For transparency, here is what I told the Teconomy team assessing Oregon’s 10-Year Innovation Plan

I begged you to respond to a survey on the Oregon 10-year Innovation Plan. So I felt it was the only fair and responsible thing to do to share what I told the folks — directly to their face. You see, in addition to completing the survey, I got to sit down with the team doing the midpoint assessment of Oregon’s 2021 10-Year Innovation Plan — Teconomy, the Ohio consultancy — cue the Pretenders (yes, I just nested an emdash phrase inside an emdash phrase so sue me) — paid by the state of Oregon to do the research and the folks who wrote the original plan. They’re the selfsame folks tasked with figuring out how the thing is holding up after five years. They asked for candid feedback. I gave them candid feedback. A lot of it. Because why not…?

And, as is my wont, I gave the bulk of my feedback through the very myopic lens of the Portland startup community. Because that’s the world I know. (I’m not going to out exactly to whom I talked. Because it’s not their fault. It’s ours.) But now that I’ve said my piece, I wanted to put my side of it out here in the open, so it’s on the record. Because I think this stuff matters. And I’d rather my feedback live somewhere transparent than disappear into a report.

First, a caveat: The plan was written blindfolded. This plan was composed in the 2020-2021 timeframe. At a point where we had no way of knowing what post-pandemic Oregon or the United States or the globe or the universe was going to look like. So it was definitely flying blindfolded while building the plane.

That is, for lack of a better term, kind of a get-out-of-jail-free card. They were doing the best they possibly could based on what we knew from the before times. And yet the world we’re in now is very different from a pre-pandemic world. And a lot of the levers the state could have pulled in 2019 no longer exist in 2026. Or have changed drastically.

And shame on our electeds and bureaucrats for not refactoring this early once we had a better understanding of what this new world was like.

That said, for your edification, here, roughly, is what I told them:

• We, as a state, have been succeeding despite our best efforts to fail. We’ve been lucky, not good. And luck is not a strategy. Here’s the hardest of hard truths. The state is not very good at economic development. We’ve been incredibly lucky. For 40 years, the state was just naturally attractive enough that people showed up and businesses got started here.
  
  It wasn’t because the state did anything. It’s crazy how lucky we are to have the corporate environment we have. Given we haven’t done much to earn it beyond being a great place to live with interesting geography.
  
  Oregon is an athlete or musician who has been making it on inherent talent alone. Not understanding. Education. Or practice.
  
  In some states I’ve seen economic-development muscle atrophy. I’m not sure we’ve ever formed those muscles in Oregon. I remember conversations where people said, “Oh, we don’t provide incentives. Companies just show up here.” You have to put some effort into this. Oregon doesn’t put in the practice to be the best at anything — and we suffer for it, because we don’t do the work.
  
  And a facet of our overly academic culture I’ve never understood is that once we’ve proposed a solution — not even implemented just proposed — we think it’s solved. And we never have to think about it again. We’ll always be “the most bikeable city,” always have “the best public transit,” always be the “land of brewpubs.” Regardless of what we do in the future. Regardless of how much our efforts degrade.
  
  Back to the analogy… Oregon is like if Jordan — you know, the guy the Blazers passed on in the 1984 draft — won a single championship and quit practicing.
  
  You have to keep iterating on the foundational solution. And we don’t.
  
  Portland gets momentum going, shows promise, has some wins — and then something drastic happens and we forget everything that came before and start from worse than scratch. A smoldering crater we have to fill in and stop burning before we can build again. The Bay Areas and Seattles of the world are a stair-step. There’s a downturn, but they start from at least here and go up a notch. And the next downturn they start where they left off and keep climbing.
  
  Portland, and maybe Oregon, is a full cycle every single time. Every decade we’re rethinking what we’re going to do this time. And that’s a failure.
  
• Portland: the state’s outlier… and its afterthought. A lot of this is the challenge of being a large West Coast state with only one metro. Portland is an outlier for the rest of the state. It’s incredibly hard for state-level policy to do things consistently across the state.
  
  But Portland has entirely different problems than the rest of the state.
  
  And there’s often an assumption that Portland has enough money to figure out its own stuff. We’ll fund other things in the state and let Portland fend for itself. So we’re kind of the afterthought.
  
  By way of analogy… in my 30 years in Oregon, I’ve consistently watched the state of Oregon continually struggle to bring its “F”s and “D”s up to “C”s. Rather than doubling down to bring its “B”s up to “A+”s. The state GPA reflects that mistake. And that needs to change.
  
• The consumer products blind spot. The relative lack of any discussion in the innovation plan about the consumer products world in Oregon is the equivalent of writing an innovation plan for Ohio and not talking about Procter & Gamble and its diaspora. Or talking about Michigan without the auto industry.
  
  That is a miss. A huge miss.
  
  With credit to Mitch Daugherty, Oregon is the Silicon Valley of consumer products. There is more consumer products knowledge and innovation per square foot in Oregon than anywhere else on earth. All of our billionaires are consumer-products people. Everything here has been consumer-products driven. And that’s not the assessors’ fault — that’s at the state level. And the state electeds have never seemed to actually understand that.
  
  I’m very tech-oriented, so I’ll always champion technology. It’s where I’ve worked for 30 years, it’s what I understand. But when push comes to shove, consumer products have far more likelihood of success around here than tech.
  
• What even is an Oregon company anymore? In a modern-day world, what even is an Oregon company? Portland has always been much stronger as a regional-office / remote-employee environment. Bend is similar. This concept of headquarters being within the state has become a dated metric.
  
  Intel is headquartered elsewhere. But we have more Intel employees than anywhere on earth. We need to rethink that whole part of the measurement. It’s the employees who live here, not the corporate-headquarters presence, that truly drive the revenue for the state.
  
• Our culture is anecdotal, not quantitative — and it’s aggressively humble. An underlying problem of Oregon culture is that we tend to be very anecdotal and not numerical. “Oh, we’ve got a lot of these things.” “Well, how many?” “I don’t know. A lot. There are a lot of them.”
  
  That’s deeply entangled in our culture. As is what I call “aggressive humility.” We don’t have people here who self-promote terribly well. So even if they’re working on something meaningful, you’re likely not tracking it, because you haven’t heard them talking about it.
  
• QSBS. Nuff said. On Qualified Small Business Stock in particular, it very much falls into that “business = bad” assessment. I don’t think it was intentionally trying to do harm. I think they were doing the best they knew how. I just don’t think they were talking to the right people. And by the time the right people heard about it, it was too late to do anything.
  
  The positioning ran afoul of the actual legislation. A lot of it was “we’re going to prevent millionaires and billionaires from making more money.” And I’m like, all those people you’re talking about are outside the state. They’re not going to be affected one way or the other. All you’ve done is hurt early stage entrepreneurs who forgo salary and revenue in hopes of a bigger payoff. And local early-stage investors who are supposed to be the risk-tolerant capital that fuels this engine. You’ve put in legislation that hampers both — even though you have a fucking innovation plan that says “early stage risk capital is a challenge we need to fix.” You’ve done exactly the opposite.
  
  Very much the whole Oregon’s right-hand-doesn’t-know-what-the-left-hand-is-doing thing.
  
  There is a path forward. There’s also an opportunity to think creatively. Like if this tax is on the books and we’re really looking to unlock early-stage capital — that’s the opportunity. Combine the two goals.
  
  You’ve had a liquidity event. You’ve realized wealth from qualified small business stock. So maybe — just maybe — you can pay 10% tax on that. Or — or — you can prove that you’ve invested say 2% of that capital in future risky startup activity. Maybe you’re an LP in an early-stage fund. Or maybe you’re doing some Angel investing. If you’re doing that and we want to increase the early stage risk tolerant capital in the state, can’t we just forgive the tax given that you’ve anted up?
  
  You give a percentage to risky pursuits and we reward you for that risk. It’s not fucking rocket surgery, my dudes.
  
  Oregon does not have a wealth or a capital problem. Oregon has a liquidity problem. Anytime there’s a moment of liquidity, if we’re not leveraging it for all we can, it’s there and gone. And QSBS is eliminating a chunk of wealth that would have otherwise gone to the next generation of startups. If we know that Oregon is an extremely risk-averse environment anyway, then adding friction that exacerbates that risk aversion is detrimental on any number of fronts.
  
  It needs to be fixed.
  
  It was based on “well, California does this,” But California is a GDP in and unto itself. We do not posture like California. So we cannot base our tax law on California’s. I’m hearing from entrepreneurs who’ve left, who are looking at trust mechanisms in other states to protect that money. I know any number of founders and investors living elsewhere 183 days of the year and back in Portland for the other half to avoid that structure.
  
  It’s extremely detrimental even in the short term. I can’t imagine what happens if we don’t solve it. I might as well delete the blog and go find something else to do.
  
• The innovation hubs need to build wayfinding. Not yet another mentorship program. The innovation hub activity outside the metro is having a positive impact. I’ve experienced some of it personally. That strategy of creating nodes of connectivity and wayfinding has had a positive impact on the state.
  
  With one very important caveat: Oregon has a tendency to assume everyone in the entire state has the exact same problem set regardless of where they’re located. And because so much state activity is driven by rural needs, the charter for the Portland Metro Region Innovation Hub — you know, the hub of all innovation in the Portland metro region — is entirely duplicative of efforts rather than additive. It hasn’t had as much impact locally as any of us would have liked.
  
  Two things come up time and again:
  
  1) Their ability to allocate capital was constrained to net new projects. There are already thousands of people doing work that needed funding they couldn’t get, because it wasn’t net-new. Huge miss.
  
  2) They were tasked with mentorship. I can count on twelve hands the number of organizations doing mentorship around here. We don’t need another. What we need is wayfinding. The greatest challenge is: I have an idea. I think this is a business. What do I do now, where do I go, who do I talk to…? That’s incredibly difficult here.
  
  I can understand that sort of mentoring infrastructure being needed elsewhere. But it’s not needed here. So don’t peanut butter charters across rural and metro regions.
  
  There’s no obvious wayfinding organization for Portland. You wind up bopping around to every different organization. It would be really helpful for a founder with limited time and resources to go to one place and be told, “Based on what you’re working on, these are the two groups you need to talk to locally.”
  
  Stupid simple. Wayfinding. W-A-Y-F-I-N-D-I-N-G. There. I spelled it out for you.
  
  The promise of the hubs as a network is compelling. If I’m a founder in Portland and there’s an organization in Bend better suited to me, that network availability of knowledge is exactly the point. And we don’t even have a database of all the organizations doing the work. Even a simple searchable database would be a huge step forward.
  
  I was hopeful that would be the first step of the hub. Unfortunately, I haven’t seen it yet.
  
• Risk-tolerant capital is failing on both sides of the marketplace. The thing that always came out loud and clear every time I went back to the plan was risk-tolerant early-stage capital. If anything, we’ve gone backwards.
  
  It’s a two-sided marketplace. And we’re failing on both sides:
  
  • On the company side, we just don’t build a lot of venture-scale pursuits here. And I don’t know that we can change the founder side.
    
    We’re a small-business community. The West Coast is largely homogenous culturally. A hard-charging growth-at-all-costs founder isn’t going to stay in Oregon. They’ll move to the Bay Area. A more buttoned-up MBA type might find Seattle more attractive. There’s the challenge of self-selection. And Oregon needs to recognize the Ideal Customer Profile that suits it.
    
  • On the investor side, in this post-pandemic world capital has become significantly more expensive to acquire and manage. There isn’t enough deal flow for Venture Capital funds focused on local businesses, so they’re forced to look outside the state. That’s fine, that’s their job.
    
    And for a first-time fund manager raising a small fund, the timeline has doubled or tripled. And even if you raise a tiny ass fund, you can’t live off the two-and-twenty in the early stages. The math simply doesn’t work. The state doesn’t quite understand that. Everybody assumes once you’ve raised a fund you’re immediately wealthy. No. You’re basically not making any money while you’re raising it. And after you’ve raised it you’re probably still working side hustles to make ends meet. Especially with small early-stage funds.
    
    So it would behoove us to better support and equip first-time fund managers. It may require the state give fund managers a stipend for the first biennium. “We know you’re not going to get paid, so here’s money to live on while you raise your fund.”
    
    And the state talks to LPs all the time. They could say, here are your first two LPs, so you have a little seed money to raise against. The state’s not pulling the right levers. We haven’t had a new fund here in a decade. It’s been the same players for 20 years. That’s challenging for founders and investors, because investors are forced to raise bigger and bigger funds, and then they don’t have the deal flow to justify that check size in Oregon companies. We’re doing the whole system a disservice.
    
    Taking it up a level… maybe we’re not even the right state to play in that space. Instead of putting investment capital into funds, maybe we’d be better off with grants and low-interest loans to Main Street businesses. Maybe that’s a better use of capital. It’s worth testing.
    
    So many people get enamored of the idea that tech is this explosive wealth-generation machine, when in reality it’s few and far between that succeed there. And venture capital can be a very costly way of building a business. It has requirements and ways of doing things that aren’t always best for an economic system.
    
• Business Oregon is the Christmas tree. I’ve said this to the people at Business Oregon directly. They have a thankless and largely unwinnable task. They’re the Christmas tree for our business community. Every fucking island-of-lost-toys project that doesn’t have a house gets hung on Business Oregon.
  
  They have so much under management. And there’s no way to be successful with a program set that disparate. That needs to be fixed. The Prosperity Council called that out. And we need to listen.
  
  Oregon Inc is one of the few organizations that has consistently had the voice of founders, entrepreneurs, and investors on it. That’s its biggest strength. Granted, even with empathetic, knowledgeable folks in the mix, they’re still inside a state bureaucracy. So they can only do so much.

tl;dr

They asked me for priorities. Here are mine.

1. Reassess that whole food-and-beverage / apparel thing. Not having a center of excellence dedicated to that industry was a huge miss. First and foremost.
   
2. Risk-tolerant capital — and QSBS is mixed in there. They spelled it out in the plan. We just haven’t done it.
3. An actual organization charged with economic development as it’s meant to be done. In my opinion, as a state we likely have more attractive resources and talent than we’re going to grow homegrown.
   
   The Oregon UAS Accelerator at the drone facility in Pendleton is a destination accelerator. People come from all over the world to use it.
   
   That’s where we need to focus. We can’t stop supporting Oregonians. But we need to think more creatively about the geothermal, water, wave, and wind energy. The processor and datacenter knowledge we have. And how that becomes attractive to other parts of the world.
   
   How do we make Oregon a destination for innovation that isn’t grown here but that we’re facilitating because of what we have…? We have a firm grasp of how to support local activity. We need to stop looking always inward and start exploring what we have to offer outward.

So that’s where we left it

That’s what I told them. And I say all of it as someone who loves this place. Someone who has spent 30 years betting on it. And someone who currently plans to keep doing exactly that.

We’ve been lucky for a long time. Now, I’d love to see us finally get good, too.

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