In our work with entrepreneurs and investors, we hear two complaints about the Triangle: 1) We need more seed capital here and 2) We need better management talent.
So, which does the Triangle need more - Money or Management?
Based on a recently completed survey by CED, the answer seems to be management. If you refer to the last three CED Entrepreneurial Satisfaction Survey Reports from 2006, 2004, and 2001, the "availability and retention of top technical and management talent" is the most significant concern for local high growth entrepreneurs.
What is the cause of this problem? Here are some common explanations we've heard:
1. The Research Triangle area is still too young. In another 20 years we will have what Silicon Valley has now. (For your information, Silicon Valley was started in 1953, Research Triangle Park was started in 1959.)
2. The tax structure in North Carolina is not competitive with other states. Therefore, executives would rather start companies in other states, or will move their companies to other states to avoid heavy taxation. Richard Holcomb, a serial entrepreneur in the Triangle, mentioned this at the Emerging Issues Forum in 2003: Jump Starting Innovation. In a previous company, some of his business partners decided to leave the state, in part, because of tax consequences.
3. There are not enough companies in the Triangle to attract an executive. If an executive moves here, they want to know that if the company they join doesn't work out for them, there are other opportunities for them to join locally. Otherwise, they would have to move their family to another region, and they would prefer not to do that. We have heard this from several sources.
4. There is a lack of large companies headquartered in the Research Triangle. Victor Dzau, President and CEO of the Duke University Health System, mentioned this in a recent CED program at Duke:
"[The Triangle] needs a big success. As I think back on my own experience, if you are ever in the Bay Area and you start a company, [there are] two things you always find out. One is that one of the VCs worked at Genentech some time in their life. The other is the CEO you recruit worked at Genentech at some time in their life."
What's your take? We want to hear from you. Do you agree with any of these explanations?