Minneapolis entrepreneurs reinventing the economy

Minneapolis is rapidly emerging as a hotbed of entrepreneurship, as two new developments and many success stories are proving. Small businesses are the backbone of our economy, and fast-growing entrepreneurs are setting the pace for our economic recovery.

Yesterday, I attended the first graduation ceremony in Minneapolis of the e200 Emerging Entrepreneurs initiative of the Small Business Administration. It’s a great example of the City and federal governments working together to support entrepreneurship and connect smart, emerging business leaders with the tools they need to succeed and put people to work.

The Obama administration began the e200 Emerging Entrepreneurs initiative a couple years ago, and Minneapolis was selected to join earlier this year. The initiative provides promising small businesses with intensive consulting services in order to help them define a clear strategy for future growth.

Of the 19 small businesses that have gone through this intensive education — which is offered entirely free of charge — 17 are based in Minneapolis. At the City, we helped the SBA identify and select participants, and we found the space downtown — donated by Thrivent — where the small-business owners have been trained.

There are some exciting success stories among these varied entrepreneurs:

  • MAG Mechanical, a Native American-owned, unionized HVAC-installation business, has grown its revenues by a factor of 30 in the past three years. They are currently subcontractors on the new Minneapolis Public Schools headquarters on West Broadway, and City staff is helping them find space to expand.
  • Flair Fountains is winning high-profile contracts for custom fountain design and installation. A recent example: a 9/11 memorial fountain in New Jersey that incorporates beams from the Twin Towers.
  • Maud Borup Chocolates, currently located in St. Anthony, is looking to consolidate and expand their production in Minneapolis.
  • PediaPals is a pediatric medical-supply company located in Seward. They’ve just signed a joint venture to be the exclusive North American distributor of a Turkish medical-equipment manufacturer, diversifying their product line.
  • Ruhel Islam, owner of Gandhi Mahal, will soon start bottling his mango lassis. This small-batch food-manufacturing venture is a perfect fit for the technical assistance and microloans available from the City’s Homegrown Business Development Center.

Another exciting development in entrepreneurship is the ongoing success of CoCo/Project Skyway. CoCo (which stands for “collaborative co-work”) is a creative work space where people working in different fields can work side by side, sparking new ideas and creating new products, and Project Skyway is Minnesota’s first accelerator for tech entrepreneurs. Earlier this year, they joined forces in the historic space that once housed the Minnesota Grain Exchange.

In just six months, they are fully subscribed with entrepreneurs in a wide variety of fields. Here are some of their success stories:

  • Northstar Geographics: Originally a one-man company, NorthstarGIS expanded by hiring another CoCo member as its first employee. Now, the company is collaborating at CoCo with another GIS company to create new software products.
  • Minnesota WordPress Hosting: After meeting at CoCo and discovering they had complimentary backgrounds in programming, search-engine optimization and hosting, Toby Cryns and Dave Allen launched this new business, now growing at a steady clip.
  • Red Branch Software: Once a one-man show, in the past year this company has grown to three full-time staff and is expanding to a second location.
  • Two startups — Mobile Realty Apps and Deals.by — teamed up to share a space at CoCo. Both companies have built intuitive smartphone apps to help people discover more about the world around them — whether homes for sale or deals at shops and restaurants nearby.

It’s clear: the Grain Exchange has become the Brain Exchange.

In September, I delivered my budget speech at CoCo/Project Skyway. I pointed out then that Minneapolis, which grew from a village on the edge of the prairie to a global economic powerhouse because of entrepreneurs and workers in the milling industry, is once again poised, thanks to entrepreneurship in so many new areas, to reinvent itself once again and lead the 21st-century economy. That’s an incredibly exciting prospect.

The business of Minneapolis is … beer

I went on a tour of a great Minneapolis business today that reminded me once again that the business of Minneapolis, at least in part, is beer. 

J.J. Taylor is the largest beer distributor in Minnesota, moving 7,000,000 cases of beer a year. The company’s roots are in Minneapolis — their predecessor began in Northeast in 1933, right after Prohibition ended — but in recent years, they had been based in Arden Hills. Then three years ago, they moved back into Northeast Minneapolis, into a much larger facility in the Mid-City Industrial Area that many people will remember as the old Dayton’s furniture warehouse, and have invested several million dollars to upgrade it. 

J.J. Taylor is a good employer, too: their 245 employees (nearly half of whom are unionized Teamsters) earn an average of $56,000 a year, with good benefits. Not surprisingly, they have high seniority and very low turnover.

And they’re good citizens: they pay $14 million a year in federal, state and local taxes and play a big role in fighting underage drinking and alcohol addition.

Plus, a business’s moving from Arden Hills to Minneapolis is a direction that I like. 

Then on Friday, I will attend the grand opening of Fulton Beer’s new brewery in Minneapolis, where they will also sell growlers and give tours. Fulton is now our second brewery in town, joining Harriet Brewing, which earlier this year became the first non-brewpub brewery in Minneapolis since Grain Belt closed in 1975. 

One of the most important things we did at the City to help these breweries get started was simply to get out of the way. Before last year, City ordinances did not allow for the on-site sale of growlers (half-gallon jugs) of beer — but for small brewers like Harriet and Fulton, that’s an important way to make money. So we changed City ordinance to make it possible, and these brewers have followed. Fulton’s new brewery is creating eight new jobs in Minneapolis’ growing craft-beer industry.

Then earlier this year, we changed City ordinance again to make it possible for small and mid-size brewers to sell pints right at their breweries. Fulton plans to open a tap room next year — and I hope Surly Brewing will join them in Minneapolis very soon.

Beer is big business in Minnesota: the beer industry — brewers, distributors and retailers — employs more than 17,000 people, generates more than $2.7 billion in economic impact, and pays more than $155 million in taxes each year.

In Minneapolis, beer — like healthy, fresh, local food — is good business: brewing, distributing and retailing beer is putting people to work in good jobs and is making a big contribution to our growing restaurant and bar scene that is deservedly getting national attention. Beer is a big part of our history, and it’s big part of our future.

City of hospitality and jobs

Our economy is still in tough shape and working families are still struggling to get ahead. That’s why we’re working hard with a wide variety of partners to make the most of our city’s and region’s assets and constantly look for ways to grow jobs. One of the promising areas for doing this is the hospitality industry — hotels, restaurants, bars, cabs and the like.

Minneapolis is the premier host city in the upper Midwest. Not only do we easily and happily accommodate 200,000 people a day from outside Minneapolis who come downtown to work, we host 18,000,000 visitors a year who come here for entertainment, business, recreation and travel.

And those 18,000,000 visitors mean big bucks and good jobs for people who live here. The Minneapolis Convention Center alone is responsible for bringing in around a quarter-billion dollars’ worth of new business every year, and our hospitality industry overall generates $1 billion in payroll every year. (Yes, I said “billion.”) Hospitality puts more than 27,000 people a year to work in Minneapolis, more than in manufacturing and government combined — and better yet is the fact that many of these jobs are good union jobs. (None of these figures includes the jobs and income generated by our unparalleled arts and entertainment industry.)

With as many assets as we already have to attract people here, we’re doubling down on our efforts to grow our hospitality industry. A couple weeks ago, Meet Minneapolis — the main organization that promotes tourism and convention business, which the City helps fund — unveiled a new tourist brand for Minneapolis called “City by Nature.” The double meaning is apparent: we’re a city surrounded by nature —beautiful lakes, world-class parks and green spaces, the Mississippi river — and we’re a city that by our nature is cosmopolitan, diverse and welcoming of everyone, whether from around the state, the country or the globe. I think this new brand captures our essence and fits our moment just right.

But the goal of “City by Nature” isn’t to make us feel good about Minneapolis: the goal of “City by Nature” is to increase the number of return visitors to our city by 300,000 a year and to add 500 more hospitality jobs a year. It’s an ambitious goal, but in this economy, we have to aim high.

Growing the hospitality industry also creates jobs for people in communities who have been hit particularly hard in this economy, like young people, immigrants and people of color, who make up much of our hospitality workforce. It’s one way we can eliminate the shameful gaps in employment in our region between whites and people of color, especially African Americans. I’ve laid out a path for doing so called “One Minneapolis” and we’re working closely with the Minneapolis Foundation and other partners to put it in place. The future of our region depends on our economy’s working equally for everyone.

The state of our economy, with its many inequities, is far too big for one layer of government to fix on its own, but at the City of Minneapolis, by working closely with our partners, we’ve been having success in growing jobs despite the recession: our unemployment rate is lower than the national average, and region continues to recover faster than most other metropolitan areas. That’s encouraging, but it’s not enough. Growing jobs is our job, and we’re going to keep at it.

Stopping potholes before they start

Yesterday, we wrapped up the 2011 street-paving season, and I’m happy to say that more than 45 miles of Minneapolis streets are now freshly resurfaced or sealcoated.

Downtown Minneapolis in particular has seen a lot of improvement: over 50 blocks of streets, some of which were in tough shape, have been resurfaced, thanks in part to federal dollars. We’ve also added 3.1 new miles of on-street bike lanes downtown.

As we approach winter, this is how we stop potholes before they start: these 45 miles of newly-improved streets will almost certainly not spring any potholes this coming winter, which means that we’ll have more resources to respond faster to those areas that do spring them. Whether you take a car, a bike, a bus, light rail or just walk, this is good news.

We can’t control the weather — we don’t know what kind of a winter we’re going to have or whether the pothole season will be as bad as in the past couple years — but we can control how we respond to the weather. And in Minneapolis, we’ve chosen to respond by fixing our streets before they develop potholes.

Big cities across the country are facing huge challenges in paying off their infrastructure debts. In that regard, Minneapolisis not unique.

I have often said that the story of Minneapolis in recent years is that our streets are safer to walk down because they have potholes in them. By that, I mean that as we have invested heavily in public safety — which has brought violent crime down to record-low levels — we have had to delay much-needed maintenance on our streets.

A pothole or a deteriorating street is like a debt in our infrastructure that we pass on to future generations. In Minneapolis, we have paid down $183 million of debt in dollars and restored the City’s AAA credit rating. Now we need to pay down the debt in our streets.

We’ve taken steps in recent years to meet the need: the five-year Infrastructure Acceleration Program will improve one-third of City-owned arterial streets by 2013. But as important as it is, it that has only helped us keep pace with the need, not get ahead of it.

That’s why starting next year, I’ve proposed a dramatic increase in the City’s street-improvement program: I have asked the City Council to approve a five-year increase of 60% over what was previously planned in the City’s capital budget for street improvements. If approved, that will mean $9 million additional next year to start, with $22 million additional in 2013.

The main reason that I am able to propose this increase is because of the closed-pension merger that was finally approved last month. As a result of paying off our pension bonds and being able to predict our future pension liabilities, we have greater borrowing capacity to expand our street-improvement program sooner and in greater amounts than we had planned.

There is still much to do — even with consistent, heightened investment, it will take many years to bring Minneapolis’ entire road network into the 21st century. And we will continue to face funding challenges, not to mention the need to keep property taxes down. But every year, like this one, that we improve scores of miles of streets is one more year that we pay down our infrastructure debt — and one more year that some potholes will never see the light of day.