CED in the News, 2002

Erskine Bowles: To Succeed, Entrepreneurs Must Stay Focused on Goals, Set High Standards

By Erskine Bowles, Special To LTW

Reprinted with permission from LocalTechWire

(Editor's note: A feature of Local Tech Wire is "Say Something" where people are invited to contribute to our Op/Ed section. Monica Doss of CED wrote about entrepreneurs in our first edition. Today, we include comments from Erskine Bowles. The investment banker and former Clinton Administration chief of staff took time out from his U.S. Senate campaign to deliver the keynote address at Friday's Money & Markets conference put on by the Council for Entrepreneurial Development. What follows is an edited version of his prepared remarks.)

RESEARCH TRIANGLE PARK - Good Morning. Let me thank Monica Doss (President of CED) for asking me to come today, and thank you, Doug (Breeden, Duke University) for that warm and generous introduction. ...

Let me just say it feels good to be back home - home with a bunch of entrepreneurs. For, you see, I learned what the definition of an entrepreneur was at an early age (from his father). But like lot of sons, I tried to emulate my Dad and become an entrepreneur.

In 1972 I started my own investment banking firm. I started it by myself with a half-time secretary. And in my first year, my revenues - not my profits - my revenues were $5,000. In my second year, they were $30,000. In my third year, they were $100,000. Clearly, we weren't profitable.

But over a 20-year period, my partners, associates and I built the largest firm in the middle market - by first realizing there was a void; and focusing - at the cost of everything else - on filling that void.

Then, we stayed focused.

We added structure where it was important to do so.

We had clearly defined goals, objectives and timelines.

We hired really good people.

We set high standards.

We held people accountable.

We always, always did quality work and never over-promised.

And that's how we got our first deal and how we built something of real value that we sold to (First Union National Bank) - for way too much money.

Sound familiar? I bet it does - aspiring entrepreneurs almost always ask me, "How did you do it? How'd you build Bowles Hollowell?" And I always basically tell them you've got to follow those eight steps that I just outlined, but ...

You've also got to be lucky.

You've got to have a good idea.

And you've got to have enough capital to buy enough time to prove your good idea makes sense.

Here, in the Research Triangle Park, we have almost all the ingredients necessary for any entrepreneur to succeed.

First, we have the Park itself. My Dad was instrumental in founding the Park 43 years ago this month ... and then helping it grow. He really believed in this place and I know that after 43 years, it's easy to take the Park for granted. But when it was established, it was a revolutionary idea - bringing together the bright minds at UNC, Duke, State and NC Central with truly forward-thinking anchor companies to create a future for the region and the state that would emphasize: technology and new industry, as well as traditional industries and agribusiness.

The RTP was the first of its kind and it remains unparalleled, even today. In other areas - The Silicon Valley, Route 128 in Boston, Austin, and the Dulles corridor outside of Washington, DC - there are for sure high-tech economic concentrations. In some cases, there are also world-class universities nearby. But nowhere is the education-economic connection as strong or as integrated as it is in Research Triangle, and that is the RTP's winning ingredient.

And this is an ingredient that communities across the country and around the world are trying to emulate.

The second ingredient that the RTP was smart enough to add to breed growth and entrepreneurship was the CED. In the mid-1980s, when other research parks started to multiply in communities across the country, a group of local leaders had the foresight to form the Council for Entrepreneurial Development.

These business leaders saw that the Research Triangle Park had established the institutional infrastructure to attract large companies. But what they needed really badly were the resources and focus to fuel start-ups.

A diverse group of large anchor companies had truly bought into the Research Triangle Park, and these big companies were thriving.

The universities were providing well-trained employees and a solid base for scientific advancement.

Chambers of Commerce were active in every surrounding community.

But entrepreneurs were not flocking to the region or springing up to take advantage of these opportunities in the numbers that seemed possible at that time.

The CED filled that void and also built a culture that embraced not only technology and research but also venture capital, angel capital, professional service and spin-off investments. And like the RTP, the CED quickly gained a national reputation. The Council set a new standard for stimulating entrepreneurial growth, and today it is the largest entrepreneurial support organization in the country.

But as each of you in this room know all too well, all of us - the CED, the Research Triangle Park, the State and Federal government - all of us, together, still have much left to do to foster the kind of growth and opportunity we need in this area to compete in this new global economy of the 21st century.

According to a study prepared by Case Western Reserve University, Raleigh-Durham ranks fourth among 50 metropolitan areas in possessing characteristics vital to growth in the new global economy of the 21st century. That puts Raleigh-Durham behind only San Francisco, Austin and Seattle, despite the fact that Raleigh-Durham is one of the smallest of the areas ranked by Case Western.

By the way, the index ranks Charlotte 30th and Greensboro 45th.

The Case Western study considers 16 factors critical to spawning growth in the 21st century. Given the foundation laid by the Research Triangle Park and the CED, it is no surprise that Raleigh-Durham scored high in:

However, the study also pointed out four areas where we are clearly behind in creating an atmosphere conducive to growth in the 21st century. They are:

As you all know full well, Gazelle firms account for the bulk of the economy's small business growth and new jobs. These firms are dynamic, innovative and highly competitive. Raleigh-Durham has fewer such rapidly growing companies than most metropolitan areas in part because of the original large-company orientation of the RTP. But even high-tech jobs in the Research Triangle tend to be in branches of larger corporations, rather than in the fast-growing gazelles.

The CED's efforts here are crucial, and we must reinforce them at the state, local and federal levels. We must continue to promote policies and resources that support change, innovation and adaptation. We must aggressively court venture capital and angel capital to fund promising new companies. And we must provide the services and skills to ensure their success.

Another critical factor to entrepreneurial growth is affordable, high-speed Internet access, which is vital for opening markets across the country and around the world. A related tool - high levels of Internet capacity, as compared to demand, also is needed to provide the Research Triangle with a competitive advantage. Backbone is especially crucial to new economy firms that host and transmit huge quantities of data.

Finally, we must concentrate on increasing exports. Export-oriented firms generate jobs - high-skilled, high-wage jobs. Firms that produce goods primarily for export pay workers 10 percent more than firms that manufacture products primarily for domestic consumption. We want to ensure that Raleigh-Durham and North Carolina get their share of that pie.

This will require that we continue to pursue policies favorable to exports while not damaging our basic businesses here at home. It will also mean identifying new and expanded foreign markets for North Carolina goods, including agribusiness. Improving our Internet infrastructure will make reaching and selling to these markets far easier. And we must also be open to foreign investment here in North Carolina communities.

So, in summary, the future economic growth of entrepreneurial companies in this region will depend on applying the new economy's technology, tools and ways of thinking. The prerequisite will be investments in a skilled workforce, an infrastructure that supports technological innovation and an attractive quality of life. And the key will be partnerships, throughout our state, like the one established here.

Businesses, institutions of higher education, government and civic groups must work in concert to design and implement creative strategies for economic development. The foundation we need for the future starts with the Research Triangle Park and the CED, but it depends on all of us.

That's why I'm so excited by what I see happening with the CED and the Research Triangle Park. Those of you who know me know I've spent my life working to bring folks together - working to achieve common sense, real world solutions to difficult problems - in the business world, in my civic life and in my public service both at the Small Business Administration and the White House.

I particularly admire the efforts of the CED because I see the principle of coming together to forge real-world solutions at work here. I know great things will continue to come of your partnership with the Research Triangle Park and from your affiliations with other economic development organizations. I look forward to being invited back often to see the great progress we all know is coming.

Thank you very much.