.  When I was a practicing lawyer, occasionally these people would wind up in my office.  My first questions were always these:  Who do you work for?  Are you students?  Do you work in a lab or as a research assistant for someone?  Are you employed in some other way?  Do you have a partnership agreement or other formalized business arrangement between the two of you?  No one can build a company on a new idea until you sort out whether someone has the legal right to do that.  The biggest complication is usually a potential claim that a university or a company or a friend, family member, or earlier investor has some claim on the idea.   The sooner those complications can get sorted out, the better off everyone will be. 

Nobody Asked Me ...

Once in a while, I read the morning paper and get all ... wound ... up.  Today is one of those days:

Brian O'Neill doesn't feel bad for fired Pirates manager John Russell.  Of course not.  No one should feel bad for a Pirates manager.  Or a Pirates player.  Or a Pirates fan.  Or starving and sick children in Africa, who really do deserve our pity and more support.  Neither sadness nor pity is the relevant emotion.  The relevant emotion is anger.  Should anyone be angry at John Russell or any of the Pirates players?  In the short term, maybe; the Pirates were a terrible team this year, but they were much, much worse on the road than at home, and it's not unreasonable to believe that managerial and on-field performance changes here and there would have turned a 100+ loss season into, say, an 85+ loss season.  In the long term, no.  If John Russell walks away with $500k for the coming year of non-work and we're angry at him, then we're blaming the employee for management's stupidity.  Sure, the amount of money that professional athletes and coaches get paid (and some college athletes and coaches) is obscene relative to what we believe to be the value they contribute to society.  But the real obscenity is ownership.  There are good owners (Mario; let's go Pens!), great owners (the Rooneys), and miserable bottom-dwelling owners.  Channel your emotions accordingly.

Out in the Sto-Rox school district, the School Board is unhappy that the Superintendent has stepped in to block immediate enforcement of a Board-approved rule that prevents students from participating in extracurricular activities if they haven't met fairly minimal academic standards.  Here is the story about the Superintendent's intervention.  The link to today's story about the blowback is not working at the moment.  What is the fuss all about?  Here's a clue:  a link to the PG's neighborhood story today about small town football.  The hed says it all:  "Dying tradition on Friday nights? Small towns cling to high school football in face of possible mergers // 'It's like the last remaining piece of our pride and dignity.'"  Want pride and dignity?  Want to give dying towns a future?  Make schoolwork a priority.  Of course, that's easy for me to say, sitting in a well-funded school district that is preparing to spend $113 million to rebuild a high school facility that could be rebuilt for $70 million.  Sure, that extra $43 million will make Mt. Lebanon residents the envy of all Western Pennsylvanians, and of course that's what counts in Mt. Lebanon.  But what do you think the schools in Sto-Rox could do with an extra $43 million?  Or $5 million?  How about Jeannette?  Clairton?  While I'm at it:  Go Clairton Bears!  So far this season, the Bears have scored 204 points -- in 4 games.  And given up 12.  That defense is slipping a bit.  Look for the Bears to tighten things up tomorrow night.

Project Olympus, the CMU-based showcase for grad students looking for a VC hookup, had one of its periodic Show-and-Tell events last Tuesday, and the PG did a nice job of writing it up.  That writeup -- which focused entirely on the gee-whiz quality of some of the IT stuff on display -- reminds me of something that I left out of my recent post about the startup/business formation issue here in Western Pennsylvania.  There's a lot of value in figuring how to increase the number of new companies formed in Western PA.  But job growth is not a big part of that equation.  All those tech companies and other small businesses that everyone hopes will spin out of CMU, and Pitt, and Duquesne (RMU, Chatham, etc. etc. - have to be fair to everyone)?  Cool things, lots of promise, optimism -- all of that is important.  But these are not job creating enterprises.  The vast majority of new businesses fail.  Most of these new spinout businesses will fail.  Even the ones that succeed involve very small numbers of jobs in the short run, only very modest numbers of jobs in the middle run, and maybe -- a big maybe -- more jobs in the long run.  Aggregate all of those jobs over the long run and we might see a decent number (Innovation Works does a nice job with this kind of arithmatic, which is a good thing for IW, which needs to show jobs-related activity to justify its state funding), but that means a lot of scrambling now for a remote, risky payoff later.  The better way to look at new business activity is this:  Startup business development and new business activity means income for the region.  More money in circulation.  More money for service businesses, retailers, and local neighborhood economies.  I am told that in the last decades of Steel (capital S), in the 60s and 70s, steelworkers in Steel Valley towns could buy powerboats and store them in their driveways.  That didn't happen just because of jobs.  It happened because of income.

Finally, today's paper carries a Letter to the Editor that is so witless that only a full-on Chad Hermann evisceration will do.  I can only hint at the issue.  One Dan Franks, a security guard at a Downtown office building, takes issue with a recent piece by the PG's Patricia Lowry about the enclosure of Downtown's open spaces by aggressive building owners and their private quasi-police.  Dan Franks looks at the general public and sees only drug dealers and the homeless.  Rather than use common sense and human judgment to distinguish between the petty criminals and lunchtime loungers (not that the homeless are petty criminals, but that's a post for another day), he'd prefer to roust any citizen who is dumb enough to believe that "any member of the general public is permitted to sit in these plazas."  Because Dan Franks has a job to do.  Yes, it is all about him.  Who does this "general public" think they are, anyway?    

Patricia Lowry's point wasn't truly about the zoning code.  It wasn't about dictionary definitions (though Dan Franks, having relied on his dictionary's definition of "pedestrian," could also look up the meanings of "public" and "citizen" and "common sense" and "decency.").  Patricia Lowry's point was that cities are places for the public to gather, and that gathering is fundamental not just to city life but to community life.  To citizenship.  To family.  To progress.  To economic comfort and security.  The zoning code is there is protect all of that.  Protect the zoning code, protect the city.  Have a problem with drug dealing?  Put that security guard training to use.  Call the real police, if you need to.  Have problem with exercising your judgment?  There must be some safe, rules-and-regulations, no-thought-required workplaces out in the suburbs.  I understand that Mt. Lebanon is a nice, leafy place to live and work.  Plus, when that new high school gets built, it will be the envy of all Western Pennsylvanians.  I'd bet that the "general public" won't be allowed to sit there.

Great cities produce great wealth, if you're after money, but they also produce health and happiness, in the big picture of things.  Open spaces for the general public sitting in plazas are not just parts of the package -- they are keys to it.  Visit a truly great American city -- New York, or Boston, or Chicago, or dare I say it?  Go Pens!  but ... Philadelphia.  You'll find open spaces, plazas, and lunchtime loungers sitting on benches built by (gasp!) titans of industry who own famous skyscrapers.  And the sky ... does ... not ... fall.  In fact, Dan, security guards still seem to do OK.  Is Pittsburgh ever going to be a great city again?  Only if it gets the small town attitude off of its Downtown sidewalks.

Over to you, Chad.

Pittsburgh Grows?

Sunday's Post-Gazette featured the latest "Regional Insights" column by Harold Miller.  It's all about the need to start and grow new businesses in the Pittsburgh region:  by encouraging new research and development, supporting and investing in local funders, supporting and investing in service firms that provide technical assistance to local startups, and buying the products and services that local startups produce.  (A version of the column appears at Harold's blog.)

I don't disagree with any of Harold's basic points.  I would add two more:

First, Pittsburgh's existing combination of basic research and investment capital is exceptional for a region of this size, and it has been exceptional for many years.  As Harold argues, more is always better.

But what is truly missing here -- and what has been missing for many years -- is an infrastructure of professional services and community culture that can bring people, knowledge, and money together in productive ways.  You can put investment capital in the same room as new ideas -- literally, as Project Olympus will do again tomorrow afternoon -- and that will not be enough to generate a good and sustainable flow of new little companies.  That's because Project Olympus (like Innovation Works, or the Idea Foundry, etc. etc.) is only one node on the network, and it can't do much more than push new ideas out the doors into the waiting hands of a small number of investors.

A robust infrastructure to grow new companies -- a large and frequently refreshed pool of managers to take over from researchers/founders, and a broad, accessible, flexible, and reasonably priced legal community to shepherd those companies through successive challenges of capital formation, entity organization, employment, tax, and immigration hurdles, compliance issues, and intellectual property problems -- doesn't yet exist.  (A legal and regulatory climate in Pennsylvania and Pittsburgh that is more new empoyment-friendly than the current climate would help, too.)  Until that infrastructure evolves, and until Pittsburgh's business and educational leaders focus on that issue, then Pittsburgh will continue to struggle in the league table for new business formation.

Second, anyone in the business of new business should be focused on where the customers are and on what the customers want, and what they will want.  Go, as Willie Sutton never said, where the money is.  And while it is warm and fuzzy and not a bad thing at all to recommend that Pittsburgh regional consumers support new local companies by buying their products, the truth is that there just isn't enough cash in the region to make our own startup economy grow.

I kid at Pittsblog about the Cupcake Class, but the real point of that idea is regional income:  In aggregate terms, Pittsburgh does *not* have the levels of income to support lots of new companies selling primarily to local customers.  Take Dozen, a local company that started by selling cupcakes but succeeded by growing out of the cupcake business.  (That may well have been the plan all along.)  Dozen is a baker and a caterer.  Dozen still sells cupcakes, but Dozen also sells lunch at the Warhol.  It's a diversified enterprise.  Why diversify?  My guess is that the margins in cupcakes are good, but a Pittsburgh company can't sell enough cupcakes -- and just cupcakes -- to make the business go and grow.   Pittsburghers are happy with donuts.   I am not talking just about retail and end-consumers.  The only firms in town that I hear about really kicking down doors with new business, new customers, and new hires are selling to -- China.  That's not just Westinghouse.  Every time I turn around in my own neighborhood I'm listening to tales of business trips to China.  That's where the money is.

What should Pittsburgh do about that?  Stop obsessing about nonstop flights to Paris.  Figure out a way to increase nonstop flights from PIT to the West Coast -- Seattle, San Francisco, and Los Angeles.  From there, it's easy to hop on a flight to Beijing or Shanghai.

New Ipso Facto at the PG

The Post Gazette is reaching out to Pittsburgh's most over-crowded business sector:  the legal community.

The Business section of the print edition is now "Business/law," and there is an online companion called "Ipso Facto" that links to a lot of locally generated content about law, the legal profession, law firms and law offices, and even law schools.  The main Ipso Facto page is here.

Having seen a preview and now this version 1.0, I think that the PG's basic instinct here is right:  there is a good local audience for this stuff.  As someone with a small stake in the legal business, I was involved in some preliminary conversations about what the page would look like, and Ipso Facto links to some content that I generate -- both at Pitt Law, where I teach, and at one of my other blogs.  As an online veteran, I'm always interested in new audiences for what I write.  But I'd say the same thing even if I weren't among the links.  A growing number of local lawyers and law firms have blogs, and Ipso Facto pulls in some of that content.

Pulling it off this project, however, is going to be a challenge.  Ipso Facto is basically an aggregator (meaning:  the PG is generating ad revenue without investing in much new content of its own), and as with any aggregator the trick is to identify content worth aggregating, to clearly and fairly label content that originated elsewhere, and to segment the content appropriately to reach different sub-audiences.  There are many thousands of lawyers in the Pittsburgh region, but some are Downtown lawyers and many are small town or neighborhood lawyers.  Some work for giant industrial law firms or for corporate legal departments; many work for small practices or solo shops.  Some have highly specialized practices; many are generalists.  And so on and so on.  The PG needs enough content that reaches all of these -- and enough content that reaches each of them. 

We will see what version 2.0 brings.