Gretchen Fauske

Local lenders make the difference in Payroll Protection Program

“Have you heard that (insert name of local business) is closing?”  This is an all too common refrain in 2020, repeated as we’ve watched restaurants, fitness studios, tour companies, retailers, and more, shut their doors for good. Researchers estimate that between early March and early May 110,000 small businesses closed across the country. In Alaska, the number of open small businesses decreased by 29 percent and consumer spending is down by nearly 12 percent in comparison to January 2020 numbers.  Considering that the median business has more than $10,000 in monthly expenses and less than one month of cash on hand, it’s no surprise that many have been unable to stay afloat during the pandemic. “We have months of economic pain still to come,” says Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development. Paycheck Protection Program: $669 billion for small businesses nationwide The economy would probably be faring far worse if the federal government hadn’t acted quickly and authorized the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act on March 27.  The CARES Act is the largest economic stimulus plan in U.S. history, and includes the Paycheck Protection Program, which provided a total of $669 billion in forgivable loans for small businesses. The program was so popular the initial $349 billion ran out in two weeks, necessitating the authorization of a second phase. Slated to close on June 30 with $130 billion unspent, the PPP was recently extended to Aug. 8.  Although highly utilized, PPP presented a host of challenges for business owners, ranging from changing guidelines and concerns that loans would not be forgiven as promised, to establishing eligibility and finding a financial institution to apply through. In the future, business owners will need to calculate the forgivable amount of their loan and track allowable expenses to ensure program compliance, which may be difficult for some. Lenders also experienced challenges, including restrictions on the asset size of eligible lenders, unclear guidelines, and using a federal website not built to withstand the program’s heavy traffic. Going forward, lenders will need to manage servicing the unforgiven portion of loans, identify how to categorize the debt, and potentially deal with audits. Did PPP work? And did Alaska get a fair share? The Small Business Administration, which manages the PPP program, recently released detailed data regarding businesses nationwide that participated in the program. “The first question everyone wants answered is ‘Did it work?’ And the second question is ‘Did Alaska get its fair share?’” Klouda said. “Although it might take years to find out how effective PPP has been, it’s clear from reviewing the data that the program was used extensively in Alaska, by employers from just about every industry and region in the state.” When Klouda analyzed the data, he discovered the following: At 53 percent, Alaska entities received a smaller number of loans compared to the total number of small businesses and nonprofits, but a higher average loan amount of $112,000, versus $107,000 nationwide.  Employers in the state received $1,692 per capita, which is slightly better than the national figure of $1,594. Urban population centers like Anchorage, Fairbanks and Juneau received a greater proportion of PPP loans relative to the number of businesses than less populated rural areas. For the most part, Klouda’s findings about PPP in Alaska matched his expectations. One in particular though, surprised him: the top five PPP lenders were largely made up of local institutions. Wells Fargo was the only national bank ranked among the top five; the other four — Northrim Bank, First National Bank Alaska, Alaska USA Federal Credit Union, and First Bank — are all smaller in-state lenders.  Alaska’s leading PPP lender  Northrim alone was responsible for approximately one in four loans in the state, which translated to nearly 2,600 new business loans between April and June. For reference, there are only about 20,000 businesses and nonprofits with employees in the whole state. “We made a decision to assist as many businesses in Alaska as possible, regardless of whether they were an existing Northrim customer because as a community bank, we recognize the importance all our small businesses have within our community,” said Northrim Executive Vice President and Chief Lending Officer Mike Huston. To manage the high volume of applications, Northrim created a loan processing assembly line and brought staff from departments like IT, Accounting, Marketing, and others into the lending process.  “There were times when work was being done every minute of the day,” said Huston. “People stayed up late, got up early, and worked during the weekends. A significant portion of our staff were working remotely, and knowing that we were making a difference for our communities made us feel connected during this challenging time.” Although flexibility isn’t often a word associated with banks, Huston says it’s something Northrim prides itself on.  “One of our takeaways from this is that change is constant, and it’s coming at us quicker than ever. Tomorrow is not going to be what we expect and we have to be ready to adapt.” Disruption creates opportunity, and businesses that can pivot or identify new consumer needs can be successful despite a challenging economy, something Northrim knows well. The bank opened its doors in 1990 on the heels of a devastating recession, and has grown significantly since its origin in two trailers in a parking lot. Despite dire forecasts about Alaska's economy, Huston remains optimistic.  “We’re continuing to invest, Huston said. “We opened a loan production office in Kodiak in early March, and are planning to open a second community branch in Fairbanks this winter. We are committed to powering the businesses that power Alaska.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for innovation and entrepreneurship. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.  

How internships offer opportunity for students and startups

Meet John Boren, a 2020 graduate from the University of Alaska Anchorage’s Computer Science and Engineering program. He’s been piecing together his college education for the last 20 years.  The first in his family to pursue a college degree, Boren enrolled at UAA and began paying for each class out of pocket, working multiple jobs during the school year and spending summers in his hometown of Seward serving Alaska’s busy visitor industry. Boren made it through two years of college, but the more he worked to afford tuition, the less time he had for classes and studying. “I just started taking fewer classes, dropped others, and eventually stopped going,” Boren said.  The next two decades in Boren’s life were marked by living overseas in Europe and South America; a stint at the University of Colorado Denver; a brief return to UAA; internships at high profile companies like Lipper Analytical Services — a division of Reuters — and IBM Research; and jobs as a deckhand, assistant project manager for a boilermaker servicing company, bar manager, and a longshoreman. In 2015, Boren was working as a floorhand for Doyon Drilling and making more than $100,000 per year when oil prices fell to $27. He remembers watching as colleagues lost their jobs and thinking, “Is this my future? When I’m 50 will I lose my job if the price of oil drops again?”  The experience inspired Boren to quit his high paying job and use his savings to finally finish his degree at UAA. Although Boren knew he wanted a future in computer science, he didn’t know that he would also get a taste of the startup life. John Boren at his internship for Legalverse. (Photo/Courtesy/John Boren) Shortly after beginning his final year of his undergraduate program, Boren saw a poster advertising a new program called Upstart Internship. Offered by the University of Alaska Center for Economic Development , or UACED, as part of the ARCTIC Program funded by the Office of Naval Research, the program pairs students with local startups to learn about entrepreneurship and what it means to be a founder. Intrigued by the possibility of working for Anchorage-based Legalverse, a startup offering electronic document management for legal teams, he applied and landed the job. “Of all the internships I’ve had over the course of my college career, the Upstart Internship was the best,” Boren said. “My boss, Jeff Levin, gave me relevant, cutting-edge SaaS (software as a service) work with time for me to research and understand what I was working on. More importantly, Jeff really focused on being a mentor and dedicated time to building our relationship. It was a great way to learn, and was especially rewarding because I knew my work was making a difference in growing his company. That kind of experience is hard to find in the software industry.” Margo Fliss, Upstart Internship program manager at UACED, says the time spent on mentorship and professional growth is intentionally built into the program. “Companies say that students apply for jobs but don’t have the experience or soft skills needed, and students say there aren’t opportunities for them to get experience or develop soft skills because companies won’t hire them,” Fliss says. “This program bridges both challenges — it gives students hands-on experience and professional development before graduation to ready them for the workforce.” The program also provides Anchorage startup companies — often operating on a shoestring budget and hungry for talented employees — the opportunity to work with some of Alaska’s brightest students. Companies must apply to the program to be considered for each cohort, and the number of applicants continues to increase. After companies are selected, prospective interns apply and go through an interview process. Startups participating in the 2019-20 cohort included Gennaker Systems (autonomous aircraft software); The Launch Company (commercial space/rocket launches); The Boardroom (a coworking space serving numerous startups); Launch Alaska (a startup accelerator); Alpine Fit (outdoor apparel); and Legalverse.  Fliss says that the Upstart program differs from what some might consider a typical internship that often includes filing or coffee runs.  “Startups who apply to be part of our program know that students need to be engaged beyond basic tasks — they are part of work that is critical to the success of the company,” Fliss said.  “Because of this, students are a valued member of the team and they learn firsthand what it's like to start and run your own business.” The Upstart Internship program emerged from UACED’s work in the entrepreneurial ecosystem, Fliss says.  “Rates of young entrepreneurs in Alaska are low and falling. Although over 60 percent of 20-somethings say they want to own a business, few of them actually do, and only six percent of Alaska’s businesses with employees are owned by someone under 35. By helping students engage in our startup community, we’re helping them visualize entrepreneurship as a career path,” she said. For some, launching their own company might come sooner than expected. Boren started applying for jobs in February, hoping to find a computer engineering opportunity that would utilize his degree. Initially, he felt like his prospects were promising. The onset of COVID-19 changed that. “All of a sudden there just weren’t jobs to apply for anymore,” Boren said. “The day I graduated, Doyon Drilling — my former employer — laid off more than 300 people. There are less jobs out there, and more people competing for them, for less money.”  He began evaluating other options. During his last semester of college, Boren participated in another one of UACED’s programs, the Upstart Alpha Startup Accelerator, which is also part of the ARCTIC program. Accelerators offer intensive mentorship and experiential learning over a period of 3 to 6 months to a cohort of entrepreneurs. When they “graduate” from the program, participants have ideally compressed years of startup learning into months.   “I was already drawn to be part of Alaska’s startup scene because of my internship,” he says. “And I thought it would be like a mini business school. I wanted to learn from people who had already launched a company, figure out who the players are, and understand business aspects like product market fit.”  During the program, Boren worked on an app called GIF Dat, which creates GIFs using voice recognition. It is the first app in a series that Boren is developing relating to voice recognition.  Other participants pursued concepts like an all-in-one family communication platform, financial literacy programming for businesses, an alcohol-free third space for young adults, a website for concert-goers, a hydroponic food production company, a digital banking service for Nigerians, and bilingual, early-childhood education resources.  The accelerator focuses on building entrepreneurial skills and relationships within the startup community. Not all participants will continue on with their businesses, having learned that their concepts weren’t feasible or sustainable. Boren is one of them. “I realize I probably won’t make any money with GIF Dat, but now I have the tools to work faster on the next product I launch, for myself, or for a company,” Boren said.  Currently, he’s working on a project automating a data mining pipeline for UACED and says that if he needs to he will focus more on launching his own company instead of seeking employment at a company. Over the years, he’s learned a lot about how plans can change, and is comfortable with uncertainty.  “You just never know what’s going to happen, but opportunities will always present themselves,” said Boren. “But what I do know is that I’m always going to be working hard to better myself and my family. And someday, whether it’s sooner or later, I’m going to be my own boss.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for innovation and entrepreneurship. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

Pandemic startups: Two Alaska entrepreneurs take the leap

At a time when businesses across the state are forced to close their doors or are scaling back operations, it seems counterintuitive to launch a business. But is it? As our economy dives back into a recession caused by the combined global forces of COVID-19 and the low price of oil, new businesses are more important than ever. High rates of business closures leave gaps in the market for newcomers ready to fill them, and for those that find themselves suddenly unemployed and facing an uncertain future, launching a business may be a good option. Startups have long been an essential part of Alaska’s economy, responsible for 89 percent of net employment growth in the private sector. Over the last decade, startups in our state consistently added 4,000 to 6,000 jobs to the economy each year. Although experts caution that accessing traditional capital will be more difficult than ever, many founders can launch lean, test the market, and look for funding in the future when they’re ready to grow. And, with unemployment rates at an all time high, there’s no shortage of workers looking for new jobs. Nationally recognized startup accelerator Y Combinator is reporting 15 to 10 percent increase in applications for its summer program, which serves early stage entrepreneurs launching and growing their businesses. In Alaska, the opposite is true: economists are seeing rates of businesses hiring for the first time (most likely startups) declining by a third when comparing April 2019 to April 2020. Entrepreneurship comes in many flavors, but can be sorted into two primary categories: necessity and opportunity. To date, 85 percent of entrepreneurs in Alaska are “opportunity” entrepreneurs, which is about average compared to other states. However, economic downturns are associated with more necessity entrepreneurship, and rates of startups launched because of need may begin to increase. Entrepreneurship born of necessity Like many Alaskans, Seth Stetson was laid off from his job in March. Although returning to his position as director of Marketing and Business Development for Kaladi Brothers Coffee in Anchorage might be a possibility in the future, he didn’t want to wait to find out. Instead, Stetson launched Anchorage Grocery, a special order, bulk food delivery service. Customers place online or phone orders throughout the week, and Stetson delivers their groceries to their doorsteps every Friday. Anchorage Grocery is Stetson’s first business and is a direct result of the pandemic: he needed an income and a way to satisfy his creative drive. While watching consumer behavior change during quarantine, he determined that delivery is the future of grocery shopping. Along with bulk online ordering and delivery, Stetson provides packaging and sanitation services with each order. “I’m giving customers peace of mind by limiting the risk that their food is exposed to COVID-19 and other infectious diseases, bacteria and germs found in traditional public grocery stores,” Stetson said. Before launching, Stetson thought that starting a business took years of planning, saving capital and working with banks. After he was laid off, he decided he was just going to launch and figure it out. It took him 2½ weeks to create a Shopify website, set up an LLC, get an EIN number, open a Sysco account, figure out product margins, and populate the website. “It was really interesting to start a business this way, without having prior experience and doing it in such a short time period,” Stetson said. “I just keep moving forward and getting things done, picking off what I need to do next. And, I’m still adjusting to the fact that if I stop, the business stops. It’s just me keeping it going.” Stetson says he’s getting a lot of feedback from customers that want more Alaska Grown options, which he intends to explore in future. Currently his local partners include Arctic Harvest, Copper River Seafoods, Kaladi Brothers Coffee and Molly B’s Bingerz cookies. He also closely tracks website activity to discern customer interest. “Right now it’s all about the meat — ribeye, ground beef, seafood — along with rice, and some fruit and vegetables,” Stetson said. “These aren’t your grocery store quantities, this is stocking up: 15 pounds of ribeye, 50 pounds of rice. My customers want to fill their freezers and their pantries.” Entrepreneurship born of opportunity When Ross Johnston of Anchorage noted images of sourdough starter and bread flooding social media during quarantine — combined with a nationwide shortage of packaged yeast — he quickly launched a new venture: Ötzi Premium Sourdough Starter. Sourdough, made by the fermentation of a flour and water mixture using the flour’s naturally occurring yeast, is a lengthy process of “feeding” the starter with additional flour and water for hours or days before mixing in other ingredients and allowing several hours of rising time before baking. When store-bought yeast is unavailable for bread, sourdough provides a tasty alternative and has captivated home bakers’ attention in recent months. “I got really into sourdough sometime near the end of summer 2019, and toyed with the idea of selling starter at a Saturday market booth,” says Johnston. “But then I started thinking about how people pay more for unique and novel products, and how sourdough bakers are fascinated by the origin story of their yeast.” Hence Ötzi, named after a mummified man who lived between 3400 and 3100 BCE discovered in a glacier in the Ötzal Alps between Austria and Italy. Ötzi’s stomach contents included processed wheat brain, believed to possibly have been eaten in the form of bread. Johnston thinks the market is ripe for a premium product and likens sourdough to wine, with many varieties and prices points available. Hoping to tap into a customer segment attracted to a high-end product, his starter sells online for $24.99 on its own, or $49.99 for a kit that includes starter, water from glacial ice melt, and stone ground flour, along with instructions for upkeep and how to bake sourdough bread and pancakes. Johnston hopes his products will appeal to people in the Lower 48, hungry for a taste of Alaska’s wide open spaces, pristine wilderness and good bread. He’s already reached a few out-of-state customers and continues to refine his product based on their purchasing preferences and product feedback. Ötzi is one of Johnston’s many entrepreneurial endeavors. As he gauges whether or not the market opportunity he suspects exists is real, he’ll scale the company accordingly. “This specific type of business is fantastic for right now. People are finding time to engage in lengthier rituals like baking sourdough bread and seem to have a greater affinity for the creative process,” says Johnston. “But any time you launch a business, whether you’re in the midst of a global pandemic or not, it’s risky.” Both Johnston and Stetson are gambling that their risks will pay off. For Johnston, that means seeing an idea scale to outside markets. For Stetson, it’s being in control of his future and providing for his family. And for Alaska, it’s the beginning of an economic rebuilding, the glimmering hope of a prosperous future. You can watch Seth Stetson and Ross Johnston present more information about Anchorage Grocery and Ötzi on Wednesday, May 26, at 9 am via Zoom: https://alaska.zoom.us/j/92204612024. Gretchen Fauske is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

A day in the life of an SBDC advisor and a small business owner

On March 28 at 5 p.m., Alaskans across the state retreated to their homes as Gov. Mike Dunleavy’s Health Mandate 011: Social Distancing went into effect. In a mere four weeks, the quickest spike in unemployment in Alaska’s history ensued, with more than 50,000 jobs lost. About one in seven previously employed Alaskans are now out of work. Those numbers are expected to increase as efforts to flatten the COVID-19 curve continue and businesses keep making cuts to stay afloat. Many small businesses are turning to the Alaska Small Business Development Center for assistance as they apply for federal aid and try to plan for an uncertain future. The Alaska SBDC estimates that requests for assistance increased 250 percent from an average month. Meet the Alaska SBDC’s Julie Nolen, Assistant State Director and Matanuska Susitna Director In July 2020, Julie Nolen will celebrate 11 years as an SBDC Business Advisor. She was born into small business; her family owned The Bagel Factory and Deli in Anchorage during the 1980s. Nolen grew up learning day-to-day operations from her parents while developing the beginning of a lifelong love for small business. “They’re the lifeblood of our communities,” Nolen said. “Not only do they provide jobs and essential services, they create our culture. And there’s a sense of pride that goes along with owning a business, a sense of working together for the common good… I love being able to contribute to that.” At the SBDC, Nolen excels at taking the complicated parts of running a business — from applying for loans to writing a business plan — and turning them into simple, achievable steps. Along with her full-time, busier-than-ever job, she is helping her second-grade son Alex finish up the school year at home and navigating the challenges of settling into a new working from home routine with her husband, Andy. 7 a.m. As soon as the alarm rings, Nolen grabs her phone and checks email. She begins writing responses as she makes her first cup of coffee, relishing her quiet time and the chance to get some work done before the rest of her family wakes up. 7:45 a.m. Nolen makes her son Alex’s breakfast. He likes “toad in the holes” (a slice of bread with a fried egg in the middle) and after he finishes eating she gets him started on his schoolwork. 8:15 a.m. Despite working from home, SBDC’s advisors communicate regularly. Each day begins with a visit to Google Chat’s “water cooler” feature that the team uses for internal conversations. Nolen says the morning check-in is the easiest way for them to share knowledge and stay up-to-date regarding the news of the day. One of her colleagues calls into a 4 a.m. Small Business Administration briefing every morning and updates the rest of the team on changes to federal relief programs. 8:30 a.m. Nolen checks in with the other members of the SBDC leadership team to discuss staff’s remote work schedules and how to meet the increasing demand for their services. SBDC is in the process of hiring temporary administrative staff and business advisors to serve clients. “Our advisors are working all day every day — previously we worked a standard 8 hours, but now we have to take a different approach to everything: the hours we work, the way we advise, the content of advising, how we communicate with clients and the public,” Nolen said. Pre-COVID-19, client meetings lasted 45 minutes to an hour, sometimes longer. Now, advisors try to get their clients the information they need in as short amount of time as possible without losing a personal touch. “Our clients know we’re slammed,” Nolen said. “They don’t expect the same kind of conversation we normally have, but they also know that if they really need us, we’ll give them the time. Some people are struggling right now, and if we can help them through, we will.” Many clients are facing bankruptcy and the permanent closure of businesses they’ve spent years pouring their time, money, and passion into. SBDC advisors are doing their best to help them access federal relief programs, which many business owners have found challenging to navigate. 9:30 a.m. Nolen spends the next few hours meeting with clients and following up on emails. She says she hasn’t helped someone with a business plan — previously a focus of her work — in six weeks; now, 95 percent of her time is COVID-19 related, helping businesses prepare to apply for the SBA’s Paycheck Protection Program or Economic Injury Disaster Loan Program. On Friday, April 17, the SBA announced these programs are no longer accepting applications due to expended funds. Shortly afterward, the Alaska SBDC posted on Facebook that they are confident Congress will pass another relief bill, and encouraged businesses to prepare the documents they will need to access federal relief programs, reduce operating costs and take advantage of any existing financial programs they qualify for. 1:15 p.m. Switching gears to “mom mode,” Nolen makes ham sandwiches for lunch and checks Alex’s progress on his schoolwork before diving back into advising work. 2 p.m. It’s time for dueling Zoom meetings! Nolen says Zoom meetings are a bit of a challenge when working and parenting simultaneously. “When it’s time for Alex’s second grade class Zoom meeting, it’s his chance to see his friends and teachers and he’s really excited for that kind of attention. I do my best to block out the noise,” Nolen said. “When it’s my Zoom meeting, sometimes he pops in and out — I was in a meeting with MTA executives and he was in the background, but everyone just laughed. We’re all going through it together.” Nolen says that the balance between working and teaching is really hard. She feels guilty about not being able to give him more of her time but is operating in “crisis mode” for her clients. “I feel better when I see my husband Andy coming up with fun lessons like ‘shop class’ when they work in the garage together. I don’t know how single parents can do this,” she said. 3:30 p.m. Nolen joins a meeting with Mat-Su Assemblywoman Stephanie Nowers to discuss a survey of borough businesses that will help guide COVID-19 recovery efforts. Both women serve on the Assembly’s recently revitalized economic development committee. 4 p.m. After quickly checking the news and social media to see if there are any updates about SBA programs, Nolen is ready for more client meetings. 5 p.m. While getting dinner started, Nolen tunes into the State’s COVID-19 briefing and continues to check email on her phone throughout the evening while her family settles in for movies on the couch. “I’ve been feeling a lot of anxiety, and it’s hard for me to unplug and relax; the lines between work and home feel really blurred,” says Nolan. “And, anything I don’t get done in the evening is waiting for me in the morning…we’re so busy that I’m barely able to keep up with the number of inquiries that come in overnight.” Despite her own tendency to work long after 5 p.m., Nolen has been encouraging staff to minimize overtime. “It’s not easy talking to small business owners who are worried about their futures, especially people who own seasonal businesses and might not be able to open,” says Nolen. “We’re business advisors but quickly become informal counselors. Clients talk about their troubles and we witness their suffering. A lot of clients call us in tears. We’re glad we can be there for them but we have to preserve our mental health too.” For Nolen, that means making the occasional escape to her cabin near Skwentna. “We went out last weekend, it’s snowmachine-in only and it felt so good to be out there. I put in my ear buds piping with John Prine tunes, got some fresh air… it was beautiful and I had so much fun. Just leaving work behind really recharged me.” 9 p.m. Nolen is in bed, trying to get rest before starting another day serving small businesses in Alaska. Work has been challenging, but Nolen’s overarching feeling is pride in the SBDC team. “Everyone is stepping up, everyone is helping out. When one center is overloaded another center jumps in to help. We’re meeting this challenge head on, together.” Meet Seward Brewing Company’s Co-Owner Hillary Bean Hillary Bean and Erik Slater purchased Seward Brewing Company from its original owners in 2014. Longtime members of Alaska’s hospitality industry, Bean leads operations while Slater oversees the brewery and culinary side of the business. Together they serve hundreds of visitors and locals during their five month season that runs May through September. Boasting four flagship beers — Rockfish Red Ale, Inked Out Stout, El Jefeweizen Chile Wheat, and Pinbone IPA — along with other specialty brews and what Bean says is the best burger in Alaska, more than 850 people visit the brewery per day at the height of the season. “The income we generate in the summer months sustains us for the whole year,” says Bean. “Starting two months late is a real kick in the gut when you are only open five months total.” Although they prefer to be seasonal workers, for the last three years Bean and Slater operated another restaurant in Seward, Chinooks, which is open year-round. The couple also operates employee housing for some of the brewery’s seasonal workers as a separate business. “We were planning to use the income from Chinooks to tear down the old employee housing and build something eco friendly that can be shut down in the winter,” says Bean. “Instead we’re using our savings to stay financially stable this year.” Although putting their plans for the housing project on hold is disappointing, Bean feels fortunate that she’s able to stay operational for the foreseeable future. Many businesses are facing a much more dire situation. According to a survey by the U.S. Chamber of Commerce, nearly half of businesses nationwide say they have less than six months until a permanent shutdown is unavoidable. 8 a.m. The first thing Bean does in the morning is grab her phone to read the news and scroll through Facebook, looking for COVID-19 updates, the latest from the White House, and a bit of pop culture for levity to balance a general sense of anxiety. “It’s like I’m going through the stages of grief — mad, sad, scared, resolved — but you can’t really get resolved because everything keeps changing,” says Bean. “Will we be able to open our dining room? How much is tourism going to drop this year? What does this mean for next year? I can’t even speculate right now, but I’m not banking on pulling in nearly the amount we did last year.” 9 a.m. Bean heads out for a walk around her neighborhood to keep her stress levels down, and then home to check on her 16-year-old daughter, Rowan. After answering emails, Bean logs into her bank account to see if any federal relief funds have been deposited. She applied for the PPP loan earlier this month through First National Bank Alaska, with assistance from Nolen. “I’ve limited myself to checking once a day,” says Bean. “But I’m monitoring it closely because we usually have income and without it the balance can get really low. I have about four different business plans in my head depending on what happens with coronavirus.” Although she hasn’t received federal funds yet, she knows they are on their way. “The bank’s branch manager, Melissa Schutter, called me to let me know we were approved! My husband texted our chef right away; she said she had tears of relief in her eyes knowing she would get paid in May,” Bean said. 10:30 a.m. Along with New York-style bagels for breakfast (obtained by trading flour and banana bread with a neighbor) Bean makes Slater a French press of coffee, which he drinks before heading to Seward Brewing Company. Earlier this year, a sprinkler in the brewery broke and three floors flooded, necessitating repairs to electrical panels and the elevator shaft. Bean spends some time on insurance paperwork and checks in with the brewery’s general manager. “I’m glad we’re able to take care of repairs now, during shoulder season while the town is on lockdown,” says Bean. “The busiest part of the season hits June 15 and we have 90 days to make money. The Fourth of July is definitely our busiest day of the year. It’s crazy to think we won’t have Mount Marathon and the crowds of the people coming to town for it this year, but I know the Race Committee thought long and hard before making that call.” 2:30 to 3 p.m. Bean’s daughter finishes school for the day, and they have a snack and hang out. 3:30 p.m. Bean balances the checkbook for both businesses — Seward Brewing Company and Employee Housing — as well as her personal checkbook. Once she’s done, she spends some time on her newest hobby, puzzles. “In a normal year, employees would be coming into town, I’d be getting all their paperwork going, getting the house ready for them,” says Bean. “We would be getting the brewery cleaned and ready for opening. Instead, I’ve become a puzzle nerd.” Seward Brewing Company typically employs 52 people during their operating season. Although Bean is unsure of how that number will change this year, she said it will definitely decrease. 6 p.m. “My husband is a chef and makes dinner every night, so we’ve been eating really well,” says Bean. “We try to do one big store run every two weeks and a quick trip for fresh ingredients once a week.” 7 p.m. After dinner, the family plays board games — Scrabble, Scattergories, Trivial Pursuit, (Monopoly was banned after games got too cutthroat) — and then watches a movie. 12 a.m. Bean goes to bed but lies awake until 2 a.m. watching Ancient Aliens, which she says keeps her from thinking about more somber subjects. To other business owners facing the same challenges as the Seward Brewing Company, Bean’s advice is to throw out previous years’ business plan. “I’ve heard it might take three years or more to build back up. You have to think out of the box. Keep your overhead low and payroll down to survive the next couple seasons. Whatever you are feeling right now, I can validate it. I’ve felt it myself.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

How COVID-19 is impacting Anchorage’s small business — and what you can do

A few months ago, Jasmin Smith closed her longtime venture The Business Boutique to focus on Baby Vend, her startup business offering supplies for babies and children via vending machines. As if launching a startup wasn’t enough, in January she also opened a co-working space, Umoja, in Mountain View. Smith poured her extra income into each of these ventures, confident that a steady revenue stream from teaching entrepreneurial classes and hosting the occasional event would keep her cash flow stable until her startups started to turn a profit. That quickly changed as the impacts of COVID-19 swept the globe. Smith’s teaching contract was canceled when the program and events she was planning were put on hold. As a single mother of young children, her options for temporary work are limited by the need for childcare. “Even if it’s just for a short time, the impacts are scary,” Smith said. “My monthly income is dipping but home and business bills are due at the beginning of the month. I have some savings, but those will start to go quickly.” Todd Grebe, a local musician, is similarly worried. He is already feeling the impact to his various income streams, which include performing, selling his music online, teaching, running an Airbnb, and driving for ride sharing apps. “I’m torn between making money in order to provide security for my family and being morally/ethically responsible to society at large,” Grebe said. Grebe also just invested in recording a new album. Typically, he would release it alongside live shows, but he worries if online presence alone will be enough to pay it off. “I’m trying not to stress too much, but at some point this is going to get really bad,” Grebe said. Looking outside for guidance In Seattle, “really bad” has already arrived. Currently the epicenter of the COVID-19 outbreak in the U.S., small businesses are reeling from the impacts. A Seattle survey published on March 12 showed that 80 percent of small businesses are reporting a drop in demand. Additionally, 60 percent of small businesses are considering wage reductions and staffing cutbacks, and 35 percent say they may be facing closure. The majority of respondents noted that they expected circumstances to worsen, and on March 16, they did. Washington Gov. Jay Inslee signed a statewide emergency proclamation to temporarily shut down restaurants, bars, entertainment, and recreational facilities. Restaurants are still able to provide take-out and delivery services, and the ban does not apply to grocery stores and pharmacies, but the business losses will be substantial. To help mitigate the impacts of COVID-19, the City of Seattle is working to help workers and families, deferring payment on business taxes and utilities, setting up a Small Business Stabilization Fund and providing assistance to access federal aid. Restaurants On March 16, Anchorage Mayor Ethan Berkowitz followed Inslee’s lead and signed an emergency order to require bars, breweries, and restaurants to halt dine-in service for food and beverage. Drive-thru, take-out, and delivery services are still allowed, and grocery stores are not impacted by the emergency order. “By making sacrifices now, we reduce the likelihood that we will pay a larger cost later,” Berkowitz said in a statement. “These closures are consistent with CDC recommendations and with our strategy of doing what we can to reduce the possibility of transmitting COVID-19. As a friend told me, ‘It will be impossible to know if we overreacted or did too much, but it will be quite apparent if we underreacted or did too little.’ ” Many restaurants were already offering increased pick-up and delivery service. Here’s a sampling: • Fire Island Bakery and Market Juice are taking phone orders for pickup and staff will deliver your order to your car. • Kincaid Grill is offering a 20 percent discount on pickup orders. • 49th State Brewing Company has an online order and pick-up option that includes crowlers. • The Chicken Shack, which was already using third party delivery apps GrubHub and DoorDash, added a private delivery option to limit the number of people who come in contact with your order. Retail Although retail stores have not been given a mandate to close, business is slowing. Kim Stalder, owner of downtown Anchorage clothing store Circular Boutique, says she didn’t have a single customer walk through her door on March 13 when the first case of COVID-19 was announced in Alaska. “I think they were all at Costco stocking up,” Stalder said. On March 14, foot traffic increased to seven shoppers, but she’s unsure how long people will continue to come. “One of my regulars came in today, like she does every Saturday,” Stalder said. “This time she let me know she wouldn’t be visiting for a while.” Stalder says she doesn’t want to temporarily close and is trying to make sure her customers feel comfortable by providing hand sanitizer upon entry and taking extra care to wipe down all hard surfaces after each shopper leaves the store. “I’m also offering private shopping by appointment, and will ship orders to people or deliver directly to their homes,” Stalder said. However, if the Fifth Avenue Mall closes, as a tenant she’ll be forced to as well. Another mall tenant, the Alaska Salt Company, announced on March 15 they will be closing until further notice. “This was not a fun decision to make,” owner Britni Siekaniec wrote in an Instagram post. “It seems like we JUST got this place put together, fully staffed with wonderful people and ready for a booming summer. Now, it feels like the first day of winter. As a small business that is sustained by a seasonal, tourist market, our future is looking quite uncertain.” Siekaniec is encouraging customers to shop online until their retail space opens again. Health and entertainment The Anchorage ban also included gyms and entertainment facilities like theaters, as well as prohibiting gatherings of 50 people or more through March 31. Courtney Lyons, an instructor for Anchorage Yoga and Cycle and a bartender at Spenard Roadhouse, will be out of work for at least two weeks. She supports Berkowitz’s decision to issue the emergency order. “I’m not really upset about the impact that it will have on me. It’s more important to protect vulnerable people in our community, and if this is the step we need to take to prevent the spread of the virus, if this saves one life, that’s what’s most important to me,” Lyons said. Skinny Raven Sports postponed the Shamrock Shuffle — a popular annual foot race — and put Pub Runs on hold until the end of March, but is keeping retail locations open. They’ve also updated their website for online shopping with direct shipping, and will make deliveries to Anchorage residents placing phone orders. Owner Daniel Greenhalgh says that he’s planning to temporarily close if necessary. For now, people needing gear to get outside for fresh air and exercise have options for shopping. How the federal government is helping The U.S. Small Business Administration is working directly with state governors to provide targeted, low-interest loans to small businesses and nonprofits via the Economic Injury Disaster Loan program. These loans may be used for fixed debts, payroll, accounts payable and other bills that can’t be paid because of COVID-19’s impact, and offer long-term repayment options. In an unprecedented move, the Federal Reserve announced that it would be dropping interest rates to zero and buying at least $700 billion in government and mortgage-related bonds, as well as giving generous loans to banks so they can offer small businesses and families loans to keep financial markets stable and support businesses. Additional updates include: • The Centers for Disease Control and Prevention has compiled a list of recommendations for employers, ranging from capital access and workforce capacity to inventory and supply chain shortfalls and insurance coverage issues. • The U.S. Department of Labor Occupational Safety and Health Administration prepared “Guidance on Preparing Workplaces for COVID-19” based on traditional infection prevention and industrial hygiene practices. The document focuses on how employers can implement entering, administrative and work practices controls. • Congress is working to pass the Families First Coronavirus Response Act to provide a number of resources to individuals and businesses. How individuals can help Alaskans wanting to support local businesses while staying home can shop online or purchase gift cards to use later. Those with the financial means may want to consider tipping extra or opt to pay for services they choose to cancel — like babysitting, house cleaning or hair appointments — or continuing to pay their membership dues for gym membership and exercise classes. Regardless of circumstance, gratitude always makes an impact; send a thank-you note or leave an encouraging comment on social media. Practicing social distancing can end up isolating us when we need connection the most; fortunately, technology that can help bridge the gap. Despite the uncertainty, Stalder feels confident in her community. “As a lifelong Alaskan, I’ve seen firsthand how Alaskans support each other in times of need. I feel certain we’ll see that during this crisis.” And, as Grebe says, “This is Alaska after all, and if there is anywhere in the world with a better can-do attitude than ours, I’m not aware of it.” ^ Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

Small Business Survey results show uncertainty amid recovery

Economists generally agree that Alaska’s recession is over, but small businesses — often the first to feel a downturn — are still recovering. The Alaska Small Business Development Center Annual Small Business Survey, to be released this week, measures the overall health of small businesses in the state and offers a look at how they are fairing post recession. Alaska SBDC Executive Director Jon Bittner says that he’s particularly interested in how the survey results identify barriers to business. “Considering that 99 percent of business in Alaska is small business, things that slow or hinder their growth really impact our economy,” said Bittner. “During a recession or times of economic uncertainty, small businesses are hit first, and hardest.” The top three barriers to small businesses remain the same as previous years: 1. Operating costs 2. Finding capital 3. Finding employees Operating costs Dawn Walsh, who co-owns Anchorage retail shop ShuzyQ with her daughter, Shawna Rider, is well acquainted with the cost of doing business in Alaska. She’s been a boutique owner for the last 15 years, and says that operating expenses present the biggest challenge to their business, specifically shipping costs and logistics. For a company that orders inventory — shoes, handbags,and other accessories — from across North America and Europe, the balance between paying bills and receiving freight is a delicate one. “We have some vendors who require us to pay our bills within 30 days, but it can take up to three weeks for freight to arrive and process,” she says. “This week, deliveries are delayed — Span Alaska called to give us a heads up that storms were impacting shipping from Seattle. You can’t always plan for that kind of thing.” She also says that high costs of shipping make special orders for customers prohibitive, especially when many online retailers offer fast, free shipping. Bittner agrees, noting that shipping costs, which become increasingly expensive the farther you travel from Alaska’s urban centers, are consistently cited as a major challenge by businesses across the state. “This is the kind of issue that needs a solution on a larger level; solving the shipping challenge is a very difficult thing for the private sector to do on its own,” Bitter said. “If the state of Alaska wants to grow the economy, this is the kind of fundamental work that could really change the landscape for small businesses.” Finding capital Access to capital is a consistent barrier for small businesses. Twenty-five percent of Alaska SBDC survey respondents said they were seeking funding, with fixed capital for new equipment and building renovations being the greatest need followed by working capital for operations. Of those 25 percent, only half of them received funding, and more than half of survey-takers expect it to be difficult to obtain financing in 2020. Bittner says that he sees an interesting shift in the sources of funding. “This year, friends and family were the No. 1 source of funding for businesses; in prior years it was bank loans. We’re also seeing a surge in people seeking other non-traditional forms of finance like online lending, angel investing, and crowdfunding.” Although bank loans are generally considered some of the best funding for a small business because of their low interest rates and dependable process, they can be difficult to attain, especially for businesses just starting out or those with an uncertain financial future. Capital from friends and family, online lending, and crowdfunding aren’t as strict in their lending requirements, but can also carry more risk for the business. Bittner notes that angel funding is also difficult for businesses with uncertain prospects to obtain. ”This year we saw a huge jump, percentage-wise, in applications for angel funding but no increase in actual investments.” Finding employees Recent Department of Labor data shows that Alaska’s population is shrinking due to a combination of outmigration, decline in birth rates, and increase in death rates. Less people means less workers, making the competition for qualified employees fierce, and a strong economy in the Lower 48 makes it hard to attract new talent to the state to fill the gap. Fifty-six percent of survey respondents say it is very or somewhat difficult to hire employees, the biggest reason being a lack of qualified applicants. “During the last three years, lack of qualified applicants has been split evenly between applicants that lack technical skills and those that lack soft skills,” says Bittner. “Lack of technical skills is hard to address. There’s only 700,000 of us in Alaska, and we can’t have homegrown specialists in everything, but the strong economy in the Lower 48 is making it harder to attract what we don’t have to the state.” He sees the lack of soft skills as a fixable problem that can start to be addressed during K-12 education, and identifies it as one that the state could solve by partnering with the private sector to invest in helping students become career-ready. Hiring qualified staff hasn’t been an issue for Walsh. “We’ve been really fortunate that people want to work for us,” she said. “When I ask my employees what they like about working at ShuzyQ, it’s always the customers. Plus, people come in because they want something to make them happy, and helping them find it is very rewarding.” Additionally, Walsh says that ShuzyQ pays competitive retail rates and offers bonuses and flexible schedules to attract and keep employees. Confidence in Alaska’s economy The survey also measures business owners’ confidence in the economy. In general, business owners are more optimistic about their own businesses than they are about the economy as a whole. When it comes to the economy, respondents are split roughly into thirds: they are equally likely to think the economy will improve (31 percent), worsen (33 percent), or are just uncertain (36 percent). However, the number of businesses marking “yes” to whether or not they have confidence in the state economy dropped 16 percent from 2018. “It’s interesting that we’re seeing declining confidence in the economy while at the same time most economists are agreeing that we’re coming out of the recession,” says Bittner. “For this level of pessimism, there must be another factor contributing to business owners uncertainty.” Walsh thinks she might have the answer, for some retailers at least. “This year was really challenging for us,” Walsh said. “We had the heatwave, and we ran out of sandals but couldn’t sell other shoes. BP announced they were leaving Alaska, Nordstrom closed which wasn’t good for retail overall, and online shopping is always our biggest competitor. “But the biggest impact was when the budget came out at the end of June. People came back to the store to return their shoes, they were frightened and worried, some of them got pink slips. Politics definitely plays a role in stability, and we’ve been told that election years are harder on retail.” Economic uncertainty is a sizable barrier to small business. “You can plan for good times and you can plan for bad times, both are acceptable and viable parts of being a small business,” says Bittner. “But the hardest thing for a business to deal with is uncertainty.” He sees businesses not planning for growth and instead focusing on trying not to contract. “Instead of working to increase market share, people are using their capital to pay for operating costs to try to hold the line,” Bittner added. “The state needs to provide them with a clear vision on what’s to come, and offer stable taxes, a clear regulatory environment, and a strong economic plan for the future.” Walsh says her team had to work harder than ever before just to keep the numbers similar to years prior. Despite the challenges, ShuzyQ finished 2019 within $1,000 in gross sales of 2018. Profits are still down 10 percent from pre-recession, but now Walsh considers these numbers her “new normal.” Signs of economic opportunity “Last summer I was very distraught, very concerned about the future of small business in Alaska because of the economy. It’s scary being a business owner,” says Walsh. “But now I have a lot more confidence than I did six months ago.” Along with a strong quarter, she’s seeing more people get involved in their communities and local politics, and points to efforts in Anchorage to invest in downtown along with new housing developments — meaning more small stores and coffee shops springing up nearby — as signs that things are turning around. Bittner is also optimistic. “I still think that the Alaska economy has a lot going for it. There are strong growth opportunities in health care and tourism, and to a smaller extent in manufacturing. There are also interesting new prospects in the resource extraction industry as well as in renewables and energy efficiency. Military/federal spending is also going to be a boon, especially in the interior and rural Alaska,” he said. “All of this could lead to more economic opportunities for those who are willing to take advantage of them. If anyone has the wherewithal to overcome the barriers to doing business in Alaska, it’s Alaskan entrepreneurs.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, board president for Launch Alaska, and a Gallup-certified CliftonStrengths coach.

An entrepreneur’s journey: Failure and resilience

Editor’s note: The following includes excerpts from the University of Alaska Center for Economic Development’s The Failure // Resilience Project brief, which explores elements of entrepreneurial failure via a combination of storytelling and research. The full brief is available at ua-ced.org/reports-and-projects. A companion film featuring 10 Alaskan entrepreneurs sharing their stories of failure and resilience will be shown at the Bear Tooth Theater as part of the One Course Discourse series on April 17 at 12 p.m., followed by a Q&A session with entrepreneurs. Bill Popp had a stable job at Safeway and was on the management track. If he stayed the course, he was well-positioned to climb the company rungs—except he didn’t want to. He wanted to stay in Soldotna and own a music store. After consulting with his wife (who also worked at Safeway) in October of 1990, Popp cashed out his 401(k), applied for and received an SBA-secured loan, and opened Toonz: an 800 square-foot music retail store with two employees. Success happened fast. “We hit a nerve with consumers, and blew out our inventory that first Christmas season. There wasn’t a piece of music left on the shelf after New Year’s Eve. We definitely found a market need that wasn’t being met until we came along,” Popp says. Within three years, Toonz had grown to nearly six times the size of the original store, filled with music and books in Soldotna. Popp opened an 1,800 square-foot location in Homer, and between both stores, he employed 23 people. In 1992, Popp was named the Soldotna Chamber of Commerce Small Businessperson of the Year and received a legislative citation for his work and philanthropy. Gross sales exceeded $1.1 million three years later. “I was the Toonz guy,” says Popp. “The guy people went to for community contributions, the go-to music and books guy. It was happening.” Then, it wasn’t. Caught in a price war between box chain stores, Toonz was out of business by the end of 1996. In retrospect, it ended quickly, but Bill remembers it as a long and painful descent. “We tried every marketing tactic, everything,” Popp says. “It staved off the inevitable but the sales volume kept going down and I didn’t recognize the truth in front of me. I kept thinking, ‘Tomorrow is another day, customers will see our value…’ but they didn’t.” After closing, Popp made his final payroll and paid his taxes, but had to break his lease, resulting in filing for personal bankruptcy. He helped the banks liquidate his business and sell the assets, and was able to restructure debts to keep his home. “It was crushing, and I was damn near clinically depressed. I invested every part of my being into the business, poured my blood, sweat, tears and passion into it. Toonz was inextricably intertwined with who I was,” Popp says. “And then after we went out of business I felt about two inches tall. I didn’t want to go out in public or see friends.” Life went on, and Popp returned to work — this time for Fred Meyer. “I may have failed in business but there’s no shame in honest work and I needed to do my part with my wife to take care of our family,” he says. Working at the grocery store gave him a steady income and time to grieve his business closure until he finally made peace with it. “I embraced the fact that I had just failed spectacularly, owned it, and wasn’t ashamed of it any more.” Popp’s story is not unique; in fact, research shows that half of businesses fail during the first five years. Alaska Business Failure Rates 27% of new businesses fail during the first year of being open 35% during the first two years 42% during the first three years 47% during the first four years 52% during the first five years. Source: Business Dynamics Statistics, CED calculations Businesses close for a number of reasons. CB Insights analyzed 101 startup failures and identified the top 20 reasons startups fail. The Top 20 Reasons Startups Fail 42%: No market need 23%: Ran out of cash 23%: Not the right team 19%: Get outcompetes 18%: Pricing/cost issues 17%: Poor product 17%: Need/lack business model 14%: Poor marketing 14%: Ignore customers 13%: Product mis-timed 13%: Lose focus 13%: Disharmony of team/investors 10%: Pivot gone bad 9%: Lack of passion 9%: Bad location 8%: No financing/investor interest 8%: Legal challenges 8%: Don’t use network/advisors 8%: Burn out 7%: Failure to pivot Source: CB Insights A pivotal point Failure is a pivotal point in an entrepreneur’s journey. Their response to failure — and their experiences immediately following failure — will influence whether or not and how they pursue new ventures, as well as impacting the success of those ventures. Studies show that “[I]f the costs of failure (i.e., financial, social, and psychological) are too high compared to the benefits of learning from failure, entrepreneurs may choose to exit their entrepreneurial careers.” Other entrepreneurs take failure in stride, applying the lessons they learned to their next startup, or funding a way to pivot in pursuit of their dream. Anchorage restaurateur Laile Fairbairn vividly remembers the disappointment she felt when she narrowly missed out on securing a location on G Street in Downtown Anchorage for her first restaurant, Snow City Cafe. “I was crushed… I had to walk away from that space and I was convinced that it was over, that was it. I still remember walking across the street with my attorney and crying. He had to stop in the middle and give me a hug, then Mom came over that night to give me a hug, friends were reaching out to commiserate. My dream was dead at that point. It felt like it was time to move on, this is not going to work out.” But instead of giving up, Fairbairn took some time to readjust her vision and eventually opened her restaurant at Fourth Avenue and L Street. Today, it seems almost laughable to think of Snow City and failure in the same sentence. After all, the restaurant has been voted “Best Breakfast” by Anchorage Press readers since 2003 and Anchorage Daily News readers since 2006. The line to dine regularly stretches out the door, and even President Obama stopped by for cinnamon rolls when he was in town. And yet, if Fairbairn’s response to that first failure had been to give up, Snow City wouldn’t exist today. Since then, Fairbairn has continuing expanding to open other restaurants, including Spenard Roadhouse and South Restaurant and Coffeehouse. Most recently, she became part owner of Crush…located in the very spot on G Street she missed out on all those years ago. Learned optimism According to research, serial and portfolio entrepreneurs are less emotionally attached to their businesses, and posses an adjusted optimism bias and with more resistance to psychological costs. A former professional athlete, Andre Horton says that though he dealt with failure every day, each time was an opportunity to learn what to do better. The experience helped him develop “learned optimism.” Entrepreneurs displaying this trait are more likely to make sense of failure as a useful experience, motivating them to engage in future entrepreneurial activity and to see adversity as a challenge. According to Horton, “Ski racing can be a gamble, but winning the race is worth it. The irony is that I lost more races than I won. I have also failed at business more than I have won. Then again, in athletics, losing just makes you a better winner…the same goes for business. They key is that the athletic ‘losers’ have to be optimistic to keep trying, as eventually they will win. Same for business.” Horton has launched six businesses to date, with two still operational: Haka LLC a bespoke business consulting (and sometimes lobbying) agency and Andre Horton Photography. He also is currently a firefighter for the Anchorage Fire Department. Using lessons learned to help others As for Popp, he eventually moved on to a job developing the Challenger Learning Center of Alaska, served as a Kenai Peninsula Borough Assembly member from 1996 to 2002, and later worked as the oil, gas and mining liaison to the KPB Mayor. Today, he is the president and CEO of the Anchorage Economic Development Corp., where elected leaders and members of the media often seek his opinions on issues about the economy and business community. Popp says his experience as a business owner — from the high of rapid growth to the low of bankruptcy — informs his work as an economic developer. He takes pride in offering businesses the kind of impartial counsel he could have used back in the ‘90s, providing data, perspective, and advice on possible paths to pursue to local entrepreneurs. Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, and a Gallup-certified CliftonStrengths coach.

Understanding the military’s role in Alaska’s economy

On May 13, 2005, Fairbanks residents awoke to a startling possibility: the loss of as much as a third of the borough’s population. The reason? The Department of Defense Base Realignment and Closure Commission, also known as BRAC, proposed to withdraw 2,821 troops from Eielson Air Force Base and transfer the aircraft of the 354th Fighter Wing to Nevada, Georgia, and Louisiana. This would mean an exodus of families, civilian employees, contractors, and the closure of untold numbers of businesses. BRACs are used by DoD to reorganize its bases for increased operational readiness and efficiency; Eielson made the list because of high operating costs. But Alaskans had long been told that our bases play an essential role in the nation’s defense strategy for the Pacific Region due to the ability to rapidly deploy to hotspots and were surprised that the military was changing course. The idea that Eielson AFB, which at the time of the proposed closure had been part of the Fairbanks area for 60 years, could be reduced to a skeleton military crew with what felt like a swiftly-made and ill-reasoned decision, was shocking. It spurred the community to action. Fairbanks Economic Development Corp. President and CEO Jim Dodson helped lead the effort. Back then, he was a local businessman who had been raised with an appreciation of the military, attending “in the home” military appreciation dinners as a young man and eventually hosting his own. He also served in the Special Forces during the Vietnam War, giving him perspective about how the military functions as an organization. Recognizing that his hometown’s economy would be devastated by the BRAC, Dodson and then-Mayor Jim Whittaker created a team to fight the closure, and enlisted Sen. Ted Stevens, Gen. Mark Hamilton (retired from the military, Hamilton was the president of the University of Alaska at the time), and other Alaska leaders in the fight. “I knew that if the BRAC went through, you’d see this community dry up and go away — 30 percent of the population, 38 percent of our payroll — that’s just too much of our community to lose,” Dodson said. “You would see businesses close, homes being foreclosed on. I didn't want that to happen to Fairbanks.” As part of the BRAC process, the commision in charge held a series of public meetings in communities with military bases on the realignment and closure list. The first meeting was in Fairbanks, where the commissioners were greeted by a crowd of more than 3,000 people, all wearing red T-shirts emblazoned with “America Needs Eielson.” The Pentagon, under intense pressure from the community and the congressional delegation, announced that fall that Eielson AFB would remain open. “We changed their minds,” Dodson said. Today, it’s a victory to look back on —  a story told to show how a small community fought for their future —  and won. Dodson says that the borough changed for the better after 2005. “Before, Senator Stevens was really the one making sure the military was in Alaska,” Dodson said. “But after the ‘Save Eielson’ campaign, we all recognized that Eielson AFB, Fort Wainwright, and Clear Air Force Base are a huge part of our economy. Since then, we have been very proactive in supporting the military’s presence in Fairbanks.” Although many Alaskans have been slow to recognize the importance of the military to Alaska, the economic impacts stretch back before statehood. During World War II and the early-Cold War, Americans migrating to the territory of Alaska reshaped the pre-statehood economy. By the mid-1950’s, as much as 40 to 45 percent of Alaska’s population was tied to defense operations as active duty, civilian support, contractors, and dependent family members. The military built roads, airfields, and ports still in civilian commercial use today, and invested heavily in scientific research at the University of Alaska. Prior to North Slope oil production, the military’s economic role dwarfed all other private industries, including mainstays like mining and fisheries. “The military drove the economy of Alaska in the ‘50s and ‘60s to an even greater degree than oil and gas does today,” says Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development. “The economy completely centered around military in those days. People who came for mining and fishing lived the sourdough lifestyle — off the grid, single men for the most part. The military brought families to the state, and with them, mainstream America came to Alaska. They wanted housing, neighborhoods, schools, places to shop, and entertainment.” Today, Alaska’s economy and population are more diverse, but the military still plays a major role. The roughly 29,000 active duty, National Guard, reserve, and defense civilian personnel is the equivalent of about nine percent of the state’s workforce, though official employment figures do not generally count service members. In the 2017 Fiscal Year, the DoD spent more than $4,000 in Alaska for every resident — more than double the amount of the 2019 Permanent Fund Dividend. And yet, there’s still opportunity to grow the relationship for the benefit of all involved. Klouda is leading a study funded by the DoD Office of Economic Adjustment to better understand the role of the military in Alaska’s economy, and the opportunities on which Alaskans have yet to capitalize. The Alaska Defense Industry Resilience Initiative will identify barriers and vulnerabilities to defense sector firms; help decision-makers and community leaders better understand community sensitivities to changes in defense activity; identify types of assistance needed by defense firms; and identify assets, resources, and stakeholders to support resilience of defense firms. “"The military is a huge investor and employer in the state, and we need to remember that when we think about economic development strategies." says Klouda. Dodson agrees. “It’s one thing to get a military mission, but then you have to figure out how to make the most of it economically,” Dodson said. Although past military impacts were often seen in funding large-scale infrastructure improvements — rebuilding the railroad after WWII and building the Parks Highway to connect Anchorage and Fairbanks — today, technology offers additional economic opportunity. Nationally, the military has been a patron of technology development; the first computers and the internet are just two critical examples. More recently, military technology focused on unmanned aircraft systems, or UAS, has spurred business and educational opportunities in Alaska, along with the creation of the Alaska Center for UAS Integration at University of Alaska Fairbanks. Similarly, military research can spur innovation. Dodson points to the new Long Range Discrimination Radar, or LRDR, at Clear Air Force Station as an example. An LRDR is capable of detecting ballistic missiles en route to targets in the US or allied nations. It will also be gathering non-missile information, 99 percent of which will not be classified, according to Dodson. “There’s an opportunity for UAF or others to use that information to help Alaska understand weather patterns in the Arctic, migration of waterfowl, and more,” says Dodson. “It could have tremendous impacts to aviation. What if someone in a remote part of Alaska knew what the weather was going to be before they took off? It could really increase safety.” The DoD also provides funding to incentivize new technology, like the Small Business Innovation Research, or SBIR, grants for research and development, a boon for tech entrepreneurs. Alaska company Triverus has been part of the Navy R&D process for more than 15 years, beginning with a SBIR grant award in the early 2000s to develop a Mobile Cleaning, Recovery and Recycling System, or MCRRS. With support from the Navy, multiple iterations of the product were designed and tested before the final design was approved. Today, the Palmer-based company employs 22 people and was awarded a contract from the Navy to deliver 43 MCRRS units, each valued at $850,000. In addition to the military, the company also serves the aviation, oil and gas, and construction industries. “The military has to stay at the cutting edge, and constantly look for new solutions. That's a great thing if you're a tech-focused entrepreneur in Alaska,” says Klouda. Dodson also sees opportunity in increasing the number of Alaska companies supplying the military with goods and services, especially with two squadrons of F-35s (46 aircraft) coming to Eielson AFB. The first F-35 is scheduled to arrive April 2020, with the rest following over the course of two years. He estimates an increase of around 5,000 people once families and civilian contracts are factored in. Almost 15 years after the fight to save Eielson AFB succeeded, the future is bright. Instead of a dwindling population and crippled economy, the borough is buzzing with activity. “Eielson is going to be 50 percent larger than it was,” says Dodson. “That’s good economic impact, but you have to manage it right,” Dodson says. “It’s pretty huge.”

Startup Week 2019: Entrepreneurship transforms economies, communities and individuals

It’s hard to know what’s going to change your life. Decisions like choosing a spouse, becoming a parent, or purchasing a home will obviously make an impact, but sometimes an innocuous-seeming choice can reroute your trajectory, spinning you into a world you didn’t know existed.  Take Erin Baca, for example. She was working at a project management firm in 2017 when she decided on a whim to sign up for Startup Weekend.  Startup Weekend is a 54-hour weekend event during which participants pitch ideas for new startup companies, form teams around the ideas, and then work to develop a prototype to present at a demonstration event on Sunday evening. Some of Alaska’s best known startups — Pandere Shoes, Attently, and 60 Hertz — originated at Startup Weekends.  Baca says her participation was a pivotal moment in her career. “It took me supremely out of my comfort zone and introduced me to an entirely new group of people I never would have met otherwise,” she said. “I also discovered previously untapped talent and passion in myself, which I’ve been able to convert into a career path where I can live my values every day.” Countless participants have gone on to apply lessons learned as they launch companies, work for startups, or support them in other ways. Today, Baca is an associate at the 49th State Angel Fund, a venture capital function run by the Municipality of Anchorage that invests in high-growth businesses. She helps organize the Alaska Angel Conference, volunteered at a recent Startup Weekend, and is the 2019 co-chair of Alaska’s Startup Week, which is November 18-24.  People holding jobs like Baca’s are considered “entrepreneurial ecosystem builders” — those who help develop opportunities, make resources available, and build a supportive community to advance entrepreneurship.  If Baca’s job sounds like fun, it is. But it’s also vitally important to Alaska’s economy. Over the last decade, startups in Alaska consistently added 4,000 to 6,000 jobs to the economy each year. Firms that are aged five years or younger accounted for 89% of Alaska’s net employment growth in the private sector, making a compelling reason to support high-growth entrepreneurship in Alaska. “People succeeding in the state is fundamentally good for everyone, but it goes beyond financial returns and economic returns. It’s also good for community returns,” says Baca.  Continuing to grow Alaska’s entrepreneurial ecosystem is one of the reasons Baca signed up to co-chair Startup Week.  Startup Week brings entrepreneurs, local leaders, and friends together to build momentum and opportunity around entrepreneurship in Alaska. Similar celebrations happen across the world, and Alaska’s Startup Week is timed to coincide with Global Entrepreneurship Week to leverage international connections. Baca is joined by Pamela Parker, founder of Everything Bagels located in Soldotna, as co-chair. A math teacher turned entrepreneur, Parker always knew she wanted to start her own business. It look a move across the country and the search for a bagel to suit her East Coast cravings to inspire the launch Everything Bagels. Pamela Parker, Co-chair of 2019 Alaska Startup Week and founder of Everything Bagels. (Photo/Courtesy/ Alaska Small Business Development Center) A little more than three years after opening, Parker is immersed in Alaska’s startup scene; she led Startup Week for Kenai and Soldotna in 2018 and she stepped into the statewide role this year. Parker says she noticed that other communities, like Anchorage and Fairbanks, had strong and developing entrepreneurial ecosystems, but didn’t see something similar on the Kenai Peninsula. After discussing with other local business owners, she says they decided to find opportunities to engage with each other in more meaningful ways.  “Startup Week gives me an excuse to step out of my business for a moment and learn about the amazing things that are going on in our community. It allows me to get tips from other small business owners and inspires me to try new things,” says Parker. “You just get this feeling being in the room with other movers and shakers that you just want to go out and do something. It reminds you why you’re doing the whole crazy entrepreneurship thing in the first place. It makes it even better knowing that I can help others in their communities achieve this same feeling by helping to coordinate the statewide effort.” Venture capitalist Brad Feld, known for co-founding Techstars, his work at the Foundry Group, and writing a series of books about entrepreneurship (Startup Communities: Building an Entrepreneurial Ecosystem in Your City is particularly well known) says that communities should offer a myriad of events that appeal to the interests of a wide-range of entrepreneurs.  Accessing community is an important component of entrepreneurial development. Entrepreneurs can grow their networks and connect with collaborators, mentors, investors, and more. Additionally, events offer the opportunity for participants to gain new knowledge or skills, test out ideas, and meet future customers.  “Any one of these events may seem trivial by itself, but the combination of all of them happening continuously over a long period of time and being inclusive of anyone who wants to engage in them and being led by entrepreneurs is what empowers,” says Feld. Although there’s still a lot of growing to do, through Startup Weekend and Startup Week — along with weekly 1 Million Cups pitches, numerous idea or business plan competitions, conferences, and other events — Alaska is on its way to providing the rich landscape of events described by Feld.  If you’d like to be part of Alaska’s entrepreneurial ecosystem, consider participating in a Startup Week event. It’s an easy and fun way to get involved as an entrepreneur, an ecosystem builder, or someone who’s curious and wants to learn more. You never know — stopping by might just be one of those choices that changes your life! Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, and a Gallup-certified CliftonStrengths coach.

‘Your voice is valuable, speak up’: The power of mentorship

Women engaged in mentorship programs experience greater confidence, make more networking connections and receive increased guidance when navigating their careers. When Kim Waller walks into a room, people notice. She exudes charisma, and once she starts starts speaking, especially about issues she cares about, it’s easy to see why she recently received a Gracie award for her radio show Power on the Block. But appearances don’t always match how we feel, especially during our teenage and young adult years.   “When I was a young woman, most people would have said I was outgoing and confident,” says Waller, founder of the Women’s Power League of Alaska, or WPLAK. “But the truth is, I had low self-esteem and low self-confidence. Fortunately, there were people around me — my mentors — who saw I needed direction, and they stepped up and helped me. Looking back, my life could have taken a very different path if I hadn’t had them helping me.” Years later, Waller is returning the favor. She moved back to Anchorage in 2018 after a career in media for MTV Networks and iHeartMedia in New York City to launch WPLAK, which includes a mentorship program specifically designed for women in their 20s. Demand to participate quickly outstripped the number of available mentors, and Waller is looking forward to growing the program when applications for the next cohort open. “In my 20s, I needed guidance — both personally and professionally. It’s a crucial time in a woman’s life: we’re thinking about our careers, relationships, family planning. It’s a lot, and the choices we make impact our future,” Waller said. “At that time, I needed people to believe in me more than I believed in myself, and they did. That’s when I really learned the power of mentorship.” While there is momentum to change attitudes on these topics — organizations like Lean In are doing valuable research focusing on women at work and the #MeToo movement is shedding light on widespread harassment — social pressures still prevail. Mentorship can play an important role in overcoming challenges. Women make up approximately half of Alaska’s workforce, driving a significant portion of the state's economic activity. Despite possessing equivalent hard skills like computer programming, accounting, or technical writing to their male counterparts, women often face social challenges and workplace biases that men do not. These range from wage disparity (Alaskan women earn 72 percent of what men make on average) to balancing caretaking and household activities with professional duties, and more. Mentorship and female entrepreneurs Katherine Jernstrom, founder of Anchorage-based coworking space The Boardroom, says that reaching out to mentors was invaluable as a young entrepreneur, especially when she was launching her business. “I started out doing customer discovery to test the idea (of The Boardroom) by asking smart people around me for their advice and feedback. Some of them became my mentors and I still speak to them regularly,” Jernstrom said. Entrepreneurs with mentors are five times more likely to start a business and keep that business. According to Youth Business International, three-quarters of young entrepreneurs participating in mentorship programs felt they had stronger decision-making skills and felt more confident in running their businesses through the support of their mentors. Women entrepreneurs in particular experience greater success when they have a mentor; 75 percent of women business owners report positive business outcomes resulting from engaging in a mentorship relationship, 2 percent point higher than male business owners. This is not a phenomenon isolated to young entrepreneurs. Women at all stages of their career benefit from mentorship, as both a mentee and a mentor. Jernstrom says that as her career progresses she continues to turn to her mentors for guidance. She says that one of the most important aspects of a mentor/mentee relationship is trust and mutual respect. “You have to be able to lay your cards on the table and not feel judged or worry that someone is going to think you’re being silly,” Jernstrom said. “I know my mentor cares about my success and well-being, and that makes me comfortable being vulnerable when we dive into the nitty-gritty of what I’m working on.” As Jernstrom’s reputation as a successful entrepreneur and savvy business person grows, people often seek her out for advice, giving her the opportunity to step into the mentor role. She says women tend to be more timid in terms of addressing business challenges, whereas men are more apt to meet them head-on. “A lot of mentoring women is coaching them to sit at the table, and telling them, ‘Don’t be shy, don’t back down. Your voice is valuable, speak up,’” Jernstrom said. Becoming a mentor or mentee Mentorship is almost universally considered critical to career success, regardless of gender. For those looking to engage in mentorship, First Round studied 100 mentor-mentee matches, and identified the following ground rules: Kick off relationships around distinct problems or challenges. Build in off ramps. Create a schedule — but keep it loose. Measure progress in every meeting. Carve out time to exchange goals. Mentoring doesn’t always need to be a formal relationship. It might last for just a few moments or span years; the common thread is the knowledge and experience that is transferred from mentor to mentee and vice versa. Waller says that mentorship can take the form of an uplifting conversation, an email of encouragement, or a relationship that spans years, and that she has grown just as much as a mentor as when she is a mentee. “When I’m mentoring someone, I’m mentoring myself as well — we may not think we know as much as we do until we sit down and start talking to someone who hasn’t walked in our shoes,” Waller said. Jernstrom is often invited to coffee to help a fellow entrepreneur vet ideas or work through a problem and considers it a form of informal or peer mentorship. She too says she benefits just as much as the invitee. “I learn a lot from other entrepreneurs, even if they’re the ones who asked me for advice,” Jernstrom said. “New perspectives are so valuable.” Regardless of the form it takes, mentorship is powerful. “Mentorship makes a difference,” says Waller. “We don’t do anything alone. There have been many hands in my success, and if I can help someone else achieve their dreams, then that is the true measure of success.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, and a Gallup-certified CliftonStrengths coach.

Manufacturing matters: Momentum in a small but growing sector of Alaska’s economy

When Jennifer Loofbourrow walks through the headquarters of Alpine Fit — currently a 960 square-foot shop and showroom with a lofted office in Midtown Anchorage — she radiates enthusiasm for the eye-catching technical apparel she manufactures. Women’s tops in Bering Sea Blue and Arctic Dusk Purple are carefully folded next to bolts of uncut fabric; sewing machines, many of which are vintage yet functional, line the walls.  Although her energy is contagious, a successful business isn’t built on enthusiasm alone — especially when it comes to manufacturing in Alaska. Fortunately for Alpine Fit’s future, Loofbourrow knows the outdoor products industry well. She previously worked for athletic wear company Lululemon, where she briefed company executives on the properties of different fabrics. Later, she and her husband owned a women’s clothing business in Ireland. Armed with this background, Loofbourrow believes she can carve out a niche in an industry dominated by giants like Patagonia and North Face, and she’s committed to doing it in here. “Establishing a capacity for sewn product manufacturing here in Alaska — the ideal testing grounds for any outdoor product — helps build industry relevant knowledge in our home state, allows us to adapt and develop products efficiently, and function as a modern business in an evolving industry faced with constant growth and change," said Loofbourrow. For those that appreciate the opportunity to see how their products are made and meet the people making them, Alpine Fit is an exciting place to visit, especially considering the rarity of this type of experience in the state. Alaska doesn’t have a high rate of manufacturing — in fact, the state ranks dead last for the amount manufacturing dollars contributed to our Gross Domestic Product, or GDP. Even Hawaii, an island state more than 60 times smaller than Alaska, has a higher contribution. Experts site logistical challenges, small in-state markets, high costs of energy, and labor issues as barriers. Regardless, manufacturing in Alaska has been growing, albeit with a few hiccups along the way. Nationally, manufacturing jobs provide above-average wages, especially for skilled positions that require training but not typically a college degree. Additionally, manufacturing creates value and generates wealth that circulates within the economy at higher rates than most other sectors. This is especially valuable when you consider that much of Alaska’s economy is resource extraction based and Outside economies end up reaping a large share of the profits. Exporting goods made in Alaska also brings outside money into the state.  Alyssa Rodrigues, executive director for the new Alaska Manufacturing Extension Partnership, or MEP, center at UAA’s Business Enterprise Institute, sees a lot of potential for the manufacturing industry in Alaska.  “We assume it can’t work, so apart from the MEPs, no one is putting a lot of time or effort into helping manufacturing grow,” Rodrigues said. “But there’s a lot of potential, even beyond local markets. One of the services the MEP offers is export assistance, and I’m looking forward to connecting with companies who want to sell outside of Alaska.”   Part of Rodrigues’ strategy is to focus on three distinct areas: food and beverage, outdoor recreation products, and military-related manufacturing. Based on a combination of research and discussions with other MEP centers across the country, she thinks each sector can leverage their Alaska-specific strategic advantages into growth opportunities.  Rodrigues points to companies like Triverus, which makes outdoor surface cleaning equipment for military, municipal, and private clients; Bambino’s Baby Food, which uses Alaska-grown ingredients and wild-caught seafood in its products; and Heather’s Choice dehydrated backpacking food which is sold in REI and Amazon, as examples of locally launched companies now selling their products in the Lower 48. “I think others can achieve a similar growth trajectory,” Rodrigues said. Besides exporting and creating well-paying jobs, another facet of manufacturing is supply chain redundancy. The value of producing local food, beverages, and other products is especially apparent in times of disaster. As many Alaskans learned during the 7.1 earthquake in November 2018, food supplies that arrive in Anchorage by barge or plane and then trucked throughout the state quickly disappear when they aren’t regularly replenished. Considering that 95% of food purchased in Alaska is imported, creating redundancy so that Alaskans have access to food in the event of a supply chain disruption increases economic and community resilience.  Manufacturing also offers opportunities for import substitution, which encourages local production for local use instead of importing products. Alaskans spend $2 billion on food each year, but $1.9 billion of that spending leaves the state. Keeping more of that money in state would generate employment and keeps local dollars circulating throughout the economy. Rodrigues especially enjoys doing her part. “I buy a lot of ice cream, probably nine pints a quarter. It used to be all Häagen-Dazs; now it’s one pint of Häagen-Dazs, and eight pints of Wild Scoops (an artisanal ice cream shop in Anchorage),” Rodrigues said. “It’s way more delicious and I’m happy to pay extra to support a local business.” Import substitution at its most enjoyable! Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, and a Gallup-certified CliftonStrengths coach.

CED Series: Attracting economic growth

In 2011, Charlotte went bananas. City officials in North Carolina launched a marketing campaign to entice Chiquita Brands International (aka Chiquita Banana) to relocate from Cincinnati and make Charlotte their new headquarters. Amidst photos of bananas framing city signage, a #bananasforCLT hashtag on Twitter, and yellow bow ties, the government offered $22 million in incentives over a period of 10 years to seal the deal. Economic developers often use incentives and marketing tactics to encourage companies to relocate or expand to their communities, a practice both costly and competitive. A key tenement of economic development, it has recently evolved to include attracting and retaining workers. Charlotte was successful in their bid, anticipating 400 new jobs and $14 million of investment. Although the resulting jobs numbers weren’t quite as expected (134 local hires, 141 transfers from Cincinnati, and 28 recruitments from outside) city officials cited $11 million in construction, new residents buying homes and paying taxes, and charitable contributions as a worthwhile return on investment. Last year, Amazon made headlines as cities lined up for the opportunity to host HQ2, the company’s second North American headquarters. The expected antics ensued: Newark and New Jersey offered nearly $7 billion in tax incentives, Birmingham, Ala., constructed giant Amazon boxes around town, Phoenix did something with a cactus that didn’t really work out, and Mayor Sly James of Kansas City purchased 1,000 items from Amazon and used the reviews to promote his town. Even Anchorage got in on the action, citing easy outdoor access, university graduates, and lack of traffic in an online application. From the 238 proposals submitted, Amazon selected 20 cities for round two and is currently making the rounds to select the location for their expansion. Anchorage didn’t make the cut. The Ted Stevens Anchorage International Airport is the fifth largest cargo hub in the world. (Photo/Chris Arend Photography/Alaska Division of Economic Development) Economic developers in Alaska are generally skeptical of our ability to compete head-on with other states to attract Fortune 500 companies. When considering what might work in Alaska, Bill Popp, CEO of the Anchorage Economic Development Corp. says that his team is focusing on opportunities at the Ted Stevens Anchorage International Airport. “We’re looking at distribution facilities for pharmaceuticals, supply chain logistics, there’s potential in high-end electronics and aviation parts distribution,” he explains. “When you consider that Anchorage has the fifth-largest cargo airport on the planet with hundreds of wide body jets and the opportunity for foreign carriers to exchange cargo here, there are a lot of possibilities. The challenge is getting them past the cost of construction and the cost of labor.” If labor is expensive and in short supply, what can we do to attract more workers to Alaska? Economic developers have recognized a shift in who attracts whom: Instead of talent following companies, companies have started following talent. Back in 2005, author Thomas Friedman told us that “It’s a Flat World, After All” and since then, it’s flattened even further. We’re now competing on a global scale. As availability of qualified workforce continues to plague Alaska businesses, attracting talented new workers to our state, along with growing our own, is essential. People are more mobile than ever before, and can choose where to travel, work, and pursue an education. Attracting potential workers that would appreciate the Alaska lifestyle could help solve the labor shortage. There’s also the matter of “boomerangs”: young Alaskans who leave the state (often for education) and find themselves wanting to come home after graduation or launching their careers outside. Born and raised in Anchorage, Chase Christie moved to San Francisco shortly after graduating from the University of Oregon in 2004, and started a career working in solar energy. After 15 years in the Bay area, he was eager to return home but knew he needed to find the right opportunity. When an Anchorage-based solar company offered him a job, he jumped at the chance. He says the proximity to the outdoors is just as great as he remembers, but that the city has changed a lot, too. “Anchorage has evolved in so many great ways since I was a kid. There's a more developed art and music scene, there are great restaurants, things that I didn’t appreciate when I was younger that I do now make the city really special and so unique.” Christie is here to stay. “I have a friend from New Hampshire who moved here in 1999 and he says it best: ‘I’ll move somewhere else, just show me someplace better.’ And I couldn’t agree more.” Moira Gallagher manages Live. Work. Play, AEDC’s grassroots effort to make Anchorage the No. 1 city in America in which to live, work, and play by 2025. She frequently considers how to attract more people to our state, and laughingly says, “I’ve actually thought about putting signs in sweaty subways during the summer — something along the lines of ‘Guess what? In Alaska it’s 68 degrees and sunny in the middle of the summer’ — an appeal of Alaska being it never gets too hot!” There are opportunities aplenty to continue developing a lively and vibrant downtown core in Anchorage. (Photo/Ken Graham Photography/Alaska Division of Economic Development) Despite our advantages, she says that there are two challenges to attracting new workers to Anchorage: lack of affordable, high-quality housing and lack of a dynamic urban core. “When people live downtown they bring vibrancy which is great for existing businesses and attracts new businesses,” she said. “People want entertainment, restaurants, music, public art. The greatest cities in the world have walkable, lively, happening downtowns.” That said, Anchorage offers an appealing combination of city and wilderness. “Our outdoor recreation is second to none. We have more acres of parkland than any other city in America,” she said. “You can get on your bike and be in the Chugach foothills 10 minutes later. In the winter, you can ski Kincaid Park on the lighted trail, or go to the downtown tree-lighting ceremony. In the summer, visit your favorite fishing hole at Ship Creek or ride miles of bikes trails. And the people here are great.” Both Gallagher and Christie have significant others who relocated to Alaska. Gallagher says her husband is from New York and “loves that Anchorage feels like a small town, yet is large enough to support big-city amenities like the performing arts and multiple general hospitals,” while Christie says his Berkeley-born girlfriend “has a job that she absolutely loves, finds she’s inspired by the people she works with, and sees living in Alaska as a long term opportunity.” Speaking of relationships, are you wondering how things turned out between Charlotte and Chiquita? Chiquita was purchased by a Brazilian company in 2015 and shortly after, packed their bags and departed Charlotte… even after the yellow bow ties, clever hashtags, and $22 million in tax incentives (some of which will be refunded, but still!). Now that’s bananas. Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. As the associate director for the University of Alaska Center for Economic Development she is responsible for leading the entrepreneurship, marketing, and outreach efforts of CED as well as providing strategic leadership for both CED and the UAA Business Enterprise Institute.

Workforce development: Career readiness and the evolving world of work

Katrina Chertkow graduated from the University of Alaska Anchorage earlier this month with a bachelor’s degree in sociology. A member of the Honors College, she graduated summa cum laude, and is pursuing a master’s degree in integrated marketing and communications at Northwestern University in the fall. Chertkow is a high achiever by any definition. And yet, her career path is uncertain. “I’m not sure what my career options are after grad school, which avenues to take,” she said. “Should I work for a marketing agency, start my own business, or freelance?” Cherkow’s uncertainty isn’t surprising. Students graduating this spring have watched as the number of people spending their career with one employer rapidly shrinks, and an increasing number of individuals have multiple careers in their lifetime. The Freelancers Union says that 34 percent of the U.S. workforce — 53 million Americans — are working as freelancers. With the rise of the “gig economy” short-term employment contracts will become more common. Workforce development serves both individuals and businesses with the objectives of: Preparing the workforce with the skills necessary to meet current and anticipated labor needs Supporting job retention and career advancement Connecting workers and employers in the labor market — International Economic Development Council For those in workforce development, this raises an interesting question: How can we prepare Alaskans for an ever-evolving world of work? Christi Bell, executive director for the UAA Business Enterprise Institute, says that higher education is already transforming to meet workforce and employer needs: “Some universities are focusing more on certificates and very targeted proofs of learning, and others are moving toward a ‘2+2+2’ model, which essentially means that students will come to university throughout their lifetime for ‘just in time learning’ — education that provides them with the knowledge, skills, and abilities needed for the exact point they are at in their careers.” For example, students could earn an electrician certificate, return in a few years to complete a bachelor degree in electrical engineering, and later enroll in a masters program for project management or sign up for specialized arctic engineering classes. Although this may seem to be a novel approach to career readiness and education, consultant and business advisor David Eisenberg says history is repeating itself: “Prior to the divestiture of AT&T (mandated in 1982), for example, workforce development provided by the Bell System was second-to-none in the technology sector. There was a highly-structured educational system within the Bell companies which coupled all manner of training — technical, supervisory, cultural, etc. — with specific experiential tracks to build the employee bench and future leadership. “It was well accepted that individuals with this sort of Bell System training were as well prepared for workplace advancement as university graduates at the time.” Preparedness for the workplace is a growing challenge for universities. “Hiring decisions are still made based on a degree, but we’re simultaneously hearing employers from all sectors tell us that they see a lack of ‘career-spanning’ skills from university graduates,” says Bell. Bill Popp, president and CEO of the Anchorage Economic Development Corp., agrees, noting that he often hears complaints from businesses regarding the lack of available qualified workforce. “It’s one of the biggest barriers cited in our business confidence survey,” he said. “Employers aren’t finding the skilled and professional workforce they want to hire. Quality of entry level workforce is also an issue.” Of survey respondents, 59 percent said that the availability of professional and technical workforce was a barrier to business growth Skill gaps include a combination of critical thinking, critical communication, problem identification and problem solving, and increasingly a range of interpersonal skills, sometimes called “soft skills.” This spans leadership, teamwork, and networking as well as timeliness, engaging with customers, and performing to one’s highest ability.  Bell says that although universities can encourage soft skills through class presentations, internships, and work preparedness seminars, the best way for students to obtain them is through applied work environments. She sees an opportunity for economic developers to bridge between universities and employers, explaining, “Universities are going to need to incorporate more interdisciplinary and experiential learning experiences into the traditional academic curriculum.” Economic developers are already making progress in this direction. In Anchorage, AEDC recently released the Internship Playbook to help companies establish and enhance internship programs through sharing best practices, foundational information, program structures, policies and procedures. Popp explains, “Internships can be an amazing asset for any size company, as well as any job seeker looking to get an edge in their search for employment. Done right, internship programs can be a great source of new talent both for the company and the community.” Students can also look to professional associations to grow their networks and their skills. The Alaska chapters of both the American Marketing Association and the Public Relations Society of America offer low cost student memberships and deeply discounted training opportunities, and the Anchorage Chamber of Commerce’s Young Professionals Group provides leadership and networking opportunities for Alaskans ages 21 to 39. Further, a group of professionals is exploring the launch of a Code School to train Alaskans in the basics of computer science, an increasingly sought-after area of knowledge. Internships and other training opportunities outside the classroom not only build critical skills, they also distinguish applicants during the hiring process. “I used to scan resumes looking for the ‘black sheep’ — someone with unique training and experience that stands out from the rest of the flock,” says Eisenberg. “My most valuable employees were those who had a variety of unusual experiences or interests or had taken what seemed to be a somewhat eccentric career path. They tended to demonstrate — through action — a willingness to take risks, make mid-course corrections (if necessary), and satisfy a thirst for continuous learning and self-development.” For qualified job seekers, there’s no shortage of job opportunities. According to AEDC, there were 31,000 jobs posted, representing more than 700 occupations at 4,800 employers during 2017 in Anchorage alone. Chertkow says that a combination of academic and service industry experience make her feel well-prepared for both graduate school and her future career. “My undergraduate research projects taught me project management, follow through, and team-collaboration while my jobs in retail and food service taught me customer service skills.” Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. As the associate director for the University of Alaska Center for Economic Development she is responsible for leading the entrepreneurship, marketing, and outreach efforts of CED as well as providing strategic leadership for both CED and the UAA Business Enterprise Institute.

Economic development in Alaska: taking stock of our opportunities

Jeff Stepp thinks Alaska is at an inflection point: “It’s a pivotal time in Alaska’s history and economy because of the confluence of the loss of federal earmarks and the decline of the price of oil, which contributed greatly to our economy during the last 40 or 50 years.” Stepp, the Economic Development Coordinator for the Fairbanks North Star Borough, doesn’t like seeing empty buildings in his community. He’s not alone; with “pivotal times” comes a hefty dose of discomfort… and opportunity. Amidst Alaska’s recession, economic developers across the state are working to course correct from a reliance on the aforementioned federal earmarks and oil revenues to a more balanced, resilient economy. Taking advantage of our unique geography, human capital, and the transformation of our existing industries just might propel us into an economically vibrant future. A transformation of this depth and breadth won’t be easy; along with a stubborn hope that climbing oil prices will solve our state budget woes, many are quick to bemoan challenges of doing business in Alaska. Economic developers often site the high costs of energy, real estate, and labor; limited infrastructure; a small population; and distance from markets as barriers. But after acknowledging our limitations, the conversation turns from challenges to opportunities, and that’s when it gets interesting. Brigadier General Billy Mitchell once remarked that “Alaska is the most strategic place on earth.” Britteny Cioni-Haywood, director of the State of Alaska Division of Economic Development, notes that “our geographical location is becoming more and more of an advantage as we move into a global economy.” Boasting the fifth largest cargo airport in the world and already an important stop for intercontinental shipping, the emerging Northern Sea Route and the Northwest Passage will make Alaska an even more valuable player in the transportation of goods. Economic development is a program, group of policies, or activity that seeks to improve the economic wellbeing and quality of life for a community, by creating and/or retaining jobs that facilitate growth and provide a stable tax base. — International Economic Development Council Two squadrons of the fifth-generation fighter jet F-35 will be arriving at Eielson Air Force Base in 2020. (AP Photo/U.S. Air Force, Senior Airman Julianne Showalter) Alaska’s location also makes it a critical component in the United States’ global defense framework. In a recent issue of Military Review, U.S. Army Colonel Michael J. Forsyth wrote that Alaska “is singularly closer to many national capitals in the hemisphere than most points in the lower forty-eight states. This makes Alaska the perfect power projection platform for the United States from a military standpoint.” Alaskans have seen increased military investment in our state during the last few years, most recently from the 2018 appropriation of $168.9 million for construction projects at Eielson Air Force Base in preparation for two squadrons of F-35 Lightning II aircraft arriving in 2020. Military investment can reach further than the infusion of cash into the state; with increasing engagement in the innovation economy, Stepp says that there is “tremendous potential for vibrant partnership between the military, municipalities, universities, and businesses.” He points to the Wright-Patterson Air Force Base in Ohio as an leader in using research and development to leverage innovation; events like Dayton’s “Commercialization Catalyst” feature presentations about Air Force Research Laboratory technologies that are candidates for entrepreneurs to bring to commercial markets. Following this model, or one like it, would accelerate the creation of scalable startups in state. Alaska's human capital is an important part of the state's economic future. (Photo/University of Alaska Center for Economic Development) Alaska is ripe for this type of strategic approach; an often overlooked “natural resource” is our people. Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development, is the lead author of the Emerging Sector Series, which assesses and defines the growth potential of economic sectors. He sees an overlooked knowledge economy in Alaska: “We’re home to a sizable professional services workforce. These are the engineers, consultants, and other specialists who possess rare knowledge in fields like renewable energy or aviation. But we have relatively few companies working on a new product or piece of software that could scale. If that valuable knowledge could be funneled in an entrepreneurial direction, we could see a new generation of high growth companies.” Klouda thinks this could mean new industries in the state that would hire Alaskans. Our knowledge workers largely came into existence performing services for the resource sector and, just as they are poised to innovate, so too are the industries they hail from. Alaskan companies can be leaders in identifying or improving upon new technologies, markets, partnerships, and ways of doing business. “Alaska’s traditional industries require smart, skilled people in order to function. And that skillset will help propel us into the global knowledge economy,” says Klouda. As we capitalize on new opportunities, we must also strengthen our existing visitor industry and support responsible development of our natural resources. This will lead to economic growth and new state revenues. Cioni-Haywood points out that to maximize our resource wealth we need to transition from predominantly extraction to value-added resource development. This means activities like refining more of our own fuel or processing salmon into high-value products rather than shipping whole. Back to Stepp, and those empty buildings: “I also see an opportunity for a new business, a new entrepreneur, a new idea to fill that space. We have to be sure that we are using all of the available economic development tools – from education and workforce development to best practices to investment and incentives – to transition to a prosperous future for the next generation of Alaskans.” During this pivotal time “as a state, as a community, we need to be more scrappy and resourceful to keep our economy afloat.” It’s time to get scrappy, Alaska. Our future depends on it, and opportunity awaits. Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. As the associate director for the University of Alaska Center for Economic Development she is responsible for leading the entrepreneurship, marketing, and outreach efforts of CED as well as providing strategic leadership for both CED and the UAA Business Enterprise Institute.
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