Louisville Venture Club Jobs Address - June 1, 2011

A couple of weeks ago President Obama met with Mark Zuckerberg, the founder of Facebook, to discuss jobs. This was the sort of meeting that the late night comedians had a little fun with. A lot of the jokes involved the way Facebook has cut into the nation’s productivity, by luring people into virtual game “worlds” like “Petville,” “Frontierville,” and “Mafia Wars.”

But Conan O’Brien focused on the real issue – jobs. He said the good news was that Zuckerberg promised to create lots of new jobs.

But there was bad news.

“They're all in Farmville." I share that joke for two reasons:

First, I try to always remind people that when we talk about job creation – we need good quality jobs. Jobs that people can build a life on.

Second, it reminds me of how easy it is to make fun of economic development efforts. Sometimes, it’s true, they might sound like the punchline of a joke.

Just a few days ago, my office reached out to 5 University of Louisville students whom you may have read about – a company called TNG Pharmaceuticals. They won the “Super Bowl” of business plan competitions with a terrific proposal -- it involved a crucial vaccine for cattle. These are students who clearly have a bright future as entrepreneurs. I have no doubt they’ll create thousands of jobs in their careers.

But because of some money they won in one of the business plan competitions, they are thinking about taking their award-winning plan and moving to Houston.

So I invited them to my office – and shared with them what we’re doing in Louisville to foster an entrepreneurial spirit. I made my best case to them that THIS was the place where they could really live up to their full potential.

I don’t know what they’ll decide – and we should win the day. But I know – and this crowd knows -- that courting entrepreneurs is a proven way to bring jobs to Louisville.

That’s why I am really interested to hear more from Steve Gailor about efforts to lure the MidAmerica Healthcare Venture Forum here to Louisville. Bringing more venture capitalists to our city – especially ones interested in the lifelong-wellness and aging-care sector that Louisville already leads the nation in – that’s just smart. And it’s a continuation of what we’ve been doing!

Today I want to talk to you a bit about concrete measures we’re taking to bring jobs to the city.

First, as background, let me take a moment to share with you how I think about jobs, specifically growing jobs.

Most people when you ask what their job is, they’ll answer by talking about what they do each day.

But our work really fits in three categories – or at least it should.

Number 1: There are those things you do every day. Let’s say you own a small ice and beverage dispensing business. (I don’t know why that example comes to mind!) ((Laughter.)) What you do every day, especially at first, could be pretty basic. You ship out machines to your existing customers. You constantly look for new clients. You manage your four employees.

Number 2: There are things you do to constantly improve. In this category, you try to rise above the daily grind and look for ways to improve – is there training that would make your employees more effective and productive? Is there a better source for critical parts, a source that would be more reliable and cause fewer production delays?

Number 3, you must spend time on creating “breakthrough” moments. That might involve inventing a new type of dispensing machine that becomes the standard for the industry and allows you to grow the number of people you employ by nearly 100 fold! Of it might be landing a global contract that increases your revenue by a third.

Now to some extent, everyone must focus on all three aspects of their job. But in my career, the way I’ve worked, I have often tried to make a special “place” for the innovation, to resource it separately.

Sure, we’ll take ideas from wherever they come. But it might be asking too much of the person who feels like they’re drowning in supply problems to figure out the next big thing that will grow the company. Sometimes you need people “tasked” to innovation.

That’s the way I ran my companies – and that’s the way I want to run the city. We need a director of innovation, a person who is charged with looking beyond the daily problems and to focus clearly on the future! That’s why I’m very pleased to announce today that I’ve hired Ted Smith to head up our newly created Office of Innovation.

Ted has spent a chunk of his career in Louisville and some of you may know him. He has a PhD in experimental psychology and while at CNET, designed and conducted pioneering research which created a new framework for modeling influential customers. But he is coming to us most recently from the U.S. Department of Health and Human Resources, where he was the senior innovation advisor for the Office of the National Coordinator of Health IT.

I was hoping Ted could be here today, but that didn’t work out. But he’ll be on the job next month and I expect big things from this office.

I told Ted – months ago – that innovation on the federal level is great, but coming back to Louisville would give him a chance to be closer to the “customer” – the real innovators on the street.

He thought about it and agreed that, satisfying as it might be to help develop a federal policy that helps start-ups, it doesn’t quite compete with making it happen on the street today.

And he’s already set a goal to have Louisville designated as a Start-Up America Region. He knows that the economic development that happens in this country will come largely from cities the size of Louisville, that are doing the kind of things Louisville is doing.

Ted has the breadth of experience we need to really encourage innovative thinking –both within Metro government itself, but throughout the community.

I will ask him to help each department on a breakthrough project. Ted will be a great asset for our city!

Ted’s position is one of four new directors funded in the budget I presented to Metro Council last week. I also am creating a director for military affairs and a director of sustainability – both targeting areas where we can grow a lot.

The fourth office is particularly close to my heart. In the past two decades, the world has come to Louisville in an amazing way. People bold enough to move to a new country are, by definition, the sort of people who take risks and solve problems. We need to work with them – and work to sell ourselves around the world.

That’s why I created the Office of Globalization. I’m pleased that the director is here with us today. Suhas Kulkarni has been a friend of mine for 25 years. A couple of months ago he graciously agreed to run the city’s new Office of Globalization as a volunteer – to help get us off the ground. I’m pleased that the budget I presented last week funds that office.

I know Suhas is the right person to lead this effort. I like to think that he and I share a similar entrepreneurial journey. Although that may be giving myself too much credit – I crossed the river to start my career. He moved to Louisville from India!

He started out with a neighborhood grocery in Germantown. From the back of the store, he also founded Omnitrade International, which supplied industrial mining and earth moving equipment across the world.

Since 1991, he has owned and operated Omnisys, an information technology company. It’s a long way from groceries to earth movers and IT – but no matter what the industry, smart business practices are a constant: A willingness to take risks and a willingness to compete globally are always valuable. Thank you Suhas for taking on this new challenge for the city!

All four of these new positions – in the capable hands of talented directors – are going to help us build the future for Louisville. We must invest today so we can grow our way to success!

I’m a business guy so let’s look at a chart to show how I think about growing the city.

These are called “S curves.” When a business first starts, it usually struggles a bit – it may not have its product completely defined, it may have a hard time convincing customers to give them a chance. That’s the bottom, flatter part of the S.

But if it makes it through that flat part, it can grow quickly. Satisfied customers are the best advertising. Things can really take off.

Eventually, though, most businesses reach a natural saturation point.

You have to come with a new idea, or a new product and start the S over.

Consider Humana! As you probably know, they started as a nursing home business, then moved into hospitals, and now are, of course, best known for health insurance.

However, even though Humana is coming off its most successful years ever as a stand-alone health insurer, they are no longer relying just on health insurance products.

Late last year, Humana purchased Concentra, an operator of urgent-care and worksite-care clinics.

And earlier this year, Humana teamed with a South African company to form the joint venture HumanaVitality. It launches July 1 and will reward Humana members for trying to live healthier lives.

They know that the surest way to insure their own future, is to look beyond their current business model. They are building a future in which their main product could be different than it is today.

The same thing applies to cities. We can’t be pointing to projects we did 10 or 20 years ago – no matter how nice – and say “we’re done.” Instead, we have to keep working.

Reimagining but preserving Whiskey Row as part of the Arena district, adding bike paths along River Road, creating a community rowing center, and building a 100 mile loop around the city – these are things that build a community where innovative people want to live and work.

We also need to promote and enhance our identity as a national leader in several key sectors – from lifelong wellness and aging care, to food and beverage services, to advanced manufacturing and value-added logistics.

The good news – as you can see from the chart – is that if you keep at it, you don’t have to start from scratch, the credibility and reputation you build with the first S, helps you with the second. Soon, you are quite “off the charts” – that’s where we want to be.

So what’s going to be our next “S”?

We’ve been busy selling ourselves to The Brookings Institution, trying to convince them they should select Louisville and Lexington as one of three new regions to participate in their Metropolitan Business Plan Initiative.

We’re hoping they’ll be announcing – any day now – the second group of three regions that they’re going to work with and it will be a tremendous honor if we’re selected. Brookings started working on regional development after identifying regional metropolitan areas – mega cities – as “the dominant source of economic and cultural power in modern America.” And if selected, the Louisville/Lexington “mega city” will be one of the first six communities in the country to really focus that power.

When it comes to basketball – rivalry with Lexington is good. But if we get too aggressive about competing with Lexington for jobs, it can become counterproductive. Instead we need to be growing a healthy region that competes globally. We’ll be working on that with, or without, Brookings. But if selected, we will instantly have credibility and expertise behind us.

No matter what happens with Brookings, or with Lexington, we will continue to work to strengthen our already strong sectors. That should be the road map to more job growth in the future.

But we also know that people don’t just need jobs in the future, they need them now. They needed jobs yesterday! For far too long, our unemployment rate has been hovering around 10 percent. That’s not acceptable.

In the short term, the quickest way to create new jobs is to launch construction projects. Too many hammers have been quiet for too long in Louisville, and we’ve got to get them going again!

That’s why I’ve been pleased that in my administration we’ve taken significant strides toward serious new construction projects. You may have heard last week, that we announced the recreation of Sheppard Square in Smoketown – a project that will cost $157 million. This is not only great news for the future generations who will live there, we hope it will create 200 new jobs as soon as the work begins.

We’re moving forward on the Museum Plaza project – that’s 4,500 construction jobs.

I am committed to getting the Bridges project under way during my first term – that’s 5,000 jobs.

U of L spent a billion dollars on capital improvements since 2002, creating nearly 3,000 construction jobs. (Not counting the people that then permanently worked in these new facilities.) Now, they’re planning to spend another billion dollars on more capital improvements over the next 20 years.

When you add these jobs to those that will be created with construction of the new VA Hospital and the expansion and renovation of the Speed Art Museum – that’s about 600 jobs -- we may be talking about 15,000 to 20,000 new construction jobs. Jobs we hope will begin pretty soon.

I always like to talk to my friend Paul Coomes, the well-respected economist at U of L, about matters like these and he tells me that – in theory – we can improve the unemployment rate by 1 full percentage point for every 6,500 jobs we create. That means that just getting these projects off the ground could lower the unemployment rate to something closer to 7 percent.

That’s not good enough – but it’s a good start.

And as those workers spend money – finally getting that new car or new computer they’ve been wanting, maybe deciding to buy a house or remodel the house they have – the effect will multiply through the economy, creating more jobs.

I’ve given you a lot to digest – along with this lovely meal – but I hope it’s obvious how hard we are working to build a bright future for all of us!

You all know how much this club and your spirit means to me and how convinced I am that the kind of work you do every day is the driving force of our economy. I’m counting on you to help push us into the future!