Opinion editor’s note: On Jan. 4, the author was named the new commissioner of the state Department of Employment and Economic Development. Steve Grove had submitted the essay that follows in early November.
When people think about the top technology hubs in America today, Silicon Valley comes immediately to mind, followed perhaps by New York or Boston. Indeed, a stunning 75 percent of today’s venture capital money goes to tech startups in those three cities.
What fewer people know is that Minnesota once was home to one of the largest and most dynamic technology ecosystems in America.
It was here that the first distinctive computer industry in the United States formed, anchored by firms like Control Data Corp. and Honeywell. Minnesota tech companies gave the world innovations like the supercomputer, the pacemaker and the black box flight-data recorder.
The University of Minnesota’s “Internet Gopher” was hosting more of the internet than the World Wide Web in the early days; its visionary founder, Mark McCahill, even coined the phrase “surfing the internet.”
As Thomas Misa chronicles in his excellent history of the Minnesota technology economy, “Digital State,” this high-tech boom in the middle of the 20th century helped pull the state from the bottom half of national wages to the top half, creating 68,000 jobs by 1989.
Combined with progressive public policies in education and taxation, our tech heyday was a key ingredient in the famous “Minnesota Miracle” that put our state at the forefront of economic development — and landed DFL Gov. Wendell Anderson on the cover of Time magazine in 1973 touting “The good life in Minnesota.”
So what does our state’s technology industry look like today? Clearly, we are no Silicon Valley, though we do have our strengths: a medical tech sector that boasts over 15,000 health businesses (including six Fortune 500 health technology companies) and a strong agriculture tech market, with five of the world’s 30 largest food and ag companies based here. But Minnesota no longer enjoys the top billing we had in the mid 20th century as a dominant tech hub.
Whatever you think about Amazon’s nationwide HQ2 search last year, it was telling that the Twin Cities wasn’t even in the top 20 metro areas considered by the tech giant.
The challenge we face today is that the twin forces of technology and demography are driving changes in the new economy at an unprecedented pace, particularly in Minnesota. Advancements in artificial intelligence are changing the nature of work, requiring far more workers to understand technologies that constantly change. Jobs in science and technology will grow at more than double the rate of all other occupations in the next 10 years in Minnesota, and there will be 75,000 open tech jobs here in the next decade.
Yet Minnesota firms are already complaining about workforce shortages in tech jobs, driven in part by the higher-than-average number of baby boomers who are retiring in our state and an opportunity gap between whites and people of color that is one of the worst in the nation. And Minnesota’s education system, once famous for putting computers in front of every student, has no comprehensive strategy to bring computer science education to our students.
If Minnesota is going to compete on the global stage in the 21st century, we need to reboot the “Minnesota Miracle” for everyone in today’s technology economy. Thankfully, the innovative entrepreneurs who built Minnesota’s first great technology sector over 60 years ago created an excellent blueprint we can learn from, focusing on three key forces for growth: ecosystem, education and a sense of urgency.
Ecosystem. The pioneers of Minnesota’s computer industry understood how important it was to create an ecosystem for innovation. As Misa tells it, Minnesota distinguished itself in the 1960s for having over 30 computing companies, creating an environment for knowledge spillover between firms and a pattern of innovative spinoffs and startups.
Homegrown companies like Control Data Corp. grew in this environment, and our talent pool also drew out-of-state firms like IBM to open up shop in Minnesota. The New York-based computer giant created a major hub in Rochester that drove a sizable portion of its computer manufacturing for several decades. It was like the 1950s version of Amazon’s HQ2, based right here in Minnesota (today that operation has drastically downsized).
Augmenting the business sector in this technology ecosystem was the University of Minnesota’s growing computer science and engineering department, which fed these new computer companies with top talent. And the Federal Reserve Bank in Minneapolis had an extensive need for supercomputers to process economic data, contributing to the growth of the industry.
With academia, business and government all in the game, Minnesota’s mid-century computer industry flourished.
Today, a robust ecosystem for innovation is just as important. But while Minnesota’s present-day tech ecosystem is growing, it is disparate between industries and geographies. In contrast, Chicago has been smart to create a centralized technology hub, 1871, that brings together startup accelerators, corporations, universities and tech talent schools all under one roof to innovate together. With support from the government, innovation hubs like these play off the same ecosystem effects that Minnesota’s computing industry once had.
We should investigate bringing together a similar centralized hub for technology innovation here.
We can also grow our tech ecosystem by aggressively marketing Minnesota as a great place to start a tech company. We should bring back the state’s Angel Tax Credit program, which incentivized venture capital investment in Minnesota startups. We should also consider directly placing a portion of the state’s investments into select local venture funds to increase the overall pool of capital available to startups, allowing skilled fund managers to support more entrepreneurs directly.
And our state government could highlight our tech ecosystem more by advancing an innovation agenda that celebrates growing companies and even brings top tech talent into government to help fix many of the state’s recent technology problems. Signals like these could show the global tech community that Minnesota is open for business.
Education. The second key thing the pioneers of Minnesota’s first tech boom did was focus on education. In the early 1970s, Republican Gov. Harold LeVander helped create the Minnesota Educational Computing Consortium, or MECC, with a bold vision to put a computer within reach of every student in the state. Driven by a board of industry experts and a $3.6 million budget, MECC was a wild success. It served as the top provider for Apple’s educational computing division and created widely popular educational games like “Oregon Trail” that were in 90 percent of all American classrooms during its heyday.
Today, quality K-12 STEM education requires a comprehensive approach to computer science instruction. Yet, unlike a growing number of other states, Minnesota has no computer science requirement in our K-12 system — and only 1,200 Minnesota high school students took the AP computer science exam last year.
We need to overhaul our approach to computer science in schools, retraining teachers and creating a computer science graduation requirement for all Minnesota high school students. Not only is coding the most valuable language of the 21st century, it also teaches students to think critically and be comfortable working with machines at a technical level — a vital skill in the new economy.
At the university level, we should expand the enrollment capacity in the U’s College of Science & Engineering, one of the top programs in the country. Since 2000, the number of applicants has quintupled, but the number of accepted students has risen only modestly. Rapidly growing the school’s footprint should be a priority of the Legislature and the university’s new president, Joan Gabel.
We also need a bold plan to retrain existing workers with midcareer training programs at scale, or we won’t be able to meet present-day workforce demands in tech. Cutting payroll taxes for employers that create training programs to provide workers with new tech skills, or expanding public-private programs like the Minnesota Job Skills Partnership to provide midcareer training for workers, are among the many workforce development priorities we should consider.
Sense of urgency. The last lesson to glean from Minnesota’s early tech leaders is how they capitalized on a sense of urgency to drive innovation. The Cold War was a key driver of our early tech economy — for many years, the Pentagon was the top customer for Minnesota’s computing industry. The drive to beat the Russians technologically led not only to military tech innovations but to a whole business-to-business computing industry that became the foundation of Minnesota’s strong medical device industry today.
While we’re no longer in a nuclear arms race, competition can come in many forms. Today’s sense of urgency should come from the rise of China. The Chinese government is making massive investments in artificial intelligence and cloud computing, setting ambitious goals to lead the world in AI research by 2030 by building a domestic industry worth $150 billion. That kind of big vision should be enough to make any American tech ecosystem take notice and accelerate investment.
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The blueprint left by Minnesota’s tech pioneers, pointing to a focus on ecosystem, education and a sense of urgency, is a great resource. But there’s one unique challenge to growing our modern-day tech industry that requires new thinking altogether: how to empower communities of color and immigrants, who represent the bulk of our future workforce growth.
Minnesota has one of the worst income gaps between whites and people of color in the country, and tech jobs — which pay almost double the average salary — represent a great opportunity to close that gap and create a bigger and better labor market for tech companies to grow in.
My wife, Mary, and I started a nonprofit six years ago called Silicon North Stars, which seeks to close that gap by connecting promising high school students from underserved communities with career development opportunities in tech. I hope that efforts like this, and new and bigger statewide efforts, will enable us to maximize our talent pool and create better tech companies and jobs for all Minnesotans.
The good news is, Minnesota has all the ingredients to grow our technology industry: A diverse economy, a talented workforce and a strong Fortune 500 sector are all big advantages. And there are signs of momentum. Last October, Forbes named the Twin Cities one of the “Top 10 Rising Cities for Startups.” What we need is a statewide commitment to building our ecosystem, improving our education system and bringing a fresh sense of urgency to compete in the new economy. With pride in our entrepreneurial roots and a bold vision for the future, Minnesota can become a nation-leading tech hub once again.
Steve Grove is a senior director at Google and an international security fellow at the New America Foundation.