Next-gen Marin County companies are growing — and that is a good thing
When COVID first hit and the Marin economy was shut down, stories of business closures started to trickle in. Some of the businesses served the local community for over 20 years but met a premature end.
In economic terms the Marin Economic Forum observed that businesses were not “resilient.” In other words, they didn’t have resources to withstand the economic shock. In human terms, we knew it simply seemed unfair.
While this story played itself out across the country, another story emerged: business license applications were soaring, averaging almost 400,000 per month nationally during 2021, an increase of over 25% from 2019.
Here in Marin County, applications were up almost 10% in 2020 versus 2019. Among these new businesses were those with a specific characteristic: a Marin-based founder looking well beyond Marin’s borders for customers.
This what I refer to as the “next-gen” Marin company: It’s created by local entrepreneurs but with the intent of selling goods and services outside of Marin, often globally, relying on a distributed workforce with little to no office footprint. These companies seek to grow very fast, all while integrating core values important to us in Marin, such as sustainability and equity, in their business models.
One example is NewRetirement in Mill Valley, founded by Steve Chen who is also a Mill Valley resident. NewRetirement is a technology company that is making financial planning more understandable and effective for a growing number of Americans.
In a short period of time, NewRetirement has attracted over 200,000 people to its free platform and signed-up over 7,000 paying customers, with a goal of getting to millions one day. In an interview with Marin Sonoma Impact Ventures, a venture fund and social enterprise supporting Marin startups, Chen talks about how excited he is about the entrepreneurial community in Marin and the “huge amount of intelligent, successful innovators who are community-minded.”
The importance of these kinds of businesses cannot be overstated. Consider the “resiliency” issue. Businesses that rely on single markets (in this case the Marin market) will always be susceptible to localized economic shocks.
Here in the North Bay, we have seen an increase in natural disasters and power shutoffs that constrain business operations. There is growing evidence that businesses need to not only be prepared for disasters but think about what they can do to keep revenue streams flowing when their customer base cannot consume their goods and services.
One answer is having alternative markets and many entrepreneurs are adapting to that even if they started their companies by selling locally.
Second, from an economic perspective, every region needs to derive a certain percentage of revenues from outside that region, through so called “tradeable goods and services.”
Tradables firms, like New Retirement, produce goods and services that are sold in other cities or countries increasing opportunities for growth in revenues and incomes. In contrast, the non-tradable sector services the local population like Marin’s restaurants, grocery stores and yoga studios.
Successful regions have a balance of businesses providing tradeable and non-tradeable goods. However, a review of the five largest industry employers in Marin shows a disproportionate number in the non-tradeable categories of: restaurants, outpatient health care, nonprofit and human services, government, and professional services.
Retail trade and construction alone are responsible for approximately 13% of Marin’s $20 billion-plus gross domestic product (GDP).
It’s not that firms operating in the non-tradeable goods and service sector present a problem for Marin; they are necessary and loved by our community.
However, there is an important need to grow companies providing tradeable goods and services. Economic literature confirms that wages in the tradeable sector are typically higher than those of the non-tradeable sector, due to higher skills demands to perform those jobs.
With a rising cost of living and the need to attract and retain local talent, Marin can greatly benefit from an increased number of good paying jobs in the tradeable sector. Growth of these higher wage jobs is also critical if we want to create pathways to economic mobility in Marin, securing better wage opportunities for our lower income residents with appropriate job training.
Growth of firms in the tradeable sector can be improved with support from public sector, who can utilize traditional economic development approaches like business attraction, workforce development or policy measures that allow companies to grow.
The city of Novato deserves great credit for its recent approval of an ordinance to allow larger scale buildings for life sciences companies located in the Bel Marin Keys Industrial Park. Life sciences companies are the epitome of the “nextgen” Marin company; serving global markets with incredible innovation and creating good high wage jobs for our residents.
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