Everyone remembers with excruciating clarity where they were upon hearing a devastating piece of news. This is particularly true of a death. And, even more true when that death is about to change your life.
As a Fremont, California, Councilmember (and a CPA), I remember seeing the message flash across my computer screen: Solyndra employees were being escorted into the parking lot. The company, which just months earlier had opened a gleaming, massive factory in our city to build its cylindrical solar tubes was experiencing a total eclipse from which it would never recover.
But Fremont did. In fact, almost two years later, the logo of disk drive maker Seagate Technologies has finally replaced the disgraced Solyndra sign.
However, there have been lasting effects for us locally (higher vacancy rates), for the solar industry (slower growth), and the clean technology sector (decreased funding opportunities). While the closure of Solyndra was a huge blow for Silicon Valley and Fremont, there were lessons learned that can help cities and startups avoid becoming the next Solyndra, and to identify signs that would warn of another Solyndra coming.
First, let’s examine how Fremont responded to the Solyndra bankruptcy, all the while maintaining its unwavering commitment to clean technology.
We didn’t back down from our clean tech initiative.
We knew clean tech was a vital sector for future growth with high global impact. Poor Solyndra management and a dip in the solar energy market sank the company, not the lack of opportunity with clean tech. Furthermore, all of our eggs weren’t in one basket. Our economy was diversified among several sectors (including life sciences) and within clean tech itself, including LEDs, fuel cells, and energy storage among others.
We focused on the people.
Our first call after hearing the news was to our Workforce Investment Board (WIB). There were 1,100 employees affected, not to mention countless suppliers. We partnered closely with the WIB to make sure we kept this highly-skilled talent. In fact, the workforce was re-hired relatively quickly into other advanced manufacturing and technology companies in Fremont and Silicon Valley.
We were proactive in marketing the tremendous real estate opportunity.
The factory that Solyndra built was state of the art. We knew we needed to capitalize on how new and relevant the asset was. We developed a close partnership with the brokerage team, which led to Seagate expanding their existing Fremont operation into the building.
So what can other cities learn from Fremont’s experience?
First, look at the signs. If it seems too good to be true, it probably is. We were all guilty of buying into the hype surrounding the accelerated growth of the solar industry. And while we are staunch supporters of continued Department of Energy support for helping to develop new sources of energy, diverse sources of funding is imperative.
Second, make the best out of the worst. You can, and will recover. And while it may not be true that “any publicity is good publicity”, many VC’s, Green Tech writers, and startup companies have discovered that Fremont’s clean tech portfolio extends way beyond this one black sheep.
Lastly, view startups like a VC would. Examine the market opportunity with a healthy dose of skepticism. Question whether this specific startup has a unique advantage to withstand competition. And, look at business objectives and metrics to assess progress — because even if we can’t prevent a Solyndra, we can certainly be better prepared.
While cities can benefit from this checklist to help avoid PR disasters like Solyndra, it is also important for clean tech companies and startups to consider the following attributes as they evaluate which city to call home.
Is there an established industry cluster?
Look around. If there are other successful, like-minded companies in the city, chances are that their presence isn’t an accident. Pay special attention to the supply chain, especially if manufacturing is part of the equation either now or in the future.
Does the city offer any benefits, incentives or tax breaks?
This is especially important for start-ups in industries that have a long lead-time to market. You need to find a city that understands your business model and is willing to invest early so as to share in your future success. After all, this will hopefully be a long-term partnership vs. a one-time real estate transaction.
Is there a workforce pipeline?
Specifically, you will want to discern whether there is an available talent pool across different skills sets to avoid costly relocation for employees and executives. Ideally, the community will also include educational institutions with degree or technical programs that feed into your industry.
Is the city a cheerleader for innovation and growth?
To use the starter-home analogy, you want to make an investment where you have room to grow, and where you will be welcome at all stages of your company life cycle. It is disruptive to change geography at different stages, so you need to ensure that a city physically has room for, and is supportive of future commercial growth. This includes proper land use and zoning, as well as community and political support.
Ironically, all of these reasons led Solyndra to make a major investment in Fremont. It is also why Fremont has one of the largest clean tech clusters in the nation. It offers special tax breaks for clean tech companies and boasts a large and widely skilled workforce. Perhaps most important, it focuses planning and economic development efforts on becoming strategically urban with innovation companies at the core of its strategy.
Fremont’s position as a startup haven and an innovation hub make it almost inevitable that Solyndra won’t be the last company in our midst to go belly-up. But the cluster building that we are engaged in ensures a strong web of support for what we consider to be an all-start cast.
We fully expect that local companies such as Tesla, Soraa, Redwood Systems, and Deeya Energy, will be the names and success stories for which Fremont is remembered. Not Solyndra.