Summary:
There's no magic formula that produces innovation. But it's clear that if California wants to stay on the cutting edge, it all starts with education and immigration, a panel of experts said.
Innovative companies cannot thrive without a well-trained work force. California has a bigger population of foreign students than any other state, yet often the best students are forced to return to their home countries after they graduate because of immigration issues, said Susan Desmond-Hellmann, UC San Francisco's chancellor and a former Genentech executive.
Fifteen percent of the companies founded in Silicon Valley were launched by students from India who remained in the United States after finishing their education. But gaining legal residency has grown more difficult this decade.
Verena Kloos of BMW Group DesignworksUSA said the company has design offices in Los Angeles, Munich and Singapore, so it can't hire just from California. But often green cards aren't granted in a timely manner, she said, so BMW trains people who then can't stay.
Moderator Mike Milken quoted venture capitalist John Doerr: "When you graduate from Stanford University with an advanced degree in the sciences or engineering, we then make you go home. We should be stapling a green card to your diploma."
Milken pointed to the state's stem-cell initiative as one example of how education and science work together to drive innovation. Desmond-Hellman said UCSF alone has attracted $84 million in research funds since 2006 because of the initiative.
San Francisco Mayor Gavin Newsom and Insurance Commissioner Steve Poizner, both of whom are running for governor, said early childhood education and K-12 schools also need attention. Roughly a third of California students arrive at college in need of math and English remediation.
Poizner, a former teacher, railed against state mandates that have made the education code too long and unwieldy and advocated the charter school model for public schools.
Economic development is also key to attracting and keeping innovative companies in the state, both candidates said.
Poizner described his proposal for 10 percent cuts across the board for all taxes and a 50 percent cut in the capital gains tax. He also advocated streamlining the permitting process so companies can build new factories and offices in California.
In addition to streamlining start-up processes and offering financial incentives, Newsom stressed workforce training, especially at the community college level, and targeting recruitment efforts to the industries that have the brightest futures: high-tech, green-tech and clean-tech companies.
He added that the state should emulate San Francisco's approach to global recruiting. San Francisco recently established a trade office in China and already has agreements with eight Asian companies to open offices in the city.
Newsom said the state needs government reform as well. He called for a rainy-day reserve, two-year, pay-as-you-go, results-oriented budget; a reduction in the number of votes needed to pass a state budget; empowering local educators; and using cities and counties to model best practices for the state.
Despite its issues, Desmond-Hellmann reminded the audience that the state has great scientists, great universities and lots of venture capital. Combined with open-minded, intellectually curious people and a diverse population, those attributes become a sort of "secret sauce," she said, that makes the state inherently attractive to innovative people and businesses.
