The Silicon Valley Leadership Group
GAME CHANGERS 2013
“Changing Needs and Boundaries of Silicon Valley”
Mac Tully, San Jose Mercury News, Moderator
Santa Clara Convention Center
September 20, 2012
Panel members, in the order in which their names are mentioned:
David Chiu, president, San Francisco Board of Supervisors
Bill Coleman, partner, Alsop Louie Partners
Jes Pedersen, CEO, Webcor Builders
Chuck Reed, Mayor of the City of San Jose
Mr. Guardino:
… I have the distinct pleasure of introducing our next panel to the stage. Now you
thought Lenny Mendonca got caught behind that truck in Palo Alto. I understand that the
chair of the – forgive me – the president of the San Francisco Board of Supervisors,
David Chiu, may also be behind that truck; but he will get here as soon as he can.
This panel is on the Changing needs and Boundaries of Silicon Valley…Look at me right
in the eye for a moment. I want you to hear this quote. Twenty-five years ago, in [an]
interview at the San Jose Mercury News, Bill Hewlett, the co-founder of HewlettPackard, the partner of the founder of the Leadership Group, David Packard, was asked
25 years ago, “Define the boundaries of Silicon Valley.” Do you know what he said?
“Santa Rosa to Monterey.” Santa Rosa to Monterey.
I’m not quite as visionary of a thinker [as he was]. The Leadership Group has always
defined it as from San Francisco County, San Mateo County, Santa Clara [County], Santa
Cruz County, and Alameda County. He was even more expansive than that; but we hear
all the time, what are those boundaries? What are those needs?
That’s what we’re going to discuss on this next panel, and I see my good friend David
Chiu has arrived safely. He wants you to know he was behind that truck. He did not drive
that truck that tipped over this morning. I’m going to ask our board member of the
Leadership Group, the publisher and president of the San Jose Mercury News, Mac Tully,
to come forward. He’s going to introduce this panel of Game Changers. Again, the topic,
“The Changing Needs and Boundaries of Silicon Valley.” Panelists, please come
forward.…That way, Mac can introduce you right on stage, and we can jump right into
your interactive dialogue…Mac Tully, it’s all yours, sir!
Mr. Tully:
Okay, thank you. Well, good morning, and welcome, everyone. I’d like to introduce our
distinguished panel today. First of all, we have Bill Coleman, partner of Alsop Louie
Partners; David Chiu, president of the San Francisco Board of Supervisors. And thank
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you for flying the friendly skies of 101. Jes Pedersen, CEO of Webcor Builders, and
Mayor Chuck Reed of the City of San Jose. We’re going to focus on the changing needs
and boundaries of Silicon Valley. Thank you, gentlemen, for all taking time out of your
busy schedule to be with us today, and sharing your perspectives on the game-changers
facing Silicon Valley. We only have 40 minutes to cover some pretty complex subjects,
so let’s get right to it.
Q:
And the first question will be for anyone on the panel, or all the panel. It is, the latest
iteration of the Silicon Valley economy has San Francisco-based companies playing more
of a significant role than in years past. What do you see as the number-one impact of this
change? And who would like to take the first stab at answering that, or sharing
perspectives? Jes?
A:
(Mr. Pedersen) Sure, I’ll take it. I think, from a construction perspective, you know, this
last recession kind of normalized a lot of the costs or the barriers to entry in San
Francisco, dropping the rental rates, you know, pretty even across the entire Bay Area. So
you had a much larger ability in the last two or three years for companies to decide where
they wanted to go; and just like some people have preferences to be in the suburbs,
others, in the cities. I think you’ll find that those who wanted to go to the cities are going
a little bit more; and, from their ability to do that, they’re also seeing a large increase in,
obviously, demand for the office space, demand for the residences. And, from the
construction perspective, we’re obviously on a roll again, and things are taking off more
in that arena, as well.
Q:
And Mayor?
A:
(Mayor Reed) Well, I think it’s good news that Silicon Valley continues to expand. If you
look at the history of the valley, it started in Stanford over a hundred years ago. It’s like
the mother lode, and the gold washes out of the hills, and runs a little bit to the South. It
runs a little bit to the North, and it’s spread out, and every decade, it gets a little bigger.
And so the boundaries keep changing. That’s a good thing, because the valley continues
to grow; and the fact that San Francisco is getting some of the growth, Oakland has got
some of the growth, that’s good for the economy.
This is a regional economy. It’s an integrated economy; and, as much as I enjoy the
bragging rights about San Jose, jobs in San Francisco are so much better than jobs in
China, or jobs in Texas, so we’re pleased to see the valley growing and prospering
because this is an integrated economy, and it’s good for all of us, and we all get to brag
about something.
Q:
Right! Supervisor Chiu?
A:
(Supervisor Chiu) I think I will agree with all the comments that were just made. We
certainly have seen a major construction boom in San Francisco, and I would agree with
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Mayor Reed that jobs in San Francisco, I think, are superior in many respects to jobs in
China; but, in addition to that, we…in recent years have been really trying to fight the
trend of San Francisco being a suburb of Silicon Valley.
We have really done, I think, a better job (laughter) of trying to change our tax policies so
that we can keep companies like Twitter and Zynga and Yelp, companies that had
recently thought of moving to Silicon Valley, and we have successfully kept them. We
actually have a measure on the November ballot in seven weeks to continue to change
that tax policy. We have been investing in the infrastructure that will keep sort of more
tech companies in our area, and I do agree that we have to think more of how we can
work with all of our cities and regions to become that regional economy that competes
with international hubs; because the rest of the world, I think, doesn’t look at us as
separate cities. They see Silicon Valley as a region; and whether it be San Francisco,
Oakland, San Jose, or all the cities and towns in between, that is how we’re going to
attract and keep our talent.
Q:
So Bill, you get to vote with your dollars as a partner with Alsop. So how do you choose
where to invest? What do you think has changed over the past—or if anything has
changed over the past—few years?
A:
(Mr. Coleman) A lot has changed over the last few years. I think the thing driving the
most, the investments in the city, is the demographics and the social networking, which
combine.
But I wanted to make an observation, taking the economic point of view, that if we look
at Detroit, Detroit never had creative destruction; so they kept at the same level for 80
years, and that’s where they are today. What’s gone on in Silicon Valley for the last 40
years is one after another. We didn’t keep the semiconductor plants here and get stuck
with that, where, today, it would be nothing. We went on and on to more and more
industries, expanded into bio and nano, and that has allowed us to really, really prosper;
but…, you know, San Francisco has maybe always been part of it, but according to your
newspaper, about a month ago, there were more startups in the last year in San Francisco
than in the valley.
A:
(Mr. Coleman) Well, you know, I think that’s creative destruction [at] its best. San
Francisco is…growing and changing.
You know, I have two companies in downtown San Francisco. I’m there three or four
days a week. And those companies, when we first invested a few years ago, space was
easy to find. Now, it isn’t, and that’s a good thing. I mean – and there’s a lot of building,
and…whole neighborhoods are continuing to rise. So I just think this is…just spectacular
for our whole future in this area and the world.
Q:
Very good! Any rebuttal from anyone? Or competition truly makes it better?
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A:
(Mayor Reed) Competition is better, and let me just put in a pitch for San Jose. We don’t
have a payroll tax in San Jose. (laughter) Three hundred and fifty million dollars that San
Francisco companies pay for a payroll tax. Zero dollars in San Jose. So I applaud the
work that San Francisco is doing to try to deal with that, because you would have lost,
probably, some of those companies. As they grow, they start looking at that payroll tax.
Well, there’s all kinds of things like that around the area that we’ve got to compete with
each other on. So if we can push San Francisco to get rid of their payroll tax, they can
push us to be better in our permitting, and this competition within the region is good for
the region, because we do compete with regions around the world, and having the jobs in
San Francisco is a lot better than losing the jobs to Austin or some other region.
A:
(Mr. Chiu) I completely agree with that. I do hope, after November, San Francisco will no
longer have our payroll tax, and we had to do something with the 49ers’ moving down
here. (laughter)
Q:
Jes, do you feel a little uncomfortable between the mayor and [supervisor]?
A:
(Mr. Pedersen) I think it’s good that there is someone in between here to keep the peace.
Q:
I think we’ll shift course now, and talk about CEQA (California Environmental Quality
Act), a very important issue facing all of California. Mayor, this will be directed initially
to you. This past legislative session, CEQA-reform discussions really did heat up. With
the recent news that…Senate [President] Pro Tem Steinberg has announced his pledge to
take up CEQA reform as a priority in 2013, and his recommendation that Sen. Michael
Rubio chair the Senate Committee on Environmental Quality for the upcoming session,
what are your thoughts on CEQA modernization? And how would CEQA reform help
San Jose compete to be the home of even more innovation companies?
A:
(Mayor Reed) It was really good news to hear Sen. Steinberg saying they’re going to take
up this issue. They tried to put it together at the end of the session. It was too difficult to
get the votes, so it didn’t happen; but the fact that he’s committed to it is really good
news, and putting Rubio in as chair of that position is good news, because the California
Environmental Quality Act is no longer what it was intended to be. It is now the
California extraction-quantification act. And if you look at where – Thank you. (applause)
If you just say what was the purpose of this act when enacted? Or what do we want it to
do, and compare that to the list of things it does, it’s like, “What is going on?”
Well, everything is going on. There’s been so many things layered onto the environment
that it has become extremely expensive, extremely cumbersome, and it’s become a tool to
block development, to block competition, and whatever happened to the environment?
That’s become secondary to it. So I think it really needs to be changed, because it is a big
drag on especially major projects, so people who want to make major investments for
new development, it just adds years to the process, and that’s bad for all of us.
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Q:
So Supervisor Chiu, are you experiencing – do you have similar views on CEQA or
different?…
A:
(Supervisor Chiu) I think I might temper the perspective a little bit that Mayor Reed just
had, in part because, in San Francisco, we are seeing more construction cranes than
we’ve seen in years. There is plenty of construction that is going on right now.
With that being said, there certainly have been some abuses of the CEQA process, and I
do think that there are some areas that warrant some change; but, certainly in San
Francisco, which includes the densest neighborhoods on the West Coast, with an awful
lot of growth, CEQA is often used to sort of balance those issues. I do wish, though, there
was a way to sort of accelerate those discussions and negotiations between neighborhoods
and the development community so we can get it right in a faster period of time, so that
the real-estate community doesn’t have to devote millions if not billions of dollars and,
instead, devote that to building things that the community actually wants.
Q:
So Jes, Bill, thoughts on, Is CEQA an impediment or a good thing for California?
A:
(Mr. Pedersen) Well, I think that when you look at some of the tower cranes that are
going up, either in San Francisco, or the work taking place down here in Silicon Valley, a
lot of that was already keyed (he means “queued”?) up from the last run, and then kind of
got shut down in ’07, ’08, ’09. Luckily, it’s readily available enough to get going
to…meet a lot of the demand that’s coming up, and I think that the new stuff that’s
coming is going to have to wind its way through, you know, the typical challenges of
getting permitted, and getting, you know, through planning. And then every region and
every city has its own issues relative to that. So I think that it’s kind of the next wave
that’s coming up that’s really going to be the concern; but I mean with…enough that’s
already going on, I don’t look to, you know, really want to promote the acceleration too
greatly, either, which is kind of one of the things that you get from really prudent
planning processes.
Q:
Okay. So I’ll switch up a little bit, and go back, and maybe as a bit of a follow-up to our
first question, we’ll start with Bill, you know, ‘cause you’ve led companies with more—
within the more—traditional boundaries of Silicon Valley. You’re a venture firm. Alsop
Louie [Partners] is actually located in San Francisco. Are the regional dynamics different
today than they were during the tech boom? And what do you really attribute that to?
What was the game-changer that made that happen, from your perspective?
A:
(Mr. Coleman) …I wasn’t a VC during the tech boom. I was an entrepreneur. I founded
BEA Systems and Cassatt Corporation. During that time, there was a slight difference
than the previous, ‘cause I was also the head of software development at VisiCorp, the
first spreadsheet, back in the early ‘80s. And, at that point, you could only hire engineers
down here, and it was all about software, or chips, and there wasn’t much else. When we
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went through the boom, and even during my days when I ran software development at
Sun, we really…had to hire the engineers down here.
But, during the boom, that began to change. The younger—a lot of the younger—
engineers wanted to live in the City, and South of Market really flourished, and we started
building down here, but we ended up with our base, called our Web Logic unit, right in
downtown San Francisco, and it was a very great complement (compliment?) for hiring.
And, as I mentioned earlier, what’s happened now is, we have this whole evolution of
social networking, and it’s more – it’s not…just the social networking. It’s what can be
built off it that can take advantage, and now we’re doing a lot of investment in how you
monetize those things.
That is really, really going to be big, and that’s the biggest change I see, because it’s a
different generation. It’s a different kind of person that you can hire up there…But it’s
this ecosphere that’s made that—that makes that—possible for both sides.
And I happen to agree now with Carl’s point of what [Bill Hewlett] said; because, you
know,…in the last two and a half years, I’ve funded two companies down here, one in
Oakland, and two in downtown San Francisco, and it really is – it’s all very
complementary. We have one real game changer going on now as far as from the
innovation side, that the technology side is -- In my history here, each decade, we’ve had
another wave of innovation, and we’ve all heard about those.
Right now, we have two, maybe three, which is really – There is more innovation going
on in Silicon Valley at large than there’s ever been in history, and every venture capitalist
will tell you that. It is so amazing, what’s going on; but we have the cloud; we have the
Web; and we have mobile. And those three things synergistically are beyond – I think will
be the greatest value creation in history.
Q:
Wow, that’s very exciting. Makes me want to go buy some stock! Supervisor Chiu, you
have a wealth of experience in the private sector, in technology, as well, as…COO of an
online communications-tech company. What’s your perspective on that?
A:
(Supervisor Chiu)…I started a company in 1999 that I ran for eight years before I ran for
office, and the experience in my company was very akin to entrepreneurial experiences in
San Francisco, in that we started our ideas in a café, and in sort of the density that exists
in San Francisco; but once we grew, and hit a certain point, after seven or eight folks, our
board, our investors, told us, “Move down to Silicon Valley.” And we did.
And that was challenging for a lot of reasons; but I think what we are seeing today is, we
are losing less companies once they get to that stage. It used to be, you hit 20, 30 people,
and investors tell you, “Go to where the talent is. Go to where the engineers are. Go to
where the VCs are.”
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Fortunately, more venture capitalists are locating in San Francisco; and, to what was
mentioned before, I think the infrastructure of density, of having walkable neighborhoods,
of having transit-oriented neighborhoods, of building more housing close to where folks
are working, and of having this hub of social activity so that people are hanging out by
the food trucks, hanging out on the street corner, and thinking of that next big idea, that’s
an exciting trend that I know is happening in all our urban areas; and it’s something that I
think is good, not just for our cities, but good for good, smart growth.
Q:
Excellent, excellent. So Mayor Reed, switching up a little bit, you’ve worked with the
mayors of San Francisco and Oakland on regional issues like transportation. Are the
regional issues changing? As the Silicon Valley workforce becomes more geographically
diverse, what is the game changer for solving that?
A:
(Mayor Reed) I think the game changer is transportation. That would be BART and the
electrification of Caltrain – two big projects to be completed within – You know, I’m not
going to put a completion date on it, but soon! (laughter) Soon!
And that’s really important because, as we look at our economies, it’s obviously a
regional economy, an integrated economy. We need a transportation network to
be…integrated, as well; and we need an alternative to everybody getting’ in their car.
Those of you who were on 101 today can realize that’s difficult. And if you have a chance
to ride Caltrain up and down the peninsula, that’s a lot better than taking your car up and
down the peninsula. So that transportation network will be helpful to companies large and
small.
I was out at Google a couple of months ago, and they’re running 87 buses to get their
people to work. That’s a huge transportation expense to them. They’re going to continue
to do that, even with BART and others that get put in place. But if you look at the longterm growth of the valley, we have to have that transportation infrastructure or else it’s
just going to get more and more crowded, and then companies will have more reasons to
leave.
Q:
Right. And the first stage of the bullet train got okayed yesterday,…the federal approval;
so it looks like we’ll be starting that. So let me just open that up for the panel: thoughts
on this regional issue.
A:
(Supervisor Chiu) As somebody who spent an hour and a half sitting in my car today, I
wish that one of you would design the next flying electric vehicle. But Mayor Reed is
absolutely correct. And one thing I would ask of the business community: Oftentimes, I
know the debate in our city is one of sort of cars versus other forms of transit. And what
I’ve seen is, the private sector and the companies that exist in our leadership often side on
the car side, and I think the extent to which I know here in Silicon Valley, that’s often a
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bit of a more mix debate, and a mix discussion; but I do think that our long-term future is
in getting us out of cars; getting us not wasting countless hours every year. We are the
number-two region behind Los Angeles as far as congestion. And I think the next time
when the economy comes roaring back, we will all be stuck in cars for many, many hours
of the week if we can’t figure this out…
A:
(Mr. Pedersen) Yeah, I think also the regionalization of what we’re just doing here within
our own community is also going to set up major—much more opportunities for major—
transportation hubs. I mean, yes, being involved, you know, with the Transbay Terminal
in San Francisco, you know, we’re highly desirous of seeing, you know, the high-speed
train really work from Southern California to Northern California.
And if we could figure out just kind of this little area of getting from San Jose to San
Francisco, and really find a way to get it the quick, which really would be the
electrification of Caltrain, not necessarily having to bring, you know, the high-speed rail
all the way up, I think that you’d start to find things like that much more viable because a
lot of construction workers that we have come from, you know, come from the mid-valley
areas. Come from Sacramento. And we attract a lot of people in; and we need to find
ways not just within our own individual Bay Area region, but also outside, to get people
in more efficiently
Q:
All right. Very good. Bill, anything to add to that?
A:
(Mr. Coleman) No. I definitely think transportation is the number-one issue. I personally
have concern about the economic advisability of the bullet train from [Northern
California] to Southern California, especially in these tight economic times; but that’s my
own issue.
Q:
Okay. So, Jes, I’d like to direct this at you. As the number-one green builder in
California, what is changing in your industry in this economy related to projects that you
have in Silicon Valley?
A:
(Mr. Pedersen) Yeah. I would say, you know, this new economy is this expanding
economy, and, you know, what’s changing is, we’ve got some really big projects that are
coming up, you know, especially, you know, north and south, you know. You’ve got
Apple, Google, San Jose Airport expansion. You’ve got the 49ers coming down here, to
someone’s or other’s chagrin. But, beyond that, we know that we are going to start getting
to a point to where all this excess capacity that was created in the downturn, as
contractors and subcontractors, you know, do start filling up, that pricing is going to start
to increase, and that increase is going to be relayed in forms of, you know, labor shortages
as well as some the material, and that just starts to drive it. So I think that some of that
evening-out would be very helpful.
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And then, kind of from the green side, the one thing that we’re also seeing, too, is just an
expansion of the definition of how green “green” can be. Everyone is or most people are
aware of USGBC, which has the LEED accreditation. Probably about 98 percent of the
buildings that we do are now accredited; but, beyond that, is kind of the living-building
challenge, which strives to go to net-zero water, net-zero energy, and keeping toxics, you
know, the use of toxics, a thing they call the “red list,” and they’re complementary.
And now at the Clinton Global Initiative next month, we’re going to [help sponsor] the
next level, which is actually called “WELL.” It tries to measure comfort, productivity,
well-being, and just the overall what [appears] to be subjectivity within how the workers
work within their space, and so that’s one of the things that we see as people, you know,
in the last wave, cared about it, and what their buildings did. Now they’re caring [about]
what their people are doing in their buildings.
Q:
Very good. Any other thoughts on that?
A:
(Supervisor Chiu) A couple years ago I passed a piece of legislation that ended up setting
the most strict energy-audit requirements for commercial buildings from San Francisco.
And the concern at that time, from some in the building community, was that we were
putting on requirements that were a bit onerous, and could potentially impact jobs. And
what we have found is that it has helped to drive, again, sort of the green-collar, cleantech world in a way that has meant…many more jobs and innovation that are happening
in the Bay Area that we are now exporting to the rest of the world. And so I think that the
environmental gains that all of our cities are making as we push each other to really be in
the forefront of, obviously, fighting some very inconvenient truths, are helping to set up
our economy to compete internationally, as we have to green our globe.
Q:
Very good. All right. So Supervisor Chiu, San Francisco has led the world in venturecapital funding – thank you, Bill! – for three years, according to the Mercury News,
trusted source. What’s your secret sauce here?
A:
(Supervisor Chiu) Well, I think, as we’ve alluded to before, it’s a number of things. In
recent years, we have made changes to our tax policies. We have really been thinking
about the longer-term needs of companies. I do think transit has had some impact on
entrepreneurs and corporate leaders deciding that they don’t want to have their employees
sitting in cars for many hours of the day.
I also think that, San Francisco, like many parts of the Bay, we pride ourselves on being
different, in the words of Steve Jobs. So my city, we were first to move forward on
marriage equality, on universal health insurance, on a lot of ideas in the environment; and
I think those types of cultural values in our ethos help with really moving forward a
creativity and an innovation within our private sector, as well.
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Q:
So, Mayor Reed, you—this year, you—took on and championed pension reform in San
Jose and the voters agreed with you. How do you think pension reform will positively
impact San Jose’s budget in 2013? And do you think we will continue to see other cities
taking up pension reform in the state?
A:
(Mayor Reed) Let me ask the second—answer the second—part first, and that is, yes, I
think other cities will. I know that other cities are, and it’s driven by necessity, and San
Jose reached that pain point where we had to do something. Other cities are on the way.
In Los Angeles, for example, they’re now paying more than 20 percent of their general
fund for retirement costs, and they’re predicting it’s going to go up by 50 percent over the
next four years. So, you know, once you get over 20 percent of the budget, it’s awfully
painful, and you really are compelled to do something. And so other cities will certainly
reach that point, and move ahead.
In San Jose, our ballot measure B that was approved by the voters with the support of
many people in this room, including the Silicon Valley Leadership Group, will save about
$25 million in its first year of implementation, which we expect to be 2013. And then the
amount it saves will go up every year for about 30 years until it reaches about $185
million a year. So it’s billions of dollars of savings over, you know, 30 years, if you want
to roll it out that far; and that will make a huge impact on our ability to, first, not cut
services; and, second, to begin to restore services, which is the key part of that. We’re
committed to restoring services to what they were in January of ’11. That’s our first goal.
We need the savings in order to do that, but we’re not all that different from many other
cities in the state. We are different in the fact that we’re a charter city, so we have a little
more leeway to deal with the problem directly. So the CalPERS cities kind of have to go
along with whatever the state legislature does and have acted. What they did was
significant, but it was small, relative to the size of the problem. So everybody’s going to
be back dealing with this next year. The governor said more work needs to be done. I
certainly agree with that.
Q:
Very good. And I’m going to probe a little bit on that, and then direct a question to you,
Supervisor Chiu; but can you give us an update, Mayor, on the impact of the pending
legislation on that? Is there anything else that needs to be done?
A:
(Mayor Reed) Well, the legislation doesn’t have as much of an impact on San Jose as it
does on other cities, ‘cause we’re a charter city; but the legislation does stand for the
principle that employees can be made to pay more for their benefits. So the legislation
will require at least some state employees to pay more for their retirement benefits, and
then it enables local governments to negotiate to make people pay more for their benefits.
And, essentially, that’s what we’re doing in San Jose. We’re making our employees,
current employees, which is where the money is, pay more for their benefits, and so that
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principle is important to San Jose; but if you look at what the state has done, it’s about a –
Okay. You measure it in tens of billions of dollars. Whether you do it in present value, or
you gross it up over 30 years, it’s tens of billions of dollars of savings.
The problem at the state level is measured in hundreds of billions of dollars. So that’s
why I say it’s small, although significant, and in order to deal with the rest of that
problem, the 90 percent of the problem that remains, things will have to be done to deal
with the benefits of current employees, and that’s a much more difficult thing to do; but it
does need to be done. I think it will take a constitutional amendment to change the
California Constitution to make it clear that the state and local governments have the
ability to do something about future accrual rates, because that’s about the only way to
save enough money to avoid these problems as they grow every year, and get worse every
year.
Q:
So Supervisor Chiu, San Francisco tackled this issue a couple years back. What’s next?
A:
(Supervisor Chiu) So we did – I’m proud of the fact that, last year, my city-hall
colleagues and I spent months working with labor unions and the business community to
tackle this last year. We did pass a measure last November that is going to save on the
order of magnitude similar to what Mayor Reed was describing in San Jose.
That being said, we have already found out, within the last couple of months, that some of
the actuarial assumptions that we were using were a little bit off, and we also know that
our long-term healthcare liabilities are continuing to explode; and so I do think those will
be issues that we will have to continue to tackle. Obviously, the state problems, I think,
really eclipse what San Jose and San Francisco have been able to do, and that is an
absolute imperative. But I think, from a city-government standpoint, we all have to think
about how we implement more pay-as-you-go systems, so that as we accrue liabilities
today, we’re also paying for them at the same time. It’s not about making commitments
today that future generations of citizens have to deal with.
Q:
Anybody else want to comment on that?…Go ahead, Bill.
A:
(Mr. Coleman) Well, this is also a personal opinion. If we look at industry in the last 30
years, basically, industry has moved from a defined-benefit to a defined-contribution
[plan]. Those that haven’t, the airline industry, the steel industry, the auto industry, etc.,
have suffered the consequences, and will continue to suffer the consequences, I believe,
in the case of the auto industry.
I don’t know how we can continue for decades to come to support all of our public
workers, be in a position to fund these kinds of programs without some change. A lot of it
is the medical benefits, and I think, hopefully, we can move into a situation where we can
have…some sort of public medical care that works out; but a lot of it is on the edges.
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The issue is the industry, the industry of free market, has not found a way to continue it;
and therefore, I just can’t comprehend how we’re going to find a way to make that kind of
retirement program economically viable for the citizens of the country.
A:
(Mr. Pedersen) I was just going to say that I think that, you know, 20, 30, 40 years ago,
going to work in the public sector didn’t seem as appealing sometimes as the private
sector; and so you were offered some benefits, and that was very attractive; and now I’d
say that working in the public sector can be as attractive as working in the private sector.
I think they have some – a little need to catch up to that in the same way that Bill was
relating to, and they’re already having those days of reckoning, and having to deal with it;
and I think that’s just the start of a longer conversation.
A:
(Supervisor Chiu) I just had one last thought, which is I think both in the private sector
and the public sector, there is a real emphasis on short-term decisions. So whether it
be…CEOs of companies that are looking to beat Wall Street expectations, and are
thinking quarter-by-quarter, or whether it be elected officials who – Mayor Reed and I are
trying to solve the problems that were created by elected officials who were elected years
ago, who were term-limited out. And we are putting into place solutions that, 10 years
from now, we will likely not be around to fix. And how we jive those decisions that we’re
making today with the long-term implications has been a problem, I think, in both of our
sectors, and I think is something that I’ve been wondering, how do we…really deal with
those generational challenges.
Q:
Very good. And so I’d like to open up my last question to all panelists. Mayor Lee was
recently quoted saying San Francisco is the “innovation capital of the world.” What do
you think of that? And is San Francisco the epicenter? Or is it a little bit more complex
and baiting a little bit here? But who would like to start off?
A:
(Mayor Reed) Let me just say that Silicon Valley is the innovation center of the world,
and I will bet money on that against any other place in the world. We brag – I love to brag
about it – we’re the capital of Silicon Valley. Now the other places that want to be the
heart of Silicon Valley, the brain of Silicon Valley, the birthplace of Silicon Valley.
Atherton is the pituitary gland of Silicon Valley (laughter), and so whatever San
Francisco wants to be, that’s fine. But just remember that the number-one patent-filing
city in the country is San Jose. (applause) And we’ve got a patent office, too! And we’re
soon to have the US patent and trademark office open in San Jose, thanks to a lot of work
from Carl and the Leadership Group. (applause)
A:
(Mr. Pedersen) Being in the middle here, I would…take a position, maybe starting with
Mayor Reed, where maybe the gold does come from Stanford; but, you know, there’s a
lot of good gold that comes from UCSF and Berkeley and San José State (applause) and
there is a think-tank brain trust that, quite honestly, pulls a lot of us together here in the
entire Bay Area, and…regardless of where you are, I think that that same brain trust that
does it for the education system is doing it now much more for the economy, and for our
SVLG Game Changers 2013 Panel #2 of 3 – September 20, 2012
Page 12
cities, as well. And so I think you need to really look at it in that way as far as how we all
contribute to help each other throughout the entire Bay Area.
Q:
(Supervisor Chiu) So, given Mayor Lee’s comments, you know, obviously, we know, in
recent years, we have seen the largest growth of the number of companies and the number
of tech employees and innovation happening in San Francisco; but that being said, I like
to say that the San Francisco-San Jose Bay Area region – It is true to say that we really do
exemplify this to the rest of the world, and I think there is a lot of benefit to healthy
competition between our cities; but I also am a big believer in regionalism – that not only
do we have to tackle our regional issues, but if we can collectively think about how to
market ourselves to the rest of the world…
We have a huge amount of VC in the Bay Area. We should have even more of it. We
have a huge number of companies that are created in the greater Bay Area. We should
continue to have more. And I think that international capital – When I speak to folks that
are looking to invest in different parts of the US, I like to explain to them that it’s not just
about San Francisco. It’s about two airports. It’s about all the sports teams we have. It’s
about all of the universities and all the cities that are doing innovation. And that is, I
think, what we have to continue to remind ourselves, that the geographic distinctions that
we may know here are completely meaningless whether you’re in Bangalore, Singapore,
Shanghai, or Frankfurt.
Q:
Very eloquently put. Bill, you get the closing remark.
A:
(Mr. Coleman) The ecosphere that is the Silicon Valley, and I believe it does extend up to
San Francisco now, is unique in history. I mean if we look historically, innovation has
always been in local centers, whether it was in Florence in the 14th/15th century, in
England in textiles in the 18th century, and the 19th century in chemicals in Germany, and
then went to the eastern United States in automobiles and radio and telephone, all in
specific sectors. They all had their boom, and they were gone. You know, they…had a
long tail of production as those things happened; but, as they became more and more
commoditized –
What’s happened here is, we’ve moved from one – Luckily, we start with IT, and IT
turned into informatics as the basis for all this stuff; but we’re moving into one area after
another, and we’re not limited by population or area. That growth is actually really
happening. I think this says that we’re going to be vital for a long period of time. We have
to celebrate this and love the competition between North and South; but we really, really
have something here, and it’s really exciting to be part of it.
Mr. Guardino:
Very much so! I am so glad we ended on that note! What’s exciting about this region’s
innovation economy? We’re not competitors. We’re not collaborators. We believe in “coSVLG Game Changers 2013 Panel #2 of 3 – September 20, 2012
Page 13
opetition.” It’s both and it’s every day. And as we have cities competing against each
other, that is good for the region when we collaborate as a region.
The Leadership Group is owned by 375 member company CEOs. More than a hundred
are headquartered in San Francisco or have a strong physical presence in San Francisco;
and that’s why, when Mayor Lee and David Chiu and Mayor Reed and others come
together, and we can electrify Caltrain. We can strengthen the region’s economy. We can
work towards high-speed rail. Those are going to benefit all of us as we compete as a
region.
So I’m going back to Bill Hewlett’s comment to the Mercury News 25 years ago. Define
the borders of Silicon Valley? He was more expansive than all of us: Santa Rosa to
Monterey. Let’s continue to think big.
And we are now going to challenge this panel. Everyone, do you have your green and red
card? Each panelist has 30 seconds -- and I’m going to have to be a tough traffic cop on
this – one game changer you’re going to lead in the next 12 months. Specific, and it’s
okay to be controversial. One game changer. Mayor Reed?
Mayor Reed:
I’m known to be a pragmatist and a realist, so let me surprise you and say I’m also a
dreamer. So, in the next year, six months, whatever the time period is, the governor is
going to make a list of the top 10 reasons California is one of the—considered to be one
of the—worst places in the country to do business, and the legislature is going to pass
legislation to fix all those problems.
Mr. Guardino:
I love it!
Mayor Reed:
Just a little dream.
Mr. Guardino:
I’m going to…divide this one into two questions to you, audience.
Q:
One, do you think that is what our governor and legislature should do to strengthen
California? That will be question one. Green card or red card. We have our first
unanimous question.
Q:
Now, how many of you think that will happen? (laughter, comments) We laugh and cry at
the same time. Paul Fong is the only one who thinks it’s going to happen! Paul?
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Paul, one, we’re going to send you a list from the Leadership Group’s perspective of the
10 top ways that California can be competitive again, but you have 30 seconds to
respond, Sir. Please?
A:
(Assemblymember Fong) We’re working on it! (laughter, comments, applause)
Mr. Guardino:
Great! Paul, thank you for being here, for your service. We’re going to go to Jes Pedersen.
Jes?
A:
(Mr. Pedersen) One thing we’d like to do is really try and champion this new WELL
standard in the green-building side, and we’ve been measuring buildings, trying to figure
out what buildings do; but it’s trying (we’re starting?) to measure the people. It’s trying to
develop metrics, and trying to make sure what we’re doing really is working one way or
the other. And so after it’s rolled out at the Clinton Global Initiative here next month,
we’re going to be trying to partner up with people who really have that kind of passion
and excitement to see that happen in their own workplaces, and try and find a way to
make it work.
Mr. Guardino:
Excellent! Okay. Do you agree with that metrics-driven solution that he’s going to roll
out at CGI next month? Green or red? Okay. I think you won us over! Good job! And
welcome, again, to your new role. Not new to Webcor. New to this role. We’re excited
for you and thrilled to work with you.
Mr. Pedersen:
Thanks, Carl.
Mr. Guardino:
David Chiu?
Supervisor Chiu:
Well, in addition to trying to continue to steal companies from San Jose (laughter) to the
Innovation Capital of the World –
Mr. Guardino:
Now you know why we tipped over that truck in Palo Alto! (laughter)
A:
(Supervisor Chiu) In all seriousness, I think there is tremendous consensus in this room
and among our cities about the importance of investing in transportation, and that is an
area I have decided to focus on over the next 12 months – making sure that our regional
bodies are fully on board with all of the various infrastructure projects that we’re
investing in, and making sure that we are moving forward with this agenda during this
tough time – transportation.
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Mr. Guardino:
And David Chiu, we appreciate and admire all that you’ve already done on transportation.
Q:
Can you be specific? One of the transportation nodes that you’re really going to focus on
in the next 12 months?
A:
(Supervisor Chiu) In addition to Caltrain, I do think high-speed rail, and I know this is a
bit controversial in this room, but I think we’ve got to move it forward. This is going to
be an investment not just for the next couple years, but really for the next century; and we
can do it right now, I think, if our leadership puts our mind to doing it.
Mr. Guardino:
Okay. Green card, red card. Moving forward with high-speed rail. Okay. Overwhelmingly
green, but not all. All the red cards, stand up please. (laughter) All the red cards, stand up
quickly, please. (chit-chat –“What an arm!”) It’s a gift. I don’t talk about it much, but it’s
a gift. (“The Giants need you!”) And we need the A’s right here! (laughter) Green card,
red card. Okay. So one of you step to the mike. There are mikes in the audience. One of
you quickly move to the mike. You have 30 seconds. Why do you disagree with
Supervisor Chiu? There it is!
A:
(British accent)…I definitely support public transportation. It’s a tremendous thing, but
we have a startup company that really gets people out of their cars. One of our biggest
success stories is a Gap where we promote and measure car-pooling, transit, and we’re
seeing -- You know, it’s interesting what you’re saying about CEQA.
Mr. Guardino:
Sir, you only have 30 seconds.
A:
(British accent) Oh, sorry. An information system. We have methods of gettin’ people out
of their cars for a fraction of the cost to really get—make—better use of the current
infrastructure, and I’d love to talk about it afterwards.
Mr. Guardino:
Great! And thank you! You sound like you come from a country that believes in mass
transit, too, so we have no doubt that you –
A:
(British accent) Absolutely! From the UK!
Mr. Guardino:
-- you do. David, you have…up to 30 seconds to respond. Then we’re going to vote, and,
sir, get ready to catch a T-shirt!
Supervisor Chiu:
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Page 16
First of all, I look forward to your company, hopefully, moving up to San Francisco, and
having this conversation. (laughter)
A:
(British accent) One of our clients is Gap in San Francisco. A big success story.
Supervisor Chiu:
You know, I think one thing that was true about many major infrastructure projects, no
one has ever regretted, years after the fact, of building subways, or building the Golden
Gate Bridge, or building major public-works projects that involve transportation. And I
do think that the short-term challenges and disputes that are raised over this, which I
completely understand. I think the concerns are very valid, but I think the long-term
economic gains for our entire region, and our entire state, we can’t estimate that, and we
are not going to really – We’re not going to see how we lose our competitiveness to other
parts of the world that have this infrastructure until it’s too late.
Mr. Guardino:
David, thank you. And, sir, I didn’t catch your name, but thank you for eloquently stating
it.
A:
…Thanks for the T-shirt!
Mr. Guardino:
You bet. Thank you! November 22nd, turkey trot. I just ate my third muffin. I’m…going
to do a marathon that morning. Did David change your mind? Or did Paul? Green or red?
Green? Oh, come on! Drink some coffee. Walk around. Move! Okay. I think…we kept it
where it was. Good job. Bill Coleman, 30 seconds.
Mr. Coleman:
Okay. Well, I’m an investor in companies, and what I see that can slow down this cloud
in social, it’s identify theft and cyber security, cyber crime. That’s what I’m investing in. I
think that we can solve the identity problem in this country. The administration actually
has a viable process for the first time, I think, in history, called the National Strategy for
Trust and Identities in Cyberspace. And a half hour before I walked in here, I got a call
that one of my companies won the grant to implement the system for coordination of
healthcare and protection of children…online. (applause)
Mr. Guardino:
Okay. Green card or red card. If you agree, a risk to our innovation economy is cybersecurity, etc. Green, red. Does anybody disagree with one of the top technologists in the
world? (laughter) Seeing none. Will you thank the president and publisher of our San
Jose Mercury News, Mr. Mac Tully, and this amazing panel? (applause)…
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/WPP September 20, 26, 27, 2012
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