Ohio’s new jobs czar is ready to revamp

By James Pilcher

The Cincinnati Enquirer

He’s been on the job for just a short time, and already he’s asking for state money back from a company that’s fallen short of job-creation goals.

Mark Kvamme said it’s a good example of what the state of Ohio can expect from him as new director of the Department of Development.

“This particular company was supposed to create 100 jobs, and they created 10,” he said. “We need to make sure companies are living up to their word.”

“Clawbacks,” or the process of retrieving state grant money from companies that fail to meet promised economic or job goals, has been relatively rare. But Kvamme said it may become more common as Ohio moves toward a new model of economic development that relies more on private-business concepts.

“This is real money when you start looking at all the different amounts, and everyone needs to be held accountable,” he said. He didn’t identify the company.

Kvamme, 49, made the comments in one of the first in-depth interviews with the media since Gov. John Kasich appointed him to the job Jan. 12.

Kvamme said Ohio has a long way to go to lure more businesses and reverse a decade of job losses. Putting private-business practices to work will help achieve those goals, he said.

Ohio has lacked clear systems in the past to measure success or failure, and that will change.

“You cannot run anything without metrics,” he said. “In the past, people never really asked how much payroll was here, how much did companies pay in tax, etc. I want all the metrics, and it has been a No. 1 process revamping all that.”

On the surface, Kvamme might appear to be all about private business and money.

After all, the California-based venture capitalist and entrepreneur has little to no connection to Ohio — apart from his longstanding friendship with Kasich.

But the opportunity to reshape the Department of Development gives Kvamme a chance to fulfill a lifelong goal that has nothing to do with politics, money or the whirlwind technology of his Silicon Valley surroundings.

“About 30 years ago, I wrote a list of lifelong goals and one of them was to help a million people somehow,” Kvamme said. “I have accomplished all my goals except that one.”

Kvamme, 49, is a partner in one of the largest and most influential venture capital firms in the nation, Sequoia Capital, in Menlo Park, Calif. It’s been around since 1972 and was one of the first firms to invest in Google. Yet even with the tens of millions the company invests each year, Sequoia has funded only one small company in Ohio, he said.

“It came as a complete shock to me,” he said. “That’s kind of a shame and something I want to change.”

Kvamme spoke with The Enquirer immediately after he and Kasich unveiled details for JobsOhio, the new plan to privatize the state’s economic development functions currently contained in the Department of Development.

Q. How does your background prepare you for this role?

A. If you really look at the job creation and retention role of the director of development, it is very similar to being a venture capitalist or in growth equity. We will be evaluating companies and getting them to stay in Ohio.

Q. How will this work for you personally?

A. I will be here (in Columbus or somewhere in Ohio) Monday through Thursday and commute back and forth (to California). Right now, it is taking up 90 percent of my time. And yes, I am taking a salary, but it’s only a buck. My job is to stand up JobsOhio, and get it going and help recruit board members and staff and put in place the board and management team and move forward. That’s what you do as a venture capitalist. The DNA of any company is established at the very beginning. So you want to make sure you have the right DNA in JobsOhio from Day One to have a great chance of success.

Q. What are Ohio’s biggest economic development strengths? Weaknesses?

A. There are a lot of strengths, and one that everyone knows about is the logistical system. About 60 percent of the U.S. population lives within 600 miles of the state. All the waterways with the rivers and the Great Lakes and the rail and highway systems make a great logistical location. And there are fundamental industries here like health care. You have Wright Patterson Air Force Base in Dayton with amazing access to advanced materials, and then there is the steel and forging industries.

But on the flip side, businesses still very much are under siege. In some ways, the state made it very difficult to do business in Ohio — from EPA regulations to worker’s compensation issues and other legacy issues that need to be taken care of.

Q. How will JobsOhio work?

A. Our vision is to create the premier economic development and jobs creation entity in the U.S. and be an ambassador for all things Ohio in those areas. If it is managed properly, it is like a university endowment.

Q. Some have criticized privatization in other states. How will JobsOhio address transparency and accountability issues?

A. Every year, we will publish a full annual report, and we will publish the salaries of everybody and be fully transparent. We have that fiduciary responsibility to our shareholders, oops, our citizens. It will be very similar to the board of trustees at a college. They are there to be guiders for a college, and there are similar conflicts of interest as at a college, but there will be full financial disclosures.

At the same time, we need to ensure we get the best and brightest, and one of the reasons we need to take (economic development) out of the public sector is to have the flexibility to act like a business when dealing with business.

Q. What becomes of Third Frontier, the $750 million job- creation and research program that funds promising start-ups and tech companies? Voters twice have approved state money for that program.

A. The direct answer is that I’m not sure yet. It’s a phenomenal program, but it has not been fully utilized to the benefit of the citizens of Ohio.