NJEDA leader: How NJ will reclaim top spot in innovation – NJBIZ

“We want to reclaim our leadership position in innovation and entrepreneurship,” Tim Sullivan, chief executive officer of the New Jersey Economic Development Authority, recently declared. “We also want to build the most diverse and inclusive innovation ecosystem in America. That’s a really important goal.”

Following the big announcement about HAX, a hard tech startup program, signing a lease for its United States headquarters in Newark, Sullivan sat down with NJBIZ for a wide-ranging discussion about that initiative, as well as challenges, priorities, goals and top issues for the rest of 2022 and beyond.

“I think HAX is an extraordinarily impactful project, not just for Newark, but for the state,” Sullivan said.

He explained that it is the centerpiece of an effort to nurture startups here.

New Jersey Economic Development Authority CEO Tim Sullivan, shown in September 2021, says Newark’s diversity offers a real opportunity to meet the goal of creating the most diverse and inclusive innovation economy and presents an opportunity to create something different from places like Silicon Valley. – EDWIN J. TORRES/NJ GOVERNOR’S OFFICE

“Over the last 40, 50 years, we have not seen enough new young companies grow and scale into midsize and big companies in New Jersey,” said Sullivan. “And that’s how you get durable job creation, when you get companies that are five or 10 people turning into 500 or 1,000 people, or 5,000 or 10,000 people.”

Sullivan said the competition to land HAX in Newark was a “dogfight” with some serious competitors in other states. He said ultimately New Jersey and Newark came out on top for a variety of reasons including having a great building in a great location, talent, connectivity, incentive programs and partnerships with higher education institutions. He was particularly pleased with how officials sang from the same songbook in one voice about the Garden State and Brick City during their pitch.

Newark’s diversity, Sullivan says, offers a real opportunity to meet the goal of creating the most diverse and inclusive innovation economy and presents an opportunity to create something different from places like Silicon Valley.

The state’s innovation economy has made great strides over the last few years and broke back into the top 10 nationally, ranking ninth in venture capital dollars invested, according to PitchBook. The New Jersey Business & Industry Association’s recent 2022 Indicators of Innovation Report compared the Garden State’s innovation economy to others in the region. New Jersey ranked fifth out of seven states in that report, tied with Connecticut, with NJBIA saying that the Garden State has taken many steps to improve its standing while offering additional recommendations to create more growth.

Those factors represent another reason why HAX is being viewed as a potential game-changer—especially with a company like SOSV backing it. Sullivan also pointed out that HAX has the chance to be at the center of the current push to bring manufacturing back to the United States, but in a decarbonized way, saying they have a compelling thesis.

“If we get this right, that’s a trend that’s going to happen over the next 50 years across the country,” Sullivan said. “And New Jersey’s got a chance to really be a leader in that because of this initiative.”

Sullivan believes there is a trend in favor of American manufacturing because of the supply chain disruptions and vulnerabilities that the pandemic laid bare. “Having your supply chain a little closer to home is a good thing,” he noted.

To that end, he hinted at some upcoming announcements of more manufacturing initiatives to support that sector, calling it a priority for the last part of the year.

Another priority is continuing to help small businesses move through the effects of the pandemic, highlighting efforts and investments to spark that recovery such as Small Business Improvement Grants and the Small Business Lease Grant program.

Speaking of films …

Filmmaker Dave Baram — producer and director of “One All the Way,” a documentary based in his native Paterson — returned to his home state for his next project. Read more here.

On the topic of film and television production in New Jersey, Sullivan said the sector continues to be a “gusher of economic activity in the state,” with filming volumes up extraordinarily.

“And most excitingly, the number of people who have either started or are looking at building studios in New Jersey is incredible,” said Sullivan. “And that’s how you really get the durable long-term job creation in the film and TV world, with studios.”

While one-day shoots are great for the state brand and for jobs, Sullivan called studios the “coin of the realm,” in terms of creating permanent, family-sustaining career-path jobs. Another priority is building out the workforce within that sector in areas such as set design, lighting, costumes, craft services and more, to a scale needed to accommodate a $1 billion to $2 billion industry.

He noted that a lot of sizable studio developers are looking seriously at New Jersey – in addition to projects already announced, in development or opened –which he said bodes well for the future of the industry in the state. And, Sullivan also believes it is a defense against the post-pandemic trends since it is an “in-place kind of business.”

Back to the office?

“That’s a good hedge against whoever knows what’s coming in terms of the future of office work,” Sullivan explained. “Because the more you can have place-based economic strategies, the more stickiness you have in your economy of people putting down roots, people making investments, people living in your state and in your community.”

That future of office work is another topic that Sullivan says is at the top of his agenda and he believes there are both challenges and opportunities within that issue, since it is a very open and active discussion.

Gov. Phil Murphy recently proposed a three-part response to New York’s toll plans. – CITY OF NEW YORK

“If you’re a town with a great downtown that can build a little bit of office space, coworking space, or if you’re a suburban office park that has been sort of left for dead, I think there’s opportunities there,” said Sullivan, noting the challenges for cities with big office tower presences.

Sullivan said the issue is an enduring legacy of the pandemic, conceding that we do not know how that part is going to play out.

“I don’t think anybody’s going back to work five days a week, Monday to Friday, in the office in most industries anytime soon,” said Sullivan. “I don’t think it’s remote work forever. Even if it’s 60% of the time. That’s a different reality for a downtown Newark or downtown Paterson or Jersey City or Camden or Trenton.”

Many of these trends and issues dovetail into other challenges. One example: the congestion pricing battle. While Sullivan would not comment on pending legislation, Gov. Phil Murphy recently proposed a three-part response to New York’s toll plans, with one segment including incentives from the NJEDA for companies that set up regional hubs for their New Jersey employees.

“Certainly, encouraging more folks to pay taxes where they work and live is better for our economy,” Sullivan noted. “As the governor says, ‘we have the catcher’s mitt out looking for businesses and people that want to be here.’”

Policy debates

And that notion collides with many broader social and political debates, such as those over reproductive health, LGBTQIA+ rights, civil liberties and others playing out across the country. Sullivan said that remote work creates an opportunity, especially when combined with New Jersey boasting the top public school system in the nation. He recounted a recent conversation with a CEO of a large organization who said actions being taken in some states are creating a huge talent issue for the company. Attracting talent is already the name of the game, and with the prevalence of remote work, people have choices now.

“They want to live in places that protect liberty, that protect people’s rights to marry who they love and raise a family the way they want to,” Sullivan explained. “And woman have autonomy over their bodies and all those things that maybe we took for granted too much over the last 30 or 50 years. New Jersey’s going to fight like hell to protect those things. Other places aren’t.”

Along those lines, Murphy made a pitch in July to companies in states where abortion rights were threatened in the wake of the Supreme Court decision overturning Roe v. Wade. In those letters, which Murphy reportedly sent to organizations in Georgia, Florida, Missouri, Ohio and Texas, he affirmed New Jersey’s protections for woman, the LGBTQIA+ community, and voters.

“And you got the No. 1 public school system, a great quality of life, and the best pizza and bagels in the world,” said Sullivan. “That’s a pretty good hand of cards to play.”

In August, Sullivan tweeted out optimism about where the Garden State was headed.

“Stitching together some data points from this week alone…another positive credit rating agency action … another really positive NJ jobs report … and @GovMurphy cutting ribbon on several hundred new jobs in NJ’s bread and butter pharma sector … the momentum in NJ’s economy is real,” he posted.

From left: Amazon NYC Head of External Affairs Carley Graham Garcia, SOSV Managing Partner Sean O’Sullivan and NJEDA CEO Tim Sullivan take part in a discussion at the Propelify Innovation Festival on Oct. 6, 2021, in Hoboken. The festival heads back to Hoboken this year, also on Oct. 6. – DANIEL MUNOZ

Sullivan insisted that he does believe that. But also conceded that there are real challenges to contend with, from moving past the pandemic to inflation to a tight labor market to supply chain disruptions and more.

“It is not a walk in the park every single day,” Sullivan said. “But anyone who’s being honest would say that New Jersey’s economy today is in better shape than at any point in the last 15 or 20 years. Not every single piece of it. The small business world is still very much hurting from the after-effects of the pandemic. Part of retail and gaming sectors are still hurting.”

Sullivan said a lot of work is left to do to get an economy that works for everybody and conceded there are a lot of headwinds.

“But the momentum is as strong as it’s been in a long while,” he said.

And much of the focus moving forward will be continuing to develop burgeoning new sectors, such as offshore wind, technology, legal cannabis, film and television, and sports betting, along with New Jersey’s traditionally strong sectors, including pharma and life sciences, as well as small businesses, hospitality and others, combined with that renewed manufacturing push.

“One of the most important things in any economy is to have a diversified economy,” said Sullivan. “It’s more resilient that way because every single industry goes through ups and downs and peaks and valleys. The more diversification you can have in your economy, the better.”