Hogan: WEDC working to 'figure out a way' to help startups
10/11/2016

WEDC Secretary and CEO Mark Hogan says a big focus of the agency in his second year on the job will be trying to "figure out a way" to boost entrepreneurship.

There are exciting things happening in the state, Hogan said in an interview, noting the state's dead-last ranking in startup activity the past two years "doesn't reflect" many of those activities.

But there is -- and always will be -- room to improve, he said.

"My tagline around here has been 'continuous process improvement,' and it doesn't stop when all of a sudden you feel like you're in the top 10 for something. If you're ranked No. 6, how do you get to be No. 5?" Hogan said. "I'm a competitive person that way."

Hogan, who spent 38 years as a commercial banker before joining the agency last October, says he's been meeting with startup leaders to see what WEDC could do better.

But he's also told them that the agency can't come up with the silver bullet, though WEDC can play a major role in bringing different industry players together or helping with financing.

"If people are relying on the government, the state or WEDC or any agency to have the idea, the next best Epic or the next best Quad/Graphics, that's a problem," Hogan said. "But what can we do to help nurture that environment and help work with the academic side, as well as the business side and entrepreneurial side ... to pull those groups together?"

The agency has made several announcements on that front in recent weeks. It's launched a new grant program to boost entrepreneurs in smaller communities. It's helping establish an aerospace center of excellence in Milwaukee and a maritime center of excellence in Marinette. It kicked in $200,000 toward a Madison fund aimed at helping women and minority entrepreneurs. And it contributed $752,000 to the soon-to-be-built StartingBlock entrepreneurial hub in Madison that will help the group offer subsidized rent to startups.

But it also faced criticism as the Ewing Marion Kauffman Foundation ranked Wisconsin 50th in the nation for startup activity for the second consecutive year. Though some took issue with the rankings, state tech leaders said they showed the state needs to do more to help early-stage companies grow.

"I'm all for that," Hogan said. "We need to find a way."

One of the ways is helping develop early-stage companies in certain "clusters," or industries where Wisconsin has natural strengths in and a wealth of companies and researchers. The agency, for example, has helped accelerator programs run by the Water Council and the state's Food and Beverage Association, whose accelerator's first cohort of startups made a pitch to investors last month.

WEDC has also held eight stakeholder roundtables across the state in the past two months, and Hogan said the "common thread" is what his counterparts in other states struggle with: how communities can retain and attract young talent.

The agency is in the early stages of developing a branding campaign geared at solving that issue. The first look at it came last December at a Wisconsin Manufacturers & Commerce event, where the group released a national survey finding that the vast majority of people think most of Wisconsin's jobs are in agriculture, not technology. WEDC, though, is still gathering input on the campaign and is months away from going live with it.

Hogan wants to bring back board governance policy proposal, loan program

Hogan also responded to criticisms on a board governance policy proposal that said board members "do not have the authority" to handle press inquiries, instead directing them to refer media to WEDC's communications team.

The two Dems on WEDC's board called it a "gag order.'' Assembly Majority Leader Jim Steineke, who is not on the board, said "we need transparency at WEDC more than ever," and the Kaukauna Republican called the proposal a "bad idea."

Hogan said it wasn't "either of those two things." He said the intent of the proposal was to ensure unless they had permission, board members couldn't speak on behalf of WEDC, though they could still talk to the press about the agency.

"If somebody on the board wants to speak about WEDC in their role as a legislator or a business, they can do whatever they want," Hogan said. "I'm fine with that. ... I was not trying to limit anybody's discussions about WEDC at all."

WEDC spokesman Mark Maley noted the concerns from board members and said the agency would work on the proposal and present a tweaked version to the board at some point.

Hogan said he'd like to bring back the proposal, which also lays out several other standards, because "it's simply good board governance." It's no different, he said, than the policies on the more than 15 boards he's served in throughout his career.

Hogan also rebutted claims that WEDC hasn't helped Milwaukee enough. The liberal group Citizen Action of Wisconsin charged WEDC has done "little to nothing for one of the most economically distressed" U.S. cities following the unrest in Sherman Park.

The agency, Hogan said, helps support the Mid-West Energy Research Consortium that's located near Sherman Park, approved a $22 million enterprise zone for Direct Supply on the northwest side of the city and gave a $147,000 grant to clean up a 7.5 acre lot on North Avenue that's been vacant for more than 20 years but will now become a intergenerational care facility.

He said he also frequently works with Rocky Marcoux, the commissioner of Milwaukee's Department of City Development, and other city and county officials on issues such as workforce development.

"If there's a good side to that story, it's because it's kind of put people on alert to say, 'You know what? We need to look at what we're doing and try to figure out a way to do it better,'" Hogan said. "But in the end [WEDC] has invested over $250 million dollars in the city of Milwaukee [since 2011]."

He also said he'd be open to re-establishing WEDC's loan program, which the current state budget phased out following criticisms of past loans. The agency's technology development loan program is still in place, but its business opportunity loan fund will go away when the fiscal year ends June 30.

Hogan, though, said there's "a place for a loan program at WEDC."

"I come from a banking background," Hogan said. "I think I understand how to make loans. So when people ask me if I think we ought to have a loan program, my bias is, 'Yeah, I think a loan program is helpful.'"

The agency has also taken flak for awarding money to companies that have then gone on to cut or outsource jobs. Some of those companies haven't had their multiple-year award contracts run out yet, so they could potentially add jobs later in the contracts, eliminating the need for WEDC to revoke the awards.

The agency has revoked a $50,000 award to W.W. Grainger, with the company filing an amended tax return and paying the state's Department of Revenue.

Similar conversations are happening with HUSCO International, which recently announced it was laying off about 100 people due to a downturn in the global economy, and Caterpillar, which notified WEDC last year it would be unable to meet the employment levels in its contract.

Hogan said at the end of each contract, the agency goes back and reviews whether the companies met their targets. If not, Hogan said, then WEDC will "enforce our rights under the terms of the contract and we'll just do it in a respectful way."

"There's no gray area there," Hogan said.

-- By Polo Rocha


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