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(upbeat music) - Hello and welcome to the City Club of Cleveland, where we are devoted to conversations of consequence that help democracy thrive.

Today is Friday, April 14th.

My name is Dan Moulthrop.

I'm the chief executive here.

I'm also a proud member.

And I'm pleased to introduce our forum today.

It's a conversation about Rebecca Fannin's latest book, "Silicon Heartland, Transforming the Midwest from Rust Belt to Tech Belt."

And the great good fortune is that we have Rebecca Fannin with us today as well.

She has more than three decades of experiences as a business journalist.

You likely know her from her work as a contributor to CNBC.

Her byline also regularly appears in the Harvard Business Review and Forbes.

In 2010, Fannin launched Silicon Dragon Ventures, a media and events platform focused on startup investment.

Ms. Fannin is also an Ohio native, so when it comes to the Midwest, she knows what she's talking about.

Today we'll hear from Rebecca Fannin about the unique opportunities that are turning the Midwest into a high-tech hub and about what is next for Midwest innovation as major companies, venture capitalists and entrepreneurs are turning their eyes inland away from the coast.

After some opening remarks, Ms. Fannin will lead a panel conversation with three leaders from our local entrepreneurship and innovation community.

Joining us on stage are Matt Buder Shapiro.

He's co-founder of Med Pilot and the Chief marketing Officer of Vitalized Health.

Ray Leach, at the far end of the stage, he's CEO of Jumpstart Incorporated, and Baiju Shah, president and CEO of the Greater Cleveland Partnership.

If you'd like to help shape the conversation, you can send us your question, text it to 330-541-5794.

The number again is 330-541-5794.

You can also tweet your question @thecityclub and our staff will work it into the Q&A portion of the program.

Members and Friends of the City Club of Cleveland, please join me in welcoming to the lectern, Rebecca Fannin.

(audience claps) - Thank you, thank you, thank you.

Well, thank you very much.

It's wonderful to see everyone here today.

And as you already heard, I am an Ohio native from Lancaster, Ohio.

So I do know something about what I'm writing about here.

And I've been writing for many, many years, from Harvard Business Review to CNBC to Forbes to a couple of books later.

This is actually my fourth book, and my first book was about China, "Silicon Dragon" And it was published in 2008 when nobody believed that China could be a tech innovator.

And I think I proved them wrong, the naysayers wrong with some subsequent books, "Tech Titans of China," which was published in 2019.

So I've been trans spotting tech, innovation and venture capital for 20 plus years.

And a few years ago, I put a project on the front burner, which was "Silicon Heartland," my new book, "Transforming the Midwest from Rust Belt to Tech Belt."

One of the reasons I put it on the front burner is that I wasn't able to go to China anymore.

All those trips to China, 100 trips to China over about 12 to 15 years, and it ended in 2020.

So I began this investigation and exploration of what's happening here in the Heartland, which I had been hearing about, but I hadn't discovered it firsthand.

Now, many people agree with me today that the Heartland is transforming, and these are people who are on the front lines as well, like Jim Breyer of Breyer Capital, he was an original investor in Facebook, Ro Khanna, congressman from Silicon Valley.

He says, a book that inspires hope for our future.

And this book is about our future and America's future and how the Heartland can rise and how it can help us compete with China.

Many others have had their remarks about the book, including John Chambers.

And you know, he's really an interesting, very quotable person who talks about if you don't disrupt, you are going to be disrupted.

So this is where the Heartland is today.

We're in the middle of this transition of disrupting so that we're not disrupted.

On my Heartland Road trip, I went to many, many places, about 26 tech clusters in the Great Lake States and Appalachian states.

It was a wonderful journey to interview many leaders of this transition, this transformation that's happening.

Mayors, entrepreneurs, investors, business leaders, and I made some really, I think, wonderful discoveries of the industrial past and the future that awaits us all.

So in Lancaster, Ohio, it's home to Anchor Hawking.

It's a glass town, right?

It's a glass factory town, but that's the past.

There's one factory left out of the huge factories that were going strong in Lancaster, Ohio.

Same thing in Pittsburgh.

There's one steel mill left in Pittsburgh out of all those bustling steel mills.

So as we can see, we have to invent the future and that's happening right now.

Intel, as we know, is investing 20 billion into a new semiconductor plant outside Columbus, Ohio, very near my hometown of Lancaster.

There's tech training already going on for this future of tech innovation that we are seeing happening here in the Heartland today.

And we need more of it.

We need more of this tech training because those jobs, the old factory jobs are not coming back.

It's all about new tech today.

New tech is about Google data centers in Ohio, even in my hometown of Lancaster on farmland.

And it's about biotech and 3D printing, advanced manufacturing from the Cleveland Clinic to the Youngstown Business incubator in Youngstown.

Many innovations happening in these tech clusters, but there's a lot of challenges that remain.

One of them is the workforce development.

Another is this idea of many societal ills in today's population, poverty remains in this area very pronounced.

Opioid addiction in some markets, and other challenges, a slower pace here in the Heartland than I've seen in Silicon Valley or in China or elsewhere.

Lagging infrastructure, yes, there's great highways crisscrossing, but there's really no high speed rail and the bridges need fixed.

China has high speed rail crisscrossing the country already.

I have taken the train from Shanghai to Beijing several times, and it only takes three and a half hours.

It used to take an overnight trip.

So the Heartland has these challenges.

One of the main challenges is the confidence factor, the culture of, you know, being humble.

The Midwest is a very humble place, everyone's nice, but there's not a lot of cutthroat competition that I've seen in China and in Silica Valley over the years.

And I have been in China during the tech boom there and I've been in Silicon Valley during the tech boom there.

And also the downside of it.

So this confidence factor of yes, we can do it, we can do it.

And we're gonna be hearing on the panel later about some entrepreneurs who are succeeding, but we need more.

There's no Steve Jobs yet, or Elon Musk get in the Heartland.

There's plenty of them I've met in Silicon Valley with that kind of personality.

But there's few and far between here in the Midwest.

So that's what I talk about, this confidence factor and the culture factor.

I've already mentioned the China rivalry.

One of the reasons I wanted to write this book is because I had already documented what was going on in China in R&D and in venture capital and in innovation and in entrepreneurship.

I saw the US lagging behind and I document that in my book.

I show the R&D spending, the venture capital spending and now we have the promise of tomorrow with the CHIPS Act and the American Rescue plans part of it, the regional innovation hubs, the US government funding statewide and government-wide.

The US is putting tech innovation on the frontline and we're catching up to China and China is still going strong.

There are a number of drivers that I write about in my book, "Silicon Heartland," the new startups, 18,000 in 10 years, the venture capital, four times growth to 20 billion in 10 years.

The universities such as Case Western and also OSU and many others, Carnegie Mellon, of course, I cannot skip over Carnegie Mellon, the corporate innovators from P&G to Goodyear to Nationwide.

Now another one of the major drivers of this Heartland transition, of course is the remote working.

So remote working came into being about the time that I was starting this book and it is here to stay I think.

And the pandemic also was a driver of this whole transformation.

We saw people leaving Silicon Valley.

I still have a place in Silicon Valley and during the pandemic and this whole era, I saw so many moving vans in my neighborhood.

60,000 people left Silicon Valley and they're coming to the Heartland in part because cost are lower and opportunities are here.

And I write in the book about where these tech clusters are.

They're in Columbus with insurance and health tech, and CHIPS now too.

Cincinnati with supply chain and sustainability, Cleveland with biotech and water tech and the Cleveland Clinic, of course, Dayton with the US Air Force and the research lab with military applications, Indianapolis with SaaS and so forth.

Detroit Motor City with Industry 4.0 and electric vehicles.

Youngstown today is all about 3D printing.

West Virginia is trying to get into cyber and new energy, new energy they need to or they're going to be disrupted big time.

In my book I talk about this important driver, venture capital and we're gonna be hearing a little bit more about that in our panel.

Is still scarce here in this region, but it's growing.

Still bout three quarters of the money goes to three coastal cities or coastal markets.

San Francisco, New York, and Boston.

It's growing here in the Heartland, but it needs to escalate.

So right now in the Great Lake States, only 8% of deals nationwide are in the Great Lake States.

On the other hand, there's been a 63% growth in the past 10 years.

So things are changing, and we'll get to hear a little bit more about how Cleveland is driving that forward in a moment.

Ohio of the great late states and the Rust Belt states is a little bit above average here.

Illinois is first Pennsylvania, Illinois was Chicago and Pennsylvania because of Pittsburgh, which is a huge transitioning town, from Steeltown to AI and robotics today.

Ohio is in third place followed by Michigan.

And we have important drivers here of this VC market, like Ray Leach of Jumpstart who is on our panel coming up.

So in these Heartland markets, maybe the population is declining in some of them, but like Cleveland and like Detroit still declining or not growing, but the tech talent pool is growing.

So over the past five years, Cleveland has gained 14% in its tech talent pool in five years.

Many other places are also going strong.

Dayton 31% increase, Indianapolis, 23% increase.

We need that.

We need this tech talent coming in to further this transition.

There are entrepreneurs region wide that I interviewed in my book and that I write about, from Flint to Pittsburgh to Cincinnati to Cleveland.

And many of them from all walks of life, immigrants, minorities.

There's a lot of creativity and innovation happening in minority led cities such as Detroit, such as Tulsa.

Tulsa is about Black Wall Street today and the renaissance of Black Wall Street.

I have been in both of these markets recently and I have seen the creativity there.

I already mentioned about the population transits mixed, tech talent is up, but population is mixed.

Cleveland and Pittsburgh and Detroit are all still declining in population.

This is over a 10 year period.

Columbus, on the other hand, has gained 15% in population in 10 years, Indianapolis, 8%, even Cincinnati, 4%.

It's a mixed picture and we need to change this and the mayors are making it happen.

In the book I interviewed many mayors, I'll highlight a few here, Bill Peduto of Pittsburgh who was very much involved with the tech transformation in Pittsburgh.

In Dayton, Nan Whaley who ran for governor here in the state of Ohio.

I have met her just recently in Dayton and she is still hard at work with the mayoral council at conference in DC.

In Flint, Sheldon Neeley, and in Cleveland Justin Bibb.

So I know many of you know Justin Bibb here.

Change makers, they make it happen.

And I write about them in the book.

Albert Rattner, who was here with us today is quoted in my book and was very helpful in telling the work he's doing in Appalachia.

And it's remarkable.

There are other people who are driving this transformation forward that I write about in the book, Gordon Gee of West Virginia University, he's the president of West Virginia University.

Dave Mawhinney of Carnegie Mellon, who's the head of the entrepreneurship center.

Baiju Shah, who is here today with us from Cleveland, we'll hear from him too.

These are change makers.

We need more of them.

We need more entrepreneurs, we need more venture capital, we need more R&D.

The promise is here, the opportunity is here and is here for the taking, to quote Albert Rodner in the book, we're moving from flyover country to fly two country.

Unfortunately this area still has this image, at least in Silicon Valley of being flyover country, but we're making it fly two country and the opportunity exists to rebuild industries here in the Heartland with new tech and to beat China.

So thank you very much for listening.

(audience claps) And now it's my pleasure to lead this panel discussion with these wonderful change makers and leaders from the entrepreneur side, from the economic development side to the venture capital side.

So Matt, I would like to start with you and from your entrepreneur, put on your entrepreneur...

It's not hard for you to put on your entrepreneurial hat, but you moved the business from New York City to Cleveland and that stood out in my mind when I was writing the book.

I said, I have to write about this company because they made this bold move.

So can you talk about how that's working out?

And without being too promotional, but.

- I'll try.

Well, first and foremost, Cleveland has the better basketball team obviously.

(audience laughs) So let's go calves.

You know, it didn't take long of burning capital and a very small WeWork in New York to realize we had to make a change.

And we looked at a few different cities across the country, and Cleveland one for a variety of different factors.

One, it is definitely more affordable that is apparent, but honestly the most important for us was incredible talent, specifically in healthcare, which is what my business is in, great healthcare customers, a media landscape that was trying to change that narrative that you could grow a company in Cleveland successfully.

People like yourself helping to change that.

And then most importantly, obviously my family's here and making my mom happy is, you know, always number one.

Honestly the one thing we were really concerned about was the ability to raise capital.

And entrepreneurs in Cleveland were very vocal about how difficult that was to do.

But truthfully, we are extremely grateful for the support we got from Cleveland and some notable people like Todd Federman of North Coast and John Penny.

They were extremely helpful, not just on capital, but in introductions.

And so, overall extremely grateful for this experience.

- And you found the talent that you needed here in Cleveland?

- Absolutely.

We went from a couple employees to 40 in the first year.

'Cause this is a city that has no shortage of people that are looking to grow companies.

- Right, and then your company was acquired after you made the move to Cleveland?

- Yes, yes.

We got acquired by a company called Vitalize Health.

And one of the important factors we looked at with Vitalize was their ability to grow in Cleveland and not just the employee base but also the customers and very, very excited by that.

- Great.

So Baiju, I wanna thank you for all your help in helping me understand what's happening here in the Cleveland market.

And I'm sure there's been a lot of new developments even since the book was published.

So maybe you can highlight a few of the changes that you're seeing that are really positive for the Cleveland economy and the taxing.

- Sure, happy to.

And thanks again for having us here and bringing your book and our story to a global audience.

You know, we've been working, I think as everyone in this room knows, for decades on trying to build our tech sectors, right?

And our tech sectors are broad, it's the IT sector, it's the biotech sector, it's the water tech sector, it's manufacturing tech, it's the whole landscape.

And we've got decades still to go as Ray and I continue to talk about.

So there have been some good recent developments.

Rebecca noted that she was here during the pandemic summer of 2020 and we had an opportunity to showcase what had happened up until that point and showcase what was happening in particular around our universities and our healthcare institutions.

One of the things that's been a recent note is the Cleveland Clinic and IBM announced the launch of their first ever private quantum computing facility, right?

IBM chose to bring that facility here to Cleveland partner with our wonderful health institutions.

And while the Cleveland Clinic is the home for it, I know that university hospitals and Metro and Case Western are all partners in this endeavor as well.

So that's one of the newer developments that's occurred since you were here last.

And wanted to pick up on something you said, and sorry for my voice.

You know, usually I have a face that's made for radio, but today I've got a voice that's made for print.

(audience laughs) So apologize for that.

But you know, Rebecca said something that's really interesting about the Midwest and our Midwest culture and how does our culture potentially impact our success, and sort of what do we strive for?

And this is always something that I think about a lot because I came out of the healthcare sector.

In the healthcare sector here in Cleveland, we don't compete to be the best in Ohio or the best in the Midwest or in the best in the country.

We wake up every day competing to be the best in the world, to serve the patients, to be the best in the absolute world.

And that's sort of what defines sort of how we approach healthcare in this community.

And we approach that certainly in basketball as well, as Matt mentioned, but also in our arts and culture community.

If you think about our arts and culture community, it's about being the best in the world.

We need to translate that inspiration to our business community where too often, whether it's entrepreneurs or corporations, you get to an early level of success and then there's a complacency that sets in.

And so you don't have, you know, the world changers that you referenced in your remarks.

So I don't know if it's as much confidence as it is complacency.

And I think that becomes our challenge in the Midwest is that we achieve a certain level of success and we stop striving for global recognition.

- Yeah, sure.

Yeah, I think that's a good point.

But also I want to point out that the region has no lack of grit, right?

Grit.

And that I have seen as a really important ingredient for a tech innovation market to make it.

China had it big time, and the Heartland has it big time too.

So grit.

- Grit is key.

- Grit is key.

Ray, so in your seat at Jumpstart, could you talk about the venture capital landscape?

Where do you see the opportunity and still the challenges?

- Yeah, well great to be here with everybody.

So many friends in the room.

I appreciate all of the partnership and support over time.

I think I would first start with a little bit as a follow up to Baiju's comments is the venture capital ecosystem that we have in our community has been a huge collaboration.

The state of Ohio, the Ohio third frontier, which is all of us, it's the taxpayers of Ohio, have probably played the largest active role to build an early stage tech ecosystem in the state.

So you may or may not be familiar, but there's a project that's now 20 years old called the Ohio Third Frontier, which has invested billions of dollars of state money across a wide range of initiatives at universities and with small businesses and certainly startups.

But a good portion of that money has gone into early stage venture funds or seed funds across the state.

So without that money there, with maybe the exception of drive, which I'll talk about in a minute, without that money, there would be no tech ecosystem, venture capital ecosystem in the state of Ohio.

Having said that, what's also important as a taxpayer is realize every dollar that the state is putting into that ecosystem must be matched and those dollars are getting paid back.

And they're not getting paid back just by tax revenues or you know, the growth of state, the venture capitalists are paying that money back too.

So I think one of the things you certainly you call out in the book, in the chapter about Ohio and about Jumpstart is the incredibly important role of the public sector.

I'd be remiss to say if it wasn't for the philanthropic community of Ohio, but particularly for Cleveland, we also would not have a tech ecosystem or a thriving investing community because of the leadership of some of our largest foundations who put up the match for the state dollars 15, 20 years ago to begin this flywheel of venture capital in Cleveland and across Ohio.

So without those two things, I'm not sure where we would be.

I shudder to think where we would be without those two actors.

Now you will notice there is a group missing out of those two and that's the business community.

So we have made huge progress in Cleveland and northeast Ohio with the public sector and the philanthropic community.

But we have really struggled as a region in building more significant partnerships with large businesses and with institutions.

Other parts of the state have done a better job in that area and certainly other cities across the Midwest and the country have done a much better job.

So JumpStart's been spending a lot more time and energy focused on how can we build a win-win partnership, not just with the traditional stakeholders, but you know, at the end of the day, there's certainly money at government, but where the big money is and the biggest opportunities to accelerate the entrepreneurial ecosystem in the venture capital ecosystem are robust partnerships with our largest institutions and businesses.

So that's kind of the next area of focus.

With that as a preface, I would share that we've made a lot of progress and again, has a lot to do with a lot of people in this room.

But you know, 20 years ago Greater Cleveland would be lucky, companies, startups in Greater Cleveland would be lucky to raise five to 8 million, 10 million a year as an ecosystem 20 years ago.

Now we certainly have companies, or as a community we're raising hundreds of millions, is a little over 500 million, a little under 600 I think actually in Greater Cleveland last calendar year.

And we do have companies now that not only have the ability to raise a couple million to get started, but then raise 10, 20 and 30 million rounds, as you know, in our community and across Ohio.

So the one last thing I'll share, kind of big picture for the state is there has been a game changing activity that's occurred, unfortunately it hasn't been in Cleveland but it's been in Columbus and that's Drive Capital.

So what's been so interesting about Drive, so Drive was founded about a decade ago and over the course of 10 years, they've been able to raise 2.2 billion of capital to invest in startups, not just in Ohio but across the Midwest.

And Drive has made a huge impact on the venture capital ecosystem of the Midwest and Ohio, but particularly to Columbus.

So what Drive has been able to do, they've invested in really young companies across, again, a larger footprint.

But when those companies get bigger and are now looking to scale, Drive's done an incredible job of relocating those companies from Madison, Wisconsin, from Baltimore, from Toronto, from Denver to Columbus.

So I think the future of Cleveland's entrepreneurial ecosystem and Ohio's entrepreneurial ecosystem is gonna be dependent on our ability in Ohio and in Cleveland to raise much larger amounts of capital that can accelerate more companies, but also most importantly in the case of Drive, write bigger checks.

So, you know, today Jumpstart Ventures, probably our average check is about a million dollars, maybe a little more than that per company over the course of a handful of years.

When Cleveland has an ecosystem that can write five, 10, 15 million checks to companies 10, 15 times a year, then we'll know, then we'll be at the next stage of impact.

And I'm very hopeful and excited to see what happens over the next 10 to 20 years.

'Cause I do think that is on the horizon.

- Absolutely.

That is the future.

And it is very interesting to note that Drive Capital's founders both came from Silicon Valley, from Sequoia Capital.

So that was Silicon Valley culture coming to the Midwest.

And then look at the impact it's had.

They've invested in dozens of startups and raised a lot of money.

So do you see a Drive capital emerging in Cleveland?

- Well, I think every community, I mean First Drive started, they have 2.2 billion today.

They had 250 million 10 years ago.

So it didn't start, nothing starts, at least in the Midwest, in the billions, it starts in the hundreds of millions, or at least a hundred million, right?

That would be the largest venture fund in the history of the city of Cleveland, a $100 million fund.

That's nothing in the grand scheme of things of the venture capital world, but it would be a great start.

So I think I am certainly have been spending, you know, the last couple decades and will help anyone in the room that aspires to be able to raise that fund or to realize that outcome, 'cause our tech ecosystem very much needs capital.

If we are able to aggregate larger amounts of capital, we'll make a lot more progress, a lot more efficiently than what we've been able to do.

But again, you know, I'm not complaining.

Silicon Valley was not created in 20 years.

It started in 1957.

By 1977 there was two companies that were really hallmark companies in the venture capital world.

One was Atari and the second one was Apple.

20 years.

That's a long time.

So in my case, it's been about 20 years, think from 1977 to 1997 the amount of progress Silicon Valley made, which again, we're not gonna be Silicon Valley.

But what fueled that really was this aggregation of capital.

So we have the talent, I think we have the grit, we have the work ethic.

If we can find ways to partner with the whole community to raise that capital, we'll accelerate our momentum.

- Right.

Yes.

So as Silicon Valley spreads nationwide, it is changing the character of many markets like Austin.

Austin could be considered a next Silicon Valley.

There are other markets as well.

In the case of Cleveland, what will have to take place before Cleveland can become one of those next Austins or next Silicon Valley?

What do you see as kind of the drivers and where are the elements of success that are gonna drive this forward?

And also I wanna ask you about the future of Cleveland because this is coming up a lot.

Many places that have succeeded already are actually suffering the consequences of too much success.

You know, there's congestion, all of a sudden the cost of living goes up, but it becomes not the kind of place that people were trying to escape from Silicon Valley.

So what is the future, let me ask it this way, what is the future of Cleveland as a tech innovation market?

How is it gonna avoid these kind of issues that have.

- Well, let's have the success first and then let's deal with the consequences of the success.

You know, I would echo Ray's comments.

I mean our biggest gap in Cleveland is capital.

Now Drive is an incredible success story, an incredible confluence of a couple of key individuals moving to a market and demonstrating that you can make money in the Midwest.

Drive is unique in the Midwest.

There's not a fun like Drive anywhere else in the Midwest.

So it's not just Columbus.

I mean there's no nothing like drive in Chicago or Indianapolis or Pittsburgh or Cincinnati or any of these other communities.

And in Ray's remarks, one of the critical things to recognize about a firm like Drive is their ability to attract companies in.

So right now markets like Cleveland or Pittsburgh, it's organic growth, it's entrepreneurs, it's people like Matt that are growing companies that are attracting capital from in region, outer region making happen.

A firm like Drive can accelerate that by bringing companies from many other places in and all of a sudden the speed gets there.

So I do think capital is a huge, huge part of it.

And it's both venture capital, but as Ray also said, the corporate venture capital.

We need our companies to start to think about the startup space in a very different way than they've been thinking about.

We've got a few companies that have launched venture units or new business creation units, like Progressive Insurance with Level 20 now in town or UH Ventures or the Cleveland Clinic ventures.

But we need many, many more of our companies to start to participate in the startup market 'cause that's another way by which we attract entrepreneurs to our community and start to accelerate the speed of growth.

And then you need that magical moment where you do have the equivalent of an apple, right?

A company that sort of starts to spawn many other companies.

We've had a few in our history here in Cleveland, not by design but by just sheer luck.

So we've mapped trees in the healthcare sector out of what was called Picker x-ray.

And out of Picker X-ray came 60 medical imaging companies that continue to persist today, you know, throughout our community or Stairs corporation, right?

Those are (indistinct), you know, in the orthopedic space and you can trace a bunch of companies that came out.

So we need a couple of those companies, but we need them at an even larger scale.

So all of a sudden they seed a whole network of new companies because of the success of the entrepreneurs and the talent.

- Absolutely.

It takes this serial entrepreneurship and the success and heroes that can inspire the new generation, the next generation.

So Matt, what inspired you to become an entrepreneur and why Cleveland?

- You know, for me, actually, firstly I just wanna comment on, 'cause Ray and Baiju brought up great points about the importance of venture capital and corporate ventures.

But I think there's a very critical stage before you get to that of early stage angel investing.

These companies that are just starting, they're not at a place where they're gonna have the metrics to probably convince a venture fund to take a chance on them.

And I think honestly that's one of the indirect benefits of a serial entrepreneur is serial entrepreneurs, hopefully, if they have some success, are willing to take chances 'cause they have capital but they also understand the risk.

I think one of the bigger issues in Cleveland is not that Cleveland doesn't have any capital, it's they don't have the type of capital that's willing to take those risks, and you know, people that understand the risk profile or the risk award paradigm.

So, but in terms of serial entrepreneurship, for me, you know, I've wanted to be an entrepreneur since day one.

I'm grateful for that.

You know, my mom's here so she knows I've been trying to start companies from a very young age, not always successfully.

But you know, to be a serial entrepreneur, you have to understand that you can have success in so many ways, not just financially.

And for me it was education, it was understanding how to grow a business and knowing that even if I didn't create Apple, I would learn a lot, probably more than in an MBA program for me 'cause school wasn't my number one skillset.

So, you know, I think serial entrepreneurs kind of all have that mentality.

- Right.

So as the city changes and the region changes, what impact is this going to have on the culture?

You know, we are going from factory work and from people who were laid off and from a lot of industries that collapsed and people lost their jobs and a lot of despair and poverty.

And now we're seeing this tech innovation happening here in the Heartland, in clusters, in pockets, not everywhere, but in certain pockets.

And I think Cleveland is coming on strong.

So how is this gonna change the culture of these cities?

- Yeah, so a couple comments on that.

So someone said, and I can't remember who said it, but every business is a tech business, right?

We truly have to embrace that mindset throughout Cleveland, no matter what type of business, you're a tech business and if you don't recognize you're a tech business, you're probably going out of business.

The corollary to that is every worker is a tech worker.

And for the change that we need to push through Cleveland is the awareness that no matter what role you're in today, you need to embrace technology.

And over the last two months we've all been having this existential conversation around what is ChatGPT and AI gonna do to everyone's job?

And the answer is it's gonna change everyone's job.

And you need to get ahead of that curve, rather than wait for the impact, like the factory being closed to recognize you needed to invest in skill building.

Now the good news is on the policy side, our governor and lieutenant governor have promoted a new program called TechCred, which is basically free skill building.

Any employer, any individual can apply to get the training cost reimbursed for recognized tech credential.

And we need to promote that broadly throughout our region so that we don't have the negative effects of the disruption of the wave of tech that's taking over.

- Right.

- I think that that's very much the case.

And I guess given I spend all day every day in the field of economic development in Cleveland, I have to share how incredibly impressed I am, particularly over the last handful of years about how the system itself is integrated, much better integrated than it used to be.

And the system, I believe has an appreciation and an understanding of the people that have the greatest insight on the problems are in the community.

We need to start in the community and work our way back to the solution.

You know, I've been doing this for a little while so I can tell you for the first decade or so that wasn't necessarily the orientation, not because people weren't doing good work or trying to do the right thing.

I think the community has gone through a big evolution and I think COVID has accelerated that where now we know that it's through collaboration, it's through the collective intelligence and resources and our interest and understanding that proximity to everyone in our community, and understanding where they are, the issues and challenges they're dealing with and bringing resources and empathy and understanding and capacity to accelerate them.

So to Baiju's point, everyone is a tech worker.

I think that's a great reflection of how I think our community has evolved.

It's understanding and its proximity to how we can build a better future for everyone.

- Okay.

Well last question as we wrap up our panel.

What innovations do you see coming here in the region that are gonna make a huge impact, make a difference?

I wrote about Alibaba, Tencent, Badoo, TikTok, all of these companies before they became well known.

Are there any companies like that, that are under the radar now in the Heartland that are gonna become these tech titans?

- Okay, so that's a great question.

So Jumpstart has about 180 portfolio companies, or we've invested in 180 companies, we have over a hundred active companies.

And so, and this is a big part of obviously our work every day.

There's an incredible evolution in a couple areas.

One is, you know, everything is software, certainly.

Logistics, a very large percentage of our portfolio now that has grown over time are logistics companies.

Some of that has to do with the geography and also the cost of logistics.

And now COVID certainly has accelerated our understanding of the cost of logistics, or the power of solving those things is what is enabling us to compete against China and is allowing us to move forward.

So there isn't, I'm trying to think through, there's a handful of companies that are solving really big issues and challenges related to software as a service.

Some of it is AI related.

I think there's some very exciting opportunities not only in healthcare but in enterprise software related to AI.

So we don't have that one single company that we think is going to transform the city.

But the good news is we have a lot of bets and a lot of companies.

And I do think, you know, it is important, the law of large numbers or the power effect, the more companies you have the ability to invest in and support, the greater the odds are that you're gonna accelerate economic opportunity and growth for a particular place.

- Right.

And Cleveland Clinic I think, is a big driver of innovation in biotech.

So a large number of startups in that area.

And do you see any of those becoming, popping up and becoming.

Baidu or Ray?

- So I'm gonna take a cop out answer.

I'm gonna say Vitalize.

(audience laughs) - Couldn't agree more.

- Okay, well I'm sure Matt really appreciated that answer.

Anything else, Baiju?

Medtronic, right?

Medtronic?

- Well Medtronic is obviously a great company already in Minneapolis, but I mean we've got a lot of companies.

I agree with Ray, you know, the importance here is you never really know, in entrepreneurship you go through roller coasters, you've been through I'm sure roller coasters as you built your company.

So you're not exactly sure, you know, if you're up or if you're down on any given day as you're building companies.

And I think having a portfolio makes the most sense and we'll hopefully have a number of these companies emerge and actually be the types of companies that we can talk about.

- Okay, next to last question about mayors.

Matt, the impact of Mayor Bibb here in Cleveland, Just quickly because.

- Yeah, slightly biased 'cause I was able to serve as a tech policy advisor for him, but I think that what he has done, just in terms of changing the culture and the excitement and the recruitment of people, not just in his administration, but also getting people involved, he's been so transformational on just the brand side.

So I think that to me has been the quickest impact and change that he's made.

- I would add just, I not only appreciate his passion but his orientation to action.

And so Future Land was a great example of that in the last handful of months.

So again, that's just another example of we're regenerating more momentum, more movement, more synergy.

So the mayor has made a huge impact.

- Well, very good.

Thank you very much panelists.

(audience claps) - We're about to begin the audience Q&A.

I'm Dan Moulthrop, chief executive here.

On our panel today are Matt Buder Shapiro of Med Pilot and Vitalized Health, Ray Leach of Jumpstart Incorporated, and Baiju Shah of the Greater Cleveland Partnership.

Moderating our dialogue is author and CNBC contributor, Rebecca Fannin, who also provided opening remarks.

We welcome questions from everyone, city club members, guests, students, and those of you joining us via our livestream at cityclubb.org or our live radio broadcast on 89.7 WKSU.

If you'd like to tweet a question and help shape the dialogue, you can tweet it @thecityclub or you can text it to 330-541-5794.

The number again is 330-541-5794.

May we have our first question please?

- Yes.

So this is a text question.

Just last fall there was an overwhelming attendance to the Future Land conference, which supports BIPOC tech entrepreneurship.

How can we leverage this momentum and other organizations who are striving to support our tech business owners of color?

- So there's a huge amount of momentum, not only just because of the mayor, but for many, many other partnerships in the city that understand and appreciate, again, to Baiju's comment, everybody's a tech worker, everyone has an opportunity to contribute and you know, I'm super excited about the momentum it has been able to generate and the collective commitment to this being the beginning.

You know, some of these, as we all know, some of these civic endeavors are really hard to sustain over time, but I'm not worried at all about Future Land.

One, just because of the demographics of our community, the energy and passion and understanding of what the opportunities that are there.

And I'm very hopeful that there's gonna be many things that not only add fuel to that conference and initiatives, but other projects, programs, funds, other activities are gonna spin out of Future Land.

So it will have its second conference here in October.

October's gonna be a big month for the city of Cleveland.

Lots of great things going on this coming October.

So again, really excited.

And it's kind of a new beginning, our first beginning in the tech sector with a specific hyper focus on people of color.

- Very good.

I saw the impact of that in Tulsa with Black Wall Street and attended the Black Venture Summit in Tulsa recently.

- Yes.

I just wanted to ask the panel.

Could you please address the great possibilities that immigrant talent could bring to this area?

- Sure, happy to talk about that.

So I think there's been a study or two put out there in terms of the share of tech businesses that have been started by immigrants or the children of immigrants, and it's something like about one in four of the tech businesses that have been funded nationwide.

And that's true as we look across our region as well, right?

Immigrants had a huge impact in our growing tech sector.

They come to our region to join companies, they come for our universities and then they become entrepreneurs.

You interviewed Charu Ramanathan from CardioInsight, who's a great story, Case Western PhD graduate.

Her and Ping Jia started, CardioInsight is a part of their PhD project, spun it out, decided instead of going off to work for Medtronic right away, they created a company, got funded by Jumpstart, are part of the BioEnterprise building and the whole community sort of swarmed them for success and they eventually sold it to Medtronic for a sizable sum.

And now Charu is that serial entrepreneur who's onto her third company.

And so it's been a huge impact in our community and it's something that, you know, we have all collectively strongly advocated for in terms of bringing new talent, immigrants in particular, to our region.

- One I would add to that, which again I think is a great reflection of Cleveland's ecosystem, is that Global Cleveland is the natural entity that might lead an initiative like that.

And so the whole community comes around, says, okay, global Cleveland, how can we bring our resources at Jumpstart to help you be the front door to accelerate immigrant entrepreneurship?

It wasn't always that way in Cleveland.

Like if there was an opportunity, there might be a half a dozen nonprofits going after that opportunity.

I think we've figured out who's the right organization, who has the right front door, doesn't mean that there aren't other entities that can be helpful.

But this collaboration piece, we've come a long, long, long way.

And I think by empowering Global Cleveland as an example in this case, to make a bigger impact is what we're really all about.

- And Global Cleveland has recently launched.

If you haven't seen a Global Entrepreneur in Residence program and they've named their first entrepreneur in residence, and you started a business, a supply chain company and he's also a Case Western grad.

- Baiju, you ran BioEnterprise to its peak.

Unfortunately after you left, it collapsed.

How do we rebuild that entrepreneurial ecosystem of expertise in the med tech space?

- So I think, I mean we've talked a lot about this Peter, it's about reconnecting the individuals.

You know, when we started BioEnterprise 20 years ago, we had a couple of great biomedical entrepreneurs, and Bill Sanford for STERIS and Mal Mixon of Invacare and a couple of others in a number of companies.

But we didn't really have a broad range of entrepreneurs or individuals that were experienced in regulatory and all the other elements of MedTech development or biotech development.

We now have a plethora, but we don't have a hub.

We don't have a hub where they gather and where they can ch exchange information and connect and get those resources.

So that is something we need to work on as a region.

We'll work with our institutions, work with our partners at Team Neo as you sworn up next for a conversation on this as well.

But it's critical because entrepreneurs need to find those resources and sometimes the best pathways are by talking to other entrepreneurs.

- And I think that you guys have done an amazing job of helping, but you know, economic development organizations can only do so much.

Like, we can't just say like, Baiju and Ray, they got it, they're working very hard.

So I think it's honestly on entrepreneurs too to help each other and you know, it's definitely a community of a very tight knit group, but also it is competitive and I think especially in Cleveland, similar to how we've seen it in other cities, people need to do a little bit better job of working together even, aside from all the great work you guys are doing.

- Right, and as Baiju mentioned before about remote working, today it's harder to get that nucleus together, you know, of everybody cooperating, collaborating in the same space.

So that's an issue.

- Hi, thank you guys so much.

This was really well done.

I think mine and Peter's questions might have been a slightly outta order, but I'm gonna circle back to the idea of serial entrepreneurs investing back into the regions or ecosystems where they found success and acting as angel investors.

So we've talked a lot about that amongst the teams that are trying to revamp and strengthen our ecosystem to support biotech healthcare innovation.

That's what I focus on.

I would love to hear your thoughts on the challenges as to why we haven't sort of realized that to this point and what could we do better moving forward to build that network and see that sort of momentum.

- Right, it's Silicon Valley, this is a huge feeder.

You know, people probably hear, have heard about the PayPal Mafia, right?

Peter Steele and all his colleagues went on to create dozens more Silicon Valley startups.

So yeah, we may be a few years away from that.

- A simple analogy is you can't push a rope.

We need leaders, we need leaders from industry who want to lead and advance our community.

The great news is there's organizations, perhaps like GCP and Jumpstart and others that can help them.

And the other element is we know how to get Third Frontier or state of Ohio support to advance many of those things.

So I think that the most important element to do better, particularly in these collaborations where you're bringing expertise is the private sector's leadership.

And if you don't have the private sector leadership, then you end up having the wrong people trying to achieve the right thing.

So it's that simple.

- Well, and I think we also need to do a better job of telling stories of Clevelanders that are already doing it or have done it.

So I think about a couple of my mentors, Mel Mixon probably invested in at least 50 different ventures, you know, beyond Invacare.

Some of them that had nothing to do with healthcare whatsoever, but just was a serial investor because he believed in entrepreneurs.

Bill Sanford Stairs invested in a number of companies.

Ray Dalton has invested in a number of companies.

Chuck Halberg, you know, we talk about Cover My Meds.

That was Chuck's fourth or fifth venture, right, that Chuck helped seed.

So we need to do a better job of lifting up those entrepreneurs.

And there's many others that are doing it, oftentimes privately, very quietly.

They're not doing it for renowned and they're just doing it because they're passionate about entrepreneurs.

We need to do a better job of telling their stories and sort of encouraging other entrepreneurs that have hit different levels of success to start to lift up the next, you know, troche of entrepreneurs as well.

- Right.

Well, one of the issues is the media coverage or the lack of media coverage because as we've seen with newspapers and TV and radio is very diminished these days.

- And we unfortunately have to leave it there.

I'm so sorry that we don't have more time.

(audience claps) Big thanks to Rebecca Fannin, Matt Buder Shapiro, Ray Leach, Baiju Shah for joining us at the City Club today.

We'd also like to thank Verizon for their partnership and thanks also to our friends at Cuyahoga Arts and Culture, the John P. Murphy Foundation and the Cuyahoga County Public Library for their partnership on our Authors in Conversation series.

Our forum today is the Paul A. and Sonja F. Unger International Forum on Cleveland in the world.

Paul and Sonja Unger were renowned civic leaders who developed education and professional development for local elected officials and advocates for Croatia independence from Yugoslavia in the early 1990s.

And they founded the Unger Croatia Institute for Public Administration in 1997.

They personally sponsored 22 fellows at the Kennedy School of Government at Harvard, including Deputy Prime Ministers, parliamentary committee chairs and ambassadors.

We're grateful to the Unger family for their support of civic engagement and democracy here at the City Club and also at Cleveland State University's Levin College.

We'd like to welcome guests at tables hosted by Edge by the Greater Cleveland Partnership, Huntington, Jumpstart, the Levin College at Cleveland State, PNC, Team Neo, the Veal Institute for Entrepreneurship at Case Western Reserve University, and of course Verizon as well.

Thank you all so much for being with us today.

Next week, as was mentioned, state of the city with Mayor Bibb, Wednesday night at East Tech High School.

Please join us.

It's free.

And also next week on Friday, the United States State Department's Chief Diversity and Inclusion Officer, also a Clevelander, Ambassador Gina Abercrombie-Winstanley will be with us.

For more information on these forums and everything else that's coming up, check us out at cityclub.org.

That brings us to the end of our forum today.

Thank you all so much for being a part of this.

Our forum is now adjourned.

(audience claps) - [Announcer] Podcasts of the City Club, go to city club.org.

Production and distribution of City Club Forums on Idea Stream Public media are made possible by PNC and the United Black Fund of Greater Cleveland Incorporated.