Ruminations on 2016 Economic Development (updated 8apr16)

George Rebane

You can never go wrong in today's media making fun of a white, anglo-saxon businessman.

The economy and economic development is on everyone’s lips these days. The Left continues to conjure the vision of an ephemeral Obama recovery from the ongoing ‘Great Recession’.  The Right points to the fabricated and pretzellated statistics the administration uses to describe what isn’t happening in the realworld.  Meanwhile, our county’s population is declining, the exodus fostered by both local factors and the butt stupid statewide mandates issuing from a post-socialist Sacramento.  Let me start with a positive tidbit.

The well-known financial news and advisory service Seeking Alpha reports that Aaron Klein, Riskalyze CEO, is this year’s winner in WealthManagement.com’s financial advisory sector – ‘Riskalyze CEO Aaron Klein On How Advisors Can Build Their Businesses’.  Riskalyze technology and products are currently used to manage $139B of client assets.  The 5apr16 report features an interview with Mr Klein that describes the Auburn-based company’s current products and entry into the new robo-advisor markets.  In its five years the start-up has garnered a number of awards for innovation, technology, and service in the institutional financial advisory sector, and continues to introduce innovative software to maintain its remarkable growth curve.  I haven’t made too much fuss about Riskalyze in these pages, but every once in a while when we talk about the region’s economic development, it’s germane to highlight a success story that embodies what Nevada County is again trying to promote (see also ‘Nevada County's Latest Economic Development Push')

Speaking of the county’s economic development, I want to remind readers that tomorrow ERC holds an economic summit (more here) to introduce its revitalized Green Screen Institute that will be structured to capitalize on the new growth in virtual and augmented reality technologies and markets, the latter hopefully soon to follow (more on Sierra Foothills Commentary here). The summit is supposed to promote “regional” growth, but is really focused on Nevada County and specifically its western part.  We have long pointed out the indigenous headwinds that companies encounter when planning to relocate a business or launch a start-up in these parts.

When planning our 2002 move here, I sought to relocate the entire Bizrate Advanced Products Group (my company’s skunkworks) to these foothills from Marina del Rey in LA. At first everyone was excited about the possibility.  But upon closer examination our team members began to discover the risks to locating in these remote foothills.  Several also had children in school, and the county’s offerings there did not help.  The bottom line is that since then, the best we can say is that things have not gotten better.

More recently we faced similar questions when starting Riskalyze that now has 100+ employees (it’s hard to keep current), with an engineering group making up about half of these young people with families. Any objective analysis pointed elsewhere in the I-80 corridor.

According to my lights our county has a lot of work to do to attract the kinds of high tech businesses that will bring the right kind of new residents to our community. Today we have an obviously liberal artsy-fartsy culture dependent wholly on the cash imported by our retirees and tourists, along with a kumbayah culture that celebrates political correctness, pot, and duns profits.  There is a huge gap in the mindsets of our leftwing eco-purists who believe that capitalism is the root of all the world’s evil, and those who seek to invite capitalists to join us in these foothills.

[8apr16 update] Jo Ann and I were part of the 300+ attendees at ERC’s Economic Summit yesterday, which for another hundred or so ended with a well prepared dinner and another panel discussion at the Holiday Inn Express last night.  Today’s Union has a front page story on the affair (here).

I am not going to hipshoot what we heard and saw at the summit, and instead let things settle and sort out a bit before composing my take on it. Overall, we thought the event was well organized and came off very smoothly – Jon Gregory and his team are to be congratulated for good planning and execution.

Departing Union publisher Jim Hemig was master of ceremonies, to whom I had a chance to express my regrets about his leaving the newspaper.   Supervisors Ed Scofield, Dan Miller, and Hank Weston were in the audience.  We heard from two keynote speakers, Messrs Michael Carmichael of Livability.com and Scott Lenet of Touchdown Ventures.  Mr Carmichael was imported for the event, and Mr Lenet has been working for some time with ERC on economic development planning, and was material in selecting the augmented and virtual reality technologies as the focus for the newly launched Green Screen Institute.  (Full disclosure, Jo Ann and I are longtime friends of Scott Lenet, but are not investors in Touchdown Ventures.)

The mayors of three cities – Rosalynn Bliss of Grand Rapids MI, Georgia Tuttle of Lebanon NH, Paul Soglin of Madison WI - were invited to describe how their communities operated viz economic development and community participation. After the GV Veterans Center part ended, we had a chance to have extended private conversations individually with Mayors Bliss and Tuttle, both very impressive heads-up women.  Missed the opportunity to talk with Mayor Soglin who declared in his panel exposition that it was government that creates jobs in our economy.  He used an example of government funded infrastructure that attracted private industry to locate nearby.  It was obvious that this mayor was no fan of Governor Walker.

It’s difficult to find an economic success story of a community that is a close fit to what we have here in Nevada County, and the more so due to the glacial pace of Obama’s ‘recovery’. Madison and Grand Rapids are big cities, and even little Lebanon (pop 13,000) is a hard fit due to its location at the crossroads of two interstate highways and proximity to Boston.  But at least Grand Rapids and Lebanon aggressively invite and facilitate businesses locating in their downtowns.

Have to also mention the great talk given by our own Mary Owens, CPA and economist, who reviewed America’s post-WW2 economic history especially as it affected employment and job creation. Had a brief conversation with her in which we agreed to continue wherein I hope to convince her to include in that presentation some aspects of accelerating technology and its impact on the growth of systemic unemployment.

Had a chance to chat with Jon Gregory who does know the Riskalyze story and CEO Aaron Klein. The Auburn company’s absence was due to the fact that the advertised “regional” development really meant only the region of Nevada County.

During the day session Scott Lenet’s keynote talk included a long and detailed presentation on the rationale and plan for founding the Green Screen Institute that emphasized its fit with our community’s existing technology companies and established cultural activities. Later at the dinner Mr Lenet moderated a panel of “digital media thought leaders” who are also on the Global Advisory Board of the (former?) Sierra Digital Media Campus.  I was most impressed by the remarks of Telestream’s president Dan Castles re not chasing the most recent flash-in-the-pan technology.

At dinner we sat next to the first tenant in GSI’s new digs on New Mohawk Road who is president of a start-up developing a novel security app for smartphones. OK, so his company doesn’t do AVR stuff, but at this stage of our economic development, anyone with a check is on strategy.  Also at our table was an angel investor from Chico who ‘consults’ to technology start-ups and early stage companies.  Great conversations with both on current markets and investment strategies for emerging technologies.

Comments

[Russ Steele]

A research study by Jonathan Weiss, “Public Schools and Economic Development", 2004, demonstrates that education plays a vital role in relocation decisions for companies and for individuals. The study ranked quality education as number two, right behind the cost of living, but ahead of nature-oriented outdoor recreation options in the decision-making process. Nevada County has the recreation options, but the performance of local schools is declining, with evaluation scores sinking to the bottom of the list. Western Nevada County's cost of living is much higher than other communities with "nature-oriented outdoor recreation options." Headwinds that the ERC has to overcome.

[Russ Steele]

The ERC 2016 Economic Development Summit will be held tomorrow, April 7 at 1:30. For the first time, the event will be streaming live at this link: http://ncerc.org/special-events/

According to an email, the Summit will feature current economic data, information on important trends about what makes a community great, and insight on the ERC's efforts to make Nevada County a Global Center of Excellence!

[George Rebane]

As we continue examining our social issues and local economic development, numbers remain important. Even the Left's standard bearer Hillary is taking her socialist opponent to task with that understanding. This is her latest assessment of Comrade Bernie, "Some of his ideas won't work because I'm not sure his numbers add up."

[George Boardman]

I don't know why Pelline is taking a shot at Riskalyze, particularly since the CEO is Aaron Klein. When Pelline was editing The Union, he named Klein as one of the bright young up-and-comers in the community.

Of course, he said the same thing about Reinette Senum.

[George Rebane]

GeorgeB 656pm - I haven't seen any of Pelline's 'shots' at Riskalyze, and don't know where they're being launched. But when it comes to talking anything about business and commerce I have found him to be shooting blanks, as do almost all of his ideological kinfolk. (As a current national exemplar take a look at Team Obama's response to the Halliburton brouhaha. To them capitalism is just a four-letter word.)

[Brad C.]

Dr. R, a few questions:

Are you referring to the Halliburton-Baker/Hughes proposed merger?

Who are the "right kind" of new residents we should try to woo to our neck of the woods?

[George Rebane]

BradC 745am - Right on time Mr Croul, thank you. Yes, that is the merger that would prevent the dissolution of B/H (and others to come), save jobs, and keep our energy services sector competing with bigger sector leaders like Schlumberger.

The right kind of residents I would woo are those with the proper education and skill sets to work in the information enterprises that we are trying to also woo and start in Nevada County. They would be a more risk tolerant kind of professionals with families willing to weather the already recounted downsides of our foothills community.

[George Boardman]

That's what Haliburton gets from hiring Dick Cheney.

[George Rebane]

GeorgeB 959am - Please clarify.

[George Boardman]

The reference to Cheney was meant to be a joke. I'm guessing Obama's trust busters aren't big fans of the former vice president,who headed Haliburton before he became W's running mate, but that wouldn't influence their decision to oppose the merger.

Would it?

[George Rebane]

GeorgeB 1058am - Good question Mr Boardman. Halliburton and its subsidiaries were also critical for providing the services that maximized the comfort of our troops in some very nasty places, and they did that at a fraction of the cost of available alternatives. But they are also one of America's leading oil/gas production enablers, and that makes them a pariah company to today's politically correct progressives everywhere.

It all makes no sense except when considered in the context of the societal objectives summarized in Agenda21. I invite you to give a simpler plausible rationale to explain away the years of observables that testify. Then we can let Occam decide.

[Brad C.]

Dr. R @ 856am - So, B/H is in danger of going belly up?

5. Baker Hughes was formed in 1987 with the merger of Baker International and
Hughes Tool Company, both founded over 100 years ago. Like Halliburton, Baker Hughes has
operations in more than 80 countries. It has approximately 43,000 employees and earned
revenues of $15.7 billion in 2015. Baker Hughes considers itself to be an industry leader in
Case 1:16-cv-00233-UNA Document 1 Filed 04/06/16 Page 2 of 38 PageID #: 2
3
research and innovation: it invested $483 million in research and development in 2015, it
maintains hundreds of active research projects, and it has thousands of patents relating to oilfield
technologies. In 2014 alone, Baker Hughes introduced 160 new products and generated over $1
billion from new products in their first 12 months of commercialization. Like Halliburton, Baker
Hughes’ oilfield services fall into two categories – drilling and evaluation, and completion and
production – and it has an Integrated Operations group that provides comprehensive solutions to
E&P companies.

https://www.justice.gov/atr/case-document/323310

...and it is all Obama's fault the Justice Dept. filed this complaint? No anti-trust (anti-monopoly) suits were ever brought against any company during a Republican administration?

There are quite a few in this list. Surely some were initiated during Republican administrations, maybe not directed at oil companies during the Bush(s) administrations (if they, or Cheney, had any say in the matter).

[Brad C.]

List,

https://www.justice.gov/atr/antitrust-case-filings-alpha

[Gregory]

The more one knows about Halliburton and Cheney, the flatter the joke.

Halliburton hire the Cheneys of the world for their executive suites for simple reasons, access to government and knowledge of the apropriations process. Nothing more.

Many seem to think you get the right kind of people to be in the area and then the good jobs will appear. That's not what brought the Littons, who convinced Donald Hare he needed to grow his new video company here. It wasn't because the place was teeming with electrical engineers skilled in what was high tech... video... just about all that talent was imported from elsewhere because it was a good place to live. Hare also worked in stealth mode so no one would know why he wanted the land he was shopping for... what was the cover story? Chicken farm? He wanted to pay agricultural prices for what he'd turn into manufacturing and engineering facilities, and I don't blame him.

The schools may be the only problem that can be fixed, but probably won't be. The Grass Valley Charter is a disaster, the Yuba River Charter is a disaster (in fact, all of the County charters are disasters), and while the Ghidotti Charter high school is the best of the best, it has largely hollowed out the comprehensive high schools that have slumped as an unintended side effect and, for example, students who move into the area are at a disadvantage because all the slots are filled. More students may have been harmed than helped with the Ghidotti experiment. Common Core is the disaster du jour; maybe when it collapses there will be an opportunity for some large scale rearrangement of our schools, getting rid of incompetent administrations and building upon the ones who have had good results.

[Russ Steele]

[email protected]:16

When Dr. Hare started his video business, he and Charle Litton Sr were no longer speaking to each other. When Dr. Hare came to Litton Hill at Litton's invitation, he was building sound systems for theaters. It was after he left Litton Hill in a huff and moved into a facility for storing frozen chickens that he started the video business. Bob Robertson, The Inscrutable Dr. Hare, a History of Grass Valley Group.

I started a series of article on Litton and his influence on business development for the Nevada County Business News. The series was interrupted when the magazine closed suddenly.

[George Boardman]

The way people around here talk, you would think Grass Valley Group was THE pivotal company in the development of video technology. GVG made a video switcher, certainly the best switcher in the broadcast biz, but just a switcher. Among other things, a switcher makes possible a seamless transition from a television talking head to a commercial for used car dealer Honest Emil, The Working Man's Friend.

Then there's the company I worked for, Ampex Corporation of Redwood City. Ampex revolutionized the audio recording industry with its development of the modern audio tape recorder, revolutionized broadcast television with its invention of the first practical video recorder, and revolutionized sports broadcasts with its invention of slow motion recording technology.

Some day when I'm feeling more expansive, I'll tell the story of how Ampex brought Richard Nixon's kitchen debate to the world and made him an international cold warrior.

[Todd Juvinall]

Hey, I delivered groceries out to the Hare's in the 60'2. My Dad built their first building and later I worked on the construction of their landscape building in 1964. It was my recollection the "switcher" was only one thing they did and that "slo-mo" was theirs as well. Many other businesses were spawned by GVG as we see some are still around today.

Mrs. Hare drove a Mercedes Sports car.

So there. LOL!

[George Boardman]

Grass Valley Group made several products, but its most successful--and the one it was known for--was the video switcher. If they incorporated "slo-mo" into their products, they had a license from Ampex.

[Todd Juvinall]

Are you sure? I recall a Monday Night Football game about 35 years ago where they took us all through the sqitcher and slo-mo.

[George Rebane]

GeorgeB 232pm - Agreed Mr Boardman.

[Jon]

Indeed, the slo-mo and so many other recording innovations indeed came out of that remarkable company called Ampex. Great history of the company on wiki.

[Russ Steele]

Ampex influenced the local economy in some other ways. When companies wanted to develop Ampex competitive products they looked for places to create a skunkworks, a long way from the Silicon Valley rumor mill. In several cases, that location was Nevada County. I forgot the name of the company, but they wanted to develop a real-time video recorder and they open a skunkworks were the Magnolia School is now, just outside of the Lake of the Pines development. This skunkworks evolved over time into Eigen Engineering and other spinoffs that I no longer remember.

[Gregory]

Come on, the greatest achievement of the Grass Valley Group was the model 1600 switcher, used by the Empire to destroy the planet Alderaan.

Other minor products designed here were the Atari 2600 game machine and all of the fast US Robotics modems.

[Russ Steele]

The Oculus Rift virtual reality headset reports your every move to Facebook and to advertisers.

When the headset’s software is installed on a computer, it adds a process that allows the PC to watch what the headset is doing and send that back to Oculus. That allows the headset to know when it is being used and turn itself on — but it also allows the company to collect information on people’s head movements and activity and send it back to advertisers.

More detail here: https://sierrafoothillcommentary.com/2016/04/08/green-screen-review-3-ar-devices-spy-on-users/

[Russ Steele]

[email protected]:16PM

Atari founder Nolan Bushnell fund the development of a skunkworks on Litton Hill to develop the Atari 2600. Somewhere I have a picture of the prototype. I cannot remember the name of the engineering company, but as I recall they had a PDP-11 and shared it with other users in the building. More when I find my book notes.

[Bill Tozer]

K

https://www.facebook.com/yaliberty/photos/a.420478680196.191456.13187955196/10153594011030197/?type=3&theater

[Gregory]

Russ, I expect that was Ron Milner's shop even then. He also borrowed my Coding and Information theory book when he was working the Lionel model train project for Neil Young... when USR was still in the Litton building. Lots of good came from the failed hospital design, and it was nice to get to know the Litton's.

[jon smith]

Hmmm. This is all pretty damn interesting. Has anyone written a book about our regional development in the modern (post gold rush) era?

[Russ]

Jon [email protected]:56

I have been working on one for years, covering the period from 1950 to 2000. There was a lot of interesting facts that many people do not know, such as Litton's role in the success of the early US space program. He created the transmission tubes that could survive the launch g-forces and still function reliability in space. He has over 60 tube patents. The Inscrutable Dr. Hare, a History of Grass Valley Group, by Bob Robertson, is a very interesting read. Copy at the library. A used one for sale on Amazon for $4,539.85.

[George Rebane]

Russ 741pm - Why is the book so expensive? Does the library still lend out the $4.5K copy?

[Russ]

[email protected]:19PM

I have no idea why so expensive. I was shocked when looking st the price. logged out and logged in a again, to see if it changed. It is a private seller and maybe just an error or a joke. I am going to find my copy and put in the safe.