The continued reinvention of Newark as an on-the-move, tech-driven center was held up by Gov. Phil Murphy yesterday as a model for other places in New Jersey that may be looking to find inspiration for their own revitalization efforts.
With billions of dollars in new investment happening within Newark’s borders — and mega-retailer Amazon considering the city as a location for its coveted “HQ2” project — Murphy pointed to lessons that can be taken from Newark’s recent hot streak, including ways city officials have embraced technology and innovation as key features of the rebirth.
“The real beauty is that it doesn’t just have to be a Newark story,” Murphy said as he addressed a conference on tech and urban revitalization that was held in Newark yesterday.
The conference organized by the New Jersey Business & Industry Association came as Murphy, a Democrat who recently celebrated his first 100 days in office, has been working to reorient the state’s economic-development efforts toward smaller companies and startups, which tend to be bigger drivers of job creation than more-established firms. Lawmakers in Trenton have also gotten into the act by advancing legislation that would provide more state incentives for the creation of small-business incubators and accelerators.
Murphy reminded those who attended the event yesterday — including Don Katz, the founder of Newark tech-success story, Audible, Inc. — that the state already has a leg up on other places when it comes to attracting tech entrepreneurs because of its cultural diversity and heritage as a former center for innovation.
“This is in our economic DNA,” Murphy said during the event, which also featured roundtable discussions on ways the state can do more to foster growth in the tech sector. “We lost (tech) because we let it go, and now we’re here to take it back.”
Murphy was a frequent critic of the economic policies of his Republican predecessor, Chris Christie, and he promised throughout the campaign season last year that he would strengthen New Jersey’s economy, in part by doing more to encourage innovation and newly forming businesses rather than the more established companies that Christie tried to lure to New Jersey with lucrative tax incentives.
Murphy’s focus on startups aligns with data that was included in a report released last July by the global consulting firm McKinsey and Co. Even though younger companies tend to grow jobs at a much faster clip than their older counterparts, the firm found New Jersey was spending roughly $174,000 on tax incentives for each job that was created or retained by an older firm, and $110,000 for every job in companies that are younger than 10 years old.
Murphy cited the McKinsey research as he delivered the keynote address during yesterday’s conference. He also said nearby states like Massachusetts have gotten ahead of New Jersey by doing more to attract the type of tech firms and startups that really drive economic growth, like investing heavily in public education.
But one of the bright spots of New Jersey’s modest tech sector is Newark, the state’s biggest city. Newark has been home to Audible, a subsidiary of Amazon and producer of downloadable audiobooks, since 2007. CEO and founder Don Katz has also been instrumental in founding a city-based venture capital fund called Newark Venture Partners.
The city has also been enthusiastic about recasting itself as a burgeoning tech center, including by promoting the high-capacity internet fiber that’s buried underneath its sidewalks. And now Newark is a finalist in the nationwide competition among North American cities seeking to attract Amazon’s second corporate headquarters. The company is promising to pour up to $5 billion in new investment into the proposed facility and will hire as many as 50,000 employees.
“We’re built for this,” said Aisha Glover, president and chief executive of the Newark Community Economic Development Corp., as the topic of infrastructure came up during one of the panel discussions.
“We’re built for Amazon — and the next Amazon,” she said.
Katz also highlighted as he addressed the conference one recent policy change at the federal level that’s been overlooked by many, which is the establishment of so-called [link:https://www.njspotlight.com/stories/18/03/25/new-opportunity-for-new-jersey-s-distressed-towns-and-cities/|“opportunity zones.” Inserted by Sens. Cory Booker (D-NJ) and Tim Scott (R-SC) into the federal tax overhaul that was signed into law late last year by President Donald Trump, the program is meant to provide new opportunities for private investors to funnel more money to distressed communities through newly created Opportunity Funds.
Treasury officials are still writing up the rules, but the program will allow investors to roll over certain capital gains to invest in targeted locations. Murphy has already proposed nearly 170 places in New Jersey as participants in the program. Katz yesterday called it a “profound opportunity” for those locations.
Like Murphy, he also pointed to the state’s prior history as a tech center as he talked about New Jersey once again becoming a hub for tech-driven industry.
“The industrial revolution was basically invented in New Jersey,” Katz said. “Bringing this back is just a great story.”
Jay Bhatti, cofounder of the investing firm BrandProject, also suggested that New Jersey, as one of the nation’s most diverse states, is already in a good position to capitalize on one of the weaknesses of Silicon Valley, the dominant player in the nation’s venture-capital world. For all its successes, Silicon Valley is not known for being particularly hospitable for female and minority entrepreneurs.
“I want New Jersey to really be a (welcoming) place for women and minority founders,” Bhatti said. “I think New Jersey could really own that mantle here someday.”