Leaders Tackle Ways To Boost State Economy East Side Must Lure Innovative Companies, Capital, Magazine Publisher Says

Surveys used by Forbes magazine to compile a ranking of cities as business locations understated the appeal of living in areas like Spokane, the magazine’s publisher said.

On Saturday, Rich Karlgaard said the studies also overlooked the assets the University of Idaho and Washington State University represent even though they are outside the immediate Spokane area.

The May 31 issue of Forbes placed Spokane 161st out of 162 communities ranked according to factors such as education, wages and job growth. Seattle was No. 1.

The rebuke has spurred a re-examination by Spokane leaders of ways to stimulate the area’s stagnant economy.

Chamber of commerce leaders from East and West Side cities met in Spokane Thursday, Friday and Saturday to identify steps that will keep the overall Washington economy booming.

Karlgaard was the keynote, concluding speaker of the conference.

He said the wealth Microsoft and other companies are creating in the Puget Sound area will provide an unprecedented store of venture capital that will fuel new companies for years to come.

“By hook or by crook, you’ve got to find some way to get that money to Eastern Washington,” he said.

Smaller communities are attractive, he said, because they are great places to live.

As a North Dakota native transplanted to the Silicon Valley, Karlgaard said if he were not with Forbes, he would prefer to live in the Intermountain West.

But not if the trade-off is settling for the prevailing salaries, he added.

Karlgaard also said area colleges must sharpen their technology offerings to assure companies that want to leave established innovation hotbeds that they will find the talent to flourish here.

Start-up companies in particular need smart workers who can move swiftly to get new ideas into the market, he said.

Innovations lose value so fast that 75 percent of the profits are taken within nine days, he said. After 90 days, there is no margin.

“You’ve got to hit that window when the window is there,” he said.

Karlgaard said small companies that can control costs better than their larger, more cumbersome competitors will also benefit as the Internet brings the cost of transactions close to zero.

Information will move faster and more broadly, matching demand and supply ever more perfectly, he said.

Karlgaard used a high-tech soda machine on a golf course as an example.

The machine would know the distance to the next refreshment, the temperature and, by sensing eye or other body activity, how desperate the golfer is for a drink.

The golfer inserts a charge card, and a rapid-fire haggling process would ensue to determine the price of the can of soda. It may be $2.73 on a hot day, 40 cents when it’s raining.

Karlgaard consoled those concerned that the stock market is vastly overpricing technology stocks.

The gains in cost efficiency achieved with the new technology in recent years are only slightly more startling than those steam-, gasoline- and electrical-powered innovations during the two centuries that began at 1770.

Semiconductors will soon be the size of a white blood cell, he said, and fiber-optic lines will bring holographic Super Bowl broadcasts into the home.

“The world is profoundly changing,” Karlgaard said.

The chambers also heard from a panel of legislators who said the state has a lot of work to do on trade, transportation and education, all topics of interest at the meeting.

Rep. Dave Schmidt, R-Mill Creek, said the transportation system is close to crippling growth, but frustrated voters are saying, “Do more with what you’ve got.”

He said more initiatives to restrain government will be introduced if I-695, which would cap auto registration fees at $30, fails at the polls.

The Legislature must respond to the pressures that have carried the measure so far, he said.

Rep. Laura Ruderman, D-Redmond, said taxpayers perceive a lack of value for their dollar.

The key to satisfying voters is communication that does not underestimate their intelligence and ability to understand complex issues, she said.

Ruderman, who said she responds to all calls and e-mails personally, said such person-to-person education is the best way to reduce the appeal of “gimmicks” like I-695.