Alaska Startup Week inspires entrepreneurs to buck state’s gloomy outlook
July marked the fourth straight year Alaska’s GDP has declined, making this the longest downturn in the state’s history. Professional and Business Services, Oil & Gas, Construction, and State Government sectors have been hit the hardest and continue to contribute to the state’s nearly 7 percent unemployment rate. While no one can completely predict the long-term impact the current economic climate will have on the state, for many, the future looks bleak.
In the recent July 2017 edition of “Alaska Economic Trends”, Alaska Department of Labor and Workforce Development Commissioner Heidi Drygas asserted that: “We face an existential risk: without a comprehensive fiscal plan, we will inevitably see deep cuts to public safety and public education. Educated professionals will leave the state as our neighborhoods become unsafe and our public schools decline.”
Drygas’ sentiments were echoed at the July 26th AEDC Luncheon where the organization’s 3-Year Outlook Report was unveiled.
“The local economy is in uncharted territory, experiencing what is expected to be three consecutive years of employment decline after generally steady growth over the previous 20 years,” the report states. “It is clear that Anchorage has experienced a significant economic downturn and further trouble probably lies ahead.”
Amidst the cacophony of negative prognoses, there are some organizations in Alaska that are refusing to buy into the status quo.
“This morning Mayor Berkowitz mentioned the need to adhere to the mythology of who we are and that’s something that I actually think about quite a bit because I think that there are two mythologies that we are adhering to right now,” explained UAA Business Enterprise Institute (BEI) Vice Provost Christie Bell to a packed room at Alaska Startup Week event “Rethink/Startup” on July 27. “One mythology dictates that we are an oil and gas state and now we are going over the edge into bankruptcy. The other mythology is a perhaps longer term mythology that when there is a need, there is a challenge and there is a solution to keep moving Alaska forward – that is the mythology I think Mayor Berkowitz was asking us to embrace.”
According to Vice Provost Bell, it is a combination of a dogged can-do attitude and entrepreneurial spirit that will be the key to righting the Alaskan economy.
“When we think about business at BEI, we are thinking about Alaska’s communities and how they are being more entrepreneurial – we want anyone who shows up at our door to find inspiration,” said Vice Provost Bell.
Comprised of eight partner programs, including the Minority Business Development Center (MBDC), Center for Economic Development (CED) and the Alaska Small Business Development Center (SBDC), BEI serves nearly 2,000 entrepreneurs a year by providing advising, trainings and the procurement of funding. In 2016, BEI secured $21 million in capital infusion as well as $370 million in contract awards. The result of which was 875 newly created jobs and an additional 93 jobs retained.
Joining UAA’s BEI is Launch Alaska, which offers loans up to $75,000 to energy and technology oriented entrepreneurs who complete their rigorous training program. For Managing Director Isaac Vanderburg, the investment Launch Alaska is making, is an investment in solving not just local but global problems.
“We have the second-highest energy costs in the nation, second only to Hawaii. We have cities that are incredibly isolated and it’s hard to get products in and out of there. We also have some of the worst water and sanitation problems – but these are great problems!” exclaimed Launch Alaska Managing Director Isaac Vanderburg to a shocked room of Alaska Startup Week attendees. “These are great problems because they are the same problems that they have in Southeast Asia, Sub-Saharan Africa and some of the most exciting emerging economies. Alaska has a really important role in the way that we generate energy, the way that we consume food and get it to one another, the way we obtain water, transportation – we have a role in helping fix major problems on a global scale.”
Vanderburg also sees an opportunity to leverage Alaska’s domestic difficulties to attract foreign investment.
“Today’s entrepreneurs are solving the problems of the future. We should be using these problems as our assets to attract firms that want to first solve problems here and then take it to a global level,” explained Vanderburg.
A prime example is the work done by 60Hertz co-founder Piper Foster Wilder. The 2017 Alaska Business Plan Competition winner is helping rural Alaskan villages to create their own mini renewable energy grids. With electricity costing up to four times the national average and many spending upwards of 50% of their income on diesel energy, Wilder’s startup could have a major economic impact on Alaska. But Wilder has even bigger plans to develop a culturally-informed Computerized Maintenance Management System (CMMS) uniquely designed for Microgrid Operation in developing world conditions. With 500 million people worldwide depending on diesel for energy and an additional 1.5 billion who have no access to electricity, the importance of 60Hertz’s work cannot be overstated.
Naturally, not all Alaskan entrepreneurs will have their eye on solving global problems. Some just want to eke out a living for themselves.
“I knew I didn’t want to work for someone else so I took the money I earned through the G.I. Bill and put it towards starting my own business” said SBDC Anchorage Center Director Ryan Gilbert of his foray into international business while living abroad in Japan.
For four years Gilbert found himself importing and selling Native American jewelry overseas before realizing his business was failing. A chance encounter at an Arizona trade show convention in 2008 ended his career as a jeweler and sent Gilbert on the path of importing and selling Himalayan salt lamps. The business change panned out for Gilbert who successfully exited the business in 2011 before joining the SBDC.
“Statistically speaking, you are way more likely to be successful by following a demand model but like most entrepreneurs, I made the mistake of thinking I could supply a product and create a demand,” said Gilbert of his experience as an international business owner. “Of course, I can think of some businesses that went with a supply model and did alright – Slinkys for example, Pet Rocks — I wish I would have come up with that idea! So, if you think you have a great idea, don’t let anyone dissuade you because you never know what might stick.”
Whether looking to make international waves or just to make a sustainable paycheck, according to SBDC Executive Director Jon Bittner, Alaskan entrepreneurs will play an invaluable role in strengthening the Alaskan economy.
“Small businesses are important drivers of job creation and economic activity across the nation, but especially here in Alaska. Every new business that starts here is an opportunity to increase the dollars that circulate in the state, and to grow our workforce beyond the industries we've traditionally known,” said Bittner. “While nothing can replace the economic impact of oil, a of can-do attitude and innovation is how you ultimately transform an economy and I'm excited for the role SBDC is playing in that transformation.”