Summer 2009
TA Chair Jeremy Jaech Urges Washington to "Put the Pedal to the Metal" in the Race to Grow Our Innovation Economy
Since 2003, the Technology Alliance has periodically benchmarked Washington's progress in advancing the essential drivers of a successful innovation economy: excellence in K-12 and higher education, strong public and private research, and a robust entrepreneurial climate.
At the 2009 State of Technology Luncheon, Jeremy Jaech, CEO of Verdiem, revealed which states are in pole position.
The TA last released a comprehensive benchmarking report in 2006. Since then, a couple of states previously excluded from the list of Washington's peers have made strides in building up their innovative sectors, as evidenced by the TA's most recent economic impact study, and have risen in the national index of states positioned to compete in the new economy. Conversely, states historically viewed as our peers, specifically North Carolina and Texas, have fallen into the second tier of technology states.
The shifting landscape of the nation's innovation hubs led the TA to alter the group of peers against which we measure Washington's competitiveness. For our 2009 benchmarking effort, we selected the top 10 contenders in today's innovation economy: in addition to our own state, the group includes California, Connecticut, Colorado, Maryland, Massachusetts, New Jersey, New York, Utah, and Virginia.
Washington's Got Talent
A key indicator of a competitive innovation economy is the intensity of a state's science and engineering workforce. In this metric, Washington consistently ranks among the top states in the nation: in overall science and engineering employment, we rank fourth in the nation behind Virginia, Massachusetts and Maryland.
In specific occupations - computer specialists, life and physical scientists, and engineers - we continue to rank among the top 10. In engineering, specifically, Washington improved from ninth to third place nationally, and is second only to Massachusetts among our peers.
"We have been a magnet for top talent because of the world class companies present here today," Jaech told the luncheon audience. "Of all the indicators, this one truly shows our state's competitive strength."
In addition to having a talented workforce, Washington excels in another key ingredient of successful innovation economies: investment.
Although California and Massachusetts combined account for more than 60% of venture capital nationwide, Washington is "clearly holding its own," Jaech noted, compared to the remaining technology states and the rest of the country. Washington pulled in 3.4% of total U.S. venture investment last year, ranking fourth among our peers and fifth in the nation.
When venture investment is calculated per $1,000 share of state gross domestic product, using 2006 data, Washington comes in third after California and Massachusetts.
The Education Pipeline: A National Tragedy
Where Washington is not holding its own is in preparing our students to be successful in higher education and the career opportunities our innovation economy continues to create in our state. Our high rankings in workforce contrast starkly with our performance in metrics of student achievement and degree production.
The National Assessment of Student Progress is a nationally administered test that gauges student proficiency in core academic subjects such as reading and mathematics. The Technology Alliance benchmarked Washington students' performance against that of their peers in other technology states and found that, while other states had steadily increased the portion of their students who demonstrated proficiency, progress in our state has remained relatively flat.
Highlighting the dramatic improvement among Massachusetts eighth graders in math, having gone from 36% to 51% at or above proficient in four years, Jaech pointed out that the increase coincided with that state's commitment to more rigorous high school graduation requirements. Washington's proficiency, meanwhile, is hovering at 36%.
Although the NAEP scores in math provide evidence that we are not keeping up with our peers, Jaech acknowledged that all states have to significantly improve their performance if we are to compete globally.
"I am not just picking on Washington," he said, pointing out that while only 34% of Washington's eighth graders scored at or above proficient in reading, Massachusetts topped the nation with just 43%.
"This is not just a state story, although I'm sure you, like me, would love to see these numbers move up, and more quickly. This is, frankly, a national tragedy."
Higher Education = Hire Education, But...
Also of concern is the proportion of the student body that never makes it to high school graduation. According to data from Postsecondary Opportunity, 31 out of 100 Washington freshmen do not graduate with their classmates four years later. Our state ranks seventh among our peers and 32nd in the nation in high school graduation rate.
"We need to do a much better job getting our children ready for work, citizenship, and higher education," Jaech insisted, citing international data that underlines the extent of the problem for not just our state but our nation: 40 years ago, the U.S. was a leader in high school completion rates. Today, we rank 18th out of 24 industrialized nations.
The problems with the pipeline continue at the higher education level, where overall bachelor's capacity as well as degree production in science and engineering fields continues to be insufficient to fuel our innovation economy and our students' futures.
Washington placed eighth among our peers and 36th in the nation in total bachelor's degree production as a percentage of our 18-24 year old population, using data from 2005. We occupied the same place nationally in 2003, having fallen one place from 2001. In science and engineering, Washington is seventh among our peers and 31st in the nation.
Jaech characterized both the state's and nation's performance in higher education as "lackluster," pointing to the fact that, as recently as 1995, the U.S. was tied for first place in college graduation rates; by 2006, we had dropped to 14th. He cited a recent study published by McKinsey & Company as a reminder of the economic consequences of falling higher education achievement: had the U.S. closed the gap between its achievement level and that of better-performing nations, our gross domestic product in 2008 could have been between $1.3 trillion and $2.3 trillion higher, or 9% to 16% of total GDP.
"I know we faced a tough budget year, and higher education took its share of the hit," commented Jaech, "but, a few years ago, our state made degree production in fields that are essential to our future economy a priority."
"I hope we get back on track because our state needs this, and our students really need this."
Graduate Education and University Research: Size Matters
One of the most alarming findings came at the graduate education level. While Washington is known for its top-ranked programs, they are relatively small for the size of our state. On a per capita basis, Washington ranks last among peers and 46th in the nation in graduate participation rate - a result Jaech termed "shocking."
"This limits opportunity for our residents, but it also has a sizeable economic impact," noted Jaech. "Creating more opportunity in our science and engineering graduate schools, particularly with an entrepreneurial faculty, would do more to strengthen Washington's competitiveness long-term than almost anything else."
The limited size of Washington' graduate education enterprise has an effect on the size and strength of our academic research, for which we rank eighth among peers and 25th in the nation on a per capita basis.
"Because we do not have a private research university in this state, it makes it even more critical for us to support University of Washington and Washington State University," said Jaech. "All of education, but most especially our research institutions, need to be a top priority as state budgets recover along with a recovering economy."
Washington makes a much stronger showing in federal, private non-profit, and industry research: on a per capita basis, we rank at or near the top of our peer group, and among the top five in the nation, in all three categories.
Washington Should Be in It to Win It
Citing Washington's mixed showing, Jaech urged state policy leaders to move forward with implementation of K-12 education reform legislation approved during the recent legislative session, make the critical investments in our research universities necessary to grow their high-impact science and engineering programs, and restore the full public funding stream to the Life Sciences Discovery Fund to support health-related research with commercial potential.
"Washington definitely has a green light when it comes to three essential ingredients: our highly talented workforce, our active and robust investor community, and strong research at our federal and private institutions and our innovative companies," Jaech concluded.
"These strengths keep us in the top tier, and we hope they can sustain us while we as a state address those areas where we need to make improvements."
Download the benchmarking slideshow from Jaech's presentation at the State of Technology Luncheon here.
Framing the Future of Computing and of Washington's Long-Term Competitiveness
On May 1st, more than 700 business, research and policy leaders from across the state were on hand for the premier event for Washington's innovation community: the Technology Alliance's 2009 State of Technology Luncheon.
Governor Chris Gregoire kicked off the event, expressing appreciation for the innovative, forward-looking members of the audience who represent Washington's economic future. Other highlights included the Alliance of Angels 2009 Company of the Year announcement and key findings from the Technology Alliance's latest study benchmarking Washington's competitiveness in the drivers of a successful innovation economy.
The program culminated in a keynote conversation featuring one of those forward-looking innovators, Microsoft Chief Software Architect Ray Ozzie.
An experienced entrepreneur and industry visionary, Ozzie joined TA board member Ed Lazowska of University of Washington Computer Science & Engineering onstage to share his insights into the future of computing.
Alliance of Angels Launches Seed Fund to Supercharge Early Stage Investment
Building on its well-earned reputation as one of the most active angel groups in the nation, Alliance of Angels announced this spring the launch of its new AoA Seed Fund. The Fund will capitalize on AoA's screening process and network of savvy investors to have an even greater impact in supporting the growth of innovative, young companies in the region.
The Fund made its first investment in June, directing $235,000 to online project management software developer LiquidPlanner. The investment was in addition to a combined $385,000 the company received from individual AoA members in recent months.
Think of it as angel investing, supercharged.
Greg Huey Brings a Wealth of Investment Experience to Position of AoA Program Director
Alliance of Angels was pleased to welcome Greg Huey, former principal at Seattle-based Frazier Technology Ventures, as the new AoA program director. Greg's primary mission as he takes the helm will be to strengthen investor outreach and education, building on the program's robust deal flow and status as the Northwest's premier entrepreneur-friendly angel investing group.
Important Dates
- September 1
- Alliance of Angels 10-Minute Pitch Clinic
- 2:00 pm - 5:00 pm
- Seattle
- September 11
- Science & Technology Discovery Series
- Featuring: Tadayoshi Kohno, University of Washington
- Computer Science & Engineering
- 7:30 am - 9:00 am
- Seattle
- September 17
- Technology Alliance Board Meeting
- 8:00 am - 12:00 pm
- Seattle
- September 28-30
- Technology Institute
- Leavenworth
