Economists and business leaders have warned for decades of an impending economic crisis in New Mexico. Revenue from oil and gas the state is dependent upon is in the process of disruption with a finite expiration date, and government labs are at risk from unsustainable federal deficits and fickle politics. Despite these well-understood facts, the state has increased dependencies rather than proactively diversify its economy.
During the decades these warnings were ignored, New Mexico exported several dozen tech companies just as they reached growth stage, representing billions of dollars of future wealth and tens of thousands of high-paying jobs. These companies are precisely what the state desperately needs to diversify its economy and avoid a serious economic crisis.
Every emerging economy must learn to create competitive businesses to mitigate poverty and reach the next level of development. Successful business clusters depend on the public and private sector coming together in a unified manner to strengthen the competitive environment relatively free of politics. Communities must support companies at critical stages, which in the case of New Mexico is necessary to avoid a major economic-driven humanitarian crisis. Startups are the easy part. Growing up is always challenging.
New Mexico has several weaknesses, including a small private sector, few early stage customers, perverse tax incentives, limited business experience, lack of growth funding, and many challenges associated with poverty. We also have many strengths, including a strategic location comparable to Denver or Dallas, good infrastructure, an appealing natural environment, a comfortable climate, and competitive costs other than taxes. However, our greatest strength by far is a robust world-class research cluster with several billion dollars per year invested, including related human capital and companies.
Unfortunately, the indirect benefits created by research investments have been substantially exported along with tech companies at precisely the time their region should support them. The result is that despite billions of dollars per year in federal research, New Mexico has never experienced a significant enduring business success.
New Mexico’s poverty, crime rate, and opportunities for youth are much worse than the states that acquire New Mexico tech companies, which influenced our decision to keep my company KYield in New Mexico. The next step was to start a group that would become the Junto Club. An independent group of tech execs working together is one of several missing ingredients that was obviously needed in New Mexico, and one challenge we could quickly solve.
During our first meeting, Adam Greenhood, CEO of AdWallet, suggested the name Junto after Benjamin Franklin’s group, which means together in Spanish. Although our focus is narrower, the concept is similar so we adopted the name. The Junto Club has been well received with immediate support including volunteer Joshua Edwards at RiskSense who was instrumental in reaching out to local companies. We have also attracted initial regional sponsors such as REDW, Rodey Law, and Peacock Law.
Our regular members now represent about 50 companies that have raised over $100 million in venture capital, are generating annual revenues in the low tens of millions of dollars, have created several hundred high paying jobs, and importantly, Junto member companies are either growing rapidly or poised to do so.
New Mexico is clearly at tipping point with potential to create a sustainable tech cluster, but as of today we are still a net exporter of our most promising tech companies. Now is the time to quickly come together and take decisive action for future generations of New Mexicans.
The executive’s desk is a guest column providing advice or information about resources available to the business community in New Mexico.
the executive’s desk
