Wednesday, June 13, 2007


Disappearing tech: Is Oceanit migrating to the Mainland?

Probably not, but hidden among other news items on their website is a very short item mentioning a new Washington DC office and pics of the opening.

Oceanit is one of the most solidly established high-tech companies we have in the state. It would be sad to see them fleeing to the Mainland one day. I'm certainly reading too much into the opening of a DC office, but the thought that this could signal a migration in the future came to my mind. Opening an office in Arlington is a logical step for a company this well established in each of the areas in which it competes.

For most "high-tech" companies in the state, reality sets in sooner or later.

Imagine you are a CEO who enjoys living in Hawaii, and there are even some arguably good reasons for your company to be here. But your clients or customers and your suppliers are in San Francisco or elsewhere, and your competitors have better access to the market and to the parts they need than you do. Nor do customers snicker when your competitors mention that they're headquartered a few blocks from Stanford in Silicon Valley, but they might fail to truly appreciate how awesome it is that your office enjoys a majestic ocean view from its perch high on the golf course in Maui.

Still, you persevere, and in fact your company is doing great work.

So one day there comes a knock-knock on the CEO's door, your door--it's the bean counters come to deliver the reality check. And before you know it, your company will do what it needs to do. You'll call the packers and the movers, sell the surfboard, and make your plane reservations.

Hawaii should be a fairly good place for technology venture capitol, given the generous tax credit and cloak of anonymity that the state grants along with it. It simply adds to the bottom line (at taxpayer expense) and no one need know about the handout. Investors don't care whether a company stays here or moves to where it needs to. In fact, if the company fails to move when it should, the investors ought to beat a path to the CEO's office themselves.

The venture capitalists don't care about generating jobs or improving Hawaii's economy. They simply want the company to succeed and have its IPO so they can realize a generous return on their investment. And so they should, that's good and right and the American way. It's also why it's a mistake for the state to rely only on a tax credit as an incentive and fail to solve other infrastructure problems that might convince companies to remain.

But back to Oceanit. I'm not saying that they are planning to flee. I'm just noting the beginning of that possibility. We saw it happen that way with Verifone and others.

Hawaii is no high-tech paradise, but Oceanit is not conducting their business the way DBEDT promotes the state. None other than Guy Kawasaki put the kabosh on false claims that being in the middle of the Pacific between time zones is a great advantage. It is no such thing, yet we paid state workers to push that angle, and many are still doing that. I also look around for the barf bag whenever I hear someone on HPR claim that Hawaii will become the center of the Pacific in telecommunications or some other field. Unlikely--not impossible, but not wise to bet on. We are already the center of some things, but none that I am aware of produce a sustainable job stream.

We need Oceanit to stay just to prove I'm wrong.


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