Stimulating black business in California through technology

Stimulating black business in California through technology

a presentation by John William Templeton

California Black Chamber of Commerce

San Jose, CA Friday, Aug. 21, 2009

©2009 eAccess Corp.

When the new city of East Palo Alto was formed in the early 1970s, Roy Clay knew that it would need an industrial base to provide jobs and tax revenues.

Clay had been the R&D director and acting general manager of computers for Hewlett Packard during the last half of the 1960s and saw the opportunity to be a light industrial supplier to HP and other companies.

In the documentary Freedom Riders of the Cutting Edge, Clay recalls launching EPA Electronics, which later became Rod-L Electronics.  He was able to hire his assembly workers directly from OIC-West, regardless of educational background.

Now more than 75 OIC trainees later, and 30 years in business, Rod-L makes the Underwriters Laboratory-certified electronic test equipment used by electronics manufacturers globally.

Clay has become a member of the Silicon Valley Engineering Hall of Fame despite being told in 1955 that there were no jobs for professional Negroes.

For the past 15 years, Roland Willis has turned old computers into the digital equivalent of silk purses in his Community Computing Center in San Francisco.    Just one high school, Thurgood Marshall High, in San Francisco has 400 computers refurbished by CCC after being discarded by government agencies and businesses.   Although our students did not receive the technology assets the state should have provided, Willis equipped them anyway.

I begin by mentioning those vignettes to address the prevalent assumption that African-Americans are late to the technological revolution or oblivious to the global marketplace.

I’m drawing on several of our recent products, the Freedom Riders of the Cutting Edge documentary, our annual Silicon Ceiling reports and our annual State of Black Business reports, plus the Black Students Internet Guide and Compelling State Interest: California without Proposition 209 in this presentation.

Unless California as a state supports the initiative and innovation of its African-American technologists, it risks falling far behind other states and international markets.

Not only did Clay direct Hewlett Packard’s first computer in the 1960s, but Jerry Lawson designed the first computer game console, Ron Jones invented the raster image processor for large-format printing and Marc Hannah designed the Geometry Engine for scientific workstations.

Although the state has thrived for years off the benefits of those innovations, it has not invested back in the communities which gave forth that spark.

California has been the number one recipient of federal research and development dollars and number one in private research and development.  Four of its universities are among the top 20 in producing graduate engineering students.

Roy Clay demonstrated 30 years ago that minority communities could host high technology facilities. Before launching his firm, Clay helped greenlight Intel, Compaq and Tandem.

But California did not learn Clay’s lesson.

Prince George’s County and the State of Maryland did.  In Walls Come Tumbling Down: State of Black Business, we rank Maryland with the best business climate for African-American firms.  One of the measures is the scale of the enterprises in the state, most particularly the technology.

Maryland has 14,000 more African-American Math/Engineering/Science workers than California and 12,000 more African-American computer workers.

In fact, Prince George’s County alone has almost as many black computer professionals than the entire state of California.

The reason is the concentration of African-American owned technology companies in the county, a consequence of deliberate policy decisions by local, state and federal officials.

Although we’ve had the shining example of Rod-L as a technological, civic and employment model, we haven’t chosen to replicate it.

Today, we have an unprecedented opportunity to undo that mistake.

The American Recovery and Reinvestment Act is laying the seeds for the most significant federal boost to innovation since the creation of the Internet.

Early signs are not good for equal opportunity stimulus though.  We’ve learned of solar company getting millions in subsidies in San Francisco after promising to train workers in Bayview for green jobs. They got the subsidy, but didn’t provide the training or the jobs.

In Walls Come Tumbling Down, we lay out the steps that are necessary to grow African-American businesses.  These are all initiatives which have been proven to work in other states.

For the most part, these are the same strategies which are at work in California, just not for African-American entrepreneurs.

First we must start from the premise that there is a compelling state interest to developing African-American innovation businesses in California. From 2000 to 2005, California ranked first in the nation in the receipt of Small Business Innovation Research awards.

However, its African-American population declined by 9 percent during that time.  A city like San Francisco had a black population decline of over 20 percent.     Significantly, San Francisco County ranks 55th in the nation in the number of African-American computer professionals with just 157, according to the Bureau of Labor Statistics.  That’s half as many as Oklahoma County, OK and only two more than Mobile County, AL.

Santa Clara County ranked 28th with 1,264, compared to Prince George’s County’s 14,130.

Given that there are 96,000 African-Americans who hold degrees in computer and information science, we have to conclude that areas with high levels of black technology entrepreneurship are more likely to attract black technical talent.

When I was editor of the San Jose Business Journal, the Bay Area was the Prince George’s County of the late 1980s with expanding numbers of innovative black technologists.  When  I wrote Success Secrets of Black Executives in 1992, we could fill a hall with black technology executives in monthly meetings of the Black Executive Forum.

We’ve done it before and 2009 is the time to light that fire again.

The focus on this week’s summit is a beginning for the policy steps which must follow.

For economic development, state and local governments take a catalytic role in assembling the factors of production–trained workforces, transportation and communications links, power, financing and regulation.

Two examples are the half billion loan to Tesla for building electric cars.  Tesla took the federal money and announced they’re building a plant in the Stanford Industrial Park, not East Palo Alto.

Mission Bay in San Francisco has been a wonder to behold as they area has blossomed with the UC-SF campus and office buildings and condos while the nearby Bayview/Hunters Point area has been road-kill in the crosshairs.

In Florida, which has had the fastest growth of African-American businesses in the country for the past 15 years, the state has created the Black Business Investment Fund, specifically to provide capital for the expansion of black-owned businesses.  It is one of eight states with specific loan programs for minority firms.

Maryland, Ohio, Virginia, New York, New Jersey and Tennessee, among others have specific authority in the governor’s office, devoted to accountability for minority business success, including quarterly monitoring of supplier diversity results.

Based on those precedents, it is time for the state and local governments to heed the advice of Sen. Barbara Boxer, D-CA, to insure that minority, women and veteran owned businesses get an equal opportunity to compete for ARRA contracts.

As my co-founder of National Black Business Month, Fred Jordan, told Sen. Boxer in an Oakland hearing, 80 percent of black contractors went out of business in California after Prop. 209.  He said we need a recovery from Prop. 209.

My proposal is this:

1) Gov. Schwarznegger create a Black Communities Innovation Task Force as an adjunct to his California Recovery Task Force with the mandate to create linkages to route ARRA funding into cutting-edge firms that will locate in HUBZones to carry out projects funded with stimulus funding.

2) That Task Force should involve as advisors or consultants seasoned executives and venture capitalists such as those who have been selected to the 50 Most Important African-Americans in Technology who can screen and mentor potential candidates

3) A goal should be the aggregation of a pool of capital including stimulus funds, pension and private venture specifically targeted to high unemployment communities in California which have been historically underrepresented in the economy

4) The task force should identify tasks within the ARRA portfolio which lend themselves to the competitive advantages of these neighborhoods.   For example, the proximity to UC-SF and bio tech would suggest a focus on health IT businesses for nearby Bayview/Hunters Point or neighborhoods near the Drew University of Medicine and Science.   My company has designed an integrated learning system which could provide a technological solution to the achievement gap using Internet 2 links to public schools.  Roland Willis’ CCCI could train and employ dozens more while reducing dramatically the environmental damage from discarded technology.

These steps are nothing but the same kind of foundation building which has been available to white companies since the transcontinental railroad and Homestead Act in California.   Even if the numbers of technologists have been declining, such an initiative would attract the talented from across the nation.

Rather than focusing on numerical goals and timetables, we should instead focus on the communities we want to transform.  For decades, we’ve redeveloped black neighborhoods by tearing down and rebuilding, but have ignored the essential element of creating jobs.

Evidence around the country is that promoting black-owned technology firms is the best way to promote stable, future-oriented careers and healthy communities.

A state which has been a technological leader can not justify leaving out its African-American population, particularly when African-Americans were present at the beginning of so many of these industries.

As we compete for part of the $8 billion allocated to high speed rail, let’s first make a commitment to high speed equal opportunity.

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