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High-Tech, High Hopes

An Industry In Its Infancy Takes Stock and Looks Forward.

Yes, tech stocks tanked this year. But 2001 was also the year that a potential 3 million television viewers heard this from Computer Chronicles host Stewart Cheifet: “You will be surprised to find out that there are quite a few innovative high-tech startups here in the 50th state and many well-financed cutting-edge research and development projects here.” It was one of a number of recent events and accomplishments that have given heart to Hawaii’s high technology pioneers.

“We are just starting to even be a blip,” says Jeanne Schultz about the global high-technology radar. Schultz chairs the High Technology Trade Association (HTTA), a statewide organization of businesses that was formed to support Hawaii’s growing technology industry and has identified five broad industry segments:
- IT/Telecom/Software
- Biotechnology
- Health & Medical Technology
- Ocean/Earth/Space Sciences
- Dual Use

“Five years ago, we were all over the board. We hadn’t even segmented into what Hawaii can do well. Now we’ve come to that point of having these five major areas, and now what we are all talking about is okay, now what niches do we play?” says Schultz.

Lessons fomr Above: Ron Higgins, local angel investor and founder of digital Island Inc.

In 1999, the Progressive Policy Institute (PPI), a Democratic Party-leaning think tank and New Economy proponent, produced the first new economy index of the 50 states. Hawaii was just about average, ranked 26 overall for 17 indicators such as “Workforce Education” and “High Tech Jobs.” Massachusetts topped the list of states followed by California, then Colorado. West Virginia, Arkansas and Mississippi brought up the tail end.

The report proclaimed, “In the New Economy, states’ economic success will increasingly be determined by how effectively they can spur technological innovation, entrepreneurship, education, specialized skills, and the transition of all organization — public and private – from bureaucratic hierarchies to learning networks.”

Hawaii Venture Capital Association's President Bill Spencer.

In April 2001, PPI ranked the 50 most-populated metropolitan areas in the nation according to 16 economic indicators. The top three were, not surprisingly, SiliconValley/San Francisco; Austin and Seattle. Those scoring lowest include Grand Rapids, Mich., San Antonio and Jacksonville, Fla.

Schultz says, “If you just rank us with states with technology, we’re small. We don’t have the same critical mass as an Austin (Texas, metro No. 2) or a Raleigh-Durham, (N. C., metro No. 4). But just to get recognized as a place that does technology is our first goal.”

Right now the only local measures of Hawaii’s High Tech Industry are done by the High Tech Development Corp. (HTDC) and by the state Dept. of Business Economic Development and Tourism (DBEDT). Each uses a different definition of high technology. HTDC is mandated by statute to survey the high-tech community periodically. This year it contracted with Mattson Sunderland Research and Planning Associate Inc. The firm surveyed 774 local companies, estimated to be the “potential universe of high technology organizations in Hawaii.”

The High Technology Trade Association's Chairwoman Jeanne Schunltz.

HTDC estimates that 719 high technology firms employed nearly 18,000 people in Hawaii in 2000, generating $2.5 billion in revenue. The number of businesses is projected to exceed 800 by 2002 and generate more than $2.7 billion in revenue. HTDC Executive Director Nola Miyasaki says she doesn’t have a dollar figure goal in mind for the industry, but thinks it is in a good place today.

“I think we’re trying to grow the industry as big and as fast as we can and I think that’s going to be a continuous effort of aggressive legislation, promoting entrepreneurship, helping startups, promoting ourselves as a place to do business and letting the world know what we have to offer,” she says.

It’s hard to let the world know, when other destinations are putting dedicated funding into highlighting their tech savvy. “The state does not have a lot of funding to market the technology industry. If you compare Orlando, they just recently went out with a technology and tourism co-branding strategy and they put $9 million behind it. Well, we don’t have that kind of money,” Miyasaki says.

University of Hawaii at Manoa John A. Burns School of Medicine's Associate Dean of Research Martin Rayner.

One thing HTDC is contributing to the marketing mix is its Web page www.hitechhawaii.com, which has been redesigned by local company RevaComm to be a clearinghouse for Hawaii’s high technology industry. RevaComm spokesperson Cari Constanzo Kapur says it is a portal to anyone interested in doing high-tech work in Hawaii and markets Hawaii as the premiere destination for high technology. “There exists no other site with such comprehensive information,” says Kapur.

And companies here should be looking outward, according to Tung Bui, the University of Hawaii’s Matson Distinguished Professor of Global business and author of Hawaii’s first report on e-commerce. He says in order for our high-tech industry to move to the next level, companies here must partner with larger global companies and institutions. “Technology is a means, but not an end,” says Bui. “You really need to find a killer application in order to succeed. So I think that one of the areas to dig into in which to find a killer application is still in one of the things that we have been doing best, tourism.”

Schultz concurs that the technology and tourism sectors need to work more closely together and that steps are being taken to familiarize both sides. This is important she says because while tech may grow it will never replace Hawaii’s mainstay. “There are some people that say (high tech) is going to bypass tourism. I don’t see that happening in my lifetime. I think tourism is going to remain our major industry. I think that technology will be at least as big as agriculture and probably will surpass agriculture.”

Edward Young is a business-banking officer for City Bank focusing on entrepreneurs in what the bank calls “targeted industries” that encompass much of the high-tech universe. He says local expectations for the industry in Hawaii are too high right now, pointing out that Silicon Valley was built over more than a decade. While he’s bullish on Hawaii’s high technology industry, he sees it as a mere infant today.

“That’s why I want to help build the technology, the emerging growth industries so there’s something there for my son and my daughter. And it’s kind of funny, I talk to a lot of people and that’s why they’re doing it also. To build Hawaii’s economy for the future,” says Young.

HTTA has been conducting “speak-out” sessions trying to get input from the industry. The findings should be released in November at a planned high-technology summit. Schultz hopes a blueprint will emerge from the statewide sessions for the industry to move forward. She says she’d like to find other ways of benchmarking its growth and favors a model used in Oregon that surveys the industry members every two years.

And in true new-economy fashion, the worry is not just about creating a new technology industry, but making sure that traditional businesses won’t lag with innovations that make them better. Says Schultz: “My one concern is that the tech industry is not going to be big enough to prop up the whole economy, so we still have to make structural changes that are going to assist traditional businesses.”

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