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Tech leaders say Schwarzenegger’s priority is education
The advice of the Silicon Valley business community to Gov.-elect Arnold Schwarzenegger can be summed up briefly: Improve the schools and make the state more business friendly, and California will take care of itself.
John Shinal, Carrie Kirby, Chronicle Staff Writers
Veterans of the valley’s boom-and-bust cycles were unanimous in saying that the area’s deep pool of talent will help bring it out of the current downturn. Yet without reform of the state’s education system, California will be hard-pressed to compete in a global, free-market economy over the long term.
In the short term, however, the governor-elect should focus on reducing the costs of doing business in California to stem job losses and drive job creation, the experts say.
"The immediate focus needs to be on getting Californians back to work," said Carl Guardino, chief executive of the Silicon Valley Manufacturing Group, whose members employ a quarter-million workers in the valley.
The loss of 300,000 jobs in the San Francisco and San Jose metropolitan areas since 2000 has played a large part in driving the state budget into deficit, Guardino said.
That’s because many of those jobs were held by well-paid tech workers. The taxes they paid on salaries and stock option gains helped swell the state’s coffers. Red ink began to flow when that revenue stream dried up after the tech bubble burst and the state failed to cut spending accordingly.
If the new governor can help instill confidence and get businesses investing more, "it would be very positive for tech and for the (larger) economy," said Harris Miller, president of the Information Technology Association of America.
Guardino, Miller and others provided a laundry list of issues that need to be dealt with to bring down the cost of doing business in California, including reforming workers’ compensation, rebuilding the state’s infrastructure and encouraging tort reform.
"If he thinks he can do it, he should take on the trial lawyers" and move to reduce frivolous lawsuits, said Roland Van der Meer, a partner with the Palo Alto venture capital firm ComVentures.
Large jury awards against businesses discourage risk-taking and add to the cost of doing business, which in turn stifles job creation, Van der Meer said.
In a time of budgetary constraints, money must be found to repair and upgrade the state’s power and water systems to prevent the outflow of jobs from the state, Guardino said.
A lot of the jobs that left as the result of the rolling power blackouts in early 2001 will never come back, he said. Many California businesses were told by their customers that they would lose their business if those companies couldn’t guarantee their hours of operation. As a result, many left the state, Guardino said.
Another factor causing jobs to leave the state is the availability overseas of comparable, low-cost labor for high-tech jobs. Increasingly, companies are cutting jobs here and sending the work overseas.
The fact that jobs will go to regions where employers can get the most productive workforce for the lowest costs is an unstoppable trend and "a natural process," Van der Meer said.
Those jobs can be done overseas because India and other countries are producing software developers and electrical engineers. Those workers have advanced skills in information technology that were once available almost exclusively in Silicon Valley.
To compete with that type of workforce, California must revamp all levels of education.
"If we’re talking about a 20-year plan, I would spend all the money I could on education," said Vinod Khosla, a partner with the Menlo Park venture firm Kleiner, Perkins Caufield & Byers and a one-time chief executive of Sun Microsystems.
Because of allegations of sexual harassment against Schwarzenegger during the campaign, the governor-elect should also appoint at least several women to high-ranking positions in his administration, said Michael Moe, chief executive officer of the San Francisco investment bank ThinkEquity Partners and a former vice president with Montgomery Securities.
"That would send a message that he understands the potential that women have to contribute," said Moe. More women than men are starting businesses in California, Moe said, and the state needs their intellectual capital to grow at its fullest potential.
"Supporting innovative ideas and entrepreneurs is what makes California great," Moe said. Schwarzenegger should apply all of the "incredible intellectual capital" present in the Bay Area to the state’s problems, he said.
E-mail the writers at [email protected] and [email protected].
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