‘The innovation economy and its growth in this state is critical’: a Q&A with new DEED Commissioner Steve Grove

Born in Northfield, Grove spent a few years as a reporter before joining YouTube and creating a division that worked to bring news and political content to the video site. He later directed the Google News Lab, which runs projects aimed at boosting local journalism around the country, and co-founded a nonprofit with his wife Mary, Silicon North Stars, which flies high-schoolers to Silicon Valley for tech camps. (Full disclosure: He was also formerly on the MinnPost board.)

Grove moved back to Minnesota from California last year before being picked as DEED commissioner. He’s inheriting an economy with low unemployment rates, but one that faces challenges. Baby boomers are retiring in droves and leaving open jobs behind them, for one. Minnesota’s wide economic disparities between white people and racial minorities are another.

MinnPost talked with Grove to get a preview of his priorities at DEED and advocacy for supporting Minnesota’s technology sector. This interview has been edited and condensed for clarity.

MinnPost: The governor’s budget plan isn’t out yet and so there might not be concrete policies or budget numbers you’re ready to announce, but what are some things you’re focusing on early in your tenure at DEED?

Steve Grove: I think it’s a unique time for Minnesota’s economy. One of the things that you understand pretty quickly is, if you’re looking to see how healthy our economy is, if you just look at that 2.8 percent unemployment rate, it doesn’t really tell the full story. So one of the things we’re doing early here is looking at the kinds of metrics and numbers that we want to focus on that tack against the biggest challenges the state faces. Our job vacancy rate is 5.2 percent — which means for every hundred jobs there’s 5.2 job openings. That’s 4.5 percent up from last year. We’ve got a huge workforce gap. Our workforce is actually smaller by 40,000 workers than it was a year ago and we’ve got 0.6 people for every one job that’s open. And there’s a declining labor participation rate.

Part of that is driven by demographics and part of it is just driven by the changing nature of our economy. So part of the early work here is to figure out which numbers do you want to track against and which numbers we want to raise and lower. And it’s not just that unemployment rate that we’re focused on. I would say … the big things that are on our radar, are of course the talent gap; You hear about that from everyone. The opportunity gap would be the other.

The differences between whites and people of color in the state are atrocious. And I think that’s something that this government has focused on for some time, but we need to do a lot more and find new solutions to change that dynamic for our economy.

I think the innovation economy and its growth in this state is critical to putting Minnesota on the forefront of the 21st century economy and growing the right types of jobs and ecosystems that are going to grow our state and put it on the cutting edge of where the economy is headed. And I think Greater Minnesota prosperity is top of mind too, you know. We want to lead the nation as a state that makes it possible to live anywhere in the state and still participate in the benefits of our global economy.

MP: Speaking of our workforce, are there just too few people? What can DEED really do about having not enough people who live here?

SG: There is a demographic change, which I think is important if you want to kind of diagnose what the situation is. We’ve got larger than normal numbers of boomers retiring in the state and you’ve got a workforce that is primarily growing amongst people of color. And so when you look at the next 25 years, you have 75 percent of our growth in the labor force coming from people of color. That changes the dynamic of your labor force pretty markedly. And so that is part of it.

But I think, also, when you look at sort of how the American economy is evolving and the states and cities that are distancing themselves, they’re states and cities that are managing the transition from a manufacturing based economy to an innovation and knowledge-based economy.

And it’s these innovation hubs that you see in states across the country that are drawing top talent from across the U.S. to come and live and work there. I think Minnesota needs to be on the forefront of that trend or we’re going to see our best talent want to leave and work in Seattle or Austin or Silicon Valley or New York or Boston. I’m a person who back, 15, 20 years ago, did that myself. … There’s nothing wrong with leaving the state. People should pursue their dreams wherever they want to pursue them. But we want to make it possible to achieve the biggest, boldest dreams you have by staying right here in the state.

So when I talk about the changing nature of the economy being a factor here, it is states and cities who can distance themselves from the rest of the country by being these hubs for innovation that are going to attract top talent. And I should say it’s not just about top talent, and not just if you work for Google or Snapchat or some tech company. Studies show that cities and states that can have thriving innovation economies and add what you might call an innovation job also add other jobs to them. There’s some studies out of Berkeley that show that for every one job in the innovation economy that has added to an ecosystem, five additional jobs get created both in the sort of professional and service sectors.

MP: I’ve read some of your op-eds about growing the tech sector in Minnesota. How much of your role at DEED will be focused on trying to boost the tech economy?

SG: Obviously it’s my background, but I don’t come at this from having some feeling that the only industry out there to grow is a tech industry. One of Minnesota’s greatest assets is it has one of the most diverse state economies in the country. And we should be proud of that fact; we should be proud of our agriculture sector; we should proud of our manufacturing sector. To me, it’s more of just looking at the historical trend lines of where our economy needs to go. And I’ll end on one of the pieces that you may have read, the one that’s in the Op-Ed section of the Strib a few weeks ago, Minnesota’s history shows that we’ve been pretty adept at adapting to economic changes. When you look at how we shifted from growing our farming economy to growing our manufacturing economy after World War II, that was a major shift for us to change the game considerably as it related to wages and put Minnesota in the upper half of state economies nationwide.

I think that we’re at a similar sort of juncture as manufacturing shifts by the fact of globalization to be thinking about innovation economies as the next wave of job growth and productivity growth. But again, I don’t say that just because I have some sort of bias towards ‘tech jobs are the only good jobs,’ but just looking at where growth can come from. Again, it’s the jobs in those sectors that can create a lot of other jobs. Don’t get me wrong, there are all kinds of challenges that we’re tackling at DEED and these problems are more much more complex than that. I think the opportunity gap is a huge one. And I call it the opportunity gap just because I think there’s a gap between the kinds of opportunities that people of color have and people that are white have and it’s just sort of the facts bear that out.

And you know, the unemployment rate is almost twice that of white people for people of color in the state. … I think that’s a challenge that we need to tackle both as a moral issue, but ultimately from an economic growth issue. We need communities of color to have all the same assets as white communities and to grow their labor force and their wages in the state. Then I think one of the things that we’re excited about is how to make the economy work across the state. If you’re a young person growing up in a small town in Minnesota without fast internet to imagine wanting to stay there because … you need access to the global economy through the Internet that you’re not going to get if you don’t have broadband.

MP: The opportunity gap is an issue that many have long talked about. It’s been clearly tough to solve. Is there any policy to address the issue that so far you’re liking or wanting to go in a different direction?

SG: It’s definitely something that we want to focus on and look for great examples of success in as we go forward. I think one overall value I have about it is that if closing the opportunity gap is only one person’s job, or is the job of one program or one sort of siloed effort, then it will remain where it is.

I think to really tackle that challenge you need to make it a lens through which you look at all of your work. As I begin to look at all that DEED does and the opportunities we have here, we don’t want to just create a program for each racial group for example, that kind of checks the box of having done something for that group’s employment horizons. We want to look at how to make all that we’re doing have a lens towards equity and I think the programs and the work that are the most effective are those that engage business very deeply from the beginning.

You look at like the Minnesota Job Skills Partnership and I’m sure you’ve followed what Summit Academy has done for example with Atomic Data. Bringing in money from DEED, and Atomic Data’s labor needs, and then Summit Academy’s training program to train new IT professionals for their firms. When you think of workforce development being successful, (it) has a job waiting at the end of it and a business invested from the beginning that can really lead to success.

One of the things that is interesting about the whole workforce development space is we used to have an economy where the companies themselves did so much training. That was at a time when a person would get a job and they’d have that same job for 30 years and so it kind of made sense for big corporate to invest in training really deeply. Today’s economy is more fluid and so companies do less of that.

MP: What lessons are you bringing from the tech world and Google to a state agency? How is that going to translate?

SG: It’s a good question. And one that I’m asking myself every day as I make this transition. There’s in some ways more similarities than I might have imagined, in a sense that I’m coming from a company who operates at global scale and we always talk about the responsibility of scale and how to get scale right. And I think government is an entity that’s even more scaled than a company like Google, right? We’re, here in Minnesota state government, responsible for the entire state. And so, that scale is also a responsibility. So that part of it sort of feels familiar, if you will. I would say Google is an interesting place and you learn a lot being a leader there and I think one of the things that you realize is that good ideas can come from anywhere and that you want to build the type of systems and processes in your teams that let the best ideas rise to the top.

Innovation, for it to work, has to create a culture where you can try and fail and try and fail and try and fail and try and then finally succeed and sort of prototype things and do that at a pace that helps you learn quickly and adapt. Tech companies in Silicon Valley have made that the hallmark of their cultures. I think government can do a lot more there to innovate. But of course there are things which you can’t fail at consistently because you have a responsibility to your citizens. So part of the leadership challenge is coming in and saying, “Okay, which areas are areas where we can create an area to innovate, an area to try new solutions, the space to try things and fail.” And which areas should we not do that? Or can we not do that?

Because you have a responsibility to your citizens, it’s different than your responsibility that a company has to their shareholders. That’s some of the cultural dynamics that I will navigate as I take on this role. … I’m not going to be the guy who says everything should be run like a private business instead of government. But I also hope that I bring some fresh ideas and fresh lens on how to get things done that come from the fact that I am coming in with corporate experience versus government experience.

MP: What are some areas where we can innovate and some areas where we can fail? There has been some debate over bringing back the Angel Tax Credit and to what extent government should come in and make possibly a risky investment. What is the role of taxpayers to shoulder that burden?

SG: The ATC isn’t about just the government deciding to be risky in a certain area. It’s about recognizing that to grow an economy that fosters innovation and allows the startups of today become the Fortune 500s of tomorrow, you need to invest. And the same way we invest in, our agriculture communities, the same way we invest in manufacturing, the same way we invest in mining, we need to invest in the startup ecosystem. So the landscape of that ecosystem is different. And so the solutions need to look different. But I don’t see it as like some special carve out for risk. I see it as investing in an ecosystem and meeting that ecosystem at its level with the right kinds of solutions that will help it grow.

So I sort of think about it that way. I do think though that generally speaking, programs like the Angel Tax Credit, and ideas in this space, need to get at this issue of how to lower the risk that people feel in starting a company here.

One of the beauties of having a really robust Fortune 500 marketplace here is that if you’re a talented engineer, you can get a pretty good job pretty quickly in a big company and not have to take the risk of starting a company. And so we want to kind of de-risk the startup landscape a little bit to the extent that we can to make it more attractive and think about that in a lot of different ways. The ATC is definitely one of them that the governor has considered as you’ve seen. But there are other solutions, too. And I think we’re looking into that space so that it seems a little less scary to take the jump and start something of your own because of the landscape we’ve created here and ecosystem that have done that have proven to be, I think, successful. So we’ll look for ways to do that.

MP: I recently moved back to Minnesota from the Seattle area, and the tech economy is thriving over there, but that has come with a lot of challenges. Housing costs were ridiculous, for one. Seattle Times columnist Danny Westneat called Amazon a ‘“prosperity bomb.” I’m curious what you would tell a skeptic of building that kind of world here?

SG: One of the advantages of us being able to look at how it’s been done in other places is that we can learn from mistakes and do things differently here. And so as we think about growing a stronger ecosystem for innovation in Minnesota, we can learn from places where they’ve gotten that right and places where they’ve gotten that wrong. And so that’s why as we think about that work at DEED, we’re not going to be doing that in our little silo of DEED. We’re going to be working with housing and education and transportation and all across this government. And I think Governor Walz has stressed that early — he wants his cabinet to be working together every single day across departments to get things done. Because if it’s just DEED out there pushing for economic growth without thinking about the housing implications or the transportation implications or the gentrification that can come when certain things take place, as you referenced, then we’re not going to get it right.