Can ideas really grow like flowers, from seeds planted in fertile soil? That’s a romantic casting of the notion, but the proponents of an “innovation block” — an effort to deposit some of that fertile soil in Kakaako for growing new businesses — would essentially say “yes.”
Everyone loves the concept of the “innovation economy,” and what the state’s High Technology Development Corp. (HTDC) hopes is that creating a place that supports the innovators will jumpstart it in Hawaii.
That is what’s behind the “innovation block” idea, a complex proposed for development in multiple phases at a 5.5-acre site now occupied by a state-owned parking lot on the Ewa side of the John A. Burns School of Medicine and the University of Hawaii Cancer Center.
It’s a project under the aegis of the Hawaii Community Development Authority (HCDA), the planners of Kakaako redevelopment. The agency put out a request for proposals Dec. 7 (see story, Page E4).
Innovation, said Luis Salaveria, can be the way to fulfill the endlessly invoked mandate for economic diversification.
“Hawaii is a small market,” added Salaveria, director of the state Department of Business, Economic Development and Tourism, the agency that houses HTDC. “We’re not going to be the manufacturing hub of a particular thing.
“But where we do have competitive advantage and where we can attract people is in this knowledge-based economy, and in what innovation happens.”
HTDC has put a lot of stock in this idea. A key policy objective is outlined in one of its central blueprints, titled “80/80 by 2030.” That means: generating 80,000 jobs, each producing $80,000 annually or more, in the next 14 years.
It’s a tall order, but Salaveria and Robbie Melton, HTDC chief executive officer, who sat down recently with the Honolulu Star-Advertiser editorial board, believe the innovation block can be a vehicle.
Melton said the site was selected over other parcels owned by the state in West Oahu because the urban location was deemed optimal. There was a feasibility study three years ago that considered Leeward properties, she said.
“However, there’s not a critical mass of entrepreneurs in that location,” Melton added. “It would be like the Mililani Tech Park, where they built it and nobody came. … When you survey the entrepreneurs, they’re like, ‘No, we’re not going out there, because the activity is here.’
“Kakaako is where all the innovation activity and a lot of the startups are. And since there’s state land, it made the most sense to do something.”
The campus envisioned for Kakaako Makai would give workspace and mentoring to startup companies in what’s being described as a “sandbox” — a place for meetings, collaboration and experimentation to try things out before scaling up any new company.
A draft environmental assessment projects a 2018 completion for the first, “sandbox” phase. Financing for that involves $3 million in state funds for planning and design. Additionally $3 million came from the U.S. Economic Development Administration, a grant secured because there are private companies willing to partner in development.
Those partners will contribute $1.325 million. And although their plans must be approved through the RFP process, the contenders who have stepped up so far are the business supply company Fisher Hawaii and ‘ike, the Honolulu-based group of companies, including DataHouse, that focus on digital solutions for businesses.
Both are in need of business space that they’d build on the campus, along with a “collaboration” area they would contribute along with mentoring and support services to educators.
Al Hirata, Fisher’s vice president and general manager, said his company believes supporting teachers in learning new technologies and skills is essential to developing the talent the innovation economy requires.
“Innovation is about much more than high tech,” Hirata said. “Innovation involves education, the arts. Innovation is pretty much about anything and everything … it’s startup businesses.
“For Fisher Hawaii, our target market has always been the smaller-middle businessman, the one-man office,” he said. “We assume that this innovation center, this entrepreneurship ‘sandbox,’ is going to be made up of sole proprietors. And we’re able to supply them with the supplies they need.”
Like Hirata, Matthew Sasaki, director of strategic business initiatives for ‘ike, sees a lot of synergies between the work his companies does and the needs of entrepreneurs.
“Much like Fisher, we’re 40 years old, and our roots start in Kakaako,” he said. “So seeing this, to come back and be a part of this growing area is very important to us.
“We talk about Kakaako being this area that’s being developed for live, work and play,” Sasaki added. “We see our ability to really be a part of this block, to bring the actual work concept to Kakaako, where we can have these great employees, these jobs coming in, helping to contribute to the area.”
Various factors may complicate the way the full block development will play out. Some of this innovation is already going on at the Manoa Innovation Center, the HTDC’s institute on UH-owned property. There have been calls for it to relocate, pressure from past university administrations wanting to reclaim the site for other purposes.
But here’s the outline of the elements the block would encompass, built over three phases:
>> A 13,500-square-foot “Entrepreneur’s Sandbox.” If the Manoa center needs to move, this space would accommodate its tenants. It would also include public spaces for meeting and collaboration.
>> The “Innovation Hale,” a 150,000-square-foot building for commercial tech businesses.
>> About 140,000 square feet of space for a “learning center.”
>> Startup business incubation areas in about 47,000 square feet.
>> A 900-stall parking structure.
>> A public plaza.
Melton and Salaveria see this as the best way to finance and finally realize a version of the tech park originally envisioned for Kakaako Makai. Former Gov. Ben Cayetano saw it as a good fit with the medical school and once promoted the idea of an aquarium and Bishop Museum science center there.
Salaveria said the innovation block expands on a concept already in place at existing commercial “co-working” spaces such as BoxJelly, a Honolulu example of the less formal, interpersonal environment preferred by entrepreneurs today.
The project’s private partners agreed, pointing to the successful models provided elsewhere. In Seattle, they cited Office Nomads and WeWorks, as well as San Francisco’s Rocket Space, Impact Hub, Nextspace and Sandbox Suites innovation centers.
HTDC is hoping the project will build upon its prior successes. According to HTDC’s last annual report, 64 companies used its two incubators last year, including 18 new companies.
Other promising statistics the report cited: $56 million in revenue that its programs helped companies produce, $24 million in investments and 296 high-wage jobs.
Still, getting legislative approval for a tech park will be a heavy lift, given all the competing demands for state funds. It will take support on many fronts.
Bill Spencer, well established in the venture capital sector and the longtime, former chairman of the Hawaii Venture Capital Association, supports the project as a “pipeline” to develop new startups.
He believes there’s been good foundational work done for an innovation economy — including small-scale “angel” investors stepping up.
But there needs to be more venture capital driving new businesses to the next level. Spencer would like much more of that investment from the bedrock visitor industry.
“People making money off tourism are not investing in alternative industries that could improve our tax base,” Spencer said with chagrin. “Even our own institutions are risk averse, and they won’t invest in their own back yard; we won’t risk what is essentially high-risk money anyway in our own back yard.
“I feel confident that we have built an entrepreneurial ecosystem that extends beyond tourism as an economic engine,” he added.
“We haven’t had a problem starting companies. The problem comes when they need the $2- or $3- or $10 million to make a home run.”
