Sic Transit Pittsburgh

While I've been focused on my day job this week, Chris Briem tackled the Post-Gazette's comic book solution to the Port Authority's budget problems. (Part One, and Part Two.)

Chris has tools at his disposal that I don't, so while I generally agree with his observations, I have only one point to add: A hub-and-spoke transit system is potentially efficient, especially if transit users behave perfectly rationally -- and potentially disastrous -- despite perfectly rational behavior. Put the hubs in the wrong places, and you have catastrophe. Even if you put the hubs in the right places, the smallest errors or disruptions can have system-wide effects. Ask anyone who had to fly through Chicago or Atlanta during the peak of the hub-and-spoke era of airline deregulation.

And, of course, one or two Pittsburghers fail to act rationally. From time to time.

Pittsburgh Goes Virtual

There's a lot of talk around Pittsburgh about growing high tech sectors: robotics, chip design, biomedical engineering, medical instrumentation, networking, intelligent systems, and materials developers. I only rarely hear as much public discussion about Pittsburgh's emerging contribution to one of the largest worldwide tech markets: simulation and videogame development. Today's P-G Bits & Bytes highlights the companies selected for the upcoming Angel Venture Fair; almost lost in the buzz -- but not quite, thankfully -- are bits of good news for some of Pittsburgh's local virtual technology and gaming companies.

SimOps Studios has a new influx of investment capital.

ImpactGames is about to release "Peacemaker."

But those two companies are only the tips of the virtual iceberg. Some of the hottest local buzz appears to be reserved for Schell Games and Etcetera Edutainment. Pittsburgh's entertainment tech educators are in high gear supporting the effort. Carnegie Mellon's Entertainment Technology Center is an industry leader with a global footprint. The Art Insitute of Pittsburgh has several entertainment tech and related programs. I've read that Duquesne and Pitt, too, are on board, though I can't quickly find links -- aside from some specialized research programs at Pitt's School of Information Science, for example, and at the Medical School.

The business community and local media are, as Bits & Bytes shows, gradually gathering steam to focus on the virtual. The Pittsburgh Business Times has written about gaming at least twice in the last year -- here, and more recently here. The Tech Council has this older summary online that talks about differences between 21st century entertainment technology businesses and older Hollywood-style entertainment businesses. Pop City wrote this pop-ish, fun piece last Fall.

Why does this matter? Videogames alone are a $30 billion industry worldwide. That's more money than Hollywood is generating these days (perhaps explaining why the Pittsburgh Film Office has been active in trying to recruit gaming companies to Pittsburgh), and unlike the domestic motion picture industry, videogaming is growing by leaps and bounds.. Entertainment technology provides as big a departure from Pittsburgh's industrial history as any emerging technology can be, and Pittsburgh has stiff ET competition -- or better, strong collaborators -- worldwide. The industry here will flourish, or not, only to the extent that it follows CMU's globalizing path. But in an industry that may generate $60 billion in revenues within a few years, even a small piece of the pie cupcake can be significant.

New Leadership

Pittsburgh's two signature cultural institutions -- the Pittsburgh Steelers and the Pittsburgh Symphony Orchestra -- each announced new leadership within the last week. As everyone in Steelers Nation knows by now, Mike Tomlin, non-Pittsburgher, will take over the football team. And as everybody in the symphonic equivalent of Steelers Nation now knows (what would that be called, anyway?), Manfred Honeck, also (as it happens) a non-Pittsburgher, will become the new music director of the PSO.

The selections have some things in common, in addition to the fact that both men are non-natives. Both are reported to have uncommon charisma. Both have reputations that have earned them raves around their respective professions. And despite the high public regard for both, they aren't quite frontrunners when it comes to job openings. Pittsburgh has picked up a couple of up-and-comers.

Some interesting differences emerge, however, from the two searches.

The Steelers played this close to the vest, as professional sports teams typically do: So far as the public was aware, the interview committee consisted of Art Rooney, Dan Rooney, and Kevin Colbert. Were the players consulted? As is the custom, apparently not -- and a few players quietly let it be known that they would have preferred to play for someone else.

With the PSO, however, Honeck came in for a workout, er, tryout -- again, industry-standard practice -- and his performance blew the players away.

Dick Simmons, chairman of the board of trustees and a major PSO benefactor, said, "In the 16 years I have been associated with this orchestra, I have never heard the overwhelming endorsement of a conductor by the musicians, and that includes some pretty high-level conductors."

And (industry practice) again, the players were formally represented on the PSO search committee.

Industry traditions and practices are always different. But I have to suspect that the players' endorsement of the new PSO music director -- in fact, their participation in the selection process -- means easier acceptance and faster success for Honeck. Tomlin has won over the Rooneys; with the fans, it's going to be just win, baby.

Sports in Perspective

Think Mario's Penguins are having a hard time finding a new home in Pittsburgh? Think the local baseball/basketball/soccer/football/wrestling/crew team is put to unjustifiable burdens by unknowing, unsympathetic skeptics? Think again. Every soul involved in youth sports -- child, parent, volunteer, administrator -- should read this moving account of what a coach and a soccer team in Clarkston, Georgia are trying to overcome.

[Cross-posted to Blog-Lebo.]

Allegheny County Comprehensive Plan

For you planning geeks out there, here are some links of interest:

Allegheny Places: The Allegheny County Comprehensive Plan. It's a work in progress.

The most recent issue of Pittsburgh Economic Quarterly, a publication of UCSUR -- Pitt's University Center for Social and Urban Research. This edition of PEQ features an excerpt from "Allegheny County Economic Trends," a research report prepared as part of the Comprehensive Plan.

The PEQ site is here.

[Update posted 1/20: I corrected this post to read "Allegheny County," not "Allegheny Conference" as I wrote originally. Where is Dr. Freud when you need him?]

Angels in the Infrastructure

Not long ago, Innovation Works announced the selection of a new manager to run a regional angel investment fund, to be called Pittsburgh Early Growth Partners. $2 million in seed money has been committed by an impressive consortium of investors. Harold Miller's post on the news appears here. The Fund will do what angel funds do: find and fund promising new companies.

This is fine news. I'm hoping for more, and I'm hoping for better. The "more" is more money, which everyone would like to see. The "better" is new models of investing.

Is there a way to leverage local investments to grow the region, as well as individual companies? Here's an example: Angels in Boulder, Colorado have launched TechStars, a fund the provides early stage seed money to new companies -- and that is specifically designed to attract new entrepreneurial talent from outside the region. Come to Boulder, get some seed money (i.e., financial capital), get some "bootcamp" style training and advice (there's a long list of local entrepreneurial mentors involved) (i.e., human capital), and hopefully stick around for the long term. More details here.

Is a similar model workable for Pittsburgh? This is a different kind of return-on-investment; it's community building, not necessarily cash. TechStars may be giving away a lot of what they have to offer: TS kicks in a lot of time, a little money, and a shot at more money down the road via access to next-level funders. TS takes equity, but it doesn't necessary stake a claim to conversion rights or preemption rights or nondilutive status or liquidation preferences or even board seats -- things that are often standard in VC deals, things that are often needed to calculate whether a deal is worthwhile. Those are also things that put off a lot of entrepreneurs. If you give it away, will they come? And will they stick around? And will the tech community be better off overall in the long run, even if the investors themselves don't reap direct benefits? That's the bet.

TechStars isn't an entirely new idea, but it could be new to Pittsburgh. The Pittsburgh business community might have to think outside the box in order to embrace it, but thinking outside the box often pays off. It's worth some thought.

Cupcake News

Now that CoCo's in Shadyside and Dozen in Squirrel Hill are both open, how do their cupcakes compare? I made a cupcake run just before Christmas, but neither store had ramped up for retail, so I missed out. One correspondent, however, recently visited both stores and sent me this review:

"Coco's chocolate cupcake won hands down. Both cupcakes had exceptionally good frosting, but the cake of the Dozen's cupcake was quite dry and simply unacceptable for a $2.50 cupcake. By contrast, the cake portion of the Coco's cupcake was moist and flavorful. Coco's also has a larger number of tables and chairs in a more spacious and inviting eat-in area."

Is CoCo's the best in (cup)cake? Are there other local upstarts vying for the crown? Traditional or long-time cupcake suppliers whose taste can't be beat?

Fear not; commenting will not brand you as a member of the Cupcake Class.

Loss, Elegantly Expressed

A city is built on a web of meaning built one relationship at a time. Pittsburgh and its web suffered a loss recently, as I learned reading this post over at Tea Leaves.

More Sporting Notes

A bit of perspective, building on Chris Briem's post the other day:

If David Beckham cashes in on all of the endorsement deals that are swirling about his transfer to Major League Soccer, then a back-of-the-napkin present value calculation ($250m/5 years/5 or 6% discounting) shows that then he alone is worth about as much as a sporting enterprise as the entire Pittsburgh Penguins franchise was worth to Jim Balsillie.

Study in Contrasts

The Pittsburgh Pirates have a new face: Bob Nutting, a West Virginian who is stepping out of the shadows of the team's investment group to assume the role of "principal owner."

The contrasts among the public faces of the three main Pittsburgh professional sports teams remain intriguing:

The Steelers are represented by the Rooneys, and particularly by Dan Rooney. They are old Pittsburgh through and through: quiet, steady, forthright, loyal, true to tradition. Most of the time -- having a casino as a possible neighbor rocks the boat a bit.

The Penguins are represented by Mario Lemieux. He is nouveau Pittsburgh: sporting superhero, charitable celebrity, glamorous, bearing an enthralling sense of entitlement when it comes to what public officials should offer the team.

The Pirates were represented by Kevin McClatchy. McClatchy was progressive Pittsburgh: young, business-minded, not from Western PA and not beholden to Pittsburgh's parochial business or political cultures. But McClatchy crashed and burned, and now we have Bob Nutting, who is the new and improved progressive Pittsburgh: young, business-minded, not from Western PA -- but from close by -- and not beholden to Pittsburgh's parochial business or political cultures.

Nutting seems to be kind of person who doesn't make big changes in a hurry, he seems to be the kind of person who isn't going to sacrifice long term fundamentals for short term payoffs, and he seems to be the kind of person who knows his own mind and follows it, without catering to the whims and demands of the sporting public. Does that make him McClatchy redux? Or does that make him a new kind of Rooney?

It's all speculation today, but my money is on the latter.

If It's All the Same to You

I'm not a fan of the Post-Gazette's current style manual, which requires that "Mr." and "Mrs." be used for second references to most individuals. It's so . . . 1960s. But I assume that the point is to be respectful, and I can live with it, even if I wish that "Ms." would show up more often.

Today, however, the manual gets the paper in trouble. The last line of the P-G story anticipating Governor Rendell's inauguration festivities reads:

Mrs. Rendell said she loved the "elegant, contemporary work" of designer Hian, adding, "As a fellow Pennsylvanian, it's a great source of pride to showcase one of her creations."

The quotation refers to her ball gown. The problem, though, is that Marjorie Rendell, wife of the Governor, isn't a "Mrs." She sits on the Third Circuit Court of Appeals in Philadelphia. Being respectful means that she is "Judge Rendell" not just in her judicial context, but always.

Bruce Katz on Cities and Pittsburgh

Brookings Institute urbanism scholar Bruce Katz is interviewed by Pop City's Tracy Certo:

One highly positive sign is the shift in thinking about cities among senior policy makers and youth. “Most importantly there’s a shift among young people because the attitudes of cities have changed among youth,” says Katz. And while cities have become cool again, some, such as Portland, are cooler than others. “In terms of smart growth, where there’s more reinvestment to the city and less sprawl, Portland is the poster child of smart growth in the U.S,” says Katz.

The key to its success? Continued growth in the periphery and a whole set of policies for reinvesting in cities. “Very few places have gone that route. Maryland and Michigan and Pennsylvania have begun to focus on transportation policies that ‘fix it first’,” he says, which include measures such as stopping expansion at the periphery of cities that fuels excess sprawl.

And cities have done a good job of getting their own act together, notably in the reduction in crime which has had a dramatic effect, and the delivery of basic services.

Seize the Dayton

As an example of his advocacy, in a report Katz authored called “Seizing City Assets: Ten Steps to Urban Land Reform,” he argues for a citywide, collective action approach to reclaiming vacant lots. Katz cites two model examples in Pittsburgh: the Pittsburgh Technology Center built on the former site of the J& L Steel mill; and Cool Space Locator, an innovative group “committed to the mission of no more empty buildings in the city core.”

Both represent examples that breathe new life into cities instead of fueling growth in the exurbs. “Sprawl,” Katz says solemnly, “is unconscionable for environmental and other reasons.” Pointing to the “classic lag between change on the ground and policy change”, he argues for greater acceleration of reform particularly at the federal and state levels to combat it.

Happy Feet?

Chris Briem writes that he doesn't know of any studies of the economic impact of the Penguins.

Here's a start: Bruce K. Johnson (Centre College), Peter A. Groothuis (Westminster College), John C. Whitehead (East Carolina University), The Value of Public Goods Generated by a Major League Sports Team: The CVM Approach, Journal of Sports Economics, Vol. 2, No. 1, 6-21 (2001).

The abstract:

This article reports an application of the contingent valuation method to measure the value of public goods generated by a professional sports team, the Pittsburgh Penguins of the National Hockey League. The data and analysis indicate that a major league sports team can produce widely consumed public goods such as civic pride and community spirit and that the value of those public goods may be substantial. However, in the case of the Penguins, the value of the public goods is far less than the cost of building a new arena. Although the analysis of public goods generated by other teams in other cities might lead to different results, the results of this article call into question the widespread practice of government funding of sports stadiums and arenas because it appears that the costs borne by taxpayers exceed the benefits received.

That piece, among others, is cited and discussed in Jordan Rappaport and Chad Wilkerson, What Are the Benefits of Hosting a Major League Sports Franchise?, Federal Reserve Bank of Kansas City Economic Review 2001:1, available at http://kansascityfed.org/publicat/econrev/PDF/1Q01Rapp.pdf

Michael Leeds (Temple University economist) was interviewed yesterday on WDUQ to the effect that the economic impact of the Penguins (like most major sports franchises) is ZERO, but this (I assume) was based on general premises rather than on a study of the Pens per se. He did offer a delightful quote to the effect that professional sports teams represent a "gift" by cities to themselves, valuable (perhaps) for psychic reasons but not justifiable in economic terms.

Unfortunately, I can't find a clip of the interview online.

Angel Fair Deadline

A angel emailed me to say that the application deadline for the Pittsburgh Angel Venture Fair has been extended to tomorrow -- January 10 -- at 5 p.m. The Angel Venture Fair website, with a link to the application template, is here.

Other People's Money

Compare this interview with TA Associates VC Jacqueline Morby ("There are a tremendous number of venture capital firms from outside of Pittsburgh coming in, which is what we need: other people's money -- OPM -- to come and finance some companies and get them going. ") with this column by Harold Miller ("[Local angel group] Blue Tree needs more angel investors to join its ranks. . . . Pittsburgh also needs a professionally managed angel fund so that high net worth individuals who don't have the time to participate in an angel network can still make early stage investments.")

VCs and angel investors are distinct but related things; each of these pieces clearly recognizes the importance of both. Still, the different emphasis (more outside money is needed to grow the region, in the first piece; more local money, in the second) is interesting to note. Can they both be right?

Pittsburgh as a Top Tech Town

The current issue of Wired magazine uses "highly scientific methodology as well as algorithms snuck out of NASA and Google" to identify Pittsburgh as one of the "top 10 places [in the U.S.] to get your geek on":

Come for the country's top-ranked computer science school; stay for the robotics startups that Carnegie Mellon alums are founding. If androids aren't your style, try for a gig at Google's new engineering office.

Couldn't Say It Any Better

Here's a comment on an earlier post that's worth pulling out and posting:

I was born and raised in the Pittsburgh area, graduated from Pitt in '89 and tried back then (unsuccefully) to find employment that would have kept me in the area. I moved to Washington, DC, and have enjoyed all the career and lifestyle benefits of a growing and prosperous MSA. My partner considered a job opportunity in Pittsburgh in 2001, and I found myself seriously considering a move back to the home turf. The more I thought about the idea, the more I liked it. I've thought about relocation from time to time since 2001. Then this casino talk erupted. No way. No way would I attempt to create a future in a city that is hitching itself to casinos for any fraction of its revitalization dreams. It all smacks of desperation, and a low-rent stripe of it at that. To me, a former Pittsburgher still incredibly fond of the place, I feel the city has failed at selecting from two future portraits of itself: 1). an affordable city full of warm people and a variety of attractions (from sports to high culture), and growing business buzz; 2). sports-centric, nostalgia-driven, and seemingly precoccupied with a revenue savior (gambling) that graces too many other destinations all over the map. I can't tell you how sad, desperate and pathetic this all appears to a variety of former Pittsburghers with whom I stay in close touch. We all love the place, and a few have even moved back. But none of us enjoys the prospect of Branson-on-the-Mon. It's death by imitation, not reinvention. It broadcasts conventional thinking. Pittsburgh has given up on being something unique, on daring to be a city of the future built on all that's best about its past. In an anxious, expensive, and rat-race-paced America, Pittsburgh is missing out on its incredibly opportunity to offer America the invitation for which it is so desperate: come home again.

Except that I'm not so sure that everyone has given up on the "city of the future built on all that's best about its past" thing. And how about the following for a slogan (not that slogans do much except capture a certain Zeitgeist):

Come home to Pittsburgh.

Institute of Politics

From Clarke Thomas's op-ed this morning regarding bills -- big bills -- that are about to come due for Pennsylvania:

"The Institute of Politics at the University of Pittsburgh is shepherding dialogue sessions to determine future action."

He's not talking about all of the problems he lists; this sentence refers specifically to water/sewer problems in Western PA. Still, it highlights an organization -- the Institute of Politics -- that deserves a little attention.

The Institute of Politics is an innocuous sounding organization that lives in and on the campus of the University of Pittsburgh. According to its website,

The Institute of Politics has been and will continue to serve as a regional catalyst, bringing public and private sector leaders together in private sessions to focus on issues of significance to western Pennsylvania. This strategy requires the development of seminars and other discussions which are regional, intergovernmental, interdisciplinary, non-partisan, and, off the record.

and

Institute programs are by named invitation only.

Because everything is off the record, the Institute does not publish detailed reports about what happens at its programs. It does publish summary reports, which are available online. However:

• The programs are designed to address and to produce agendas for action regarding public policy, and


• They are designed for participation by leading public officials in the region.

Strawmen Alert

Strawmen suffer in the words of today's P-G perspective piece on Negative Pittsburgh:

"Most cities would jump at the opportunity to have a new civic center built for them at little or no cost to the taxpayer." Most cities would also jump at the opportunity to host Santa's workshop. Pittsburgh wasn't offered a civic center, and what was offered wasn't going to be "at little or no cost to the taxpayer."

"Most cities would love to boast of having a professional hockey team with the best young talent in the league." Most cities would also love to boast of full employment, perpetual sunshine, and zero crime. The question is what it costs, and what the city can afford, not just what the city gets.

"Most cities would also want to build or extend a light rail system where the federal government is paying 80 percent of the cost and construction would have minimal traffic impacts." No, actually, most cities would (or should) not. *Taxpayers* and *people who ride public transportation* would want to expand public transportation where public transportation is needed.

"Most cities would see how a new arena or light rail extension would stimulate new business and development." Most cities would (or should) put an arena and rail transportation in places where development is most needed and wanted. Want to use light rail extension to stimulate development in an underserved community? Put the T on Fifth and Forbes Avenues between Downtown and Oakland.

"Most cities would appreciate the number of quality jobs that such projects would create during and after their construction." Most cities trying to promote quality jobs don't count "ushers" in their lists.

"Most cities would see a new arena as a lure for new entertainment or the extension of a rail system as just a stepping stone to other areas, like, say, the airport corridor or the North Hills." Most cities interested in extending light rail to an airport that lies south of the city would not spend tens of millions of dollars on a northward extension.

Coming Soon: Connected Pittsburgh

Preliminary efforts are afoot; a few of us who blog may actually try to put a little "future of Pittsburgh" money where our mouths are. Have a little taste of what we have in mind at this year-old piece from the Pittsburgh Quarterly: What is Pittsburgh? The question is: Can a concept of Pittsburgh's future be operationalized? Stay tuned.