Can’t Phoenix grow its own?

Why is Phoenix always trying to attract companies from outside the state? I hear way more about the state, county and municipalities offering incentives to out-of-state companies than I do about those same governments funding local business development.  I know I’m sounding like Derek Neighbors here, but it’s something that’s been bugging me. If cities put as many dollars into funding and supporting local entrepreneurs as they give in tax breaks to big out-of-state companies, there would be no lack of hot startups coming out of Phoenix.

Much of the Valley’s population is made up of transplants. Nearly everyone is from somewhere else. But why do we apply that same model to business here?

UPDATE: Thanks to Tyler Hurst for pointing out that I originally had “it’s” instead of “its” in the title.

  • http://tdhurst.com tdhurst

    If you look at Austin, Silicon Valley, Seattle and other tech powerhouses, their one commonality is that they all invested in local startups that eventually made it big. Their growth was slow but sustainable, and that business model is antithetical to AZ's real-estate-based grow at all costs mentality.

    But yeah.

  • http://www.yuriartibise.com Yuri Artibise

    It's not that AZ can't produce our own businesses, its that we can't keep them. For much for the past decade we were among the top states in number of start-ups and fast growing 'gazelle' companies. Alas most of these start-ups ended up moving out of state, usually for access to brains or capital.

    As such, to me the answer isn't subsidizing local entrepreneurs. Rather it is adjusting our systems to provide the talent and capital so existing entrepreneurs don't have to move out of state to grow their businesses. This means shifting taxes away for small businesses and towards property; and shifting investments away from subsidizing companies and towards education.

  • http://matthewpetro.wordpress.com Matthew Petro

    Real estate is definitely the other side of this coin. So much of the local economy comes down to selling more land. Local governments attract big business so that they can instantly provide thousands of jobs, which will in turn provide people to buy houses from developers.

    How do we get lawmakers to have the patience to invest in local business growth and wait for it to blossom instead of just trying to land the big businesses now?

  • http://matthewpetro.wordpress.com Matthew Petro

    Yeah, lack of education funding is another thing which seems to handicap local business growth. But I have to question that a little bit. There's over 4 million people in the Phoenix metropolitan area, many of whom have moved here from all over the US and other countries. That represents a lot of education from institutions around the world, and plenty of graduates of the School of Hard Knocks too. But that's not enough brains to provide the intellectual capital a growing business needs to succeed?

    I'm not saying that education doesn't need more political and financial support in this state…it does. But I don't think that's a root cause of the problem.

  • http://derekneighbors.com Derek Neighbors

    I have a blog post coming.. i think.. the triangle is right, but its on its side…

    - people
    - innovation
    - capital

    should be the priority currently its

    - capital
    - innovation
    - people

    More later. :)

  • http://matthewpetro.wordpress.com Matthew Petro

    I look forward to reading that post.

  • http://www.yuriartibise.com Yuri Artibise

    By supporting candidates who get it, both with time and money. If each entrepreneur in the Valley contributed their $410 to a candidate that gets the need for reform and encouraged their friends and family to do the same, inroads could be made. If they can't afford the $$, or their candidates are running 'clean', they can help support their candidate (and/or others) by going door to door canvassing support. At the very least the can call the representatives and Governor and show their objection to legislation like Bill 1070.

    As long as the only support that most legislators get is from the Tea-bagging right whingers we can't expect much to change.

  • Sean S

    1070 came out of left field right there

  • http://www.yuriartibise.com Yuri Artibise

    Most of these people have only moved here within the past decade or two, and many of the more educated ones only stay around for a few years. For every 5 people who move to AZ, about 3 people leave, and they are usually the more educated ones. Despite all the people you mention, AZ is still well below the US average in residents with Bachelor degrees or higher (not to mention high school diplomas).

    I think that we are currently seeing a small emergence of the 'creative class' in Phoenix because the economic downturn has limited people's opportunities to move away and they are trying to make the best of a bad situation. But when the situation improves, many of they will move on again.

    It takes time to modify economic and business patterns. Even if we were able to affect change in the legislature and stop spending money on attracting developers and big boxes and start cultivating our local creative talent, it would be at least a generation before things started to change substantially.

    Remember Seattle, San Jose and Austin have been cultivating their entrepreneurial climate for 60+ years (and were kickstarted by massive influxes of federal investments which don't exist anymore.) Sure companies like Twitter and Google seemed to be 'overnight success, but a success that was built on generations of people who laid the groundwork. Phoenix simply doesn't have that foundation yet, and we don't seem to have the patience to lay it.

  • http://matthewpetro.wordpress.com Matthew Petro

    The tea baggers have only been around for a little while. Developers have been around this city for 50 years, building master-planned communities and obtaining large amounts of political influence. Support needs to be given to younger legislative candidates who don't think the only way to generate tax revenue is to let developers build more houses that can be taxed.

    I don't mean to sound ageist with that comment, but I think that older legislators are still steeped in the developer-driven economy. Younger people tend to have a different view and I think that's who we need in office.

  • http://derekneighbors.com Derek Neighbors

    I have a blog post coming.. i think.. the triangle is right, but its on its side…

    - people
    - innovation
    - capital

    should be the priority currently its

    - capital
    - innovation
    - people

    More later. :)

  • http://matthewpetro.wordpress.com Matthew Petro

    I look forward to reading that post.

  • http://www.yuriartibise.com Yuri Artibise

    By supporting candidates who get it, both with time and money. If each entrepreneur in the Valley contributed their $410 to a candidate that gets the need for reform and encouraged their friends and family to do the same, inroads could be made. If they can't afford the $$, or their candidates are running 'clean', they can help support their candidate (and/or others) by going door to door canvassing support. At the very least the can call the representatives and Governor and show their objection to legislation like Bill 1070.

    As long as the only support that most legislators get is from the Tea-bagging right whingers we can't expect much to change.

  • Sean S

    1070 came out of left field right there

  • http://www.yuriartibise.com Yuri Artibise

    Most of these people have only moved here within the past decade or two, and many of the more educated ones only stay around for a few years. For every 5 people who move to AZ, about 3 people leave, and they are usually the more educated ones. Despite all the people you mention, AZ is still well below the US average in residents with Bachelor degrees or higher (not to mention high school diplomas).

    I think that we are currently seeing a small emergence of the 'creative class' in Phoenix because the economic downturn has limited people's opportunities to move away and they are trying to make the best of a bad situation. But when the situation improves, many of they will move on again.

    It takes time to modify economic and business patterns. Even if we were able to affect change in the legislature and stop spending money on attracting developers and big boxes and start cultivating our local creative talent, it would be at least a generation before things started to change substantially.

    Remember Seattle, San Jose and Austin have been cultivating their entrepreneurial climate for 60+ years (and were kickstarted by massive influxes of federal investments which don't exist anymore.) Sure companies like Twitter and Google seemed to be 'overnight success, but a success that was built on generations of people who laid the groundwork. Phoenix simply doesn't have that foundation yet, and we don't seem to have the patience to lay it.

  • http://matthewpetro.wordpress.com Matthew Petro

    The tea baggers have only been around for a little while. Developers have been around this city for 50 years, building master-planned communities and obtaining large amounts of political influence. Support needs to be given to younger legislative candidates who don't think the only way to generate tax revenue is to let developers build more houses that can be taxed.

    I don't mean to sound ageist with that comment, but I think that older legislators are still steeped in the developer-driven economy. Younger people tend to have a different view and I think that's who we need in office.