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Growing our own way | Globalization benefits Hawaii



Our high-tech industry won't
be built in a day; it will be
cultivated a bit at a time

By Jeff Bloom and Rob Kay

Even with the Aloha State still reeling from the aftermath of Sept. 11 and Silicon Valley in a deep funk, these are indeed bullish times for Hawaii's cadre of budding technology entrepreneurs. Never have more resources in Hawaii been available for start up companies in terms of venture capital, mentoring and infrastructure.

How could this be?

There are several explanations. To some degree, Hawaii's infrastructure has slowly, painfully evolved organically at a grass roots level to better accommodate entrepreneurs. This is critical for major structural transformation to occur. Other agents of change have come from Silicon Valley and beyond.

Silicon Valley to Waimanalo

Hawaii is slowly but surely attracting well-heeled and well-intentioned Silicon Valley transplants who are now part time Hawaii residents.

While small in number, they have proven to be helpful in using their resources to fund upstarts and mentor local entrepreneurs. No two people personify this westward drift better than John Dean, chairman of Silicon Valley Bank, and venture capitalist Barry Weinman, managing director of Allegis Capital in San Francisco.

Dean, who owns a home in Waimanalo, has a love for the islands derived from his Peace Corps volunteer days in Samoa. Recognized by Business Week as being one of the 50 most significant people in Silicon Valley, in a few short years he has worked behind the scenes funding Hawaii startups and working hand in glove with the University of Hawaii's College of Business Administration to promote stronger relationships with the tech movers and shakers on the Mainland.

In particular, under the aegis of the UH Business School, he has organized the Kipapa lecture series which has brought some of the best minds in Silicon Valley to share their knowledge with local people.

Weinman, also a part time Oahu resident, runs a $600 million venture capital firm and got to know Hawaii during a stint in the Navy where he served on the USS Radford based in Pearl Harbor. He has funded many successful high tech firms on the mainland and is one of very few Silicon Valley players in a position to mentor local companies and consider them for investment.

Just as importantly, he has endowed UH with the Barry and Virginia Weinman Professor of Entrepreneurship and E-Business chair that is occupied by former Harvard University professor Rob Robinson.

The University of Hawaii

It's a truism that entrepreneurs grow up around a university, says Cathy Owen, president of HotU. She's right. Silicon Valley would not exist without the intellectual medium provided by Stanford and the University of California. Likewise, for Hawaii to succeed as a hotbed of innovation, UH has to play a similar role. From our vantage point, it's starting to happen on several fronts.

Over the past few years David McClain, the dean at UH College of Business Administration, has cemented ties with Silicon Valley movers. This has started to pay dividends in terms of providing the university with capital and valuable intellectual resources.

Another CBA powerhouse is Shirley Daniel, who is establishing a women's leadership and entrepreneur program with community groups such as the YWCA and the Asian Pacific American Women's Leadership Institute. She has also worked with DOE to create an entrepreneurship program at the high school level.

In addition to in-house leadership, the College of Business Administration has acquired new blood that is already stimulating young entrepreneurs.

Robinson, executive director of the entrepreneurship center, has been here for less than a year but has reinvigorated this program at UH. In addition to running a popular UH business plan competition, Robinson is reaching out to the community by establishing a UH Angel investment group with the aim of funding and mentoring local start up companies.

Hawaii's high-tech incubator

"Getting a high-tech start up going in Hawaii has never been easy in the best of times," said Kevin Sypniewski, the CEO of Honolulu-based AssistGuide Inc., an Internet portal for disability, long-term care, retirement living and other "life-care" providers. "Nowadays with HiBeam," Sypniewski says, "there's a high caliber of guidance and mentoring available locally that makes an entrepreneur's job easier."

Composed of local experts in the fields of law, risk management, venture capital and other areas, HiBeam acts as a "virtual board" that provides advice and direction for promising new high tech companies.

For example Pat Sullivan, chief executive officer of Hoana Technologies, a spin off of Oceanit, credits HiBeam for helping new investors in his company get their due diligence completed. He pointed out this was a necessary task for investors who might feel like fish out of water in the technology arena. He said HiBeam offers valuable guidance specifically for fast growing companies such as Hoana, which has cutting edge medical technology aimed at a "global" marketplace. In addition to Hoana, HiBeam has been actively involved with startups such as HotU, Hawaii Biotech, AssistGuide, Hoku Scientific and its newest portfolio client company, Landmark Networks.

Dustin Shindo, chief executive officer of Hoku Scientific, has also had positive experiences with HiBeam.

"The great thing about HiBeam," he said, "is that when you deal with them you can tap into their collective rolodex and get connected with some of the best minds on the Mainland. Short of going to Silicon Valley, there's no organization like it in Hawaii that can accelerate our growth."

New tax laws

The state Legislature deserves credit for passing Act 221, a state tax incentive that gives 100 percent tax credits for investments in qualified Hawaii technology companies. This law frees up money locally that can be invested into businesses that might otherwise have a difficult time attracting capital.

Although recently maligned by critics as being open to exploitation, I believe the law has done its job by attracting investors to start up companies that otherwise may have not received cash.

It's unfortunate that that the producers of the Blue Crush "surf flick" took advantage of this bill, but we should be careful not to overzealously reverse the bill's appeal and, as they say, throw the baby out with the bath water.

Act 221 is clearly one of the best things to happen to tech investment in Hawaii and we should be extremely careful not to scare away potential investors. I believe a great deal of serious investment money that could come into our state as a result of Act 221 is still sitting on the sidelines.

"Act 221 is a major milestone for Hawaii," said David Watumull, chief executive officer of Hawaii Biotech and one of the savviest tech managers in the state. He calls this legislation one of the most progressive incentive packages in the nation.

Says Watumull, "The Governor and all those at the Legislature who supported the bill deserve a lot of credit." Watumull reckons the incentives have helped bring in more than $2.5 million to his own company, which is working on a dengue fever vaccine.

Grass roots

As alluded to earlier, an entrepreneurial "revolution" must be seeded in Hawaiian soil to succeed. This is where a coalition between private companies and grass roots non-profits is vital.

One such partnership is HiTech Quest, an alliance of private companies and individuals founded and sponsored by Bank of Hawaii, Oceanic Time Warner Cable, Microsoft and others. The goal of the group is to identify and mentor entrepreneurial young people in Hawaii.

In addition to providing internships and IT training for high school students, HiTech Quest gives youngsters the opportunity to showcase their abilities in front of their peers as well as some of the top business and professional experts in the state. This year's HiTech Quest contestants will be featured at the 2002 ITEC Event Dec. 4-5 at the Hawaii Convention Center.

Students are encouraged to come up with IT projects that are judged in a competition much like a science fair and rewarded with scholarships and prizes. Teachers as well as students are encouraged to participate in HiTechQuest. One such teacher is Ryan Kusuda, a Kalani High School instructor who has been active with HiTechQuest from its inception.

"Hawaii is a very risk-averse culture," said Kusuda, "and we need to indoctrinate children at a young age with the premise that entrepreneurial risk taking is OK and that sometimes new ideas may fall flat."

Entrepreneurs aren't born. They need to be nurtured. Students require both teachers and mentors from the business community to encourage them to think out of the box and to take calculated business risks. Young adults must also learn that there is no shame to fail in business. The key element in Hawaii's future is our children. Without bringing them on board, all the venture capital and tax incentives in the world will be of little use to our community.

Jeff Bloom is the founder of CTA, a Honolulu computer
staffing and consulting firm. Reach him at
or 839-1200. Rob Kay is a Honolulu-based public relations
practitioner specializing in technology. He can be reached
at or 539-3627.


Hawaii's economy and
universities have benefited
from globalization

By Niti Dubey-Villinger

Does Hawaii benefit from globalization? The short answer is yes. If we look at the state as part of the United States, then the answer is a resounding yes

But Hawaii has seen benefits that are somewhat unique from those seen in the nation as a whole.

Several questions need to be answered to determine whether globalization has yielded benefits. One question is: Who is investing in Hawaii? Mainland based companies? Foreign companies? What about tourism? There is no question about this: Hawaii benefits from tourism. And, as a service sector industry, tourism has benefited from globalization.

Globalization contributed to wealth and job creation in many countries around the world. As people become richer (and their disposable incomes increase), they are interested in spending money on leisure pursuits -- traveling is one of them. Traditionally, Americans, Western Europeans and Japanese traveled overseas. Today, there are increasing numbers of tourists from China, India and other developing countries. Globalization has contributed to the growth of tourism and the hospitality sector. Hawaii is benefiting from globalization.

As part of the United States, Hawaii benefits from globalization with respect to investment by foreign companies. Large foreign multinational companies like Toyota, Mercedes Benz, BMW and Bayer have invested in the United States. These companies create jobs for Americans and (often) sell their products at a cheaper price than if the products were imported to the United States. Workers in the United States also benefit from the skills and training these companies offer.

Similarly, if we look at the hospitality sector in Hawaii, it benefits from the globalization the industry has experienced over the last 30 years. Hawaii's hospitality employees benefit from the global standards that large hotel chains and restaurants have developed.

Finally, Hawaii's educational institutions have benefited from globalization. This so-called "educational tourism" generates nearly $180 million in revenues for Hawaii's educational institutions. Many foreign students are coming to Hawaii to pursue their education. Globalization has played a role in this arena.

Hawaii has benefited from globalization.

Niti Dubey-Villinger is an assistant professor
of management at Hawaii Pacific University.
She can be reached at

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