Comments on: Secretary Moret’s 90% Rule

By: PB

PB — Thu, 28 May 2009 16:59:35 +0000

What are the benefits of the Digital Media Tax Incentive?

By: Alex del Castillo

Alex del Castillo — Sun, 24 May 2009 01:38:20 +0000

Those who would attempt to encourage in state retention of this or that type of “good tech job like coder or QA” are in fact discouraging the creation of new wealth and ideas. Once something becomes commoditized, then the growth potential lies in efficient and effective delivery and utilization of the commodity. How many processors are manufactured in Silicon Valley? A decade ago a good example would be wanting to make TV shows rather than TVs, software rather than computers.
We are in the position to leapfrog and grow creative jobs and dynamic businesses here by becoming thought and process leaders in leveraging social media and web 2.0 in new and wide open areas. Low cost outsourcing of some work is the difference between starting and growing a company or not. As Chris no doubt understands, outsourcing is not low cost without effective requirement writing which comes from thorough understanding of client needs. Those jobs usually exist in the home office and it is the quality of those folks and their processes that differentiates them from competitors.
Encouraging or at least not discouraging nascent (that’s for you DC) LA businesses from using the best tools available for success makes this place more attractive for start ups and increases network effect.

Thanks for the update.

By: Will Scott

Will Scott — Sat, 23 May 2009 21:19:42 +0000

Hey Chris,

Great post. I’m really happy to see you put this down.

As you we are a lot alike in the way our companies work. Instead of Russia, our production team is in India.

Our product requires a little more cultural context and “touch” so we have all of our customer facing elements here in the US, most in the GNO region.

We absolutely would not have been able to scale as we have (1 -> 20 emp. 3 yrs of 3X annual growth) if we had only sought local customers. Our company is international and our customer base is national and we can scale.

I would love to think that a marketing service firm could be eligible for the DMTC because I’d love the support and cost-savings, but I don’t think we are and it’s a shame. We employ as many locally as distant, we work for companies all over the country and I’m happy to do what we do internationally as well.

We don’t need the money to be profitable, but it would definitely be an incentive to focus on hiring in LA.

Incentives or not, we’re going to run our business here and help customers wherever they may be. We will likely always meet the 90% rule.

Cost savings, lifestyle and other quality of life issues make this a great place to live and work. All those flatteners we know make the distance between producer and patron irrelevant.

I’d love to see Louisiana more broadly define “Export Product” so that we too could benefit.

I’m very glad I know you Chris.

Will

By: Chris Schultz

Chris Schultz — Sat, 23 May 2009 18:03:45 +0000

@dcrais – your energy is boundless. If this is a quick and dirty response on a busy Saturday morning, I can’t wait to read your next treatise.

Thanks for your comment, I really agree, internalizing this rule is probably the best thing for everyone (I don’t think we want it codified). Local companies should think about what they can be doing to bring business in from out of state.

I know you have great experience in this regard with Careside. Companies are virtual, supply chains global. This is no longer the exception, it is the norm in today’s economy.

Thanks, and look forward to continuing the discussion.

@william – read more about the current tax credit (currently in the legislature so likely to undergo some changes July 1st) http://wiki.voodooventures.com/Louisiana+Tax+Credit+Info

By: David Crais

David Crais — Sat, 23 May 2009 17:45:17 +0000

Agree completely. I was just having this conversation this week with members of GNO, Inc and also with Econ Dev people at a reception Thursday night at the Governor’s Mansion.
Careside, medical device company in Los Angeles where I served as VP for Sales, was built on a “virtural company” model. That is, we designed the product (a $18,000 unit price blood analyzer sold to hospitals with IT packages bringing the total average purchase order to around $250,000 per sale) in Los Angeles, had our prototypes made there, our VC financing came from Portland, Minneapolis, New York, our component parts were made in Japan by Fuji, and the units were contract manufactured by UMM in Indianapolis and by Peak Mfg. in Colorado. Our sales people were in over 16 states and 8 countries, and I, as VP Sales, lived full time in Chicago with a corporate apartment in Los Angeles.
Confusing? Maybe, but this is how busineses work today. With this business model we raised over $74 million in Venture Capital, had an IPO in 1999 on the American Exchange, sold systems to over 500 hospitals and clinics in the U.S. and many more through our international distributors in 8 countries.
Does it mean we were not a Los Angeles based company? No way. I personally paid income taxes to both the states of California and Illinois. We were also welcomed into the Southern CA Biomedical Association, LARTA, and OCTANE as a “local” company.
So, with reference to the Digital Media Tax Credits, I completely agree that the Voodoo Ventures model does not “export jobs to Russia” but actually creates jobs in Louisiana, jobs that quite possibly not otherwise exist.
As to the “90%” idea for income being derived from out of Louisiana, I happen to like that idea. I don’t know if I want it codified, or even in the regulatory or administrative rules. But for too long, when I would attend meetings with the Louisiana Tech Council or other local tech or entrepreneur groups, the cry from the audience would be that they aren’t getting enough local contracts (and usually about government contracts), but very little attention was being paid to obtaining business from outside the local market.
I spent the first 12 years of my career working with startups who had one mission in mind: grow a national or international business in 3 years (the time most VC’s will give you, at least in the ’90’s, for them to achieve an “exit” or “liquidity event” so they can recoup thier investments. My mission, first as a sales rep, manager, and then eventually VP for Sales, Marketing, and Business Development, was to ramp sales up from coast to coast beginning in the first 6 months of the product or business launch. That’s how we need to begin thinking in New Orleans and in Louisiana.
If we truly want to be the next Austin, Tx, or to be truly aspirational, the next Silicon Valley, we need to have a market focus, as I hear VC’s saying, THAT CAN SCALE.
There are very innovative and very exciting changes taking place in New Orleans right now, but if we only focus on doing services for local businesses we will continue to be passed over as a tech or entrepreneurial center. Therefore, even if we do not codify the 90% rule, we should all internalize and live it in executing our plans everyday. We, the city, and the state, can only benefit from it.
David Crais

By: William

William — Fri, 22 May 2009 03:11:29 +0000

What are the benefits of the Digital Media Tax Incentive?