We hear it from politicians, the media, and just about everyone else, “We need more good jobs,” and yet, nobody’s telling us how to create these good jobs. After successfully starting and growing a multi-billion dollar company in Silicon Valley, Martin Babinec returned to his home in upstate New York where he then realized, that there were a number of forces at play in Silicon Valley–forces he hadn’t appreciated at that time that helped him succeed as an entrepreneur.
Since then, he’s been on a journey to understand the importance of community dynamics in the creation of new businesses. In his new book, More Good Jobs, there’s a playbook for turning your community into a magnet city, helping local entrepreneurs to start and grow companies, and in doing so, creating more good jobs for everyone in our communities.
Drew Applebaum: Hey listeners, my name is Drew Applebaum and I’m excited to be here today with Martin Babinec, author of More Good Jobs. Martin, I’m excited you’re here, welcome to the Author Hour podcast.
Martin Babinec: Thanks for having me, Drew. I’m excited to be here.
Drew Applebaum: First, can you tell us a little bit about your professional background?
Martin Babinec: Sure, I’m a guy who was very fortunate to have started a company in the late 80s in Silicon Valley. And that company has grown to be a large public company today. I remain connected as a board member, but it was the journey of building a company in the most entrepreneur supporting place on the planet that made me appreciate the value of community when I moved from Silicon Valley to Little Falls, New York, my home town, 20 years ago and began an effort to help other people start and grow companies.
You might say for the last 20 years, I’ve been involved in a variety of different activities around how to help other people start and grow companies in the newer industries. Those activities include having started a couple of nonprofits–among them, Upstate Venture Connect, a 501 C3 that has as a charter to help grow the innovation economy across the upstate New York region. And a private foundation that gets involved and makes these activities and some other things too.
It’s just a lot of activity and time and resources plowed in this goal of how do we create more good jobs?
Drew Applebaum: Now, you’ve had this goal for you said, almost the last 20 years, and so what was the inspiration to put this book out now?
Martin Babinec: Well, I guess what started this book was realizing that some of the experiments that we’ve been running for the last 20 years, or the last 10 years really, in my effort in building community have finally started to take root. So, we could see the growth of the number of people participating in different initiatives and could see that there are some lessons that we’ve learned along the way about how to bring people in the community together.
I wanted to share with others because the need for communities to take advantage of the talent in their communities to grow jobs is a need that exists in a lot of places beyond upstate New York. We’ve made some progress, we have a long way to go, but as we look around the country and actually the world, there are many places that struggle with this challenge of watching the next generation talent, some of their most capable people leave the place of their birth or where they are really interested in living. And not able to sustain themselves with the opportunities in the newer industries because of the talent flocking to magnet cities. Or cities that the newer industry companies seem to congregate.
Many communities who are in, not only more rural areas but distant from hotbeds of, we’ll call it, emerging world technology companies, talent flocks from where there are few opportunities to places where there is an abundance of opportunity.
Upstate New York
Drew Applebaum: Now, you talk about upstate New York a lot in the book, and can you give us a background or some more background information on the traditional job ecosystem that was in upstate New York, or still is in some cases?
Martin Babinec: Yes, upstate New York was, in an earlier era, a hotbed of entrepreneurial activity. We’re talking in the late 1800s and the first half of the 20th century, a lot of industrial companies got started here, as New York was the largest state in the entire United States–largest in terms of the population through much of that period with infrastructure. The infrastructure was then built to support an expanding amount of industries, manufacturing in particular, and the quality of the infrastructure was so great and so much wealth was created from these manufacturing and industrial facilities, the quality of our educational system and healthcare system, and many other things that we think of today in terms of public infrastructure was really superior.
Then as we got into the–call it the 1960s 1970s, the growth in manufacturing and industrial jobs actually began to, first slow down, then decline. The loss of jobs from upstate New York to other areas where costs were lower and the regulatory environment was friendlier, created a scenario where our once-powerful economy that had growth and population and growth and income for well over a hundred years, started going in reverse.
Drew Applebaum: Now, you mentioned it earlier and you said that your success was a byproduct of having been lucky enough to be in Silicon Valley when you were starting your first company. You decided to think more about what you could do to play a role in creating the environment for others. Now, tell me about the research that you’ve been doing over the past 10 or 20 years to try to find solutions to this problem?
Martin Babinec: As you say, in the first 10 years of my being in upstate New York, after relocating my family, I spent that entire period commuting with my family here and my company headquartered in Silicon Valley. During that period, I didn’t have an opportunity to do formal research and outreach because I was spending a lot of time going back and forth and no matter which coast I was on, somebody was wishing I was on the other coast.
For me, that period caused me to spend a lot of time thinking about the difference between my two valleys and all these forces. And as I approached the end of that commute period, around 2009, I had just stepped down from the CEO role at my company, TriNet. And I knew that even though I was working full-time as chairman, that that role would also transition. I could see the future within the next year or so, and the opportunity to dedicate my energies wherever I wanted.
That journey of taking the ideas I had been thinking about over a 10-year commute and not having the time to put those into action during that commute. I had a lot of ideas and I started gathering information from going and speaking with others, especially in the year 2009. I started the outreach of speaking with others who were interested in trying to help startups grow across the entire upstate region at the conclusion of 2009. The results of many discussions with people around the region led me to start the nonprofit Upstate Venture Connect in 2010, co-founding that with Nasir Ali, who has been my partner since. Together, we’ve been on this journey to help individual communities across this very broad region, where it could take six hours to go from one part of the region to another. And many points in between, of course.
It’s widely dispersed, and there are a lot of different assets there but because they are separated by both geography, and institutional silos, we had all these assets that were operating individually, causing entrepreneurs who might need help in a particular city to look around and say, “I’m trying to do this or that and couldn’t find access to the right resources.”
When we began Upstate Venture Connect, it was with that goal of answering,
“How can we go about scaling up the opportunity to make it easier for entrepreneurs trying to not only start but grow companies in these newer industries which are going to create good jobs and have a tremendous long-term impact on their city?”
That was our whole goal in beginning that journey for Upstate Venture Connect and what I’ve learned over the course of the last 10 years is what’s led me now to put that together in the book and help share some of those lessons with others, wherever they might be, who have similar interest.
Becoming a Magnet City
Drew Applebaum: Now, changing a city or region’s culture isn’t easy. Are there patterns that you found in thriving tech hubs that can be adopted by smaller towns or cities or regions that want to attract or retain this talent?
Martin Babinec: For sure. Many people, when they ask, “Why is it everybody wants to go and start a company in Silicon Valley?” Even though the cost of living there is in the stratosphere, I mean, it’s among the most expensive places in the entire United States to try and live. There’s congestion, the amount of traffic can be just incredibly onerous. There are a lot of reasons you say, “Why would anybody want to move from a very comfortable environment surrounded by their family and maybe have a high quality of life, to go into an area that has so many issues to start a company?” Why is that?
People that aren’t familiar with Silicon Valley, oftentimes say, “Well, it’s because that’s where the money is. There are lots of venture capitalists out there, ready to throw money into technology companies.” When in fact, I can tell you from having started a company there, it’s less about the fact that that’s where the VCs are, the venture capitalists, and more about the ethos of Silicon Valley. The most important attribute, which the media doesn’t really pick up on, is that what makes Silicon Valley work is the ethos of what we call pay-it-forward, or in the book, we describe as give-first.
Let me explain what that means. When you’re starting a new company in an industry which people aren’t familiar with and your ambition for the company is to create a product or service that is both based on an innovation, and your goal of selling that product or service is not just to the local market of who is around you but your ambition is to offer something that could be sold anywhere, whether it’s throughout the US or maybe the world. The internet, of course, is making that possible.
Those attributes change you from being a small business, even if you’re starting with just a person of one, if you’re starting a company with that ambition, you move into the startup category. Once you’re there in the startup category, based on that description of being founded on an innovation, something that’s not yet in widespread acceptance, and maybe leveraging an innovation that can help propel and support growth, and number two, targeting what could be a very large market, certainly not limited by geography, that combination of factors means that the entrepreneur is going to need help from people who have some experience in having done that before.
And in Silicon Valley, what’s unique is that the entrepreneurs who have actually built companies along those lines are visible and accessible and help people with this goal of creating successful startups.
They help people without asking for anything in return. That’s what I mean by give first–offering their help, not as a transaction. They say, “I’m going to help someone that I know or someone that I already trust and I’ll even help somebody that I may not know well.”
There are many opportunities in which we can go and provide some help. We have no idea what’s going to come back, but if we do enough of it, some of these things are going to make a difference and some that we help are going to end up doing something pretty incredible. That ethos is really what powers Silicon Valley.
Drew Applebaum: Now, let’s go straight to the beginning and to the title of the book. The title’s More Good Jobs!, what exactly are the jobs you’re looking to bring to these areas and what is your definition of a good job?
Martin Babinec: Well, a good job is a job that, of course, number one, the person who occupies it wants to have it. If the person doesn’t want it, it is probably not a good job. That’s not to say that a good job for one person might be a bad job for someone else. But you know we begin with the idea that your best jobs are going to be one that a person wants.
The second attribute is that the company offering the job is producing something that people want to be part of, and so they can attract the best talent. So, if you think about, especially in today’s world, where the people that have the best skills are most in-demand, then you can almost pick your category.
Obviously, software development, there is a lot of demand for that, but there is a demand for other types of technical talent. There is demand for people that have really high-level skills and finance. There are a lot of different roles for which you will get high salaries. The higher someone’s salary is, you could say, the more that’s a barometer for the demand for that talent.
So, if the company is having to pay high salaries, it means that they need really top talent. If you have a lot of companies that are paying lots of high salaries, you have something really special. That is what happens in these pockets of cities around the US that have very high average wage rates. It is because they have companies that are offering jobs at high salaries and they are attracting people who could work anywhere.
So, to be a company in that scenario, it means that you are offering something of value to others. When they do that, by the way, those high salaries end up being cycled into the local spending in that community, which in turn causes wages to rise in all other sectors–not just in the sector of that company. Because if you have a lot of people being paid big dollars, then those people making very large salaries are going out to eat more. They are hiring landscapers to mow their lawns and tending their landscaping and swimming pools–they are buying more services. They are making contributions to local charities.
There are ways that high salaries then funnel the creation of more jobs in the community. So, if we can create a lot of companies that are not just paying high wages today, but if they’re based on an innovation and selling potentially to a national or global market, then we have a situation where that company can grow.
If you have a community with lots of these companies that are attracting talent in the newer industries, paying them lots of money, and those companies are growing in size and adding new employees every year, think of the impact that that has on the local community. That is what More Good Jobs is all about.
Local Ripple Effects
Drew Applebaum: Yeah, you know you mentioned you have some stats and you have some graphs that are very eye-opening in the book that talk about the local ripple effects, which are super powerful. And the question for me is what does the struggle look like with the local government to make some of the changes you talk about in the book? Because I know upstate New York pretty well and change is not something that’s necessarily embraced there.
Martin Babinec: The intentions of the government are always good and politicians, many of them that I have met over the years, want to do the right thing. They want to have more of these jobs that I’ve described, but the approach that New York State and many other states have taken who aspire to have more good jobs along the lines that I have described here, has been to use taxpayer dollars and incentives to try and attract big companies who are already established to come and move into a local area because of those incentives.
New York State has a very long history of doing this and very dismal results. Even though we keep doing the same thing and thinking we’re going to get a different result, it ain’t happening. That has been an underlying frustration and one of the drivers that led me to say, “There’s got to be a better way because what we’re doing is not working.”
Drew Applebaum: Now is it because these larger factories and companies, they could guarantee, almost a number of jobs that are going to come in? While when you are coming in with a hub or emerging companies, you’re just not sure about the return. Is that the immediate struggle?
Martin Babinec: Well, there is no question that politicians are trying to show that they are having an impact. If you think about the public relations value for them, standing in front of a factory cutting a ribbon, saying, “This factory is now opening with 200 jobs,” that is the politician’s press coverage that they believe shows they are helping to create jobs. Of course, what gets lost in that equation is that the amount of dollars invested to create the 200 jobs has been completely lost in the equation.
You could take that same amount of money and put it someplace else with, probably, a lot better impact and that’s problem number one. Because they don’t report what the cost per job is and they don’t track overtime, what happens in a company that has accepted state money or incentives, and how well did they deliver on the expectations that were set? That is problem number one.
Problem number two is that the process of creating lots of small companies. Most people if you ask, “Would you rather have one company of a thousand employees or 10 companies of 100 employees?” Most people would say it would be better to have 10 companies of 100 employees because you’re reducing your risk. If you have one company with 1,000 employees that leaves a small to mid-sized city, it creates a huge risk for the community. If you’ve got the same number of employees spread out over 10 companies that’s so much better, right?
So, they get the value of having lots of small businesses. But all of the government programs are directed towards exactly that, small businesses–like restaurants, dry cleaning services, or just the typical small businesses that are only serving local customers. And yes, they might have a small manufacturing company. But the notion of, “What can the government do to help create an environment in which many small startups can move the needle in creating lots of good jobs?”
The problem with that, from a political perspective, is it takes too long. And the political process is such that politicians who get elected are feeling the pressure to show what they are doing to address the needs within the district that they’re representing. And how can they report their success?
When you help startups grow, you may not be able to see the net impact for five or 10 years, maybe even longer. Plus, you’ll have a bunch of these startups that will never even make it. Who are lost. Anything that happens where investigative reporting discovers government money went into some company or some kind of deal and it didn’t work out, nobody wants that black eye. So, it doesn’t work in the way that it’s intended.
I would also point out the prevailing thinking in places like states such as New York, where taxes are high, and regulations are also very onerous from the standpoint of being an employer and the things they have to do. Compared to some other states with lower taxes and fewer regulations, there will absolutely be politicians who say that the reason we have this problem is because taxes are high, and we have too many regulations.
But because I am a person who built a company in Silicon Valley and kind of understand what the forces are at work to have that success in the Bay Area, notwithstanding the fact that it has even higher taxes and even more onerous regulations than we have here. By the way, you could think of New York City, it is even worse than it is upstate. They have more regulations, they have more taxes, and yet it is booming with regards to the growth of these innovation academy companies. So, there is something more to the equation than just taxes and regulation.
Not that that doesn’t matter because believe me, lower taxes are good for business. Fewer regulations are good for business. Don’t get me wrong but that is not the only reason that, certainly, when it comes to people starting companies–remember I have been working with entrepreneurs for a long time, even in the course of myself building a company. It is all about working with entrepreneurs in these newer industries. And I can tell you, in having interfaced with thousands, probably tens of thousands of entrepreneurs over the years, that people don’t start companies in a particular location based on what that area’s tax rate is and the amount of regulations.
That is not part of the calculus entrepreneurs use when they decide where they’re going to put their company.
Drew Applebaum: Now, can you give an example of a city or a series of cities that have done this successfully? And maybe what the transition looks like? And now what those cities look like now?
Martin Babinec: There are some cities that have proven that with the right building of a community, you can take a city without a lot of entrepreneur density and not much activity, and have something to show for it in what I would consider to be not a long period of time.
So, the example that I cite in the book is Boulder, Colorado. A city, which in 1995, my friend Brad Feld who wrote the forward in the book, moved from Cambridge, Massachusetts in the Boston area where he was very successful as an entrepreneur and investor, and he moved from Cambridge to Boulder. At that time, Boulder, which is not much bigger than my neighboring community of Syracuse, New York. The community at Boulder really didn’t have that much emerging tech activity. It certainly was not a place that venture capitalists were traveling to go and visit to find the next real deal.
I knew Brad Feld pretty well and I went along for that ride. We went and opened a TriNet office right there in Boulder because of my belief in Brad Feld and what he would do. And sure enough, give it 15 years, Boulder is ranked on the metric of venture capital per capita, second only to Silicon Valley. So, today people move from all over, including upstate New York. I became an investor in a company that started in upstate New York and moved to Boulder. Because they felt that was the place to be for their particular situation.
Boulder is today what we call a magnet city, where they are attracting talent. Not only people who are entrepreneurs go there but because they have built so much density of these companies that are all innovation economy companies, even if somebody is not starting a company, people that are interested in these newer industries flock to Boulder and nearby Denver to take advantage of this very vibrant innovation economy that’s happening in that region. This is what we aspire to do across our broader region of upstate New York.
Drew Applebaum: Now, you’re donating all of the proceeds from the sale of this book, can you tell us about that and where it’s going?
Martin Babinec: Yes, whatever proceeds come from this book will go into our UpMobility Foundation, which is a foundation that has several charitable aims. But one of them is specifically helping others start and grow their entrepreneurial community. We will invite people to apply for a grant as they are able to describe, here is what they’re doing in their social enterprise for which additional funding might advance the cause of creating more good jobs.
Drew Applebaum: Now we only touched on, briefly, the amount of information that is in this book. And it is such a good read and I just want to congratulate you, Martin, on putting the time in and finishing this book. I think it is going to help a lot of people.
Martin Babinec: Thank you, Drew, it’s been a great discussion and I look forward to helping to spread the word through your podcast and invite others to visit our site at moregoodjobs.org.
Drew Applebaum: Martin, I am excited for people to check out the book. Everyone, the book is called More Good Jobs and you can find it on Amazon. Martin, thank you for coming on the show today.
Martin Babinec: Thanks, Drew.