Category Archives: Entrepreneurialism

How Walkable Urbanism and the Talent Pipeline Won the Amazon Deal

Conceptual rendering of Virginia Tech’s proposed $1 billion campus in Alexandria near the proposed Amazon campus.

More information is coming out about the wheeling and dealing behind Virginia’s incentive package that coaxed Amazon, Inc., to locate a $2.5 billion campus in Northern Virginia. It turns out that many of the key pieces in Virginia’s incentive package were initiatives that had been in the works for years. Virginia is putting resources into projects that, most likely, it would have funded eventually anyway.

Amazon wanted an urban location and it selected the Crystal City-Potomac Yard area of Arlington and Alexandria, currently being rebranded by the largest property owner, JBG Smith, as National Landing. A decade ago JBG Smith had commenced the yeoman’s work, with no immediate prospect of reward, of winning the local planning and regulatory approvals to re-develop the aging edge city into a walkable, high-density, mixed-use area — just the kind of urbanism Amazon was looking for.

Meanwhile, Virginia Tech had engaged in preliminary planning to build a major academic campus in Northern Virginia. The idea was mainly conceptual when Amazon announced his national HQ2 competition, but Tech had a scaffold upon which to build when the state began scrambling to put a deal together.

It helped that Commonwealth’s point man for selling Amazon, Stephen Moret, was not a conventional economic developer. The Virginia Economic Development Partnership president takes a broad, integrative approach to the profession that transcends the assembly of real estate deals. Having recently earned a Ph.D. from the University of Pennsylvania in higher education management and serving as a member of the State Council of Higher Education for Virginia, Moret is well versed in the critical need to build the talent pipeline. He is also conversant about the connections between land use, workforce, innovation districts and economic development.

I haven’t talked to Moret since the Amazon deal was closed. But I recall a conversation a year-and-a-half ago in which he casually blue-skyed an idea for promoting corporate investment in Southwest Virginia by creating a New Urbanism-style development zone around the campus of the University of Virginia-Wise. In that vision, the real estate was almost incidental. Moret’s idea was to create a knowledge-based community with access to UVa-Wise students and graduates that a corporate investor would find attractive.

It’s not a stretch to say that the Amazon project is the same idea writ large — very large. The $550 million in direct employment subsidies constitutes only a modest piece of the deal. What really sold Amazon on Northern Virginia was the prospect of setting its corporate facility (a) in a walkable urban community, (b) in close proximity to a technology-oriented university campus, (c) in order to create a dynamic innovation ecosystem with Amazon at the center, (d) in a metro area with one of the largest tech-savvy labor pools in the country.

Building the talent pipeline. Both the Roanoke Times and the Washington Post have published articles highlighting how the educational piece of the incentives package came together.

As the Roanoke Times writes, Virginia Tech’s proposal to build a $1 billion, one-million-square-foot campus near the Amazon facility was the cornerstone of the talent-recruitment piece of Virginia’s bid.

Virginia Tech had been planning some sort of campus near the nation’s capital since President Tim Sands arrived at the university four years ago. Tech didn’t have a location in mind or much more than a general sense of what the Innovation Campus could be.

“If the first time we had thought about it had been 14 months ago, this probably wouldn’t be what it is,” Sands said during the gauntlet of interviews after Tuesday’s announcement. “We were ready and the timing was perfect.”

Moret was unaware of Sands’ Northern Virginia ambitions when he first reached out to schedule a conference call with college and university leaders around the state last year.

He discussed the HQ2 bid with everyone and laid out early plans to roughly double the number of computer science graduates the state produced each year as part of the HQ2 bid.

He also asked if anyone was interested in the possibility of opening a campus near Amazon in the Washington, D.C., area.

“Virginia Tech reached out right away and said, ‘Hey, we’ve actually been working on this idea for a few years. And we’re prepared to put in a very large investment to make this happen,’” Moret recalled.

George Mason University also stepped up in a big way with plans to expand its Arlington campus. But the GMU campus will not be tightly integrated geographically with Amazon’s like Tech’s will be.

Crystal City rendering by Torti Gallas + Partners

Investing in walkable urbanism. Writing for the Congress for the New Urbanism’s Public Square Journal,  Robert Steuteville provides background on the urban planning piece of the deal.

Crystal City can be thought of as a large suburban retrofit—guided by a plan and form-based code that won a 2009 CNU Charter Award for Torti Gallas + Partners and Kimley-Horn and Associates. That plan and code, adopted by the county in 2010, entitled the new, higher-density development and put in place a framework to create a more walkable urban neighborhood over time.  …

The area was originally built without a master plan, and that changed with the recent master plan. “It’s high-rise suburban. It wants to be higher density, with a more urban mentality— away from cars and with retail on the street that is accessible to people,” says John Torti of Torti Gallas. “It has the potential of becoming a wonderful place.”

Steuteville’s article provides the following graphic comparing a mile-long segment of Rt. 1 as it looks now with the plan transform it into a more walkable, urban boulevard:

Continue reading

Dissecting Virginia’s Amazon Deal


Virginia has committed to investing a sum unprecedented for an economic development deal in the Commonwealth — roughly $2.5 billion in state and local dollars to bring Amazon, Inc. to Northern Virginia. In a presentation to the House Appropriations Committee yesterday, Stephen Moret, CEO of the Virginia Economic Development Partnership (VEDP) provided a detailed account of the incentives. Now that the numbers are out, the public has an opportunity to review the deal. At Bacon’s Rebellion, we love critiquing things, so here goes…

Cash flow positive for the state. The first point to note is that, while Virginia is making a massive public investment to the project, it will be cash-flow positive for the Commonwealth from Year One. If Amazon pays its projected 2,500 employees an average of $150,000 a year — the target number to qualify for state subsidies — the company’s Virginia workforce will generate a lot of new income taxes and sales tax revenue. By Year Ten, added state revenue from direct, indirect and induced employment will amount to $209 million. The sum could grow to $364 million within 30 years. That compares to a General Fund revenue forecast of about $20 billion in Fiscal Year 2019.

As Steve Haner explained in the previous post, the deal will have a minimal impact on the current budget cycle, and future expenditures on higher education, transportation and direct subsidies to Amazon will be phased in over time. The project is designed to ensure that new General Fund revenues will exceed project-related outlays. In other words, according to Moret’s numbers, the state will make a “profit” on the deal from which the entire state benefits.

Investing in competitiveness. A second key point is that 60% of the incentives will be invested in infrastructure and educational programs that don’t go into Amazon’s pocket. I have a huge philosophical problem with the state giving $550 million in Phase One (and another $200 million in a potential Phase Two) to one of the world’s richest companies. Talk about welfare capitalism! But Amazon could have located in Dallas, Texas, or a handful of other cities, so it has the power to play off one location against another. I don’t like it, but that’s the way the world works. The question for Virginians is whether or not the state comes out ahead.

Critical to the deal, Virginia will invest heavily in building its tech talent pipeline. According to Moret’s presentation, the state envisions producing approximately 25,000-35,000 new degrees (over and above baseline levels) in computer science and related programs over the next 20 years. That’s more than Amazon will require. So, labor-starved tech companies other than Amazon will benefit from the investment.

In an earlier post, I had expressed concern that the state would be subsidizing Amazon’s employee recruitment efforts to the tune of $22,000 per employee, giving the company an immense advantage over other Northern Virginia companies competing for talent. In his presentation, Moret acknowledged that there would be “short-term pressure” on Northern Virginia job markets, but that NoVa executives were mostly positive about the deal. His presentation includes a sampling of reactions back in February:

“The economic lift that we get in Virginia, the branding part of it, would be a strong positive for our recruiting efforts. Clearly we will be competing for talent, but that’s fine,” said a Fortune 500 CEO. “I think it’s important for regions to have a diversity of employment options. The economic lift and intellectual lift for the region is a strong, strong positive. I would like to see us get selected.”

“It would be a double-edged sword. Great for the economy. Great for the brand,” said the CEO of a successful tech company. “Long-term it would be good, but it’s another competitor to deal with for talent. … It would give cachet to our area.”

Said the C-level exec of a Fortune 500 company: “In the short run, it will entail some competition for talent. But it’s very powerful for the region for the long term. We’ve made Virginia our hub. The fastest growing part of our ecosystem
is tech – we hire thousands of associates [every year]. We want to have an ecosystem where new tech grads stay here and where there is a desire of folks from around the country to move here.”

The workforce worries are real. But the Virginia’s higher-ed investments will expand the local talent pipeline, Moret argues, while the presence of Amazon will help give the Northern Virginia tech sector a more positive brand nationally, aiding recruitment from other labor markets.

Meanwhile, the state, Arlington County, and the City of Alexandria will spend hundreds of millions of dollars building out transportation infrastructure serving the Crystal City/Potomac Yard area. The transportation initiatives, designed to complement walkable urbanism in the region’s urban core, will accommodate business and residential growth for more than just Amazon. The Metro bus and rail system is operating at significantly below capacity, notes Moret. This deal could boost ridership and revenues for the troubled mass transit system.

Projected share of Amazon commuters by transportation mode.

As Arlington and Alexandria re-develop the region as a walkable mixed-use community, Arlington projects that 77% of Amazon’s workers will walk, bike, car-share or take mass transit to work. That number, if accurate, is phenomenal. By creating a new template for Crystal City/Potomac Yard, Amazon could catalyze the development of even more transportation-efficient walkable urbanism that can soak up a lot of future transportation demand. Continue reading

Safety Training for Offshore Wind Workers?

Turbine construction off coast of England. Photo credit: Energy News Network

Who knows if and when Virginia will ever build a dynamic wind-power industry, but at least one aspiring entrepreneur wants to make Virginia Beach the location of the East Coast’s first safety training facility for wind industry workers.

Scott Chierepko, a retired Navy Seal, wants to break ground on a 25-acres facility complete with a massive indoor pool, the size of two Olympic pools, equipped with model wind towers equipped with blades and generating components, boats, cranes and catwalks, reports Energy News Network. The equipment will allow workers to gain expertise “moving from a small boat to a tower, escaping from a flipped supply vessel, practicing high-angle rescues and tool transfers, and rehearsing how to lower injured workers from high above.”

Trainees will also be able to learn how to evacuate from a submerged helicopter. A separate outside facility will be designed to teach them firefighting skills.

“It’s Hollywood in a box,” he says about the pool’s waves, water currents, rain, wind, light, fog, sound and other simulated atmospheric effects. “It’s a systems engineering challenge, but we’ll have the whole nine yards. We’ll be able to provide everything from a sunny day with flat seas to a night with four-foot waves.”

Meanwhile, Old Dominion University plans to offer students a certificate in offshore wind site assessment planning. Graduates would be eligible for jobs with the private companies that design site assessment plans and the state and federal agencies that review them.

“Eventually we will need welders and other shipyard trades, but right now the jobs are in planning,” says George Hagerman, senior project scientist with ODU’s Center for Coastal Physical Oceanography. “We have a real-world, locally relevant example to use throughout our certificate coursework.”

The Energy News Network article did not say where Chierepko’s BEI Maritime  hopes to raise the money for his training facility, so there is no way to evaluate, based on information in the article, what the odds are that he might succeed with his venture. An obvious question: What investor would want to plunk millions into a venture whose success would be contingent upon the emergence of a wind-power sector that, at this point, does not yet exist?

But the story does illustrate the kinds of service enterprises that might be spun off from an East Coast wind power industry should it come to fruition.

Will Virginia Legalize Recreational Marijuana Use?

High times today.  The marijuana legalization wave is beginning to wash over North America. Nine states (WA, OR, CA, NV, CO, MA, VT, ME and AK) along with the District of Columbia have legalized the recreational use of marijuana.  Well over 20% of Americans now live in states which have legalized recreational marijuana use. On Oct 17 of this year recreational marijuana use will be legalized across Canada. While the various provinces will regulate the sale and use of marijuana in their own unique ways, it will be legal across Canada.

Higher times to come. Several more states are slated to decide the question of legalized recreational marijuana use this November (or sooner)…

Michigan – Voter initiated measure to permit those over 21 to grow and possess personal use quantities of cannabis and related concentrates.  Statewide polling data from this spring shows 61% of voters intend to vote “yes” on the measure. While you may not be able to drink the water in Flint it looks like you’ll be legally able to use it in a bong come this November.

New Jersey – The New Jersey legislature is debating bills that would legalize recreational marijuana in the Garden State. Interestingly, some of these bills would also expunge the criminal records of anybody convicted in the past of marijuana-related crimes. Was I ever arrested for weed?  Fuhghetaboutit!

North Dakota – A voter – initiated referendum will appear on North Dakota ballots this November. Uniquely, the North Dakota initiative would set no limits on the amount of marijuana people can possess or cultivate. Perhaps a large stockpile is required to get through those long, dark winters.

New York – A recent state commissioned study on recreational marijuana legalization came out strongly in favor of making ganja legal. Gov Andrew Cuomo quickly sprang to action setting up a working group to write a marijuana legalization bill. Put New York in the “when, not if” column.  This should give new meaning to Billy Joel’s song “New York State of Mind” (which has the opening line, “Take a holiday from the neighborhood”).

Oklahoma – This June Oklahoma voters approved a broad medical marijuana usage law. Activists have collected a lot of signatures to get the question of legalized recreational marijuana on the Nov 6 ballot. Whether there are enough signatures or enough time to get the ballot question approved this year remains to be seen. Sadly, Merle Haggard died in 2016 before being able to revise the first line of his famous song Okie from Muskogee … “We don’t smoke marijuana in Muskogee”.  It seems that sooner, rather than later, people will be openly smoking marijuana in Muskogee.

Delaware – In June, a majority of House lawmakers voted in favor of legislation to legalize marijuana use and retail sales. However, because the legislation imposed new taxes and fees, state rules required it to receive super-majority support. Lawmakers are anticipated to take up similar legislation again next year. I’ll predict that by 2020 people will be legally getting small in the Small Wonder.

A spot of hemp, Mr. Jefferson? Five of the first six presidents of the U.S. were Virginians and there is evidence that all five of them smoked a little hootch from time to time. You can read the evidence from an unimpeachable source … High Times …  here.

Will River City go up in smoke? But what of modern Virginians and Virginia politicians? In a 2017 Quinnipiac poll Virginia voters supported allowing adults to legally posses and use small amounts of marijuana by 59 – 35 percent. So, the voters would like to see marijuana legalized in Virginia. But since when did the voters matter to Virginia’s political elite? They don’t listen to voters, they listen to dollars. The Virginia Public Access Project tallies up the following donation totals for “all years”:

Beverages – Alcohol Distributors / Brokers – $20,885,384
Retail Sales – General $10,113,070
Restaurants – $6,533,357
Beverages – Alcohol Manufacturers – $3,993,418

As point of reference, Dominion Energy donated $11,354,842 during the same period.  Meanwhile, PepsiCo, owner of Frito-Lay – the maker of Cheetos – only donated $82,385.

— Don Rippert

Predictions of Coal’s Demise a Tad Premature

E. Morgan Massey

As a teenager E. Morgan Massey worked a summer job in the West Virginia coalfields as an assistant “field man.” He traveled around with Stuart Andrews (father of the late state Senate Finance Chair Hunter Andrews), keeping tabs on coal mining operations represented by his grandfather’s coal sales company, the Richmond-based A.T. Massey Coal Company. That was during World War II, before Massey enlisted in the U.S. Army Air Corps, graduated from the engineering program at the University of Virginia, and began mining coal, not just selling it. At 91 years, he has seen more ups and downs in the coal industry than a Kings Dominion roller coaster, and he thinks the market may be turning again.

Not only has Massey lived through more booms and busts in the coal industry than just about anyone alive, he has made more money than most. He built A.T. Massey Coal into the fourth largest coal producer in the country before he retired some 25 years ago at 65 and Massey Coal went public as Massey Energy. Vowing not to compete with his old colleagues, he proceeded to pioneer the development of the South American coal industry and become the first American to invest profitably in a Chinese coal enterprise. The key to his success was a philosophy articulated when he ran Massey Coal under a joint partnership of the Fluor Corp. and Royal Dutch Shell. He steered the company’s capital into highly productive mines that would remain profitable even during the inevitable downturns in coal prices. To boost output during the good times, he leased out marginal coal reserves to sub-contractors who would bear the brunt when prices tumbled.

The coal industry has taken a walloping the past decade as tighter federal environmental regulations have penalized coal as an electric power source, the fracking revolution has undercut coal as a boiler fuel, and solar and wind power have begun displacing fossil fuels generally. While a market remains for high-quality Central Appalachian coal in the metallurgical market (in which coal is processed into coke and used to make steel), the steam coal market seems to be shrinking with no let-up in sight. The situation has become so bad that the Charleston Gazette-Mail headline has proclaimed that coal’s decline is “imminent” with or without President Trump’s recently announced regulatory rescue.

When I’m not blogging for Bacon’s Rebellion, I’ve been working with Massey on writing a corporate/family history of the Massey family and the A.T. Massey Coal Company, and I’ve had the benefit of his thinking. Coal has survived the demise of its market as a fuel for railroad locomotives, steam ships, a home-heating fuel, cheap oil, and abundant nuclear power. Coal has always found new markets. Even if no new markets materialize any time soon, the depression in coal prices and production has been so severe that Massey thinks the time may be opportune for some bottom fishing.

Despite his age, Massey still has the entrepreneurial bug. While he’s not interested in opening any new coal mines, he sees a future in the fuel. With the help of 80-year-old Stan Suboleski, a former head of Virginia Tech’s mining engineering program, he’s launching a new venture, the Minerals Refining Corporation. This time around, he’s “mining” coal using a technology developed at Virginia Tech to extract coal fines (and possibly rare earth metals) from the massive piles of preparation-plant refuse found all over Appalachia. One way or another, he’s determined to find a way to extract a profit from the black rock.

AI – Nirvana or Apocalypse (for Virginia)?

Smells like tech spirit – Artificial Intelligence may be on its way to becoming the buzziest buzz-term in the buzzword laden history of the buzz-o-sphere.  No prior trend has engendered the societal debate that AI has sparked.  Scientistsbillionairespoliticianspoetspriestsbutchersbakers and candlestick makers have all gotten into the game.  Ok, the candlestick maker reference was hogwash but give that industry time … something will come up.  Everybody has an opinion and the opinions are “all over the map”.  Artificial intelligence will either be the recreation of Eden on Earth (without the troublesome snakes and apples) or the kind of zombie apocalypse that gives zombies nightmares.  Either way. it seems clear that AI will have a profound effect on how we live, work and play in Virginia.

“I’m sorry Dave, I’m afraid I can’t do that.”   Concerns about computers getting too big for their britches go back a long way.  Generation after generation had their fears of computer overlords generally mucking things up.  The average American Baby Boomer first learned the perils of artificial intelligence in 1968 from HAL of 2001: A Space Odyssey fame.  Thirty three years later everybody laughed when 2001 came and went without any psychotic computers in evidence (give or take the Apple Newton).  But here we are 17 years later and there are some very serious people with some very serious concerns.  Why did concerns about AI go from the realm of entertainment to a serious debate about the start of nirvana vs the end of mankind?

The winter of their discontent.  AI has gone through a series of boom and bust cycles over the decades from the hype of the 1970s and 80s to the last of the so-called AI winters from about 1990 through 2011.  In some ways the public’s fascination with AI elevated the highs and made the lows all that much lower.  In 1981 Japan’s MITI funded the Fifth Generation Computer Systems project with $850M.  The ambitious program would build a new generation of computers designed for AI along with the AI software needed to make the dream come true.  An impressive list of goals was drawn up.  Ten years later the goals had not been met.  Twenty, even thirty years later many of the goals from 1981 were still elusive.  Then, in 2011, came one of those bizarre occurrences that sort of change everything.

Your answer must be in the form of a question.  In January 2011 IBM’s AI platform, named Watson, played Jeopardy! against the two best human Jeopardy! players in history and beat them soundly.  The AI winter was over.  In reality, AI research had been going on at IBM and elsewhere during the so-called AI winter but the Jeopardy! contest reawakened the public’s fascination with AI.  AI research was often called something other than AI during the AI winter because of the stigma AI had developed.  Kind of like the way liberals now call themselves progressives.  There were neural networks, expert systems, knowledge engineering, etc.  However, it was AI.  The Watson Jeopardy! match put AI back in the public’s imagination and it’s been “off to the races” ever since.

The Last Question.  Google followed IBM with a more impressive AI demonstration.  In 2016, using its Deep Mind AI platform, Google defeated the reigning human Go master.  Go is a 3,000 year old Chinese board game that has been notoriously hard for AI platforms to successfully play due to the mind-boggling number of possible moves.  These advances, and many more, explain why the debate over AI and the future of mankind has reached such a fever pitch.  It appears that this time … AI is finally real.

Come out Virginia.  Don’t let ’em wait.  You backward states start much too late.  Ok, apologies to Billy Joel but Virginia has a long history of denying the present and ignoring the future.  In a world where Russian bots already stand accused of meddling in American elections Virginia needs a frank discussion regarding the escalating capabilities of automation and AI.  Will bots affect the 2019 Virginia elections?  How will automation impact Virginia’s economy?  Was it coincidence that Steve Haner’s by-line started appearing on BaconsRebellion about the same time that AI-powered bots began posting on social media?

— Don Rippert

Huzzah for Middle-Aged Startup Entrepreneurs

Many communities are obsessed with making themselves attractive locations for Millennials on the theory that recruiting and retaining skilled and educated young workers will boost the entrepreneurial economy. Come to think of it, I might have contributed to that line of thinking. But maybe localities should be appealing to an older crowd. Successful start-up entrepreneurs are more likely to be middle-aged than youthful.

According to data published by Pierre Azoulay and three other economists in a National Bureau of Economic Research paper, “Age and High-Growth Entrepreneurship,” Americans are more likely to start up new enterprises between the ages of 35 and 45 than at any other age. The likelihood of starting high-growth enterprises skews even older.

“The view that young people are especially capable of producing big ideas — whether in scientific research, invention, or entrepreneurship — is common and longstanding,” the authors state. “Famous individual cases such as Bill Gates, Steve Jobs, and Mark Zuckerberg show that people in their early 20s can create world-leading companies. Meanwhile, venture capital firms appear to emphasize youth as a key criteria in targeting their investments.”

Younger people are less beholden to existing paradigms of thought and practice, according to this train of thought, and they are less distracted by family obligations. But Azoulay et al. find that the most successful entrepreneurs tend to be middle-aged, not young. “The mean founder age for the 1 in 1,000 highest growth new ventures is 45.0. … We further find that the ‘batting average’ for  creating successful firms is rising dramatically with age.”

Mid-life entrepreneurs have had more time to accumulate human capital (deep experience and knowledge in their field), financial capital (money), and social capital (contacts and relationships), yet the still maintain high levels of energy and ambition.

Bacon’s bottom line: A half year ago, I compiled some research for a client comparing economic trends for the City of Richmond, and the counties of Henrico, Chesterfield and Hanover. With its walkable urbanism, Richmond has positioned itself within the region as the preferred abode for Millennials, and many businesses are relocating from suburban locations to downtown Richmond in order to recruit the Millennials. I expected Richmond, with all that youthful energy, to outpace the counties in start-ups and entrepreneurship.

Source 2017 Inc. 5000

Richmond does, in fact, host more fast-growth start-up companies, as measured by 2017 Inc. 5000 entries, than Chesterfield, Hanover or Powhatan counties. But Henrico boasted the most of all, accounting for nearly half of the 29 fast-growth companies in the entire metropolitan area. Henrico has precious little walkable urbanism to sell; land use is dominated by traditional sprawl-style development. What the county does have is lower taxes, good schools, low crime, upscale retail, and neighborhoods with spacious houses — primary considerations for middle-aged families raising kids.

I think Henrico could benefit from more walkable urbanism, which would make a killer land use in a jurisdiction with low taxes, low crime, and good schools. But the larger point is that a middle-aged population and entrepreneurial vitality need not be incompatible. Indeed, the two traits go hand-in-hand.

Virginia Small Business Rating: Fair to Middling

Ranking out of top 177 metros. For an explanation of metrics, see Reward Expert’s methodology here.

Yesterday I opined on the critical importance of tax rates in influencing the flow of corporate and human capital between the states (“Supply Siders Like Virginia’s Economic Outlook“). But I made the point that taxes are hardly the only factor driving economic growth. Another important variable is entrepreneurial vitality — the ability of states and metros to grow their own businesses. Strong entrepreneurial ecosystems have kept states like California and New York in the game despite atrocious tax policies that push businesses and high-income households out of their states.

Now comes a new of “Best and Worst Places to Start a Small Business,” published by Reward Expert, a company that creates reward packages for credit cards. Researchers used a bundle of 30 metrics including office space, demographics and diversity, education, income, transit, housing costs, and venture capital activity, among others for 177 metropolitan areas with populations greater than 250,000.

Under this methodology, the Denver, Colo., and Boston, Mass., metros scored No. 1 and No. 2, while Charleston, S.C., and the Tallahassee, Fla., regions scored the worst.

And Virginia metros? Overall, they put in a fair-to-middling performance. The Washington and Richmond metros ranked 21st and 22nd respectively, both respectable scores but not enough to blow anyone’s socks off. Roanoke was a pleasant surprise at 29th. Lynchburg scored in the top half. Virginia Beach-Norfolk was the only laggard, falling into the bottom half — but nowhere near the bottom.

Metropolitan rankings have become a dime a dozen now, and I haven’t analyzed Reward Expert’s methodology to see if it is better or worse than the others. (I do question how valuable the five-year startup survival rate is as a metric, for instance, for it seems to vary within such a narrow range. And Washington’s low score for educational attainment looks plain wrong.) Just consider the report as one more colorful fragment in the kaleidoscope of data we scrutinize to track our performance.

Combine this report on small business prospects with the “Rich States, Poor States,” which focuses more on factors influencing corporate investment and human capital flows between states, and the outlook is cautiously positive for Virginia. By no means can we consider ourselves an economic development powerhouse, as we were during the glory days of the 1980s and 1990s. And we’re still too dependent upon the vagaries of federal government spending. But our economic fundamentals look better that those of most states.

Update: WalletHub has come out with its own ranking of best cities for business startups. Bottom line: Virginia sucks. Out of 180 cities:

Richmond — 79th
Virginia Beach — 131st
Norfolk — 150th
Newport News — 160th
Chesapeake — 170th

Important difference between the two rankings: Reward Experts looks at Virginia metropolitan regions, WalletHub looks at Virginia “cities.”

21st Century Wealth Creation:

Dan Larimer. Photo credit: Roanoke Times

Nine years ago Dan Larimer was broke, living with his parents, driving a 2001 Nissan Altima, and recovering from a messy divorce. Today Forbes magazine estimates his net worth at $600 million. The source of the 35-year-old Virginia Tech graduate’s fortune? Crypto-currency.

As the Roanoke Times‘ Jacob Dimmit tells the story, when Larimer was down and out, he managed to scrape up $20 to purchase 400 bitcoins. Today, those coins are worth about $4 million.

But a fortuitous purchase of bitcoin isn’t what made him one of Virginia’s wealthiest people. Fascinated by crypto-currencies, Larimer began creating his own. He launched his first crypto-currency, BitShares, in 2014. The value of all BitShares now exceeds $400 million. Then he launched Steemit, the first social network to operate on a blockchain. That currency now has a market cap of $600 million.

Now Larimer is working on his latest and greatest project,, which he hopes will outdo bitcoin.’s coin, EOS, already ranks as the ninth largest cryptocurrency by market value, worth $4 billion. And he’s barely gotten started. is headquartered in the Cayman Islands to avoid government taxes and oversight, but the engineering office is in Blacksburg. The company is self-funding, selling a digital token that operates similarly to bitcoin. The plan is to develop software and applications on top of the blockchain technology upon which bitcoin and other crypto-currencies are based.

As the Roanoke Times describes it: “ will create software that it releases into the public for free. Developers will use those tools to create their own applications that run on their own blockchains, much like the way Bill Gates and Microsoft created the Windows operating system for all sorts of personal computers.” It’s not clear from the article how is supposed to make a profit, but, hey, there’s a lot I don’t get about the technology.

“Chronicling wealth is a big part of what we do,” Jeff Kauflin, co-author of the Forbes Richest People in Crypto-Currency list, told the Roanoke Times. “Crypto is a legitimate asset class now. There’s a lot of wealth that’s been created based on it, hundreds of billions. We at Forbes think it should be treated as a legitimate asset class.”

Clearly, Larimer is a genius. With the encouragement of his father, a defense contractor, he began writing software on a Macintosh II as a fifth-grader. When he exhausted all of the Advance Placement computer science classes during his junior year in high school, he just taught himself. When he started at Virginia Tech, he tested out of three semesters of coursework.

A turn towards libertarian thinking. In Blacksburg, Larimer got married, had children, and then got divorced. He and his ex crafted a deal under arbitration. The courts overturned parts of the deal, leaving him feel cheated. “That was my first experience with the government not respecting arbitration,” he said said. “I view violence as a shortcut to governance. So I made it my mission in life to find free market solutions to securing life, liberty, property and justice for all.”

Larimer said he believes cryptocurrencies, and the blockchain technology that power them, can provide fairer solutions to all sorts of societal woes. Currency is the beginning, but Larimer said the technology has the potential to reach much further.

No one company or government controls the software, so authority is decentralized. It’s based on computer algorithms, so the subjectivity is removed from the equation. A contract agreed to by two parties, whether it’s the transfer of a bitcoin or a separation agreement, is set in stone and cannot be relitigated.

“Right now in the current system, I have no way to know if that’s your car,” Larimer said. “I have to go ask the government. And if there’s a dispute between us, I have to go ask the government. The government will decide and they may or may not honor our contract.”

In the future, Larimer imagines, vehicle registrations will be stored in a blockchain, or a public ledger containing the information on every vehicle transaction to ever occur.

A block will be created when a vehicle rolls off the assembly line, then another when it’s sold at a dealership. When that owner decides to sell the car on Craigslist, they accept payment and in exchange add another block transferring ownership yet again.

If there’s an argument years later about who owns the vehicle, anyone can look back at the public ledger, called the blockchain, track the chain of blocks back to the manufacturer and determine the rightful owner.

This would be a vehicle registration system that would give unprecedented transparency, where deals could never be undone and the government would be completely uninvolved.

Bacon’s bottom line: We live in strange and unsettled times. I cannot begin to fathom how information-age alchemists can conjure up billions of dollars from the ether through the creation of crypto-currencies. Such digital prestidigitation seems to nullify all the axioms and maxims for slow-and-steady wealth accumulation that I grew up with. I can’t begin to imagine the creative destruction that crypto-currencies and blockchain will unleash, and I have no ability to augur who the winners and losers will be, much less how to preserve the modest wealth that I have accumulated. If you’re on the wealth-creating end, it must be an exhilarating time. If you’re on the sidelines, it’s most disconcerting.

I will say this: If crypto-currencies and blockchains are going to transform the world, I’d like to see one of the epicenters of change arising in Blacksburg. If turns out to be the next Microsoft, Apple, Google, or Amazon, I’m glad that Virginians will see some benefit from it.

This Bitcoin Mania Is out of Control

If you don’t understand how to mine bitcoin, try reading this Wall Street Journal graphic. You still won’t understand, but at least you’ll have tried. (Click for larger image.)

If people want to invest in bitcoin, or invent competing cryptocurrencies, or dedicate their computers to “mining” bitcoin by solving computationally difficult puzzles, well, it’s a free country and they can do what they want. As a political-policy commentator, I would never advocate banning such endeavors. As a social commentator, I am moved to ask, are these people out of their minds? What a socially useless activity.

As a economic-development commentator,  however, I must cheer the initiative of Frederick Grede, Michael Adolphe, and other principals of Bcause, a company that aspires to become the largest bitcoin mining operation in North America. The Virginia Beach-based company has raised $5 million in funding led by Japanese financial-services firm SBI Holdings and plans to raise more.

A Wall Street Journal article today describes how Michael Poteat, an engineering student at Old Dominion University, started mining bitcoin four months ago. He purchased 20 “mining rigs,” computers that solve complex equations to generate new coins. The 20-year-old kept tripping the circuit breaker in his house, and he struggled to find a place to accommodate his operations. “It’s just difficult as an individual to handle all the logistics,” he says.

Then Poteat came across Bcause, which provides the infrastructure, security, and electricity to enable large-scale bitcoin mining.  The WSJ elaborates:

Bitcoin miners are rewarded with new coins and transaction fees for performing the calculations that make the bitcoin network tick. The more valuable a bitcoin is, the greater the incentive to start mining. But the more miners who participate, the more computations are needed to earn rewards.

The process can be expensive and cumbersome, requiring specialized hardware and large amounts of power. Such challenges have long prompted miners to share space and resources. Now, companies that harbor mining equipment are fielding more requests than ever. …

Bcause is one of the firms that have sprung up to cater to aspiring bitcoin miners. In an old beverage warehouse in Virginia Beach, the start up is running thousands of rigs for clients from the U.S. to Asia. … Bcause has contracts with clients to house about 60,000 mining rigs and will serve retail clients by renting out spare machines, a process known as “cloud mining.” It has about 5,000 machines up and running, and plans to outfit another site in eastern Pennsylvania.

The profitability of mining bitcoin hinges on the cost of buying the mining rigs — the Antminer S9 is the most popular — electricity, and, of course, the price of bitcoin. Right now, despite a recent slide, the price is still high by historical standards, and bitcoin mining is said to be “insanely profitable.”

As a hosting service, Bcause says it is insulated from price volatility because it doesn’t invest in the mining equipment or the cryptocurrency itself. However, it does plan to build out a one-stop shop for trading bitcoin, including a clearinghouse, and derivatives exchanges.

I confess: I don’t get it. I don’t understand what bitcoin is good for, other than as a vehicle for maniacal speculation. I don’t understand how bitcoin mining works. Maybe there is some social utility from all this fevered activity, but maybe we’re just bystanders to the 21st tech-economy answer to the 17th-century Dutch tulip bulb mania. Will bitcoin become the Next Big Thing, like the Internet, that will revolutionize commercial transactions and transform our lives? I don’t know. Will it crash and burn? I don’t know.

Peter Diamandis, serial tech entrepreneur and founder of the X Prize Foundation, spoke at the Richmond Forum earlier this month. He made the case that technological change is accelerating, driven by the geometric increase in computational power and the growing capabilities of Artificial Intelligence. A colleague of Ray Kurzweil, the author who coined the phrase, “The Singularity,” Diamandis said that technology is rapidly approaching escape velocity in which change will no longer be in human hands. So, yeah, it won’t be long before the robots take over.

Curse you, bitcoin!

In a world in which all the rules are changing, how do we know what to do? Will our skills and knowledge be worth anything a decade or two? What will happen to our pension funds and personal investments as half the companies in any given portfolio is disrupted and rendered worthless? Will there be any work to do, or will robots do it all for us? Will there be any purpose or meaning to human existence?

The Promise of Personalized Medicine

If all you want is a doctor who will prescribe you pills, Dr. Neal Carl is not the man for you. If you want to understand the metabolic pathways of your medication, he’ll take the time to explain.

Personalized medicine is the new frontier of healthcare. DNA testing has become so inexpensive that it is now practical to develop wellness regimes tailored to peoples’ individual genomes. Virginia’s biggest endeavor in this field is taking place in Northern Virginia under the auspices of Inova Health System’s Center for Personalized Health. But another approach to health care delivery is taking place here in Richmond. My friend Linda Nash has launched a next-generation concierge medicine business, WellcomeMD, whose physicians treat their patients based on an in-depth analysis of their DNA, gut biome, and a full-battery blood test.

To get a feel for how personalized medicine works, I took up Linda on an offer to have my DNA tested and then meet with WellcomeMD’s Dr. Neal Carl for a consultation. Except in rare instances, genes are not medical destiny. But they do influence our health in many ways, and knowing our genetic proclivities is helpful in crafting an approach to fitness and nutrition.

The testing process is absurdly easy. Visit the WellcomeMD office, take a cheek swab, send it off, and wait ten days for the results. Interpreting the findings, however, requires a background in genetics, proteomics, and metabolic pathways — subjects that few primary care physicians studied closely in medical school. But Carl has immersed himself in these disciplines and how they relate to wellness. After poring through the data on some 20 to 30 “actionable” genes — that is, genes that provide information that can inform us about individual fitness and nutrition — he sat down with me to go through the findings.

I never made it past Introductory Biology in college, so a lot of it was over my head. But here’s what I gleaned from the consultation: Like most people, my genes confer both strengths and weaknesses in the 21st-century struggle for health and wellness.

My genetic profile indicated that my power/endurance response is weighted in favor of endurance. I was never destined to develop a weight-lifter’s physique. I wasn’t genetically predisposed to become the fabled 90-pound weakling, but I was never going to become a Charles Atlas either. Lifting weights could increase my strength, but I’d never develop bulky muscles. Conversely, my body is genetically suited to moving oxygen to body tissues and metabolizing it efficiently. Practically speaking, I’m far better suited to fitness regimes that emphasize endurance over strength.

The genetic test also measures for the body’s ability to detoxify muscles after exertion. I fall in the middle range, suggesting that I needed a day’s break between intense workouts. I also have a proclivity for injury of tendons and ligaments, with special concern for the Achilles tendon.

All this rang true. While I was never a great athlete, I devoted 14 years of my life to serious study of Tae Kwon Do, the Korean martial art. On the side, I ran, lifted weights, and did aerobics. I was never the strongest, certainly not the fastest (Carl confirmed that I lack the fast-twitch genes), nor the most flexible, but I did have the capacity to finish grueling hour-and-a-half workouts while others were hugging the floor. If I could survive the first 45 minutes of a fight, I could definitely kick the other guy’s ass!

Without the benefit of medical coaching, I have fallen into a fitness regime consistent with what my body was telling me. These days, I sporadically lift light weights and do one or two bouts a week of intense half-hour cardio. My efforts at consistency are bedeviled on and off by minor problems with rotator cuffs, pulled muscles and once, in an ill-fated fling with barefoot running, a pulled tendon in my foot that left me limping for weeks. All of these traits were consistent with my genetic profile.

As for nutrition, my genes don’t put me at risk for obesity, but just gaining 10 to 12 pounds over my ideal weight does put me at risk for pre-diabetes. I have a metabolism that makes me gain weight more readily by consuming carbs than fat. I’m salt sensitive (which may help explain my hypertension), and I have a heightened cancer risk from eating charred meat — which is a major bummer, because half the meals I eat consist of grilled beef or chicken. This information is useful because, evidently, I have not naturally gravitated in life to a nutritional regime consistent with my genetic endowment. Things must change. There will be more broccoli and brussel sprouts in my future.

The body is an incredibly complex organism, and a handful of genes don’t tell the whole story. To get a full, rounded picture of my health, Carl also would test my gut biome. Intestines are a “second brain” loaded with neurotransmitters, he says. When your intestinal bacteria aren’t happy, you aren’t happy. If I were a patient, he also would get an in-depth blood panel looking at dozens of markers — far more than the normal primary care physicians would track. And he would integrate all that data into a holistic understanding of my health that encompasses exercise, nutrition, stress and sleep.

New medical model. Managing a patient’s wellness at this level of understanding is time-consuming, and primary care physicians, who typically have a roster of 3,000 patients, cannot do it. The business model of WellcomeMD calls for Carl to oversee only 300 patients.

Nash founded PartnerMD, a successful concierge medicine practice, before leaving the company selling out her interest several years ago. As soon as her non-compete clause expired, she was ready to roll out what she calls “concierge 2.0.” The old model allows doctors to spend more time with patients and give them more holistic care. But WellcomeMD pushes the envelope of medical practice.

“Genetics testing has to be part of concierge medicine going forward,” says Nash. “It really is a different model. For people who want to delve deeper into their genetics, their stress, their sleep, we’ll have more time and more advanced tools. Under the traditional model of medicine, there is no possible way to do this.”

Carl, who practiced general medicine at Chippenham Hospital, found the traditional medical model frustrating and unsatisfying. He saw on average about 25 to 30 patients a day, whom he had to move through in an assembly-line process. He focused on getting their “numbers” to look good — numbers for blood pressure, cholesterol, blood sugar, and the like.

“As it played out, a percentage of the patients didn’t feel that well. Many were on several. Even with good numbers, they still had bad events,” he says. By way of comparison, he notes that television broadcaster Tim Russert had a “normal” cholesterol panel, but he had an underlying cardiovascular disease that his doctors didn’t catch until he had a fatal heart attack.

“We were putting Band-Aids on things and not getting root causes,” Carl says of his former practice. “There had to be a better way to practice medicine.” Continue reading

The Airbnb Dilemma: Regulate or Not?

Revenue growth in the rental of dwellings in Virginia through Airbnb has outstripped the rental of single rooms. Source: “2017 State of the Commonwealth Report”

Airbnb, the website that allows homeowners to rent rooms and houses for short periods, no longer occupies an obscure niche in the Virginia lodging marketplace. The company is capturing a disproportionate share of growth in lodging industry rooms and revenues, and it depresses the ability of hotels to raise rates during periods of peak demand, concludes the “2017 State of the Commonwealth Report.”

The number of Virginia listings has surged from just over 2,000 in October 2014 to 10,400 in October 2017. Total revenue has increased over the same period from $1.52 million to $17.4 million. Airbnb share of the lodging market rose from less than a half percent to nearly 4.7%.

“While the Airbnb rental sector may be smaller than the traditional lodging sector, Airbnb is a rising competitor,” write Robert M. McNabb and James V. Koch, the lead authors of the report.

The image most people have of Airbnb participants is of homeowners renting out a spare room for pin money. But the data suggest that it’s becoming an increasingly big business in which property owners are renting entire dwellings. While private room revenues increased sixfold over the three-year period studied, the rental of entire places increased thirteenfold, as seen in the chart above.

That reality has implications for how Airbnb should be regulated. Whole-house oceanfront rentals in Virginia Beach have generated numerous complaints regarding unruly behavior, illegal parking, and trash. The lodging industry has argued that Airbnb rentals should be taxed on the same basis and should meet the same regulatory standards as hotels and motels are.

McNabb and Koch are sympathetic to Airbnb to a degree.

It is not the job of government to protect existing firms and industries from new, more efficient or more attractive competitors that would serve consumers better and do so at lower prices. … Enabling citizen consumers to spend their dollars where they wish is a welfare-maximizing stance for government to adopt. … As a rule, challenging competing firms to meet “the market test” — that is offer goods and services at prices and levels of quality that are attractive consumers… — not only is an equitable approach that treats all citizens and firms the same, but also generates the best overall results for the citizenry.

However, they add an important caveat: Government should not intervene as long as the use of Airbnb “does not generate undesirable side effects such as pollution, noise, traffic congestion, crime, unsanitary conditions that impact the public health, and the like.”

While some Airbnb hosts have consciously evaded city regulations and taxes, it does not necessarily follow that localities should devote substantial resources to cracking down on them. Single-room hosts account for a small percentage of rooms, revenues and taxes, and they are rarely the source of behavioral problems. They go in and out of the market, and they’re difficult to identify and force to comply. The payoff for local governments is low.

Cities would do better to devote scarce enforcement sources going after Airbnb hosts offering their entire place for rent. “Plainly speaking, this is where the revenue is and evidence suggests that any behavioral problems that Airbnb generates are concentrated among these properties as well.”

Meanwhile, the authors advise hotels operators to re-evaluate their pricing and quality strategies. “Airbnb and similar rental hosting firms are not going to go away.”

Celebrating Creativity at the Makerfest

After watching too much cable TV news, I get really depressed about America. But I’ve found a tonic: Attend an art show, craft fair or a makerfest to connect with real people doing real things. The creativity, imagination and craftsmanship on display are a delight to behold. Yesterday I spent a half day at the RVA Makerfest 2017 at the Science Museum of Virginia. By the end of the day, I felt much better. Here are some of the people I met.

Andrew Sink shows a plastic replica of his brain made with a 3-D printer.

Andrew Sink and his business partner Chris Caswell met in Florida. Caswell moved to Boston where he purchased a 3-D printer, and they brainstormed the idea of retailing 3-D printers and supplies. Choosing to meet halfway, geographically speaking, they launched their business in Richmond two years ago. They believe 3D Central to be the first 3-D printing retailer in the country. While similar ventures have popped up in other cities, they think they’ve got the best business model.

A difficulty with hawking with 3-D printers is that they take considerable effort to learn to operate. Often, people give up and return the product to the retailer. Sink is proud that they’ve never had a return. The key to growing the market, he says, is education and training. 3D Central holds classes, provides individual training, and even teaches summer camps. “You can’t just sell printers,” he says. “You need a holistic solution. I feel that’s what we’ve accomplished.” The company now employs six, and the partners are looking for expanded office space.

As for what these printers can do… In the photo above, Sink shows a print-out of his brain. After taking an MRI to help diagnose his migraines, the hospital gave him a CD image. He fed the data from the CD into the 3-D printer. Voila, a pink plastic brain.

Heidi Rugg and her puppets

Fourteen-year-old Winter Peace says she has been making puppets since she was seven.

It takes a wide range of skills to become a puppeteer, says Heidi Rugg, lead puppeteer of the Barefoot Puppet Theater in Richmond and founder of Puppets off Broad Street, an alliance of four local puppet troupes. Typically, puppeteers make their own puppets. Animating puppets requires mastery over an array of springs, levers, pivots, fulcrums and wheels — in a word, machine mechanics and physics. And, of course, puppeteers must compose entertaining skits and perform them.

Jim Henson and his muppets catapulted puppeteering to national fame in the United States, but the art form is not widely practiced outside of a few big cities. Atlanta, Boston and New York are the big players on the East Coast, Rugg says, but Richmond has a respectable puppeteering community, which has grown to the point where it supports a “performance series” — RVA Winter Puppetfest.

Keith M. Ramsey with his steam-punk inspired art.

After studying at Virginia Commonwealth University (VCU), Keith M. Ramsey landed a job in a graphic design firm in Richmond. One day he passed a co-worker’s computer displaying some steam punk art. “It stopped me in my tracks,” he says. He immediately fell in love with the genre, and began fabricating things made from castaway metal materials, which he refers to as “found” materials. Adding welding to his repertoire of skills led to an explosion of artistic creativity and innovation.

As it turned out, it was a good thing that Ramsey developed a serious hobby. The design firm laid him off. After that, he plunged into his artwork full time and never looked back. Among the creations on display yesterday were steam punk-inspired lamps and pen holders. Trust me, you cannot buy these office supplies at Staples! See more of his artwork here.

Ballard “Viking” Midyette explains how he made a knife.

Ballard Midyette lovingly produces custom hand-made knives, spending many hours fashioning the blades and wood handles. Other artisans make custom knives, too. But Midyette goes two or three extra steps. He finds the personality in each knife and finds a name to fit. “The Wild Card,” “The Minimalist,” “The Cynewulf,” and the “Conjurer” were the names of some of the knives on display yesterday. He also photographs each step of the production process and writes a narrative, which he posts on the Web for his customers to see.

After studying music at VCU — he plays the trombone — he nearly went to law school. But he bailed at the last minute to pursue his craftsmanship, which he supports through a full-time job. Making a quality product can take hours of polishing blades and sanding wooden handles. Some might find the work tedious, but Midyette, whom his friends call “the Viking” for his mane of red hair, says there is zen to the process. “It’s like taking away the parts that don’t look like the knife.”

He and his partner James Bernard aren’t in it for the money — “I started this without any attachment to income,” Midyette says — but they have found that, if they do good work, it will sell.

Mike Harrell hammering an iron rod into a hook.

Mike Harrell discovered blacksmithing on the Internet. For a long time, he followed a number of blacksmith blogs. With a burly build, bushy beard, and gleaming pate, Harrell could have been called from central casting for the village smithy role. When he finally sought out the company of Richmond-area smithies through the Central Virginia Blacksmith Guild, he discovered other bearded men like himself. “I have found my people!” he says.

The guild has about 110 members. While many members are hirsute and hefty, says Harrell, there are female smithies, too. Working a day job at what he will describe only as a “Richmond-area credit card company” (wink, wink, nod, nod), he pursues smithing as a serious hobby. He works mainly on functional items — at the show he was forging a hook that could be used to hang a bird house — but relies upon others for artistic vision. There’s nothing wrong with being practical, he says. As he asks the kids who watch what he does, when the zombie apocalypse comes, would they rather be good at video games or iron-smithing?

Continue reading

A Patch in Time Saves Nine

The WannaCry and Petya cyber-assaults on banks, airports and other businesses in Europe in May used a vulnerability in Microsoft software to infect machines and spread around the world. Microsoft had issued a patch to close the back door months earlier, but many users never installed the update. Ironically, when Microsoft creates a software patch, it tips off bad guys to a previously unrecognized vulnerability. Cyber-criminals can create a virus to exploit that vulnerability sure in the knowledge that many corporations will fail to update the all of the thousands of computers and devices in their system.

The single-most effective thing that any IT manager can do to maintain security is to promptly install software patches. The task sounds pretty basic. But it’s easier said than done.

Christiansburg-based FoxGuard Solutions helps clients keep software up to date on critical infrastructure such as power grids, wind turbines and nuclear power plants. Founded in 1981, the company has seen its cyber-security business expand at a compounded growth rate of 42% over the past five years.

As far as FoxGuard CEO Marty Muscatello is aware, none of its customers were affected by the WannaCry and Petya attacks, reports Jacob Demmit with the Roanoke Times, after accompanying U.S. Rep. Morgan Griffith, R-Salem, on a tour of the FoxGuard facility. The company’s software is used in 40 different states and 35 countries. Reports Demmit:

FoxGuard has been using a $4.3 million cooperative agreement from the U.S. Department of Energy since 2013 to develop tools to track software updates and patches for 128 companies in the critical infrastructure industry.

It’s pretty easy to keep a single home computer up to date, but that becomes increasingly difficult when an IT department is trying to protect a power plant that could have 100,000 different machines across a power grid. A company might not even be aware of some computers on its network that could let hackers in, like an air conditioning system.

FoxGuard, it would seem, has a bright future, for its market will expand exponentially. As the Internet of Things takes off, embedding microchips and wireless in billions of devices, corporations will be hard-pressed to keep track of them all. Patching them all will be almost impossible, for Original Equipment Manufacturers typically stop updating software for devices they no longer manufacture. The challenge is particularly acute for electric utilities, which have cobbled together multiple generations of technology to operate their systems. As they move increasingly toward flexible “smart grids” to accommodate solar and wind power, they will install thousands of sensors and actuators across their systems, potentially making them even more vulnerable to cyber-attacks.

For a monthly fee, says the Roanoke Times, FoxGuard tracks all those machines and makes sure the client knows of every update on a timely basis. The company can even download and test the update in its own lab to check for compatibility issues before installing it in the field.

Bacon’s bottom line: The news brings daily remembers of how vulnerable the global Internet-connected economy is, and how anyone with a good cyber-security technology or service can tap into a global market. Governor Terry McAuliffe is right about this: Cyber-security is one of the biggest economic-development opportunities to come along in Virginia in a long time.

Entrepreneurial Monks Peddle Natural Burials, Monastic Immersion

Monks at lunch. Photo credit; National Geographic

The order of Trappist monks living in Holy Cross Abbey in Clarke County has dwindled from 68 to 10, and those ten are aging — the youngest is 59 years old. The remaining monks know they must change to survive. And for a group that traces it origins back to 1098 France, committing themselves to cloistered lives of celibacy, poverty and obedience, they have been pretty darned adaptive.

In a new one-hour documentary and accompanying article, The National Geographic highlights the order’s moves to become environmental sustainability. Organic farming and low-flow toilets are all fine and good, but what impresses me most is the monks’ spirit of entrepreneurial innovation — making the best of what they’ve got in their 1,200-acre property located about an hour’s drive west of Washington, D.C.

The monks have set aside 80 acres set aside for a “natural cemetery.” People  can choose to be buried there in a shroud, as the monks are, or in a biodegradable coffin. Alternatively, they can choose cremation and have their ashes scattered in a separate section of the cemetery. Natural burial ranges from $4,000 to $8,000, depending on the spot. Since the cemetery opened in 2012, there have been 97 interments and 12 people who have had ashes scattered.

But this is the best:

In the last five years, Holy Cross has introduced “monastic immersion weekends” in addition to regular silent retreats, so that men and women can get a fuller taste of monastic life. Those weekends always sell out, says Kurt Aschermann, a companion to the abbey. Even the guests for the regular silent retreats are leaving larger donations than in years past, says Father James, which means that the retreats have become more profitable.

That’s what you call inventing a new business model!