Regional Economic Development Initiative by San Jose Silicon Valley Chamber of Commerce

OCTOBER 9, 2015 PAID ADVERTISEMENT

WHAT ROLE WILL SILICON VALLEY PLAY IN

The Internet of Things? SMART BUILDINGS

HEALTH TECHNOLOGY

TRANSPORTATION R&D

AND HOW DO WE GET THERE?

AGILE DEVELOPMENT & MANUFACTURING

YER

PRO

•

• EM

SPONSORED BY

R PR

EY consultants provide the digital business know-how to help leading organizations tackle the big, complex industry issues. ey.com/advisory #BetterQuestions

1510-1700180 Advisory Fridge_v2.indd 1

When fridges re-order food, will we need supermarkets?

10/5/2015 11:37:51 AM

PAID ADVERTISEMENT

OCTOBER 9 , 2015

A Message from the San Jose Silicon Valley Chamber of Commerce

ew regions in world history have created more innovation, more successful start-ups and more wealth than the Silicon Valley. The genesis of this success arises from the entrepreneurial spirit endemic in our institutions and businesses—and a critical mass of smart people who like to collaborate, who like to disrupt traditional thinking, and who look to make the world a better place through their innovations and new technologies.

Contents Health Technology . . . . . . . . . . . . . . . . . 4 Agile Development & Manufacturing . . . . . . 6 Smart Buildings . . . . . . . . . . . . . . . . . . . 8 Transportation R&D . . . . . . . . . . . . . . . . 10

The Internet of Things A new wave of innovation

The greater San Jose Metropolitan Area—also known as Silicon Valley—is the location for the most patent filings, for the most venture capital and for the most innovative era-changing companies. Our employees are highly educated, highly skilled and represent the world. They are committed to their companies and our communities.

REDI is just one of the San Jose Silicon Valley Chamber of Commerce’s many initiatives in which we want to provide our business community with the connections, information, resources and tools they need to be successful. We believe that when businesses work together they will ensure Silicon Valley’s future as the world’s leader in innovation and wealth creation. To learn more about REDI or the chamber’s other initiatives, feel free to contact me directly at mattm@sjchamber.com or 408-291-5277. Matthew R. Mahood President & CEO San Jose Silicon Valley Chamber of Commerce

Moving Silicon Valley Forward S ilicon Valley has been the global hub of innovation for over six decades. Yet, this central position could be threatened as other globally competitive regions such as Austin, Boston, New York City, Seattle, Beijing, Munich/Stuttgart and Tel Aviv, develop their own innovation economies and attract companies and talent from Silicon Valley. To remain competitive as an economically viable region for doing business, the San Jose Silicon Valley Chamber of Commerce created the Regional Economic Development Initiative (REDI). REDI is a private-public partnership that engages stakeholders in a collaborative effort by focusing on Silicon Valley’s most promising economic opportunities. REDI is about leveraging regional efforts and creating an economic development strategy to strengthen the competitiveness of the region. The initiative builds on the work of long-estab-

lished local organizations that have effected great change in Silicon Valley over the years. Since launching in January 2015, REDI has identified the most promising opportunities for action by conducting interviews with key business and regional leaders, analyzing labor market and investment data, and reviewing regional and national economic trends. As a result, REDI Action Teams are examining four primary economic opportunity areas for growth potential and economic sustainability. They are: health technology, agile development & manufacturing, smart buildings, and transportation research & development. REDI is led by the San Jose Silicon Valley Chamber of Commerce in cooperation with the City of San Jose and Santa Clara County, and supported by the regional business community.

Evolution of Silicon Valley

1950–2015

Social Media Internet

Value Added

Local business and civic leaders are yet striving to make our region an even better place—where it’s easier to start, relocate or expand a business. The San Jose Silicon Valley Chamber of Commerce has focused its efforts over the last nine months to launch a new Regional Economic Development Initiative, also known as REDI. This initiative is intended to look over the next horizon of our region’s economic growth and work collaboratively with both the private and public sectors to ensure we are taking the appropriate action to grow businesses and jobs within our region’s most promising economic opportunities.

Internet of Things

Personal Computer

Integrated Circuit Defense Source: Adapted from The Silicon Valley Edge

1950

1960

1970

1980

1990

aily routines are increasingly digitized in the Internet era of connectivity. GPS tracking, personal healthcare devices, intelligent transportation and machine operations are just a few examples of how the Internet of Things (IoT) is driving innovations across industries. From defense and the integrated circuit to the personal computer, Internet and social media, Silicon Valley has been a world leader in groundbreaking technologies over the past 60 years. IoT represents the next wave of innovation in Silicon

2000

2010

2015

Valley and is based on digitizing the physical world and operating at the convergence of software, hardware and sensors. With wide applications in consumer and industrial markets, IoT will transform existing businesses, create new enterprises and generate economic value on a global scale. The emergence of IoT is already creating significant business growth opportunities for Silicon Valley, particularly in health technology, agile development & manufacturing, smart buildings and transportation R&D.

REDI Goals T

he goals of REDI are to build on regional activities and create one regional voice to:

»» Promote the Region: Market Silicon Valley as “the global capital of innovation and entrepreneurial success”; »» Recruit New Businesses: Augment local cities’ capacity to meet with significant companies to encourage them to locate in or relocate to the greater Silicon Valley region, and welcome them when they arrive; »» Retain Existing Businesses: Help cities meet with significant employers and growing companies in the region to show appreciation and assist with expansion; »» Attract Public Investment: Garner support and advocate for the region in securing resources for significant, strategic economic development projects at the regional, state, and federal level; and, »» Support Local Entrepreneurs: Encourage new business creation throughout the region.

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Health Technology T

he integration of IT, personal hardware, and big data with health services presents enormous opportunity. Over the last five years, health technology has evolved significantly in two notable ways. One is the transformation of healthcare organizational infrastructure. By employing innovative technologies and “smart” analytics, healthcare organizations can meet local health challenges, improve patient care, and optimize operations. The other relates to consumer-facing markets such as smart phone apps and wearable devices that engage patients in managing their health. The convergence of these two areas is key in determining how healthcare systems will leverage technology on the patient and institutional levels to decrease costs and increase quality of care. Silicon Valley’s edge Silicon Valley is home to major healthcare systems, biotech companies, startups and prestigious research universities. This environment creates opportunity for a wide range of new clinical and consumer medical devices and health management systems that create efficiencies and improvements in patient well-being.

Silicon Valley healthcare organizations work closely with the business community and academic institutions in bringing products to market by piloting new products, offering real-time feedback on technology viability, and in some cases providing venture capital financing for promising ideas. Additionally, the relationships between the Valley’s research hospitals and universities connect entrepreneurial STEM talent to real-world health care problems and opportunities. Local economic opportunity

Silicon Valley has the resources to make

health technology an important regional

industry. The region’s healthcare, traditional IT, and bioscience and engineering industries represent hundreds of thousands of jobs and are exhibiting strong growth. Health technology also impacts Silicon Valley’s R&D and manufacturing firms, which are critical partners in bringing new devices to market. These industries, particularly manufacturing, also have the potential to create jobs across skill levels in the production of medical devices, equipment and treatments. Investment in Silicon Valley health technology startup companies has increased five-fold since 2009 and is growing much faster than all venture capital funding combined. Investment in health technology since early 2013 is estimated at more than $3 billion.

Hospitals adopt health technologies to improve patient care while creating jobs and new business opportunities

Health technology action team members Good Samaritan Hospital, co-chair City of San Jose, co-chair Anaerobe Systems Apixio AppSec Consulting Benchmark Solutions Bozzuto & Associates Insurance Services, Inc. Breathometer Cisco CMIT Solutions of SW Silicon Valley El Camino Hospital Filice Insurance GeneWEAVE Health 2.0 Silicon Valley Hispanic Chamber of Commerce Hospital Council of Northern & Central California Jabil Kaiser Permanente Palo Alto Medical Foundation PricewaterhouseCoopers Advisory Services LLC Regional Medical Center of San Jose Residence Inn and Courtyard Hotels by Marriott Sand Hill Angels Santa Clara Valley Health & Hospital System Stanford Health Care Stoddard Insurance Agency Valley Health Plan Wilco Management For more information, please visit www.svredi.com or contact Matt Mahood at mattm@sjchamber.com.

Health technology priority action strategy Develop an industry catalyst to provide a venue for startups and entrepreneurs to understand customers (e.g. institutions, systems, patients) and real-world barriers to execution, as well as for institutions/health systems to find solutions to healthcare problems. 4

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Q&A with Paul Beaupre, MD Good Samaritan Hospital CEO Paul Beaupre, MD, co-chairs the REDI Health Technology Committee. From his position as a business leader and a healthcare provider, Dr. Beaupre discusses opportunities for growth in Silicon Valley’s health technology industry. Q: What is the potential for Silicon Valley as a center for health technology?

Q: What are expected outcomes of the forum? How can this help entrepreneurs? How can it help health systems?

A: I think the potential is very high. The Valley has distinguished itself in other business sectors and has a proud tradition in innovation. I think healthcare systems in the Valley, entrepreneurs, and accelerators can be brought together in the precompetitive space to enable great ideas to get to market quickly.

A: The forum will provide a venue for startups to learn more about healthcare customers including institutions, systems and patients, and real-world barriers to execution, as well as for institutions/health systems to find solutions to healthcare challenges. With the healthcare systems posing the problems that need solutions, I think the forum will allow startups to really focus on useful solutions for the industry.

Q: What are some key topics that should be addressed in the health technology forum connecting health technology firms with hospitals?

Q: What are potential components, such as big data, to the health technology catalyst and how can it help Silicon Valley?

A: I think that we should first assure that the right problems are being addressed. Then, I think we should look at ways of bringing all the requirements for successful innovation into one environment with the goal of accelerating the solution to market. We are working closely with healthcare leaders to identify real world challenges that entrepreneurs and technology companies could address. Some early ideas include medication management, daily wellness and infection control.

A: Big data is very important, particularly when it comes to predictive analytics. However, it is only one component of many. By focusing Silicon Valley’s strengths, we should strive to keep and grow the innovations in the areas such as genomic development, pharmaceuticals, and user-friendly electronic health records centered here in the Valley.

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Agile Development & Manufacturing A

gile development and manufacturing plays a critical role in Silicon Valley by prototyping and producing innovative hardware. Silicon Valley is home to a large number of small and mid-sized agile developers and manufacturers, which often operate on a contract basis with both established and startup companies to launch new technologies such as biomedical devices, computer hardware, scientific instruments and Internet-connected products. The region is also home to many suppliers as well as high technology companies that develop and manufacture their own products. Silicon Valley’s edge Silicon Valley’s agile developers and manufacturers prototype and scale production of technologies quickly and precisely, creating an advantage for companies seeking to move products rapidly to market. Silicon Valley’s strengths derive from the region’s high concentration of companies that specialize in designing, prototyping, engineering and scaling production, as well as an extensive workforce of highly educated engineers and technically-trained operators. Proximity to startups and established technology companies are additional advantages for Silicon Valley’s manufacturing companies. The top 10 largest contract manufacturing companies (by revenue in 2010) in the world operate in the Silicon Valley region. Approximately 90 agile manufacturing companies are located in Santa Clara County alone. Local economic opportunity Agile developers and manufacturers are an important driver of continued growth

in regional output in manufacturing, and represent a core opportunity for job creation and company retention. Manufacturing industries accounted for 25 percent of the San Jose metropolitan area’s total regional output, and manufacturing has exceeded growth against the rest of the economy since 2003. Contract manufacturers in Silicon Valley reported workforce gains and positive employment projections in recent years and in 2012 accounted for 7,600 jobs in Santa Clara County. More than 75 percent of manufacturing jobs in the San Jose metro area in 2013 were in “very” high technology industries, the highest proportion of any other metro area in the U.S.

Agile development & manufacturing action team members City of San Jose, co-chair City of Fremont, co-chair Product Realization Group, co-chair Bestronics, co-chair Airbus Group BBSI Brilliant Things CalWeld City National Bank Excelitas Flextronics Foxconn Hastest Solutions, Inc. InSite Partners MANEX Morgan Hill Chamber of Commerce The RK Logistics Group, Inc. San Jose State University SanDisk Snap-File South Bay Solutions, Inc. TechCU Vander-Bend Manufacturing Wilco Management For more information, please visit www.svredi.com or contact Matt Mahood at mattm@sjchamber.com.

Raising awareness of manufacturing advantages—faster production cycles and higher quality output—and strengthening connections among OEMs, developers, manufacturers and suppliers will generate opportunities and jobs.

Agile development & manufacturing priority action strategy Develop a comprehensive and centralized resource map of product developers, manufacturers and associated services to promote local sourcing and manufacturing; and concurrently cultivate a “Silicon Valley Made” brand and increase awareness of the region’s competitive advantages. 6

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Q&A with Nat Mani Nat Mani, CEO of Bestronics, is co-chair of REDI’s Agile Develpment & Manufacturing Committee. He shares insights into Silicon Valley’s position as a premier region for high tech manufacturing. Q: What is Silicon Valley’s potential as a leader in agile development and manufacturing? A: There is simply no match for Silicon Valley in terms of the rich ecosystem that exists to nurture agile development and manufacturing. Over the years, despite all the talk about globalization, that ecosystem has resulted in more innovation happening in the Valley than outside. The Silicon Valley brand feeds on itself and the advantages compound every year: money, talent, infrastructure, experience. All of these are in our favor. Q: A critical priority for regional manufacturers is to strengthen connections between local businesses. How will REDI promote stronger linkages between manufacturers, suppliers and innovators in the region? A: With the infusion of new talent into the Valley, it is vital for an initiative like REDI to thread these linkages and strengthen relationships, which is what makes Silicon Valley available “on demand” to constituents. At the end of the day, stakeholders are looking for “customers/expanded business opportunities.” Tangible projects will make the benefits self-evident. Q: How will REDI help to position Silicon Valley as a value proposition for manufacturing? A: REDI can use high profile case studies as examples and emphasize the benefits of collaboration. The SEMATECH alliance, which fueled

standardization of process toolsets in the chip industry, set precedence. More recently, the FlexTech Alliance was awarded a $75 million grant from the U.S. Department of Defense to fund the Manufacturing Innovation Institute in San Jose. These are examples where Silicon Valley is seen as the best market to manufacture and launch a product and once started, manufacturing ends up staying here. There is always a comparison to China, but I believe the aspirational model for Silicon Valley is Germany where 20 percent of its GDP is manufacturingdriven even though costs are 33 percent higher than in Silicon Valley. U.S. manufacturing accounts for 12 percent of the GDP. Focusing on innovative complex products that need local supporting infrastructure should significantly boost manufacturing in the region. Q: What is the benefit of Silicon Valley having a “brand” for manufacturing in the region? How will REDI support this? A: A brand for Silicon Valley manufacturing is a huge plus. In fact, we trademarked “Built in the Valley” for just this purpose. It will encourage companies to partner with Valley-based service providers. Companies can access the “smarts” of the Valley to bring products to market, leveraging local design support and manufacturing without having to move their entire company here. That is a key benefit and a tremendous value. REDI can help convince companies from any part of the world to tap into Silicon Valley’s rich manufacturing ecosystem to ensure a robust product launch with a credible go-to-market strategy.

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Smart Buildings B

uilding and construction industries are being transformed by consumer and regulatory demand for better energy efficiency and advanced materials, devices and systems that promote greater savings and improve building operations. Smart buildings represent the application of IoT in buildings across the value chain: producing cutting edge research, testing ideas, developing products, and implementing changes and products in building construction and retrofits. IoT integrates traditional energy savings technology with the power of big data’s predictive and intelligent capabilities. Silicon Valley’s edge Silicon Valley is home to leading R&D facilities where entrepreneurs and companies are responding to market demand by developing and testing smart building technologies. This concentration of innovative thinkers and early adopters is catching the attention of astute investors. Venture capital investment in Silicon Valley smart buildings companies increased 2.5 times in the last two years (2012–2014), compared to a seven-percent increase globally. Over the last decade, investment in regional smart buildings companies increased over five-fold, reaching $555 million in 2014. Local economic opportunity Smart buildings companies in Silicon Valley have an economic opportunity to advance innovation at the convergence of construction, technology and manufacturing. Innovative companies are applying IoT technologies to buildings and capitalizing on regional technology strengths to create products and systems that optimize building design and improve operations. Smart buildings technology directly impacts the region’s construction and building operations industries with a variety of job opportunities for regional workers across a range of skill levels from

engineers and facility managers to construction trades. Jobs in smart buildings, including energy efficiency retrofits and smart building products, grew 21 percent from 2003 to 2012. The traditional construction industry, in contrast, increased overall jobs only eight percent in the same time period.

Building owners deploy smart-tech to reduce costs and emissions while creating opportunities and jobs.

Smart buildings priority action strategy Build awareness of smart buildings technologies and benefits to increase the deployment of products and services, especially in small and medium businesses.

Smart buildings action team members CBRE, co-chair Prospect Silicon Valley, co-chair Suffolk Construction, co-chair Barry Swenson Builder BOMA City of San Jose Cypress Envirosystems EASCOR EBCOACHING Elevation Construction Management Environmental Systems, Inc. Inspired Labs Intel J&C Consulting Services Mineta San Jose International Airport Moore & Moore Oracle PG&E Reylabs Rosendin Electric Santa Clara & San Benito Counties Building and Construction Trades Council SeeControl Sigsense Technologies Smiota,Inc. View Glass For more information, please visit www.svredi.com or contact Matt Mahood at mattm@sjchamber.com.

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Q&A with Dave Pogue Dave Pogue, global director of corporate responsibility at CBRE, co-chairs REDI’s Smart Buildings Committee. Here he explains the importance of smart buildings technology in the local marketplace. Q: What is Silicon Valley’s leadership potential in smart buildings technologies? A: Silicon Valley already is a world leader in developing smart building technology. Our focus will be on creating a better way of connecting this technology to local property owners so they can improve the performance of their properties. Q: What are current challenges to raising awareness of smart buildings benefits to owners and property managers? How can REDI address these challenges? A: The first challenge is getting good information on the thousands of small and medium-sized properties that make up the majority of the Valley’s building population. By understanding and comparing current utility performances, we can identify the buildings that would most benefit from improvement. Then we can introduce smart buildings technologies to those property owners to help them evaluate cost-effective options for building retrofits. Many owners of small buildings often lack the resources, including staff, technical knowledge and financing, to pursue a smart buildings retrofit they may perceive as complex and expensive. In fact, with so many great competing technologies, it can be difficult for any building owner, regardless of resources, to evaluate the best options to suit their needs. A coordinated plan like the REDI project is designed to simplify the process.

Q: How will REDI obtain the necessary data to help the region’s smart buildings industry? A: We will be working with a number of resources including commercial real estate databases, EPA Energy Star, utility company databases and outreach programs through the SJSV Chamber to create a target list of properties that could most benefit from this type of program. Q: How can increasing smart buildings pilot projects help companies and the region? A: Everyone wins. If we can improve the energy efficiency of our building stock, there will be an immediate financial benefit for owners and occupants. Environmentally, lower energy usage improves our carbon footprint and aids in meeting California’s mandated emissions targets. When new products developed by local technology companies demonstrate successful outcomes, business increases for these companies as more building owners and operators become end users. And finally, local improvement projects mean local jobs for contractors, installers, technicians and more. This is good for the pocket book, good for the environment and good for the economy.

Look Who’s Coming to Santana Row... Federal Realty Welcomes

Many thanks to Armand Tiano of Newmark Cornish & Carey in representing Splunk and Todd Shaffer, Randy Gabrielson and Tracey Solari of Newmark Cornish & Carey in representing Federal Realty Investment Trust.

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Transportation R&D R

esearch & Development (R&D) centers are helping global tech companies, startups, and university research facilities connect technology to everyday devices. These connectivity innovations span industries from transportation to healthcare to retail and the built environment, and are heavily driven by software developed in Silicon Valley. The application of the Internet of Things (IoT) to the automotive industry is particularly significant in Silicon Valley where local automotive R&D, tech firms, and innovation transportation firms are demonstrating successes across the platform. Silicon Valleyâ&#x20AC;&#x2122;s edge Institutional assets in the research community and specialized talent position Silicon Valley as a critical hub for R&D. Researchers are conducting both basic and applied research with commercialization targets spanning from one to 20 years, resulting in frequent R&D collaborations among regional companies, universities and labs. Silicon Valleyâ&#x20AC;&#x2122;s specialized science, technology, engineering and mathematics (STEM) talent pool is the most concentrated of the top innovation regions in the U.S. The number of scientists, excluding computer scientists, in the region more than tripled between 2003 and 2013. The share of STEM managers, engineers and computerrelated professionals in the regional economy is 3.5 to 5 times higher than the national average. Local economic opportunity The convergence of hardware, software and mobile technologies is transforming transportation and promoting innovation in vehicles, infrastructure and transportation systems. Silicon Valleyâ&#x20AC;&#x2122;s expertise in information technology and

emerging strengths in IoT are driving transportation companies to locate R&D centers within the region. Fourteen automotive companies have already set up R&D operations in Silicon Valley. In addition to traditional automakers, information technology leaders such as Google and Apple

are investing in transportation technology development in the region. Conducting R&D activities in Silicon Valley increases the likelihood that innovations will be commercialized and scaled locally, thus attracting investment and generating jobs and tax revenue.

Transportation R&D action team members Cisco, co-chair Prospect Silicon Valley, co-chair Cupertino Chamber of Commerce Mountain View Chamber of Commerce DENSO Hyundai Motor Company MANEX Peloton Tech Reylabs Innovations reduce congestion and enhance safety, improving quality of life and attracting talent.

Transportation R&D priority action strategy Host a Transportation Innovation Showcase to catalyze interest and visibility of the industry in the region and mobilize local leaders to promote adoption.

For more information, please visit www.svredi.com or contact Matt Mahood at mattm@sjchamber.com.

PAID ADVERTISEMENT

OCTOBER 9 , 2015

Q&A with Barry Einsig Barry Einsig, global transportation executive at Cisco and co-chair of REDI’s Transportation R&D Committee, looks into the future of transportation innovation. Q: What is the potential for Silicon Valley as a center for transportation innovation? A: There are 14 automotive R&D centers in Silicon Valley, which indicates that the region is already playing a large role in helping to shape transportation innovation. The next 20 years in transportation are going to see a revolution equivalent to progress over a century ago when steam technology was applied to transportation. Connected vehicle technology is going to surge in a very positive and productive way in the digitization of transportation. Transportation is a key element of the next level of the Internet. Q: What are some potential benefits of promoting transportation technologies in the region? A: There are efficiency and quality of life issues associated with living in urban areas. Applying technology to help direct those issues is key, particularly within the urban environment’s fixed infrastructure. The relationship between technology and the urban environment is critical to increasing efficiencies and gaining the advantages of economic growth. We need to apply technology to our existing infrastructure to get more capacity out of it, more through-put. Think of our transportation infrastructure as a network itself. Silicon Valley is ideal for moving beyond test-beds to show the real economic and social value of applying technology to all modes of transportation and treating them as one system.

B R A N D P U B L I C

Q: One of REDI’s strategies is to cultivate Silicon Valley as a test-bed for transportation technologies, similar to the Internet in the ‘90s. How will the REDI team build awareness and support for deployment of transportation innovations? A: I think it’s too late for test-beds. We’ve tested, we know the technology works, and we know the capabilities are there. We need to think about Silicon Valley as the place where we solve complex problems and derive the real business and social impacts, in much the same way the Internet did. This isn’t about trying a technology to see if it works. This is about wide scale deployment and implementation to show the social and business benefits and impacts. REDI can help deliver the message that the business community is ready, willing and able to drive transportation innovation forward the same way it did with the industrial Internet. We have tremendous amounts of information and data to support this entrepreneurial case. Q: How will a public-private forum strengthen the industry and deployment in Silicon Valley? A: I think it’s really a private-public partnership. Private enterprise has the capabilities to drive this technology forward and the public has the need. Transportation impacts all of us every day, whether it’s freight and logisticsoriented or passenger transport over multiple modes. Silicon Valley has an entrepreneurial public community that’s willing to move forward with great companies and educational institutions.

S T R AT E G Y

NINICO

C O M M U N I C AT I O N S

R E L AT I O N S

A D V E R T I S I N G

NINICO is not just our agency. They are a trusted partner. C A S E B A R R Y

S W E N S O N S W E N S O N

B U I L D E R

S J

L A

N I N I C O C O M M U N I C AT I O N S . C O M