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Q&A with Matt Nees (Part 2): Waking the Sleeping State
Thursday, August 26, 2010
By Ben Serviss
EnzymePDX
In the second and final part of our interview with Matt Nees, president of the Software Association of Oregon, Nees outlines how Oregon’s government is dropping the ball in cultivating a stronger technology industry. The largest professional software association in the Northwest, the SAO is composed of more than 350 companies in Oregon and Southwest Washington that are involved or affiliated with the software and technology industries. Catch up on the first part of the interview here.
Q. How has the current economy impacted Oregon’s software industry?
NEES: One of the things the SAO does in today’s business climate, with companies coming out of the recession in whatever state they’re in, is making sure that their voices are heard. So for Measures 66 and 67, we didn’t do lobbying or anything like that, everything we do is grassroots and educational. And so we polled our community on whether to support or not support the measures, and sure enough it was split down the middle. So we said, OK, so be it, and we put out the message that we’re not going to take a stance on it, but we will say as an organization representing the tech community of Oregon that we believe the legislature is tying everyone’s hands to a damned-if-you-do, damned-if-you-don’t approach. We, the SAO, are putting forward the open invitation to bring business and thought leaders to the table with the houses to start developing how we’re going to fix this problem afterwards ––
Q. Before it’s even passed.
NEES: Yes. That was our message. We take no position, we know our hands are tied from legislation from doing this; we want to start addressing the problem as soon as we can.
Q. With these measures, it’s another issue of companies staying in Oregon or leaving. From your position in the tech community, how are people taking that?
NEES: Well look, I mean, to go back to the question of our environment here being a business-friendly state, we have a lot to overcome. One of the first things we have to overcome is doing what’s right for the business community to ensure that as these businesses grow and need to expand, they’re not looking to expand elsewhere. And I can tell you right now that a number of our industry leaders here in the Portland are not going to expand here. They’re looking out of state to expand.
And my first thought is, of course, how is that possible. But I understand from a business continuity standpoint they have to do what’s right for the company. Where the state is missing the boat, and I don’t know if they’re sitting there with their hands tied, but they’re not approaching these companies and saying, Hey, I see that you guys are growing, like Tripwire. Let’s say that Tripwire is looking to expand, which they’re obviously going to if they go public, but why not turn around to Tripwire and say from a state perspective, Are we meeting all your future needs to keep you guys from growing here as opposed to setting up shop in Utah, or Nevada, or Indiana, who are offering big incentives to come and relocate.
So in my last CEO exchange, I had several big companies that have reached that threshold, and they have flat-out said we have to expand, we’ve reached our capacity here, but I’m not doing it in Oregon. They’ve got states calling them up all over the place offering great incentives, that’s what Oregon used to do, that’s how the Silicon Forest was born, that’s how Intel kept planting more and more facilities, factories and people here. Right now, the next Intels are being overlooked or not even being looked at. They’re not being taken care of and cultured the way that these growing cultures should to ensure that they stay here. Because if we lose a Tripwire, we lose a Webtrends, if we lose, let’s say that there was no incentive for Netbiz in Tualatin to grow to the 300 employees that they have, or Consumer Cellular to be a $100 million company in Tigard, what if they turn around and say well to get to our $250 million mark, we need to make some changes, so we need to go build in Utah. No one’s stopping them from doing that.
Q. Who’s the main outreach contact with the state?
NEES: It’s got to start with the governor. It’s got to be the leader. And he’s got to have the tax infrastructure, the budget in place in order to build these kinds of incentives. But it can’t be looked at as a short-term transactional type of investment. It’s got to be looked at as, look, it’s going to take $10 million for Webtrends to start their new building in Portland, or whatever. That $10 million is going to bring X amount over five years of revenue in tax structure and everything else, that’s the way it needs to be looked at, and it needs to be enacted now. Because you’ve got a 500-member corporation that’s looking to expand outside of Oregon right now, and has never received one single call from the state, from a leader.
Q. It would seem like an important phone call to make.
NEES: You would think. So right now, your business growth future is capped, and that’s part of that misperception outside of Oregon’s borders as well, which is that companies can only grow to a certain level in Oregon, then they have to move. There are two reasons for moving – one is because they’re arm-twisted to go move down by their VC, like Jive, but their core is here, and that’s fine. Two, you move because you’ve tapped the existing talent pool, and you can’t grow anymore here. Or, you’re not happy with the business climate and you say look, Indiana just called and offered me $10 million on the spot to come and set up here.
Q. And we need some kind of reply for that, it seems like there’s just silence right now.
NEES: It’s nothing but silence. Right now, our leadership base is waiting for the changing of the guard, and I say that as an economy we cannot afford to wait. We can’t. There’s too much at stake, the economy in the Oregon market is just now starting to come back up and ramp up in certain areas and we can’t lose that momentum. You lose that momentum, you fall back down.
So it’s a rollercoaster ride at this point, but if we don’t have people taking action, doing what’s right for the business community, then that means that companies leave, companies don’t set up shop here, that means people don’t work, they lose their jobs, or they move out of the state which means you lose tax revenue – personal, income and business tax. So tell me which one is the win-win situation. I’m a little passionate about it.
Q. You look around downtown, and about 10 percent of office space is vacant – why?
NEES: Well, one of the things that are being overlooked a lot is the fact that the government entity that is focused on economic development doesn’t have the funding to enact innovative, creative ways of doing things, and then you start looking at how long it takes for government to churn solutions out. And it’s part of our game, that’s the way it is. But if we don’t enact certain entities – economic development departments, Business Oregon, Portland Development Commission – if we’re not empowering them to make the right choices to get companies into those spaces on a quick basis, then that startup or move has already shifted and gone by.
Business startups here in the thriving entrepreneurial market, they’re on a dime. We’re flexible, we’re agile when that happens. So whether it’s Downtown Portland or Wilsonville, Tualatin or the West Side – there’s a lot of space out there and it doesn’t cost nearly as much as the downtown space – but there’s a reason why companies want to stay downtown.
There’s a reason why WebMD is maxed out in Montgomery Park right now, but wants to stay in Portland, and deal with the tax – they pay taxes big time, they know that – but there’s a reason why they want to stay in Portland. And so they’re finding innovative solutions to do that, by finding new spaces when the time comes up soon. But they will not, Craig [Froude, WebMD executive vice president] says I will not move out of Portland. People here just love it too much in terms of his workers, they love the atmosphere, the culture, everyone just thrives off it. The best thing he could do for his organization is keep it here. That’s the kind of story that the PDC or the city or the state should be out there blasting on a megaphone, why WebMD doesn’t want to move out of Portland.
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