Column: How Hawaii can diversify economy now

In my roles as a venture capitalist, angel investor, business consultant and accelerator manager, I have been working on trying to diversify the economy in Hawaii for over 20 years. Our lack of diversification has never been in starker relief than it is right now. As tourism stops, so does the Hawaii economy. How can we take this unique moment in time to take action and prevent this economic devastation from occurring again?

>> Develop innovation-driven businesses. Encouraging the development of innovative intellectual property (IP) based businesses (technology, design, creative, content, media) makes the most sense for Hawaii’s future. Our costs are too high to manufacture here, our living expenses are too high to depend on a service economy.

Recommendation: Continue support of new IP-based business creation in Hawaii through full funding of business development programs (accelerators, business development centers, university entrepreneurship programs, etc.).

Recommendation: Support IP-based businesses to stay in Hawaii through a “buy local” program for IP businesses. In need of new software? Shop local first before looking at mainland solutions.

>> Train knowledge workers. We need to develop world-class knowledge workers with the skills needed to create and work in these businesses. Designers, engineers, software architects, biotech researchers, etc. would love to live here, we just need to give them a way to live here. Developing these talents on island needs to be a priority and we should be supplementing these education opportunities for our young people.

Recommendation: State-sponsored and subsidized training for knowledge workers in software development, engineering, design and media.

>> Attract world-class talent. We have an amazing lifestyle to offer and many a talented software engineer from Silicon Valley would love to live here. Talented kamaaina who have spread far and wide around the planet would love to come home if there were job opportunities for them here.

Recommendation: Subsidized housing for knowledge workers is a simple, low-cost way to incentivize digital nomads to make Hawaii home.

Recommendation: Marketing program to attract talented knowledge worker kamaaina and companies led by kamaaina to come back to the islands.

>> Attract IP businesses. Building new IP based businesses takes time, costs money, and is fraught with pitfalls along the way. In the short term, we need to shorten this process by targeting scaling companies and incentivizing them to relocate to Hawaii. We need to target businesses in certain sectors for which Hawaii makes strategic sense: renewable energy, travel technology, astronomy, marine science, etc.

Recommendation: Financially incentivize target companies to come here and stay here — relocation costs, wage supplements, tax incentives, etc.

Recommendation: Develop a local buy-out fund led by our biggest companies which targets scaling businesses willing to relocate to Hawaii. Larger local businesses can diversify their holdings while creating high paying job opportunities for Hawaii’s people (e.g., local bank buying mainland financial technology software company).

To summarize, Hawaii needs to be purposeful about attracting and developing knowledge-based workers in the islands; we need to be purposeful about developing and attracting IP-based businesses that are strategically aligned with Hawaii’s strengths to employ these knowledge workers. It will cost money, it will be controversial, but can we really afford not to take action?

We need bold, purposeful action now, before it is too late (are we already there?).

Why do I care so much? Like many of you, I have children and I want them to be able to live and work in Hawaii as adults without sacrificing their intellectual curiosity or their financial security.

Chenoa Farnsworth is managing partner of Blue Startups.