Convening the Community: Part 1
The 2030 vision of the Greater Phoenix economy
Every region hits an inflection point in which it must develop and implement an intentional growth strategy to assure it continues to innovate and stay ahead of the curve in order to remain competitive on the international stage. If successful, a region can thwart decline and spring into the next phase of its economy.
Greater Phoenix has experienced remarkable growth. With manufacturing jobs outpacing construction, new industries taking hold and Maricopa County growing faster than any other over the last decade, the region is ready for its next stage.
This pivotal discussion is the crux of Convening the Community, a two-part series in which community leaders set a 2030 vision of opportunity for the community. In the first event, which took place Nov. 17, four panelists discussed the anchors of an innovation-centered economy and how we can learn from regions that have successfully implemented smart, strategic growth plans. Panelists included:
- Chris Camacho, President & CEO, Greater Phoenix Economic Council
- Rebecca Clyde, CEO & Co-Founder, Botco.ai
- Richard Gray, M.D., Vice President, Mayo Clinic and CEO, Mayo Clinic in Arizona
- Mike Madsen, President & CEO, Honeywell Aerospace
- Robin Reed, President & CEO, Black Chamber of Arizona
“(Arizona has) been through a number of boom-and-bust cycles largely driven by housing growth, and I believe we’re on a new plane of industry growth,” Camacho said. “We want to make sure that our market grasps where we are in this life cycle and we’re working together to advance the requisite policy as well as strategic planning and infrastructure to ensure we don’t experience any level of decline in the future. The good news is, we have that opportunity.”
Greater Phoenix has a history of major bipartisan work that has enabled the creation of advantageous policies and established a quality of life that has spurred the competition we see today. By reviewing the history of our market and that of other regions that successfully navigated their own inflection points, we can be proactive in our path to continued prosperity.
“No one can fully fortify themselves against globalization and other technology disruption, but we need to be thinking about these emerging markets and how our assets are positioned,” Camacho said. “Every economy is going to go through market cycles, and we’re not insulated from that. We need to ensure that we’re strengthening our industry base so when these cycles do occur, we’re not stuck with simple economic industries that are more significantly impacted by downturns.”
Here are some highlights from the Q&A. Answers have been lightly edited for clarity. Watch the full report below and register for Part 2 of the Convening the Community series here.
Register for Part 2 of the Convening the Community series here.
Q: How do we accelerate the entrepreneurial network with the mindset of economy building and coalition building?
Clyde: I see that there are three key focus areas we need to be coming together on a community basis.
The first is education. All of us have talked about the importance of diversifying our workforce, but one of the things that alarms me the most about what has happened in this last year is that women's participation in the workforce is the lowest it has been in 30 years. I know that we're all feeling it in our industries. We need to be thinking about how we, as a community, are coming together to address childcare and public education, from, what I call it, the cradle all the way to the PhD programs.
The second is really around attraction of capital in the state of Arizona. We have done a really good job with a few things so I'm really happy about that Arizona angel investor tax credit that was renewed recently by our legislature. That's fantastic. And it certainly helps small startups like myself to really get off the ground. But we do need to encourage more institutional investors to come to Arizona. One of the things that happened in the case studies is that they were able to attract a lot of venture capital to those regions. Not only did they have outside investment coming in, but they had VC firms actually come and establish themselves in those communities. That’s something that we're just getting going.
The third thing I would say is that as businesses and as public services, we need to make technology investments. The world has become all virtual. We're not going to go back to pre-pandemic days. This is affecting our places of work. It's affecting how we engage with our consumers, our customers, our schools, our healthcare organizations and public services. So, what are we doing to really create an amazing digital front-door experience for our customers?
We have to think about how we take our brick-and-mortar experience and make our digital experience even better and smoother and more exciting, because that is the reality of the future. So those are the three things I would really like to see come together and I think that if we're doing those, as a community, we're going to be able to see the kind of growth that you just talked about in some of those other regions.
Q: Over 99% of businesses in Arizona are categorized as small businesses. What are the takeaways from the COVID-19 recession as we look forward and continue to help these small businesses flourish in our community?
Reed: To articulate where we're going to go moving forward, we need to understand a little bit of where we've been. Some of the disparities that have been identified within the small business community has been surrounding access to capital. For example, the data shows that 80% of white-owned businesses receive at least some portion of the funds they request through a capital raise, that’s only 66% for the BIPOC Community. Of that 66%, they receive on average $30,000 less in funding and pay an interest rate of about 1.5% more.
In the first three months of the pandemic, 40% of black-owned businesses shut their doors, versus nearly half of that, 22%, of white owned businesses. That carried over into the paycheck protection program. Sixty percent of white-owned businesses received PPP funding while 29% black-owned businesses received funding. Now where that obviously sounds like really bad news, what it did was it created an opportunity for change.
The Consumer Financial Protection Bureau wants to implement what was written into the Dodd-Frank Act which is that we begin to collect race and gender data on borrowers on commercial loans, so that we can now start tracking that. We have a lot of data that comes from one-off surveys, but not true, comprehensive data gathering. If this passes and we are able to do this, we will have something that is more in line with what we see in the residential mortgage industry, the Home Mortgage Disclosure Act. To be able to collect similar data in commercial lending is going to be a gigantic step forward in creating some more balance and minimizing the disparities we're starting to see.
Q: How do we help BIPOC entrepreneurs in need to get connected to opportunities and accessible capital?
Reed: Some of the work that our chamber is doing with GPEC and economic development directors throughout the Valley is that we're starting to identify the very strong need for a small business ecosystem here. One in which you can receive the various levels of training and technical assistance so that you can go from starting a business in Arizona to going public in Arizona without having to leave. As Rebecca stated, we don't have venture capitalists that are staying here. I watch a lot of them kind of cut their teeth here, and then they leave. What we need here is a system that, at each level and stage of your business development, there should be a set of available technical assistance to guide you to the next level.
We have a very short time span that our BIPOC businesses are in business, and we need to link them. Part of how we do that is to really work with them at the early stages so they can become that mid-sized company, so they can become a public company, and right now we don't have that depth. But we are all doing work right now to create that ecosystem so our small businesses can continue to grow and then stay here in Arizona so that we stop losing the great talent we have.
Q: Our state and region have made strategic investments in infrastructure that have enabled a resilient grid. What are your thoughts of key investments that drive innovation in our marketplace today?
Madsen: I look at it from a public sector the same way we would look at it from a private sector, which is where are those areas and needs of the markets that are going to be growing in a sustainable way and be profitable for the participants? I think some of those things are building blocks for a lot of different industries, so it's not necessarily just aerospace or medical, but things like electromechanical systems, advanced electronics beyond just semiconductors. Software is going to be an increasing element of everything that's manufactured.
All of those technology areas are aligned with existing and new needs that we see coming into the market over a multi-decade perspective and allow us to have a sustainable, renewable economy.
I think we also have an obligation, as an investment priority, to build ecosystems that help small businesses grow in these spaces, aligning them not only with venture capital companies, but with industry sponsors and the education community, so that we can do that seed planting. It’s great when we relocate a business from another area to our community – we ought to also be planting those seeds for the future large businesses. And then of course investing in our STEM education, particularly I think focused on the minority populations in our community.
Q: Mayo is known for its collaboration in the community. What does the next generation of industry-university, public-private partnerships look like from your perspective?
Gray: (Those case studies) were really about collaboration producing those kinds of results, and of course this is near and dear to my heart because one of the things that makes Mayo so special is collaboration around a patient's complex health problems. That's our model of bringing together different capabilities of different specialists. It's similar, I think, in our continued development in the Phoenix metro area, of making sure that we're creating that ecosystem. We have created much of that ecosystem, but now we're intentional about leveraging those collaborations.
We want to lead that much-needed transformation of healthcare to a simpler, more digitally enabled, more affordable future, and we're bringing in others. We launched something called the Mayo Clinic platform in 2019 to accomplish a lot of this, and the major things that we've done from that is form the right collaborations. Companies like nference, TripleBlind, Medically Home, Google and others are trying to bring those forward, but a key collaboration as you refer to earlier is with our university systems. We're really fortunate to have strong systems here in Arizona. Mayo Clinic has had a formal Alliance for Health Care with ASU since 2016, and we've built a lot of programs around research and development and bringing in other collaborators. ASU has now opened a campus adjacent to our Phoenix campus and recently opened their health futures center, and we've co-located a lot of those collaborations.
Q: Broadly, we’ve been receiving questions about affordable housing and workforce housing. I’m curious if any of your enterprises are looking at anything unique when trying to recruit people and dealing with housing becoming an issue.
Gray: We're undertaking a very large expansion right now at Mayo Clinic in Arizona and the number of staff that we're recruiting is substantial. As I meet with even the people that you would think would be in the best position to be able to obtain housing -- our new physicians and scientists and so forth -- that's the first question I ask them all. Have you found a place to live? And it's not uncommon to get the answer ‘no.’ I do think it is an important undertaking, and particularly for us because we're also an educational institution for our trainees, our medical students and others. This is a bigger and bigger issue. We've been considering innovative approaches partnering to produce some more student-directed housing. But I think it is going to be a challenge for us.
Now, the other thing that I try to remind people of is Phoenix still has a lower overall cost of living. When you look at our tax environment, food, transportation, entertainment, other things, there are some offsets there. So we need to put it into context, but certainly housing is becoming more and more of a challenge.
Reed: I consult to companies that are growing and, and some of the feedback I'm getting is exactly that, that housing is becoming a big question mark. That used to be our significant competitive advantage -- that you could earn a great living here, and because the cost of living was so low, you can have a wonderful lifestyle -- and we're losing that edge. But to some extent, I know in California, they say it's now 17 years to save for 20% down payment on a house, but Arizona is 11 years. So we're going to start getting further and further away from homeownership if we don't do something to either create more affordable housing or find some way to bridge that gap a little bit.