Embed Size (px)
DESCRIPTION
Presented by Jim Damicis, Rupam Shrivastava, and Virginia Gibbs In 2012 and 2013, two COTF panels introduced the concept of the emergence of a Creative Molecular Economy (CME) at the World Future Society conference. New ideas such as a Future Forward Workforce, Leadership for an Emerging New Economy and Building Interlocking Entrepreneurial Networks were introduced. This session continues to introduce new practical practices for a CME to include a 21st Century System of Venture Capital and how to create regional centers able to build capacities for a CME.
Citation preview
Reconstituting the Middle Class
Prepared for World Future Society Annual Conference - July 2014
Presentation By:
Virginia Gibbs, President & CEO, Fayette Chamber of Commerce
Jim Damicis, Senior Vice President, Camoin Associates
Rupam Shrivastava, Director, ePlanet Capital
Panelists
Jim DamicisSenior Vice PresidentCamoin Associates
Rupam ShrivastavaDirector ePlanet Capital
Moderator
Virginia GibbsPresident/CEOFayette Chamber of Commerce
Session Overview
Economic Trends and The Middle Class Capacity Building for Transformational
Community Development A New Approach for Economic and
Workforce Development New Methods of Financing Economic Growth
and Job Creation
3 economies in transition
Industrial economy Knowledge economy Creative Molecular economy
Definition: “An economy based on the integration of emerging radical technologies, with creative individuals, small groups and companies organized in interlocking networks, connecting and disconnecting constantly in processes of continuous innovation.”
Shrinking US Middle ClassPercent of adults self-identifying as each social class
2008 2010 2012 20140%
10%
20%
30%
40%
50%
60%
Middle ClassUpper Lower
Source: Pew Research Center
% of Aggregate US Household Income1972 2012
Upper class 44% 51%
Upper middle class 24.5% 23%
Middle class 17% 14.4%
Lower middle class 10.4% 8.3%
Lower class 4.1% 3.2%
Source: US Census
Median US Household Income
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Median US Household Income in 2012 dollars
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$45,788
$56,080
$51,017
Decreasing Manufacturing Jobs
In 1979, there were 20 million manufacturing jobs in the US
Today there are 12.1 million manufacturing jobs nationwide
During that time, the total workforce grew from 98.3 million to 145.8 million
In Georgia, manufacturing peaked in 1997 with 556,700 jobs
Today there are roughly 361,000 manufacturing jobs in Georgia
Source: Atlanta Journal Constitution, June 2014
Top Employment SectorsFayette County, Ga
2003
1) Retail
2) Manufacturing
3) Construction
2013
1) Retail
2) Healthcare and social services
3) Accommodations and Food Services
Capacity Building: Transformational Community Development
21st century Leadership Development Future focused community conversations Adaptive planning Interconnectedness/interlocking networks
21st Century Leadership Skills
Ability to spot weak signals & emerging trends Future focused Use “and/both” thinking Parallel paths Comfortable with ambiguity Deep Collaboration Highly developed interlocking networks No silver bullet
Community Conversations
Facilitated Future Focused Ask appropriate questions Diverse panels (age, gender, race, etc.)
Example of Question: “How do we prepare students for future jobs which don’t yet exist?”
Adaptive Planning
Establish framework DICE Method (Design, Identify, Connect,
Emerge) Allow for ebb and flow of human engagement Need high level of trust and accountability
Capacity Building: Transformational Community Development
21st century Leadership Development Future focused community conversations Adaptive planning Interconnectedness/interlocking networks
“We are unsettled to the very roots of our being. There isn’t a human relation, whether of parent and child, husband and wife, worker and employer, that doesn’t move in a strange situation…There are no precedents to guide us, no wisdom that wasn’t made for a simpler age. We have changed our environment more quickly than we know how to change ourselves.”
Walter Lippmann
Pulitzer Prize winning journalist
1914
17
Reconstituting the Middle ClassNetworks and Entrepreneurship
Prepared for World Future Society Annual ConferenceJuly 2014
Presentation By:Jim DamicisSenior Vice [email protected] www.camoinassociates.comTwitter: @jdamicisLinkedin: www.linkedin.com/in/jdamicisBlog: www.camoinassociates.com/blog/
Trends Contributing to Loss of Middle Class
• Loss of Manufacturing Jobs – movement from low skill to higher skill jobs that require education/training
• Loss of Government Jobs• Rise of Service Economy – lower wages, less benefits, less full-time• Healthcare – rising costs – less being paid by employer• Decrease of Unions and their Influence• Housing – now a riskier investment – harder to enter market• Increased Globalization – increased supply of workers• Growth of Independent Contracting and Contingent Workers• Rising Cost of Education• Increase in Skills Gap• Job Replacement Through Technology – Technological Unemployment
18
19
Self Employment
Source: America’s Self-Employment Landscape, Joshua Wright, Economic Modeling Specialist Inc., February 6th, 2014, http://www.economicmodeling.com/2014/02/06/americas-self-employment-landscape/
20
The “Freelance Economy”
The Freelance Economy- One in three Americans, roughly 42 million, are estimated to be freelancers. By 2020, freelancers are expected to make up 50% of the full time workforce. Independent work is becoming more common across all generations.
The Part-Time, Freelance, Collaborative Economy, Newgeography, Roger Selbert 03/26/2014 - http://www.newgeography.com/content/004222-the-part-time-freelance-collaborative-economy
21
“The Gig Economy”
• It is estimated that contingent workers made up over 11% of the labor force in 2005
• Most new jobs since 2001 have been under contingent arrangements
The Rise of the Gig Economy, the Rise of the Gig Economy, Gerald Friedman, Dollars & Sense, March/April 2014, http://dollarsandsense.org/archives/2014/0314friedman.html
22
Richard Florida on the Service Class
• “More than 60 million American workers - 45 percent of the work force.”
• “Projected to make up more than half of projected new jobs to 2018 - 7.1 million new jobs”
“We have to make service class jobs good jobs - sources of innovation, continuous improvement, and productivity gains”
Source: Where Service Jobs Will Be, The Atlantic Cities, August 23 2010 - www.theatlantic.com/business/archive/2010/08/where-service-jobs-will-be/61465/#.UF5wQzqgxMQ.mailto
23
Technological Unemployment
From McKinsey Global as referenced in Now even the big banks are talking about technological unemployment, James Pethokoukis, May 30, 2014http://www.aei-ideas.org/2014/05/now-even-the-big-banks-are-talking-about-technological-unemployment/#mbl
• “Historically, when labor-saving technologies were introduced, new and higher value-adding jobs were created. This usually happens over the long term.”
• “However, productivity without the innovation that leads to the creation of higher value-added jobs results in unemployment and economic problems.”
24
What This All Means for Economic Growth and The Middle Class?
Cannot Rely on or Wait for Recovery to Enable Large Companies and Institutions to Create and Sustain Full-time, Permanent, Wage Jobs!
25
Two Opportunities for Transformation to Reconstitute the Middle Class:
Building Capacity and Diversity Among Workers and the Middle Class for:
•Networks – Diverse, Interlocking, Self-Organizing
•Entrepreneurship and Innovation
26
Characteristics of the Creative Molecular Economy:
• Regional & Global Innovation Networks• Crowdsourced and Continuous Innovation• Future Forward Workforce – adaptable• Crowdsourced Start-up Financing
• New Technologies Transforming Production
• Identifying Weak Signals
• Broad-band infrastructure capable of uploading and downloading massive amounts of data
27
“More than 90 percent of all American entrepreneurs came from middle-class or lower.”
Ewing Marion Kauffman Foundation (July 2009)
Entrepreneurship and The Middle Class
28
Entrepreneurial Networks
“Entrepreneurship often is a lonely, emotional, and challenging process that evolves over time.”
“To be successful, entrepreneurs need connections to potential mentors, networks for learning, and emotional support from peers at all stages of the entrepreneurial process”.
The Dos and Don'ts of Local Entrepreneurship Promotion, Kaufman Foundation, Entrepreneurship Policy Digest www.kauffman.org
29
The Future Worker -Self-Organized Networks
“The confluence of advances in social, mobile and cloud technologies has begun to shift economic power from large-scale institutions that dominated the industrial age through sheer size and economies of scale to self-organizing individuals and loosely governed networks. The ability to self-organize in order to produce and repurpose products and information has reduced the efficacy of long-standing business frameworks, processes and decision-making.”
The Rise of The Empowered Employee, Maria Ogneva, By yammer in Tips & Guides, March 16, 2012. https://about.yammer.com/yammer-blog/the-rise-of-the-empowered-employee/
30
The Future Worker -Self-Organized Networks
Socially aware businesses are embracing the Peer-to-Peer approach; first and foremost, people want to talk to other people in organizations. Employees have personal and portable networks they can tap in order to get work done, thus weakening their dependencies on company resources. By joining creation spaces and communities, individuals can now create products, content and even movements, based on their passions and find solutions that they wouldn’t find on their own.
The Rise of The Empowered Employee, Maria Ogneva, By yammer in Tips & Guides, March 16, 2012. https://about.yammer.com/yammer-blog/the-rise-of-the-empowered-employee/
31
A New Approach for the Middle Class
• Developing skills and leveraging networks to create your own business/job
• Used to be much higher risk then wage employment (working for someone else) but not so much anymore
• Programs and policies to support entrepreneurship and innovation grew in the past 20 years through growth in knowledge economy
• We must now make entrepreneurship and innovation a pervasive culture – everyone can do it and practice it in our institutions, companies, jobs, and in developing their own capacities
32
A New Approach for the Middle Class, Cont.
• Support capacity building among lower and middle class to learn and leverage the tools developed by the freelance, gig, and knowledge economy
• Including through schools, open-public places such as libraries, for all kinds of people including immigrants, the unemployed, workers – not just for the intellectual, entrepreneurial elite
• Extend beyond manufacturing and high-tech to service economy
33
New measurements/focus for economic development, growth, and workforce – not jobs and businesses created but:
• Networks – reach and depth• Peer to peer learning and collaboration• For businesses but also people/workers• Diversity of participation
A New Approach for the Middle Class, Cont.
34
Ultra-rich man’s letter: “To My Fellow Filthy Rich Americans: The Pitchforks Are Coming” Nick Hanauer, politico - June 30, 2014
Why We Must Transform and Reconstitute the Middle Class: “The
Pitchforks are Coming”“If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.”
35
What Else?
•All of this requires new approaches to financing business and economic growth.
New funding sources for the Creative Molecular Economy future
Rupam Shrivastava
Innovation is central to the concept of a Creative Molecular Economy
Innovation and entrepreneurship in CME
New tenets of CME are inherently entrepreneur friendly
Market participants and business leaders need to be comfortable with uncertainty, ambiguity, and nonlinear activities(1)
Frequent changes in ideas and direction are central to this innovative process
Developed markets: Reached current economic levels by
innovation – e.g. industrial revolution in the mid 1800s and technology revolution in late 1900s
Emerging markets: Lot of recent growth playing ‘catch-up’ Future growth dependent on innovation
(1) Creative Molecular Economy Innovation Model: McAllen, Texas.
Creative Molecular Economy model(1)
CME Company
Innovation focus
Harnessing local talent /
ecosystem
Smaller and more nimble
Integrated with the local
ecosystem
Locally financed and
owned
More employee focused
38
CME companies will be different from current start-ups as they will have a larger local footprint
CME companies
Ways how CME start-ups will be different from those today
39
CME companies will be well integrated with the local ecosystem , which will develop into an “innovation center” or “CME Region”
CME Regions
CME Companies
Stakeholders:Employees,
investors
Investors:Angels, Banks, Accelerators
Business partners:
Other companies, customers
Liquidity sources:
Acquirers, public markets
CME Regions will be similar to innovation districts of today
Semiconductors and IT in Silicon Valley High-tech. and life sciences in Research Triangle Park in
North Carolina Biotech in the Boston area
However, a CME Region would not only be self reliant on indigenous innovation, but local funding and exit sources
as well. Only Silicon Valley comes close today
40
While new innovative funding sources are being experimented, sources of liquidity are still the traditional public markets and acquirers
Evaluation of current financing sources for CME Companies
Self, friends, family
Angels / Accelerators /
Crowd-funding
Venture capital
Bank loans and
guarantees
Public markets
Acqui-rers
OTC exchanges
CME Ideal
Funding source req. Funding side Exit sideAdequacy of size X X X X X XLiquidity X X X XTransparency X X X X X X
Company charac. Funding side Exit sideInnovation focus X X X X X XSmall and nimble X X X X X XIntegrated with local eco. X X X XLocally financed X X X XEmployee focused X X X
Innovative funding sources have been developed to address the hitherto dearth of investment capital
Liquidity sources – i.e. public market, acquirers and OTC exchanges cannot handle the kind of CME companies that will emerge soon
5 April 2012, President Obama signed the JOBS (Jumpstart Our Business Startups) Act intended to encourage funding of small businesses by easing various securities regulations
Prior to this, US legislation prohibited public solicitation for private companies raising funds.
The SEC will regulate crowdfunding in the USA.
JOBS Act – further facilitating funding
[IN EFFECT] Companies can solicit investments from accredited investors online
Accredited investors can invest <$100,000 (per company) annually
[COMING SOON IN EFFECT] Non-accredited investors may purchase equity through crowdfunding
Companies can raise up to $1,000,000 per year
Title II
Title III
42
Local exchanges will need to overcome the hurdles faced by OTC exchanges, which mainly hover around transparency and avoidance of fraud. Below are initial areas to consider
Junior exchanges – facilitating exits
Funding sources and history
Social and corporate network
validationFinancial reporting Prior trades and
investments
Insider information – guarantors,
mentors
Related company information
Other going concern related
metrics
Information exchange
New junior exchanges will be online and automated to reduce establishment and running costs
• Weak signals
• New products / services
• Collaborative networks
• Avoid herd mentality
• Local competitive advantage
• Integration with local ecosystem
• Web 2.0 / 3.0
• Social media
43
Listing requirements on junior exchanges will be similar to current requirements but will have an enhanced focus on “CME Characteristics” of the company. These characteristics are:
CME context requirements in exchange listing
Thinking connectively
Distributive intelligence
Trend identification
Self-organizing collectives
44
All the important players in the CME ecosystem will work together to create a virtuous cycle of innovation funding and liquidity
Key players
Investors
• Community banks
• Angel investors
• Equity investors (institutional and individuals)
• Relaxed investment criteria due to business inter-connections
Entrepreneurs
• Develop company with view towards listing
• Encourage transparency right from the start
• Continue relationship-based business until listing
Economic developers
• Develop incentives to promote entrepreneurship
• Encourage local expertise
• Incentivize funding sources and encourage individual investors
• Attract outside investors
Chambers of commerce
• Play “SEC type” role
• Develop initial listing requirements which are common nationwide
• Add CME elements to listing requirements (important)
Each CME Region will be interconnected with other regions and will enable knowledge sharing and distributive thinking
Regional level inter-connections
Local funding source 1Accelerator, VC,
Crowdfunding, Banks
Regional Start-up 2Local Start-up 2
Local Start-up 3
Local funding source 3Accelerator, VC,
Crowdfunding, Banks
Local funding source 2Accelerator, VC,
Crowdfunding, Banks
Regional funding source Large Accelerator, Large
VC, Crowdfunding, Regional Banks
Regional Start-up 1Local Start-up 4
Local Junior exchange 1
Local Junior exchange 2
Local Junior exchange 3
Regional public stock exchange
CME REGION 1
Local Start-up 6
Investors
Investors
Investors
Investors
Investors
InvestorsInvestors
Area boundaryCollaborationFundingLiquidity
CME REGION 3
CME REGION 2
Conclusion
Financing start-ups in the context of CME will involve some evolutionary changes on the funding side and revolutionary efforts on the liquidity side
Accelerators, traditional venture capital, crowd-funding platforms are providing enhanced breadth to the funding side
Establishment of online junior exchanges will facilitate higher liquidity and transparency levels
Success of the above proposal will depend on: Smart connected systems for information sharing and collaborative thinking Inter-connected nature of investors and trend identification on a larger level between CME
Regions Implementation will vary by the development of particular regions:
Regions with highly developed funding ecosystem will require a liquidity medium via the junior exchanges
Other regions will have to develop a funding ecosystem first
There are numerous existing sources of funding and will continue to grow through the JOBS Act. Junior exchanges will facilitate exits for these startups.
Session Summary
Economic Trends and The Middle Class Capacity Building for Transformational
Community Development A New Approach for Economic and
Workforce Development New Methods of Financing Economic Growth
and Job Creation
Q&A
ContactJim DamicisSenior Vice PresidentCamoin Associates
camoinassociates.com
Rupam ShrivastavaDirector ePlanet Capital
eplanetcapital.com
Virginia GibbsPresident/CEOFayette Chamber of Commerce
FayetteChamber.org
