(Photo courtesy of State Treasurer)
Rob McCord, your Pennsylvania state treasurer, wants you to have empathy for him.
Just about the highest ranking Democrat in state politics has an easy laugh and a friendly manner. But, he says, if you’re going to describe him, you ought to start first with his entrepreneurship, and entrepreneurs ought to stick together.
Since 1994, McCord, 51, served as a senior executive at Safeguard Scientifics and founded the Eastern Technology Fund. He co-founded Pennsylvania Early Stage Partners and, from 1996 to 2007, he led the Eastern Technology Council [Official bio here].
Gaming the Gaming Board
In recent weeks, McCord won a landmark case that ordered the Pennsylvania Gaming Control Board to allow treasury office representatives to sit in on their.
“The public service rendered by this is that I can see there are lawyers with the gaming board who are trying to keep outside eyes out, and there are members on the gaming board who appear to be trying to hide something or they wouldn’t have tried so hard to keep me out and my designee,” McCord told Technically Philly.
He’s a venture capitalist in background, a Harvard kid and a Wharton grad by education and now he’s in his first term safeguarding $120 billion in public funds. In that role, McCord is offering the office up to his base — whom he describes as “job-creating, technology-orientated entrepreneurs”– for advising, investing and as a potential client.
If nothing else, he thinks the Philadelphia technology community ought to know who he is. If only because he grew up on the Main Line, invested in tech businesses here and, well, because when it comes to statewide representation, Philadelphia could use a friend.
Fortunately, McCord is swearing by the position for now, despite prognostications to the contrary that suggest he is a sure bet to run for governor.
“I love being treasurer. People who watch me will know, it looks a lot more fun to be treasurer than in Congress, which was another option,” McCord told Technically Philly. “I plan to run for reelection [in 2012], and I do not take it for granted. So I’m obsessively focused on the treasurer’s office.”
In between calls on his Blackberry, McCord met with Technically Philly in a crowded Cosi in Bryn Mawr to talk his background, how he could have a big impact if only he had a billion dollars and illiquid assets.
As always, edited for length and clarity
Not a lot of VC guys end up in office, why does your past fit the job?
My background in finance has proven acutely and extremely valuable in this position. No one from the Wharton School has held statewide office, I believe, let alone state treasurer. Nobody who gets in arguments about asset allocation has ever run for state treasurer. There have been bond underwriters, but not someone who talks about illiquid assets and entrepreneur-spurring assets. I have spent a lot of time in that area, so I thought with my venture capital background, I was able to really delve into these other issues that interested me.
I have… a good background to be in a chief investment officer role. …I just think it’s valuable for entrepreneurs to be represented by entrepreneurs and be asking the question ‘when we put this money to work, how much will come back in job creating, innovation-spurring endeavors in Pennsylvania?’
Where is Philadelphia in this scheme of entrepreneurship compared nationally?
I’m a glass half full guy. Pennsylvania is doing very well, not perfect, but very well.
Most regions in the country couldn’t just add water — give them a certain amount of money — and have jobs follow. Philadelphia is one of those regions.
Pittsburgh, Allegheny County, is another. Very few people in the southeast known what is happening in that southwest portion. It takes more work there, but it’s real… I look at it region by region, and Pennsylvania has a uniquely high number of those regions that can offer wealth from entrepreneurial-ism.
So just add water?
Yes…if you had another billion dollars, if you said to entrepreneurs that we will back your company but you have to be located in the Greater Philadelphia region… there are few entrepreneurs who would say ‘no way, I can’t make that work.’
When you look at our operating costs when compared to Silicon Valley or San Francisco or Manhattan or Boston or even Austin, TX, we’re right up there with the rest of them [in terms of being a competitive place to be].
The Research Triangle in North Carolina and Philadelphia are two of the country’s best lower cost centers of entrepreneurship.
…I would say San Fran, Boston and Austin are ahead of us in the sexy for young people factor, and that means we should put more work into reminding people what a great place it is to live here. But when you look at your overall cost of doing business as a young, only modestly funded entrepreneur living in say Center City or Old City Philadelphia to the same pay living in Manhattan, it is just hugely different.
The lifestyle in Philadelphia is much greater than what you might say is Greater Connecticut, but you simply have more money washing around Greater Connecticut because you have people saying I want to be within 45 minutes of the doorstep of my portfolio CEO. The increase supply of capital makes the difference… [but don’t think Philadelphia isn’t competitive in a national way.]
…So, yes, if you gave me a billion dollars in venture capital in this area, I could make it one or two, but of course if you gave me the first five draft picks, I could improve the Eagles, so it’s harder than that. …In the end, we need to continue to sell Philly as this great region that it is but also be growing the entrepreneurial community that we need with the help of the schools to support it.
To some extent Ben Franklin Technology Partners is meant to invest in only locally-based companies, but is it realistic to think others would do the same?
[In my venture career], we certainly set up soft goals for how much investment and success we hoped to have in the local region. If you look at groups like Penn State alumns, Carnegie Mellion alumns, fans of Greater Philadelphia and if more private groups could increase their soft goals [around Philly-specific funding], that could start something.
Some career fiduciary bureaucrats are resistant because they don’t want to reduce possible earnings. So it’s about early funds. I would love to see nonprofis like foundations be involved where we run an experiment, we invest in a for-profit-way but the profit goes back in a foundation. [The foundation network] only invests in locally-based companies, and if they can prove the profitability and sustainability of the experiment, they open it up beyond Greater Philadelphia… It’s about understanding the value of various, strong local hubs of investment and entrepreneurship.
What is your role in making any of that happen?
In the treasurer’s office, people reach out, and we try to put them in touch with appropriate investors. Right now, our coffers are dry, like lots of governments….
They should continue to come say to us that ‘we’re a growing company and venture eligible and can you introduce us.’ The odds of us getting you fresh funding is very low right now, but we sell this region. As I travel around the country with conferences and meetings, and I’ll say to private equity managers that you’re a fool if you ‘re looking at Greater New York but not Greater Philadelphia. A lot of big companies are looking at more rollups — complete acquisition — so a local company gets wrapped up into a national scale… we can help connect there.
A sub item of that is that a lot of people are not ready for venture capital but don’t know it, so often we spend time educating people about that, and people want a sounding board on how to grow their companies, whether it’s angel or other moves, and we can help.
So other than reaching out, how should this community interact with you?
Offer empathy. [laughs]
…They should know that this is someone who has invested in companies like mine, who has grown companies like mine, who, to a certain extent, has worked at companies like mine, so at least I’m someone who empathizes with the cause. I’m a Democrat but a market-minded Democrat… so when an entrepreneur reaches out to me and tells me what legislation is hurting or helping them, I want to hear it and I listen, so know at least that there is representation in statewide office.
Big companies get a lot of representation because they buy it. … I tend to think job-creating, technology-orientated entrepreneurs and service providers who go out of their way to support them as my base. …So I want to help however I can….
We are something of a clearinghouse, so we can guide people to the services that their companies need. We have ginned up demand generally in the need for information technology support in Harrisburg.
Why is IT in government an important match?
There are two different directions: as cost reducer and quality of life improve and job creator.
As a cost reducer, when less money is used to get the same work done, you almost always need to call on technology, so we’ve been able to cut [treasury] payroll 16 percent while increasing productivity by 25 percent in our direct service areas.
How? What are specific examples?
In a number of ways… We improved decision rules in the Bureau of Unclaimed Property with on-going searches, some automated with various technologies, to look for people who reported [or when it has been found in government control.] Half of that unclaimed property doesn’t get collected. That’s a tax-free, limited effort to bring in revenue and reduce the cost of government. That’s since we we came into office… and just one example.
Similarly, we reduced the fees in our Vanguard [college savings] tuition account program… with increased tech both in Vanguard and in treasury with customer service and in simple maintenance… So look at pa529.com for details. We dramatically reduced fees, increased the amount collected in and reduced the cost of government through technology.
….We have to face that regardless of the exchange rate between China and us, uneducated labor will be less expensive outside our borders, so we have to create high value work. You do that with relationships and protectable technology advantages.
And that’s what I do best: relationships and protectable technology advantages.