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REGION’S BUSINESS
PHILADELPHIA EDITION
A JOURNAL OF BUSINESS AND POLITICS
PHILADELPHIA’S FOREIGN FANS Philadelphia is the top destination in the state, but it’s not just Americans visiting. International travelers make up a good portion of visitors. So what’s driving them to the City of Brotherly Love?
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CONTENTS
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“Travel makes one modest. You see what a tiny place you occupy in the world.” — Gustave Flaubert
15 Philadelphia’s International Tourism
1900 Arch Street Up to 16,000 SF Retail Space Outdoor Seating Spring 2014 Delivery
13 After $150M Exit, Paul Martino
Talks Series A Crunch
4 9 18 20
Weekly Briefing Political Commentary
21
Three Emotional Holiday Traps To Avoid
Fine Estates Q&A: Daniel Greenberg, North Broad Living Management PRESIDENT AND PUBLISHER James D. McDonald PHILADELPHIA EDITOR Rich Coleman BUSINESS EDITOR Michelle Boyles CONTRIBUTORS Eric Boehm, Charlie Gerow, Don Lee, Christopher Wink,Juliana Reyes, Scott Staruch, Tim Holwick, Judy Weightman PROOFREADER Denise Gerstenfield ADVERTISING DIRECTOR Larry Smallacombe
Independence Media Corp. 350 Sentry Parkway, Building 630, Suite 100C Blue Bell, Pa. 19422 Email: feedback@regionsbusiness.com Advertising: advertising@regionsbusiness.com Online: regionsbusiness.com Facebook: /RegionsBusiness Twitter: @RegionsBusiness Subscription & Advertising Information: (610) 572-7109 Copyright 2013 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited. Region’s Business is published weekly on Thursdays and online at www.regionsbusiness.com. The publisher makes no representations or warranties regarding the advertising appearing in its pages or its websites.
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DEALBOOK
EDUCATION
Katz Pledges $25 Million To Temple At an event meant to express the school’s appreciation for his prior contributions, Philadelphia businessman and philanthropist, Lewis Katz, announced he would donate $25 million to Temple University. Mr. Katz, a founding partner of the law firm Katz, Ettin & Levine, received his bachelor’s degree in biology at Temple and been a member of the University’s board of trustees for the last 15 years. He currently serves as managing partner of the Philadelphia Media Network, publisher of the Philadelphia Inquirer, the Daily News and Philly.com. Making no specifications on how the funds should be allocated, Mr. Katz alluded to his experience at Temple and the impact it made on his life.
STARR Events Announces PAFA Catering Contract In 2014, the Pennsylvania Academy of Fine Arts (PAFA) cafe will undergo a complete renovation and rebranding, featuring made-to-order salads, gourmet sandwiches, desserts and La Colombe coffee. Stephen STARR Events will head the project as part of a recently announced partnership with PAFA that also includes special event offerings. PAFA is one of the few area art museums that permits guests to dine inside its galleries, making it ideal for catered affairs. Starting in December, STARR will begin catering events at the museum’s Landmark and Samuel M. V. Hamilton Buildings. The organization joins other cultural institutions like the New York Horticultural Society, Carnegie Hall and the Philadelphia Museum of Art, which also have exclusive catering contracts with STARR Events.
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FINANCE
WSFS Acquires First Wyoming Financial Privately-held First Wyoming Financial Corporation will be acquired by WSFS Financial Corp. for a price of $64 million in a deal expected to close in late 2014. First Wyoming’s subsidiary, The First National Bank of Wyoming, will merge into WSFS Bank, WSFS’s chief subsidiary, bringing with it nearly $308 million in assets. FNB first opened in 1909 and has six branch locations that served the banking needs of central Delaware. WSFS has 51 branches, mainly in Delaware, but with a growing presence in Southeastern Pennsylvania, as well as one location each in Virginia and Nevada, comprising an estimated $4.4 billion in assets. The deal has been authorized with both banks’ boards, but finalization is still pending shareholder and regulator approval.
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WEEKLY BRIEFING
BUSINESS
NJAA Recognizes Dwell Luxury Apts.
Northern Liberties Offers Small Business Holiday Sales
The New Jersey Apartment Association (NJAA) Garden State Awards of Excellence recognizes excellence among leaders in multi-family rental housing. This year, the group honored the Klein Company’s newly developed Dwell Luxury Apartments for green building excellence, excellence in property management, excellence in curb appeal, and property website. Dwell took home the awards for the category of garden/low rise apartments built after 2010 and featuring more than 200 units. The Association also named the Klein Company 2013 Market Rate Management Company of the Year [under 2000 units]. Earlier this year, Dwell was also recognized by Mid Atlantic Real Estate Journal and South Jersey Biz.
In an effort to steer shoppers towards small business retailers, 13 Northern Liberties area shops have joined together again this year to present the NoLibs Holiday Shopping Spree, offering discounts and deals the weekend of December 7 and 8. Customers collect their shopping spree card at the first participating retailer (along with 10% off their purchase). Each retailer will give the shopper a sticker for their card. The more stickers, the higher the discount, topping out at 25% for customers who obtain three stickers. Shoppers can visit the participating retailers in any order, at any time over the weekend to take advantage of the sale and add to their discount amount. Many
shops will also offer free gift wrapping and light refreshments in addition to other specials. Participating shops include: - Arcadia, 819 N. 2nd Street - Art Star, 623 N. 2nd Street - Bloom, 910 N. 2nd Street - Casa Papel, 804 N. 2nd Street - City Planter, 814 N. 4th Street - Duke + Winston, 633 N. 2nd Street - Flying Pig Picture Frames, 1031 North 3rd Street - Framing Philadelphia, 631 N 2nd Street - Jinxed, 1050 N. Hancock Street (in the Piazza) - Once Worn Consignment, 906 N. 2nd Street - Philly Phaithful, 737 N. 4th Street - Ritual Ritual, 716 N. 3rd
HEALTHCARE
Local Periodontist’s Honored For Field Contributions The American Academy of Periodontology (AAP) has given its 2013 AAP Gold Medal Award to Philadelphia’s Dr. Louis F. Rose, DDS, MD. The award is bestowed annually in recognition of outstanding contributions to the field of periodontics. Dr. Rose has been a contributor to the field of periodontics and the AAP for more than 40 years. He served as Director of the American Board of Periodontology from 2005 to 2011 and Editor-in-Chief of the Compendium of Continuing Education in Dentistry since 2008. He is also Clinical Professor of Periodontics at the University of Pennsylvania School of Dental Medicine and has served on numerous AAP committees.
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WEEKLY BRIEFING
RETAIL
Macy’s Kicks Off Season With Display
G. Widman for Visit Philadelphia
CEOs Race To Provide Healthy Holiday Meals To Under-Served Executives from Philadelphia-based Health Partners Plan and Health Partners Foundation sprinted up and down the Navy Yard’s Defense Drive filling shopping carts with frozen turkeys last week as part of its annual Turkey Push event. Employees donated 35 food baskets filled with Thanksgiving trimmings for four, 150 turkeys donated by Interphase Medical Equipment and Bur-
man’s Medical Supplies, as well as a $20 grocery gift card from Health Partners Foundation. Run by senior executives, and cheered on by community residents and employees, the event emphasizes the Foundation’s mission to make a difference in the community. Following the race, the donated items were delivered to the residents of Abbotsford Homes, not far from the Navy Yard facilities.
The unveiling of the Macy’s holiday window display serves as the unofficial start to the Philly holiday retail season. This year’s big reveal was accompanied by much fanfare, including musical performances from Max Schneider and the cast of Broadway musical Jersey Boys, artist Mack Wilds, the Rock School for Dance Education, and a special presentation of “A Christmas Carol” by the Walnut Street Theatre. Starting Black Friday, visitors can enjoy the Holiday Light Show.
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Phila. Works Welcomes New Board Member Mayor Michael A. Nutter has appointed Community College of Philadelphia Interim President Dr. Judith Gay to the Philadelphia Works Board of Directors. Under Dr. Gay’s leadership, the CCP Department of Academic Affairs has ensured broader access, added in-demand certificate and degree programs and expanded online course offerings to its students. Before joining CCP in 2000, she served in positions with Montgomery County Community College, Chestnut Hill College and Gettysburg College. Dr. Gay also serves as Board of Directors for Interim House.
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WEEKLY BRIEFING EXECUTIVE BOOKSHELF
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@OpenAccessPHL OpenAccessPHL What’s happening at the intersection of civic participation, technology, innovation, & entrepreneurship. RT @OpenAccessPHL: The intersection of entrepreneurship, civic participation, innovation & technology is a busy place in PHL RT @OpenAccessPHL: Classic Towns of Greater PHL - communities that have preserved history, character & main street charm http:// www.classictowns.org/
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Headhouse Crab & Oyster Co. Opens on South Street Restauranteur David Ralic has partnered with Chef Mike Stollenwerk to transform his space on South St. with a focus on casual seafood fare. Headhouse Crab & Oyster Co. Renovation highlights include a reclaimed-wood floor made from a 19th century Bucks County barn, and a separate raw bar with blackboard menu listing daily specials. Chef Stollenwerk’s menu ranges from the traditional to the adventurous with offerings like classic New-England style boils, chicken-fried oysters (along with the raw variety) and lobster grilled cheese. The bar selection features local brews and cocktails made with local ingredients.
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28 NOVEMBER 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
9
Philadelphia Becomes First City to Ban 3D Printed Guns
Timothy Holwick is a freelance writer covering Philadelphia government.
Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
On Thursday, November 21st, Philadelphia City Council unanimously passed a bill to ban firearms made with a 3D printer. The bill is widely thought to be the first of its kind in the United States. While the impact of the bill is still as unclear as the overall feasibility of a 3D printed firearm, Philadelphia City Council is proud of being ahead of the curve as the first municipality to ban them. 3D printers have recently been increasing in popularity and decreasing in cost. The printer creates 3D objects by laying strands of melted polymer according to a computerdirected pattern, much like a traditional printer does with ink on a page. Back in May 2013, news broke of two Texas men successfully engineering and firing a pistol made by a 3D printer. The pistol, called the Liberator, has 16 parts. All of those parts were made with a 3D printer with the exception of the firing pin, which was a common nail found at any hardware store. The inventors of the pistol intend for the
design to be uploaded to the internet so anyone with a 3D printer could download it and make their own Liberator. City Council’s legislation is short on words. It simply states a few definitions
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and directs: “No person shall use a threedimensional printer to create any firearm, or any piece of part thereof, unless such person possesses a license to manufacture firearms under Federal law.” The penalty for violation is a fine in the neighborhood of $2,000, which is consistent with Class III offenses in Philadelphia. Councilman Kenyatta Johnson introduced legislation and indicated in
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interviews that it was a response to buzz on the internet about the creation of such firearms. The federal government reacted quickly to the Liberator as well when the designs of the firearm were promptly pulled off of the internet. Many anticipate that lawsuits will follow as the Liberator blurs the lines between gun control and information censorship. In Philadelphia, however, a clear statement was made about Council’s opinion of these modern technologies and their potentially dangerous uses. There is already criticism that this law is very difficult to enforce, but others would argue enforcement is only possible with the legislation in the books. It is a preventative piece of legislation, as there are not exactly reports of incidents involving 3D-printed firearms in Philadelphia. At the least, City Council is attempting to preempt a would-be problem, instead of simply reacting to the first incident with these easy to make, but difficult to detect firearms. The bill will require Mayor Michael Nutter’s signature to go into effect.
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28 NOVEMBER 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
School Districts Getting Sobering Notices About Pensions
Eric Boehm is a reporter for Watchdog.org and can be reached at EBoehm@ Watchdog.org. Follow @PAIndependent on Twitter for more.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
School districts across Pennsylvania will be receiving news this week that is unpleasant, but not unexpected. The Public School Employees Retirement System, or PSERS, this week began sending notices to school districts that their pension costs will climb to 21.4 percent of payroll in the 2014-15 school year. Even though that total could change a bit before it becomes official at an end-ofyear meeting of the PSERS board, it gives a pretty good indication of what school districts will be facing. For historical context, the 21.4 percent figure is the highest rate since at least the 1950s – and it’s quite a jump from 16.9 percent district’s paid this year. The actual cost will vary greatly from district to district depending on the size of payroll, but statewide the PSERS pension obligation for next year will ring in around $1.4 billion – with roughly half that cost covered by school districts and the rest left to the state. Another $537 million will be needed to fund the State Employees Retirement System, or SERS, next year. State Rep. Glen Grell, R-Cumberland, believes it is time for the General Assembly to do something about Pennsylvania’s
mounting pension costs. He said this week that it should be the next major priority of the state government, now that a $2.4 billion transportation infrastructure bill has been signed into law. Without changes, districts will be forced to raise property taxes, cut programs and lay off staff, he said. And unless something is done, Pennsylvania’s pension obligations will continue to grow – at a rate of $3.9 million per day, according to Grell’s estimates. Grell is one of a handful of lawmakers who have been pushing pension reform for quite some time in Harrisburg – basically since the last reforms that were enacted in 2010 to postpone having to deal with the major costs associated with the pension spike. Part of the problem this time around is a lack of agreement over what is to be done. A fundamental part of Grell’s proposal includes borrowing as much as $9 billion to pay down a portion of the $49 billion debt. But the Corbett administration and legislative leaders are not keen to add so much debt to the state’s credit card in the name of paying down other debts. Other options, like a plan pushed by
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Corbett last spring, involve extending the existing “collars” on pension payments to ease budgetary troubles. But critics say that plan merely “kicks the can” to the next administration because it allows lawmakers to continue underfunding the already-underfunded plans and does not address the desperate situation of the state pension funds. Unlike the recent transportation bill, which garnered a wide swath of Democratic support in both the state House and state Senate, any changes to the state pensions will have to be a Republican lift. Democratic leaders have repeatedly signaled their unwillingness to put up votes for an issue so important to union members. Instead, they suggest closing tax loopholes and raising tax to meet the obligation. In the meantime, school districts across the state are getting the sobering news about pension contribution rates as they plan for next year’s budget. The state covers about half the cost of each district’s pension obligations, but taxpayers are ultimately responsible for it either way.
28 NOVEMBER 2013
LEGISLATIVE UPDATE
REGIONSBUSINESS.COM
11
Years In The Making, Transportation Funding Approved BY SCOTT STARUCH “We’ve shown the nation now that our roads, our bridges, and our mass transit are nonpartisan,” Governor Tom Corbett proclaimed triumphantly last Wednesday following the passage of a $2.3 billion comprehensive transportation funding package. The need to address Pennsylvania’s crippling transportation network has been talked about for many years. In 2010, the Pennsylvania State Transportation Advisory Committee quantified the state’s unfunded transportation needs at approximately $3.5 billion. Governor Tom Corbett’s 2011 Transportation Funding Advisory Commission estimated that if we didn’t address our transportation funding gap, the gap would reach an estimated $7.2 billion in 10 years. Thus, the long-debated transportation funding proposal passed last week was years in the making and heralded by leaders from both parties, as well as an array of interest groups including agriculture, business, health care, labor, mass transit and beyond. Gov. Corbett signed the bill on Monday, Nov. 25, at events in Pittsburgh, Centre County and Montgomery County. Here are a few details of the legislation’s funding for the state’s transportation system: LmZm^ khZ]l Zg] [kb]`^l3 R^Zk * ^lmbfZm^% *1/ fbeebhg4
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EZlm P^]g^l]Zr% ma^ Ahnl^ >gobkhgf^gmZe K^lhnk\^l & Energy Committee held a hearing on Rep. Ross’ !K&<a^lm^k" A; */22% pab\a phne] k^jnbk^ [Z\dni ^e^\mkb\bmr `^g^kZmhkl iZkmb\biZmbg` bg ikhÕmZ[e^ =^fZg] K^lihgl^ ikh`kZfl mh k^`blm^k pbma ma^ =^iZkmf^gm h_ Environmental Protection and certify compliance with emissions limits, report annually on operations and meet reasonably achievable emissions limits. HEALTH CARE Ahnl^ ;bee */),% pab\a phne] k^jnbk^ Z iarlb\bZg mh supervise other personnel administering anesthesia during medical procedures, was approved by the House last week and has been sent to the Senate. For three decades, ma^ lmZm^ A^Zema =^iZkmf^gm aZl k^jnbk^] ln\a lni^kobsion, but this bill, sponsored by state Rep. Jim Christiana !K&;^Zo^k"% phne] fZd^ ma^ k^`neZmbhg iZkm h_ ma^ eZp under the Medical Practice Act.
TAXES Ahnl^ ;bee *.*,% lihglhk^] [r K^i' =ng[Zk !K&P^lmmoreland), advanced out of the Senate Finance Committee last week and now awaits consideration by the _nee L^gZm^' A; *.*, Zf^g]l ma^ Eh\Ze MZq >gZ[ebg` :\m' According to the PA Chamber of Business and Industry, HB 1513 “ensures that all taxpayers are on a level playing field by clarifying that a Business Privilege Tax could only DECEMBER be imposed if the ‘privilege’ of doing business is exercised Ma^ L^gZm^ k^mnkgl mh AZkkbl[nk` hg =^\^f[^k +g]% makhn`a Z Ë[Zl^ h_ hi^kZmbhglÌ bg ma^ eh\Ze mZqbg` cnkbl]b\- Zg] ma^ Ahnl^ hg =^\^f[^k 2ma' Ma^ L^gZm^ Zg] Ahnl^ tion, or if transactions are conducted more than 15 calen- each have five voting days remaining in 2013. dar days per year.” Contact Scott at sstaruch@quantumcomms.com for additional information on any of the above news. ENERGY & ENVIRONMENT
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28 NOVEMBER 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
Is Obamacare This Year’s Christmas Grinch?
Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
Many Americans know Black Friday as the unofficial start of the Christmas shopping season. For those of us with roots in the City of Brotherly Love, it may hold special meaning. The term originated here half a century ago to describe the incredible traffic that would clog Center City the day after Thanksgiving. By the mid 70’s the term had gained wide acceptance and new meaning. It was then used to mark the day retailers move out of the “red” and into profitable “black.” Although most retailers operate at marginal profit throughout the year, it is true that for giant operators like Walmart, Black Friday can boost their year-to-date net profit by as much as $5 billion. No wonder retailers have pushed Black Friday “doorbusters” and super values out as far as they possibly can. While a few years ago it was fashionable for stores to open at 6 a.m. to offer the best deals to early arrivers, the clock has consistently been turned back to 4 a.m., 2 a.m. and earlier. Many retail chains now offer “Black Friday” deals on Thanksgiving Day, itself; and in states where “blue laws” prohibit it during the day, they’re opening at midnight. Amazon started releasing new deals on Sunday and promised to continue through “Cyber Monday,” a more recent addition that stretches the critical peak shopping period. Black Friday is the single most important shopping day. It sets the tone and locks in profitability (or lack of it) for the season and the year. In 2006 it drew 140 million shoppers who dropped roughly $350 each. Last year more than 100 million additional people showed up, spending nearly $425.
There’s an ominous cloud hanging over late November this year. Black Friday falls on the latest day possible, Nov. 29, making it the shortest possible buying season. But that’s not the major reason for the gloom. Several national surveys, including the iconic Gallup Poll, indicate that Americans are planning to significantly trim their holiday spending. Could it be that the specter of Obamacare is dampening many Americans’ holiday plans? Another poll, by Harris, shows nearly 50 percent of Americans point in part to the cost of Obamacare as reason to save money on gas and travel, and to stay home and shop online. “For many of our customers,” Carol Schumacher, Wal-Mart’s vice president, told the Wall Street Journal, “having to afford health care and insurance may be another line item in their personal budget they may not have had to cover previously.” The simple fact is that people are paying attention to the cost of Obamacare. They’re seeing rising premiums and higher taxes. Forbes Magazine recently estimated that the average health care premium will increase more than 40 percent as a direct result of Obamacare. That’s caused not only sticker shock but a loss of confidence in government. Taxpayers expected affordable health insurance. When their expectations are not met, they begin to worry. When they worry, they pull back and spend less. When they spend less — well, you get the picture. The false promises of Obamacare are now rooted in the psyche of many potential Black Friday shoppers Added to that is the fact that we have the low-
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est labor force participation in 35 years, fueled in part by increasing awareness of the hidden costs of Obamacare. While employers have been granted a one-year reprieve from the requirement to provide insurance (if they employ more than 50 full-time workers), individuals have thus far been granted just a six-week extension. That means many Americans, in order to avoid a tax penalty, are now required to buy more expensive plans with no help from their employers – a burden for the dwindling number of Americans who have full-time jobs. According to one recent poll, nearly a third of all small businesses are cutting staff, hours, benefits or all three as a result of Obamacare. That means less spending on Black Friday. The contrast between the “trainwreck” (to quote one Democrat) of Obamacare and what happens in a fully functioning free market could not be more stark this Christmas season. Consumers find deals all over the place because of intense competition and innovative marketing tactics: brick-and-mortar stores plan earlier openings, small businesses rally to corner the Saturday market and online sites offer their best deals the Monday after Black Friday. Consumers win, the economy flourishes, and we are all more prosperous as a result. Contra Obamacare: cancelled policies, an unworkable website, skyrocketing premiums, higher taxes, debasement of competition and less money for families to spend on each other. The big government model doesn’t work. Free markets do. And that’s what Black Friday is all about.
28 NOVEMBER 2013
REGIONSBUSINESS.COM
ENERGY
New Site Tracks City’s Energy Use BY JULIANA REYES See how much energy each city-owned building uses on EEB Network (eebnetwork.org), a new site that organizes city data on energy usage. The site has data on buildings like the Philadelphia Museum of Art, every Free Library branch and City Hall. The site, another effort on Philadelphia’s part to become the “greenest” city in America, is a partnership between the Energy Efficient Buildings Hub, the Navy Yard research outfit, and Honest Buildings, a New York City startup that creates platform for organizations to share energy data. It allows you to compare, for example, City Hall’s energy usage to the national median of office building usage (City Hall, it turns out, uses about half the energy that your average office building uses). “This is a big moment for the Hub,” said EEB Hub interim director Laurie Actman, “because we’re pushing data out.” As of this summer, the city required buildings with more than 50,000 square feet of indoor floor space to report their annual energy usage. Once the city collects that data, it will be posted on EEB Network as a way to hold building owners accountable for their energy usage. This article was originally published in Technically Philly at Technical.ly/Philly. GAMING
Gambling Online Now Legal In NJ BY JULIANA REYES You can now — legally — gamble online in New Jersey. Yes, you have to physically be in New Jersey and this will be monitored through your IP address. The state approved six Atlantic City casinos to offer online games starting yesterday, after a five-day trial period, the Daily News reported. That makes New Jersey the third state to allow online gambling. The new addition will give Atlantic City “a fighting chance,” said one Atlantic City casino general manager to the Daily News. The city saw its casino revenues drop by almost half since 2006, when it brought in more than $5 billion. This article was originally published in Technically Philly at Technical.ly/Philly.
INNOVATION
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After $150M Exit, Bullpen Capital’s Paul Martino Talks Series A Crunch BY CHRISTOPHER WINK The Series A Crunch is the collision of a rise in seed stage investors and a retrenchment of institutional venture capitalists into the later stage. That hole in the market to fund tech startups, between the early money and the late money, though some question its size, is right where Paul Martino is working. A resident of Doylestown, Martino is the fasttalking entrepreneur whose current project is as cofounder of Menlo Park-based Bullpen Capital and recent father of a $119 million exit of his adtech business Aggregate Knowledge (closer to $150 million with stock options, Martino says). Here’s what’s happening: as the cost of launching a venture has plummeted (cloud based services, free social media marketing tools, etc.), there’s been a gold rush of new angel investment groups and seed stage funds to lower and earlier deals, just as more advanced venture capital firms have decided to focus on giving bigger money later on to lessen risk. So thousands of U.S. venture-backed tech startup teams that got their first $250,000 of funding might disband if they haven’t built enough revenue or been acquired before they can attract a more established firm that might want to give $5 million or more toward a bigger company. For example, Fox Rothschild attorney Michael Harrington says it’s easier for him to get you $10 million than anything earlier on. “A lot of these ventures want a fully developed business before they invest now,” said Martino. “That’s not risk, that’s not investment.” This would seem like a market opportunity that would soon get flooded, just like seed stage investment nationally, but Martino says otherwise: “This is the most un-sexy startup investing you can do.” “No one is running to do this middle stage stuff,” he said. You get the tech scene cred for being early, and you get buzz for doing the big deals later, “no one cares about what happens in the middle, but we’ll make plenty of money,” he said. Martino hired a CEO replacement and left Aggregate in summer 2010 — not long after leading a postinvestment “high wire” pivot from its initial recommendation service model to an adtech focus — and spent the next six months finding what would come next. In December 2010, Martino and a host of Silicon Valley contacts joined together, to address the Series A crunch by investing in what they felt was most lacking. By way of friendship, former Phillies relief pitcher Chad Durbin became another of their limited partners. “We told him that what we were doing for entrepreneurs is what he did for a starting pitcher: get them
to the closer,” Martin, a graduate of Lehigh and Princeton universities, said. “So Chad said, ‘you should call it ‘Bullpen’ then.” (State backed investor Ben Franklin Technology Partners of Northeastern PA is another limited partner with Bullpen, not Ben Franklin of Southeastern PA, because Martino had ties to the latter from his Lehigh days in Bethlehem, where he started a gaming company early in his career.) In early 2011, the first Bullpen deal became a prototype of their model, Martino said. They followed San Francisco early-stage firm True Ventures to fund an expansion of social customer service startup Assist.ly. Less than a year later, Salesforce purchased the company for $80 million, after other later money helped shepherd that. Last year, Bullpen raised their second fund, of $35 million, and has invested locally in Solve Media, Perceptual Networks and Grassroots Unwired, the mobile customer data tool based at Venturef0rth. Like other bi-coastal investors in the Philadelphia region, Martino is on the road frequently, spending time each month in New York, Los Angeles and San Francisco, but this has always been home for the Lansdale native and North Penn High School alumnus. So he’s experiencing the ‘rise of the rest’ expansion of new tech business corridors in a new way. “Just because we’ve democratized the understanding of how to do this doesn’t mean every city has the capability now to do this, but Philadelphia has a lot of the right parts,” he said, going on to address how Silicon Valley and New York are separate conversations entirely. “But it sure is great for the country to have 10 third place tech regions.” That popularity of tech as an economic development certainty is a warning sign, but it’s different than it was in the 1990s run up to the dot com collapse, Martino said. “We are absolutely in a bubble, but it’s not in terms of real total dollars, it’s in the number of companies,” he said. When “large asset allocators” move back into tech investors and valuations get out of whack, then there’s real concern. For now, “I don’t know how this plays out exactly,” he said. If Martino isn’t sure if something seismic or momentary is happening there, he is certain the conversation about technology leading a new urbanist movement is largely just bluster. In the late 1990s, it was a shock when a San Francisco email software company called Critical Path went public, before some struggles, Martino said, because all the action was in the suburbs. Now in the Valley, the “hotter, younger” companies are choosing the city. It’s something happening nationwide. This article was originally published in Technically Philly at Technical.ly/Philly.
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INNOVATION
Three Views On Teaching Entreprenuership
I
Leah Davidson is a sophomore in Wharton originally from Quebec, Canada. She participated in the Student Reporter program, which brings a select group of students to internationally renowned conferences to report on business and sustainability. The article was originally published in the Wharton Entreprenuership Blog at beacon.wharton.upenn.edu/ entrepreneurship
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
nnovation is following your instincts.” “Innovation is pushing beyond known limits and making it work.” “Innovation is bringing happiness.” These quotable mantras from the live Twitter feed for the 2013 World Economic Forum Annual Meeting of the New Champions’ closing session “Innovating into the Future” beg the questions: If innovation is so critical, how can we foster entrepreneurship at an early age? Can we really teach people to yield positive social returns by challenging norms, pursuing passions, and taking risks? Or is innovative entrepreneurship something innate that cannot be taught? The WEF’s high-profile participants hold differing views on whether one can teach people to succeed as entrepreneurs, but they all support instilling business fundamentals and entrepreneurial principles in youth of all backgrounds and personalities. Here are three different viewpoints.
1. Yes, entrepreneurship needs to be in classrooms worldwide! Amy Rosen is CEO of the Network for Teaching Entrepreneurship (NFTE), an American program that trains teachers to lead entrepreneurship classes. Through a year- or semester-long curriculum, middle and high school students learn to write a business plan, keep accounting records, market a good or service, and pitch their ideas in regional and national competitions. Over NFTE’s 26 years of operation, 500,000 students have become entrepreneurs, often by selling T-shirts or babysitting for neighborhood children. The program addresses what Rosen believes to be a huge problem: youth unemployment. “The youth unemployment numbers are not going down,” says Rosen. “A young person is three times as likely to be unemployed as an adult. We’re five hundred million jobs short in the next generation of jobs for youth. Entrepreneurship becomes the best employer.” Although it is difficult to directly correlate NFTE’s work to increased employment, research has shown that NFTE’s educational modules lead to lower dropout rates, greater career readiness, and business formation at twice the rate of students who have not undergone training. Rosen does not believe every child is suited for an entrepreneurial career, but she is quick to debunk the myth that educational institutions should only support the next Bill Gates or Mark Zuckerberg. “The notion that all kids should learn certain knowledge and skills is very important,”
says Rosen. “You can teach kids to develop the attributes of successful entrepreneurs, such as persevering through obstacles and accepting failure. You can also free children’s minds to think differently. Our most successful entrepreneurs are often the students doodling at the back of the classroom, completely unengaged, because they don’t learn in traditional ways.” Entrepreneurial education is on the rise. NFTE is leading a slew of organizations, from Junior Achievement to the National Federation of Independent Business, that buy into the philosophy that the processes of idea generation and implementation are as fundamental to a child’s long-term development as are reading and writing. 2. Yes, but students must come to the table with an entrepreneurial mindset and intrinsic motivation. From DreamIt Ventures to the Unreasonable Institute, there are many accelerator and incubator programs that construct what the WEF calls “ecosystems to engage and enable people to become entrepreneurs.” These hubs for innovation usually provide mentoring, networking, and funding opportunities for people who, by nature, have a pioneering spirit and desire to create change. Rick Aubry, the founder of New Foundry Ventures, one such ecosystem for social entrepreneurship in the Silicon Valley, believes that not everyone can thrive as a social entrepreneur. “Social entrepreneurship in particular requires personality, orientation, tenacity, and commitment to solving problems,” explains Aubry. “You have to have a certain capacity to take risks as well as the flexibility to adapt to change.” Given his background investing in social startups, he does, however, believe that when a spark exists, it can – and should – be kindled. Aspiring social entrepreneurs enter New Foundry Ventures with a few ideas, but they may need Aubry’s assistance to conduct feasibility studies, build prototypes, evaluate outcomes, and identify key locations for longterm program implementation. Francisco Jose Cordoba from Colombia participated in an incubator program called the Founder Institute prior to piloting Pachoman, an NGO that supports young people who are addressing educational and technological disparities. Cordoba is a Global Shaper, a person between 20 and 30 years of age whom the WEF has recognized for exceptional leadership potential. From Cordoba’s experience recruiting and training young innovators through Pachoman, he says,
“I think you can be taught entrepreneurship, but you will not be as good of an entrepreneur as if you were born with the entrepreneurship gene.” As someone who initially dropped out of college to create the tech startup Seed Software, Cordoba feels strongly that entrepreneurs need to be willing to tread far beyond their comfort zone.
3. No, teach business on the blackboard and bring entrepreneurs to the field! Toni Thorne, an award-winning serial entrepreneur from the Caribbean, thanks her parents for fostering her interest in the broader world and encouraging her to better her Jamaican community. “At six, I founded a summer camp that was very successful. I always liked reading and building things,” Thorne explains. For Thorne, intellectual curiosity and inventiveness, key traits of any entrepreneur, emerged naturally. She thus believes “that business skills, like finance and accounting, can be taught, but that entrepreneurship cannot.” Thorne has initiated numerous projects, including a clothing line called BoUIK and Martha’s Smile, a charity for children suffering from HIV/AIDS. With every undertaking, she has grown from her mistakes and taken advantage of new connections. Thorne’s perspective supports the view that youth need to learn entrepreneurship through apprenticeships rather than through case studies and textbooks which publishing houses export to the masses. Conversations with Rosen, Aubry, Cordoba, and Thorne reveal that the two sides of the debate around teaching entrepreneurship bear a crucial point of intersection. When entrepreneurial education becomes more experiential and accelerator or incubator programs become more accessible, everyone reaps the benefits. Students with entrepreneurial inclinations reach greater heights of success, “closeted” entrepreneurs are able to uncover inherent skills, and even the most left-brained of people feel inspired to test new hypotheses. At the end of a session called “Learning Creativity,” moderator and Chief Business Correspondent for the BBC Linda Yueh asked the audience, “Can creativity be taught?” Perhaps people were feeling buoyed by their proximity to so many bright minds or overly hopeful about entrepreneurship’s capacity to improve the dismal economic climate, but almost all the hands went up. The overwhelming feeling was that, yes, with the right tools, it is possible to stimulate anyone’s imagination.
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PHILADELPHIA’S INTERNATIONAL TOURISM When it comes to destinations in Pennsylvania, Philadelphia is at the top of the list. But it’s not just Americans interested in their native country’s history. International tourists make up a large portion of visitors. So what’s driving them toward Philly? STORIES BY JUDY WEIGHTMAN ILLUSTRATION BY DON LEE
T
ravel is big business — the travel and tourism industry generated $1.46 trillion in total sales ($865.4 billion direct, $591.2 billion indirect) in 2012, according to the International Trade Administration (ITA) (www.travel.trade.gov). That’s 2.8 percent of the GDP, from an industry that supports 7.8 million jobs (5.6 million direct, 2.2 million indirect). The numbers in the Philadelphia region are also significant: tourism has a $9 billion economic impact annually, and accounts for 88,000 jobs, 52,000 of them in Philadelphia proper.
International visitors account for a significant piece of that pie. In 2012, 67 million visitors spent $165.6 billion in the United States, $47.5 billion more than U.S. tourists spent abroad. That trade surplus is a long-term trend; there’s been one every year since 1989. The top three states attracting international visitors — New York, Florida and California — get almost three-quarters of them (73.6 percent). Pennsylvania, with a 3.3 percent share of the market, is tenth on the 2012 list, with 952,000 international visitors (up 4 percent over 2011).
The top destination in Pennsylvania is, of course, Philadelphia, which is 14th on the list of U.S. cities. In 2012, Philadelphia greeted 595,000 visitors from abroad. The ITA data is based on the port through which visitors enter, so those numbers are actually higher. “Our prime location on the Northeast corridor of the U.S. and proximity to New York City [first on the list] and Washington D.C. [eighth] also plays a key role in attracting global travelers,” said Crystal Hayes, Senior Tourism Communications Manager at the Philadelphia Convention and Visitor’s Bureau (PHLCVB).
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WE KNOW THAT EVERY DOLLAR WE SPEND TO PROMOTE PHILADELPHIA GENERATES $100 IN VISITOR SPENDING AT LOCAL BUSINESSES... THE CORPORATE WORLD WOULD CLASSIFY THAT AS A HIT.’ —BLONDELL REYNOLDS BROWN, CITY COUNCILWOMAN
PHLCVB
Those visitors have a significant impact on the local economy: a tourist might spend $3,000 to $7,000 during a typical week-long trip, according to the PHLCVB. Leisure travel accounts for more than half of the visits. There are three main draws for international visitors: cultural institutions and events, shopping and (believe it or not) visiting family. The list of cultural institutions goes way beyond the Art Museum and the Barnes Foundation. Longwood Gardens in Kennett Square is a world-class garden with an international reputation that attracts more than a million visitors a year. Philly is also known for its lively performing arts scene. Music-lovers who have seen the Philadelphia Orchestra on its foreign tours, for instance, are eager to hear them play in the Kimmel Center. Prestigious annual races like June’s bike race and November’s marathon attract international athletes as well as their friends and family. Fashionable tourists are delighted to learn that Pennsylvania doesn’t charge sales tax on clothing and shoes. An obvious magnet for them is the King of Prussia Mall, which had more than $1 billion in sales in 2012, according to the King of Prussia District. It attracts about 25 million visitors a year, a quarter of whom
come from outside the metropolitan area, according to travelandleisure.com. The sixth most-visited mall in the country, King of Prussia is the top-drawing mall in the Northeast. Not everyone wants to shop at a mall, of course. The shopping district known as Rittenhouse Row, which stretches from Broad to 21st Street and Spruce to Market, is loaded with upscale retailers. Other shoppers prefer to find funky boutiques in Northern Liberties, Old City or Manayunk. “Philadelphia is home to many worldclass universities that draw students from all over the world,” PHLCVB’s Hayes said. “While they are here, visits from family and friends also contribute to our international visitation levels.” During the 2012 – 2013 school year, 820,000 international students — the highest number ever — attended colleges and universities in the United States, according to the Institute of International Education. The 37,000 of them who came to Pennsylvania reflected an increase of 11.6 percent over the previous year. These students, who pumped about $1.2 billion into the state economy, made Pennsylvania the state with the sixth highest number of international students. Both the University of Pennsylvania (5,800 inter-
national students enrolled) and Drexel University (3,300) have student bodies that are about 12 percent international students. Add all of the international students at other institutions in the region — from the 1,500 at Temple University to the half dozen studying horticulture at Longwood Gardens — and you have a significant presence, many of whom have friends and family who come to visit them while they’re here. After leisure tourists, who comprise 56.3 percent of international visitors to Philadelphia, convention and business travelers are the second biggest group, at 36.9 percent. Again, the presence of numerous world-class universities in Philadelphia is a factor in attracting this group, as are the pharmaceutical companies in the region. Clearly, some of our international guests have specific reasons for coming to Philadelphia, whether it’s attending a convention or visiting a loved one. Others, though, need to be persuaded to visit. There are two agencies responsible for marketing Philadelphia to tourists. Visit Philadelphia (formerly the Greater Philadelphia Tourism Marketing Corporation) markets primarily to leisure travelers in the United States and Canada, though their website is accessed by more than a half million international consumers,
according to Paula Butler, vice president of communications. The other agency, PHLCVB, has primary responsibility for marketing beyond North America. Recent budgets have cut state funding to these two agencies by more than $10 million annually. A city funding bill sponsored by Blondell Reynolds Brown that took effect July 1 of this year is expected to give both agencies an additional $1 million per year for their sales and marketing efforts. “We know that every dollar we spend to promote Philadelphia generates $100 in visitor spending at local businesses — plus $5 in tax revenue for the City of Philadelphia,” Reynolds Brown said when the bill passed City Council last December. “The corporate world would classify that as a hit.” The money comes from an increase in the tax on hotel rooms. When the commonwealth originally gave the city permission to raise that tax, in 2008, they capped the increase at 1.5 percent, but the city raised it only 1.2 percent at that time. City Council has now raised it to the full allowed 1.5 percent. This yields an overall hotel-room tax rate of 15.5 percent, the 11th highest in the 25 largest hotel markets in the country. The 0.3 percent increase, which doesn’t affect that ranking, is earmarked to be
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The London Connection Mayor Michael Nutter’s trade mission to London earlier this month included efforts to promote tourism at World Travel Market. The WTM, the largest tourism convention in the English-speaking world, attracts 47,000 travel professionals. Nutter put in an appearance at the booth manned by staffers from PHLCVB, the Valley Forge Convention and Visitors Bureau, the Philadelphia Museum of Art and the Barnes Foundation. Representatives of Philadelphia International Airport were also present to discuss the possibility of adding more international flights with airline executives. “The world is getting to know Philadelphia, and we need to be much more aggressive in promoting this city and telling Philadelphia’s story,” Nutter said. “There is tremendous interest in our city, and we must get used to the fact that Philadelphia is a global city and a player on the international stage.” Two lucky Londoners will have the opportunity to come find out what Philly has to offer for themselves: PHLCVB, in conjunction with Brand USA, is running a contest on social media involving London’s iconic taxi cabs. Anyone seeing one of the 11 cabs bedecked with images of Philadelphia can post a picture to Twitter or Facebook, using the hashtag #PHLinLondon, to win a trip for two. The contest runs through November 30, but the cabs will sport the signage through January.
split evenly between PHLCVB and Visit Philly for their marketing efforts.. “Over the past decade, Philadelphia has placed extreme importance on expanding awareness of the City and our assets globally, through increased marketing efforts,” said Jack Ferguson, president and CEO of PHLCVB. “The international travel market to the U.S. continues to increase significantly and the PHLCVB has focused on key emerging markets — including China, India and Brazil — to capture our share of that increase.” The PHLCVB efforts take place on two fronts, at home and abroad. At home, they have just launched a new website, www.discoverPHL.com, which has been completely translated into German, French, Spanish and Portuguese and has some material in six other languages. “We are also the first destination in the U.S. to launch a website completely built and hosted in China for the Chinese market, www.discoverPHL.cn,” Hayes said. “The Chinese website is also promoted in partnership with Baidu, the leading search engine in China.” PHLCVB staff also “works with leading tour operators in each country to promote and create travel packages to Philadelphia (as well as run cooperative advertising to their client base) and hosts [them] in Philadelphia to learn about and explore the City as a destination,” Hayes said. They also host “journalists from across the globe to discover Philadelphia and generate positive coverage for the City to interest international consumers and drive travel to Philadelphia.” Abroad, PHLCVB employs five different representation firms, in the U.K, France, Germany (which also covers Austria and Switzerland),
Italy (which also covers Spain) and India. During FY 2012/2013, members of the staff went on sales missions to Brazil, Chile, France, Germany and India, and attended or had a presence at 34 international tourism trade shows. To better serve tourists in these markets, the office’s visitor’s guide has been translated into Chinese, French, German, Portuguese and Spanish. As the number of international visitors rises, more businesses are looking at ways to accommodate foreign guests and customers. The concierge staff at the Independence Visitor Center, for instance, is fluent in nine different foreign languages — from Arabic to Yiddish — among them. Providing foreign language services need not involve hiring staff to that extent, though. “Translated signage and collateral is a very valuable resource,” Hayes said. The nature of that collateral will depend on your industry. The Barnes Foundation, for instance, offers downloadable audio tours (available at the iTunes store) not only in English but in French, Japanese and Spanish. If you’re hosting international business travelers for meetings or a convention, the PHLCVB’s numerous services can help make their trip memorable. “The PHLCVB wants to ensure a positive customer experience for all global travelers to Philadelphia no matter purpose of trip,” Hayes said. “We offer pre-planned itineraries as well as a personalized itinerary builder through YourTour,” an app on their website. Whether it’s cheesesteaks in South Philly, a carriage ride through the historic district or a jazz concert at the Art Museum, you can make sure your foreign visitors have a uniquely Philadelphia experience.
DISCOVERPHL.COM
BY THE NUMBERS
Foreign Visitors Foreign visitors to Philadelphia, in 2012, by country. (Data provided by PHLCVB)
87,000 U.K.
83,000 Germany
51,000 France
31,000 China
27,000 Italy
25,000 India
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28 NOVEMBER 2013
REGIONSBUSINESS.COM
REAL ESTATE
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Fitz4 First Phase Fully Framed, Moving To Finish BY SANDY SMITH It’s been a while since we checked on the progress of Fitz4, Metro Impact’s modern townhouse development at Fitzwater and Chadwick streets in Graduate Hospital. As you can see, the project has progressed nicely since we documented the start of framing in July. The first phase of the project, comprising three townhouses on the east side of Chadwick, has been completely framed and the outer wall plywood and insulation is complete. Installation of windows has also begun, as can be seen on the south end of the project in the picture above. At this pace, we estimate the three townhouses should be complete in the spring of 2014 – a mere three years after the project was first proposed. (Most of the lag time is the result of the zoning and permitting gauntlet the project had to run.) The second phase — a fourth townhouse on the west side of Chadwick — should get under way then. This article was originally published on the Philadelphia Real Estate blog at Blog.PhiladelphiaRealEstate.com.
28 NOVEMBER 2013
REGIONSBUSINESS.COM
OPINION
21
Three Emotional Holiday Traps To Avoid
M
Joe White is an author, speaker, international trainer, and founder of Get Life Coaching. Learn more at www.getlifecoaching.com.
any people consider the holidays to be the most stressful time of the year. Whether it’s family stresses, financial stress or just figuring out how to manage it all, some people have great difficulty around the holidays. Many times, the holidays bring an unwanted focus on the things we don’t have, which often leads to feelings of loneliness, despair, frustration, and depression. These feelings are not just part of our imagination, but we have a responsibility to ourselves to not believe things are worse than they actually are. Loss, grief, anger and depression are feelings that everyone experiences at some point in their life. Problems begin to arise when we allow these feelings to define our life conditions in a negative way. Only when we envision life as a gift worth celebrating will we allow the conditions for life to change for the better. We have been conditioned to believe that change happens over time, but this is NOT TRUE. Change happens in a split second. We experience how quickly life changes in everyday life when there is the birth of a child, a diagnosis of cancer, or perhaps the end of a career. Stress occurs when we try to control that which is not under our control. It creates an imbalance and we experience that as pain. To navigate life’s challenges we must learn to identify triggers and emotional barriers that hook us and prevent us from being on the road to true happiness. With this in mind, here are three emotional traps to identify and avoid this holiday season:
1.“You are not your problem”
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
(FLICKR.COM/EN321
Throughout our lives, we are taught by those in disciplinary positions (parents, teachers, bosses) that we are our problems. Typical excuses come in the form of “I’m too lazy/depressed/addicted to make my life better.” Once we define ourselves as the problem, it becomes ingrained in our psyche as a self-fulfilling prophecy. Drop the excuses and realize that you are a human being with feelings. Negative feelings are completely normal and do not define the kind of person you are or will be. People are not their behaviors.
through our lives is very cyclical. Challenges will always arise, sometimes at the worst possible moment, but just as the water retreats after high tide, our problems will retreat from our lives over time. Make it a point to face your problems and push through them. It may be uncomfortable or painful in that moment, but the pain is only temporary. You at the level of your soul is far greater than anything that is coming your way.
2.“Your problems are not permanent”
Death is the only permanent problem. When we think there are no other options to explore in life, the only thing left to do is sit and wait for the end to come. As long as you are still breathing, there will always be a chance at redemption. Think
We all feel at times like our lives are stuck, but so long as we are still breathing, there is still a chance to change for the better. The ways in which problems ebb and flow
3.“There is always another option”
outside of yourself and hold onto the belief that there is still hope for your life. If you believe there is still hope, you will always find another way out of a problem. The next step may not be large or drastic, but even the smallest step in the right direction will lay the foundation for change to occur. Don’t sit around and wait for change to come to you. Take time before getting together with family for the holidays to do some soul searching. Identify with your feelings and challenges and face them head on. You will be amazed at how small victories lead to real, substantive change for the better. I wish you love, passion and success this holiday season. Live Free!
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BY THE NUMBERS
73%
Number of Americans who donate to religious organizations, according to a national study entitled Connected to Give: Faith Communities
65%
119,000
Men and women participated in a 30-year Harvard study examining the health benefits of consuming nuts
Number of Americans who both identify themselves as religious and donate to charity
56%
Number of Americans who do not identify themselves as religious and donate to charity
55%
Number of Americans who indicated their faith motivates their charitable giving
80%
Number of Americans report being affiliated with a specific religion
69%
Portion of donations for non-religious purposes that went to religiously-identified organizations B. Krist for Visit Philadelphia
6,400,000
Number of children between the ages of four and seven diagnosed with ADHD in 2011, according to a study recently published in the Journal of the American Academy of Child and Adolescent Psychiatry
4,400,000
Number of children diagnosed with ADHD in 2003
69%
Number of children with diagnosed ADHD who received medication
4 of 5
Number of children diagnosed with ADHD who still had the condition after receiving medication
FLICKER/Steve Slater (Wildlife Encounters)
Flickr/Renee S. Suen
20%
Difference in death risk for those participants who regularly consumed nuts (seven or more times a week)
29%
Decrease in risk of death from heart disease
11%
Decrease in risk of death from cancer
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