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Three CEOs Talk To Malloy About Connecticut’s Entrepreneurial Ecosystem

by Christine Stuart | May 28, 2014 12:59pm
(6) Comments | Commenting has expired
Posted to: Business, Economics, Election 2014, Jobs, Labor, Hartford

Christine Stuart photo

Right to left: Gov. Dannel P. Malloy, Jeremy Hamel of Umbie DentalCare, Ned Gannon of eBrevia, and Bryant Guffey of ZetrOz

Democratic Gov. Dannel P. Malloy sat down with entrepreneurs from three start-ups Wednesday morning and tried to figure out what the state was doing right in supporting their businesses and how it could improve.

Most of the funding for these programs was authorized as part of the October 2011 bipartisan jobs package.

While the state got a lot of things right, the CEOs of the companies said there are still some challenges.

Ned Gannon, whose eBrevia company is using artificial intelligence and machine learning to more quickly scan hard copies of documents into readable text for lawyers and business executives, said he received a phone call from a friend in Silicon Valley who was having trouble finding software engineers. Gannon said he, too, is having problems finding qualified employees, but the phone call only proves that “it’s a tight market everywhere.”

Jeremy Hamel, co-founder of Umbie DentalCare, a cloud-based software management system for dentists, said about 90 percent of his workforce comes from the computer sciences program at Central Connecticut State University. His advice though was that the state college system should start teaching more web development and less java script.

Hamel complimented Connecticut Innovations for the investments it has made, but warned that it needs to continue to make investments with greater risk if it’s going to succeed.

“We’ve created these environments where elected officials and folks within the bureaucracies themselves are afraid to fail,” Malloy said. “And I think that was very much the situation Connecticut was in a few years ago and quite frankly watching the political debate back and forth could be a problem in the future.”

Malloy said fear of companies failing after the state invests in them is probably the main reason the due diligence “is as great as it is” before the money is doled out. But he said getting these companies an answer about funding quickly is one of the goals of his administration.

Hamel said they hired some veterans and were unaware that there were tax credits they would receive for hiring them. However, when it came time to fill out the paperwork, Hamel got frustrated and hired the veterans without applying for the credit.

“I actually dropped the process. It was way too much of a process for me. I was going to hire them anyway,” Hamel said.

Malloy responded by saying maybe he can talk with the folks in the Labor Department to figure out how to streamline it.

Gannon said eBrevia took advantage of the “small incubator grant program” and used it to hire an attorney who annotates documents to use the software and thereby “train” its built-in artificial intelligence. When the $30,000 grant was depleted, they ended up hiring the person.

“It was a great experience for us to get a feel for him and his skill set and then we hired him as a full-time employee,” Gannon said. “As a start-up, because you have such a finite resources, you have such limited room to make mistakes in terms of personnel, so that’s why programs like that grant have been helpful for us.”

Bryant Guffey, CEO and co-founder of ZetrOZ, which makes a portable ultrasound therapy system, said there are people working at their manufacturing facility in Trumbull that had been unemployed for up to a year. He said his company tried to take advantage of all the programs the Labor Department had to offer.

But Guffey said he was in Connecticut today because of the programs Connecticut Innovations offered.

Guffey said his staff has doubled in size since arriving in Connecticut with 12 employees with a technology they licensed and created at Cornell University in New York. The company was looking for a place between New York and Boston. With $1.5 million in direct investment from Connecticut Innovations, the company was able to find new office space and participate in the Connecticut Angel Investor Tax Credit Program.

What More Can The State Do To Help?

Gannon wanted to know how Connecticut-based technology companies could connect with the relevant state agencies to possibly land some state business.

“This is a real problem in Connecticut,” Malloy said. “In part because of really a very big hangover from what happened in a prior administration with the governor and corruption, so the legislature went hog wild writing legislation that makes it very difficult to adapt quickly.”

Malloy said he shares the same frustration with the state’s contracting process. He said because of former Gov. John G. Rowland’s corruption there is now a lot of “T-crossing and I-dotting.”

“In the nine years following that situation, at least for a majority of that, we bred into the system this fear of making mistakes,” Malloy said.

He said he’s doing his best to change that.

There are other companies vying for state contracts on things such as cleaning solutions. Malloy said he knows to send those folks to the Department of Administrative Services, but was at a loss for where to send Gannon. He suggested he have a conversation with Attorney General George Jepsen, who oversees an office of 200 attorneys and may have use for Gannon’s product.

Malloy has been criticized by both those on the left and the right of the political spectrum for what is often called “corporate welfare.”

Early in his administration the Working Families Party released a report which found that the incentives the state gave to businesses were poorly monitored and rarely came with clawback provisions.

The report authored by two researchers at a nonpartisan, nonprofit organization found just over half of the companies audited in 2010 successfully met their job requirements and those that fell short haven’t been subjected to any clawback provisions. Of the 70 companies the researchers looked at 39 fulfilled their job creation obligations, while 31 have not.

The Malloy administration claims it has given assistance to about 1,600 companies, while the previous governor gave assistance to about 120. Not all 1,600 companies have succeeded. At least a handful receiving Small Business Express grants have failed and a few have withdrawn their request for state assistance.

Malloy has the ability to offer money to up to 15 companies that plan to create more than 200 jobs in the state, but only 12 of those offers have been successful.

Click here for a map of all the companies that have received state assistance.

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(6) Comments

posted by: art vandelay | May 28, 2014  3:26pm

art vandelay

If Malloy is sitting down on stage with 3 start up entrepreneurs, you know it’s a staged event.

posted by: Greg | May 28, 2014  4:50pm

“In the nine years following that situation, at least for a majority of that, we bred into the system this fear of making mistakes,” Malloy said.

Bush’s fault.  Rowland’s fault.  Blaming issues from two governor’s ago is a poor excuse for taking ownership of today’s issues, whether it be state contracting or the CT economy. 

Malloy owns the last four years of this state’s continued decline. Period.  If Malloy wanted reforms in any aspect of government he had the last 4 years to do so.  Blaming Rowland for Malloy problems is a cheap cop-out and everyone knows it except for his fanboys who will never say otherwise.

posted by: robn | May 28, 2014  4:56pm

How about if the state stops picking winners and losers and just creates a good climate for business in general. Like stop taxing the bejesus out of homeowners so its a place that talented people want to live here (you know, the talented people that form the core of these businesses.)

posted by: state_employee | May 28, 2014  7:27pm

You can almost see the arrogance oozing out of malloy up there with those guys.
He is a failure and needs to be booted out on his can.

posted by: NoNonsense2014 | May 28, 2014  8:24pm

The State’s database that shows up when you click the link for the “map of all the companies that have received state assistance” is inaccurate and out of date. There are some notable failures that don’t show up as such: Hybrid Insurance still shows 11 jobs retained; yet CEO Earl O’Garro was arrested earlier this year for failing to pay wages to insurance company employees. And Gilberties, LLC (aka Lazy Burrito shops) shows 3 jobs created and 7 retained; however, all three of the company’s restaurants have closed. And those are just the two that come immediately to mind.

posted by: shinningstars122 | May 28, 2014  8:47pm

shinningstars122

@ArtVandelay>>>If Malloy is sitting down on stage with 3 start up entrepreneurs, you know it’s a staged event.

LMAO.

The glass is always half empty I see?

At least some things are positive.

I think one selling point for our state which I will take full credit proclaiming here right now thank you…is water.

We have water baby! Clean water. Why go to a drought plagued state, like Texas, when you can come to us and know that since 1958 we have received 60% more rain than normal.

Corporate America water will be the new oil soon enough so come to CT now before it is too late.

Robin as for taxes how do you propose funding our school systems?

It is a selling point that many folks who live here with children appreciate.

@Greg we get it…you don’t live in the past and probably also miss Rowland’s radio show on WTIC too.

Oh one more thing…when was Bush governor of CT?