Ann Arbor SPARK picks Silicon Valley economic development executive as next CEO
(This story has been updated several times with additional information.)
(Editor's note: AnnArbor.com Executive Vice President Laurel Champion is treasurer of the Ann Arbor SPARK Board of Directors.)
Economic development group Ann Arbor SPARK has selected a Silicon Valley economic development executive to become its next CEO.
SPARK's Board of Directors chose Paul Krutko to lead the group. Krutko, who currently serves as secretary/treasurer of the International Economic Development Council, most recently led the economic development initiatives of the city of San Jose as chief development officer.
Paul Krutko, the new CEO of Ann Arbor SPARK
Photo courtesy of Ann Arbor SPARK
Krutko, 55, who lived in northern Ohio until he was 40, previously worked for municipal economic development initiatives in Cleveland from 1990 to 1997 and Jacksonville, Fla. from 1997 to 2002.
A graduate of the University of Cincinnati's College of Design, Architecture and Art, he previously was executive director of the Downtown Development Authority and senior director of development services for the Jacksonville Economic Development Commission, downtown housing development manager for Cleveland's Department of Community Development and finance manager of Cleveland’s Economic Development Department.
"He comes from the Midwest and he has a tremendous experience in economic development for both large- and medium-sized metropolises," SPARK Chairman Stephen Forrest said in an interview. "He brings a great scope of knowledge. We feel that Michigan is at a turning point and that Paul can help lead that turnaround."
SPARK, which has about 17 employees, provides business services to entrepreneurs, startup companies and established businesses in Washtenaw County and the surrounding areas. The group operates three business incubators serving several dozen startups.
The group manages an annual core budget of about $3 million, including about $1 million in tax dollars from the Ann Arbor/Ypsilanti Local Development Financing Authority, otherwise known as this region's SmartZone.
SPARK also manages pass-through business investment programs on behalf of the MEDC and other partners, including the $15 million Michigan Pre-Seed Capital Fund, which invests up to $250,000 in startup companies in exchange for an equity stake.
Krutko, in an interview, said he was attracted to Ann Arbor by the budding entrepreneurial ecosystem, the high-tech research activities, the high quality of life and the challenges of leading a growing economic development group.
“I’m really looking forward to coming back to the Midwest. I’ve been away for about 15 years in other parts of the country, so it feels good to come back, and Ann Arbor is a great opportunity,” he said. “SPARK is an organization that’s got a really solid foundation that Mike Finney created, and I’m really looking forward to picking up the reins and advancing the strategic agenda that the board has laid out.”
Krutko said that finding a way to help emerging businesses is one of the most important aspects of economic development. He said companies that are poised to grow from "10 to 10 squared" — that is, 100 employees — reflect "the critical place where you can facilitate" growth. He said it's important to ensure that companies of that size maintain their headquarters in the community.
After that period, he said, "whatever they do, as they grow and deploy around the world, the wealth and higher-level positions are going to come back to the community they started in," he said.
Among the key ways to help existing companies and attract outside firms is emphasizing the strong pool of talent that is available in the region, Krutko said. SPARK places a heavy emphasis on helping talented workers connect with growing companies, monitoring rapidly growing companies and helping them navigate government bureaucracies.
"The companies are following the talent," Krutko said. "The work that SPARK is already doing in terms of focusing on that question is very, very vital."
Former Ann Arbor SPARK CEO Michael Finney is now CEO of the Michigan Economic Development Corp. under Gov. Rick Snyder.
File photo | AnnArbor.com
SPARK was formed in 2005 as an outgrowth of an idea nurtured by the U-M Technology Transfer Office Advisory Board. Snyder and U-M President Mary Sue Coleman are generally considered the group's co-founders.
According to its latest annual report, SPARK claims companies it has assisted announced business expansions from 2006 to 2009 with a promise to add 9,049 jobs. That figure is very difficult to authenticate, however, and the number of jobs that were actually created is probably much lower.
As Michigan’s economy collapsed, Washtenaw County lost 5.8 percent of its jobs from October 2005 to October 2010, dropping from 207,300 to 195,200, according to the Michigan Department of Energy, Labor and Economic Growth.
But the county fared much better than the state of Michigan, which lost 11.9 percent of its jobs during that stretch, dropping from 4,432,800 to 3,905,500.
Forrest said he views Krutko's appointment as an opportunity to help SPARK continue to broaden its influence in Michigan's economy.
"SPARK got its start and flourished under the leadership of Mike Finney and for that we, as a community, are extremely lucky," Forrest said. "Now we are looking to make SPARK have an even larger regional and national promise and profile.
"As we look at how MEDC is being reconfigured under (Finney and Snyder), we feel that SPARK has an opportunity under Paul to take advantage of it and make SPARK a truly statewide, and perhaps even a somewhat national, model for how economic development can occur and can help to revitalize areas that have seen some diminishment of their economic base over the years."
In San Jose, the third largest city in California, Krutko's initiatives included a "climate prosperity plan" called "San Jose Green Vision," which said in its 2010 annual report that it had received more than $70 million in grants to boost the clean-tech industry, promote energy efficiency and reduce carbon emissions.
He resigned Nov. 5 from the city of San Jose. The San Jose Business Journal reported that Krutko's top accomplishments included helping to convince eBay to expand its San Jose headquarters.
"In leaving my only regret is that there are still so many things left to accomplish, but I am confident that the team I’m leaving is more than equal to those tasks," Krutko told the city in his resignation letter, according to the SJBJ.
Among Krutko's first responsibilities will be filling key empty positions at SPARK. Snyder’s ascension to the governorship set off a leadership exodus for the group.
Finney joined MEDC a few weeks after Snyder’s election and proceeded to recruit two of SPARK’s top executives, Elizabeth Parkinson and Amy Cell, to take comparable positions at MEDC.
Skip Simms, SPARK's interim CEO, will return to his role as vice president for entrepreneurial business development.
Krutko and SPARK declined to reveal details of Krutko's compensation package. Krutko, who starts his new job April 18, said it was "very fair" and that he had been recruited by four other groups throughout the country. Finney was paid $258,423 in total compensation in 2008, a figure that includes the cost of benefits.
That compares to $439,859 for Southwest Michigan First's Ron Kitchens, $282,320 for Birgit Klohs of Grand Rapids-based The Right Place, and $156,732 for JoAnn Crary of Saginaw Future, according to tax documents.
Krutko comes to Michigan as Lansing lawmakers debate the future of the state's business tax credits and general tax structure.
Snyder wants to replace the controversial Michigan Business Tax with a flat 6 percent corporate income tax that would largely exempt small businesses. He also wants to eliminate most of the tax credits that the state distributs to entice high-tech companies to expand and locate in Michigan.
Krutko said he believes in selective use of tax credits favoring industry "clusters (in which) you're trying to be successful." But he said that budget realities should limit the scope of tax credit distribution.
"We're in very challenging budgetary times, and my view generally is that tax incentives, if they're offered, should be focused on 'driving industries.' 'Driving industries' are those companies that are making goods or producing services that are sold outside the region. They are bringing revenue and income back into the community. For every 'driving industry' you create in a community, four other jobs result," he said.
SPARK picked Krutko after conducting a private, national search that attracted more than 100 applications, Forrest said.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Nathan Bomey
Thu, Mar 31, 2011 : 1:58 a.m.
In case you haven't seen it yet, here's the story we posted tonight on the "breach" of city policy Krutko reportedly committed before his resignation in San Jose. In addition, the story briefly discusses the situation with Team Jose. <a href="http://annarbor.com/business-review/ann-arbor-sparks-new-ceo-left-san-jose-after-undisclosed-breach-of-city-policy-reports-indicate/">http://annarbor.com/business-review/ann-arbor-sparks-new-ceo-left-san-jose-after-undisclosed-breach-of-city-policy-reports-indicate/</a>
sig.melvin
Thu, Mar 31, 2011 : 12:55 a.m.
WEll this story will be watch and thank you CASH for that info. Very interseting .that and Ardesta ...really what is the country coming too.So nathan keep us up-to date ..
Cash
Wed, Mar 30, 2011 : 7:02 p.m.
A correction, Mr Krutko most recently was with Peltonon...after "parting ways" with San Jose. See article links that I posted.
Terminal
Wed, Mar 30, 2011 : 4:28 p.m.
Where are the regular bunch of annarbordotcom's conservative "government accountability" posters? I guess they're ok with this giveaway to business "Richy Rich's" just as much as they're against a few crumbs for the poor, pensioners and seniors. This is tax money that goes to SPARK that we're talking about here. This is taxpayer money funneled into private for profit businesses with little accountability. And when they do provide any informations it is nebulous and followed by the Snyderesque "Trust us". And Mr Krutko's background smells like low tide. Here's a quote from a news article from the Silicon Valley Mercury News linked by Cash. "SAN JOSE OFFICE OF ECONOMIC DEVELOPMENT CHIEF: One day after the November election, economic development chief Paul Krutko, 54, a sometimes-irascible promoter of a pro ballpark and soccer stadium, abruptly resigned. E-mails and text messages uncovered by the Mercury News suggest he did not go gladly. His second in command is Kim Walesh, 46, a respected strategist who has told friends she does not want the Krutko post. With redevelopment agency chief Harry Mavrogenes continuing to handle ballpark negotiations, the job could be rejiggered. Pay: $225,284." Terminal
Cash
Wed, Mar 30, 2011 : 4:50 p.m.
Terminal...and now this article falls 2 pages back. No mention of the San Jose problems in the article. This stinks to high heaven.
Patricia Lesko
Wed, Mar 30, 2011 : 2:29 p.m.
@Nathan SPARK officials could absolutely collect information on actual job creation. They could make reporting a predicate of services and funding provided. In other words, it could be a contractual obligation. The LDFA could make the same contractual obligation of SPARK before providing taxpayers dollars from the AAPS. (<a href="http://www.a2politico.com/?p=1803)" rel='nofollow'>http://www.a2politico.com/?p=1803)</a> The Detroit Free Press did an expose in May last year that tracked actual job creation as a result of funds dispersed from the 21st Century Job Fund (the bulk of those funds dispersed went to AA start-ups and AA SPARK got $8 million dollars). Fewer than 1,000 actual jobs were created. (<a href="http://www.a2politico.com/?p=4229)" rel='nofollow'>http://www.a2politico.com/?p=4229)</a> Mr. Finney's SPARK salary, according to data gathered by GUIDESTAR, was far and above beyond what is paid at non-profits that manage budgets the size of SPARK's. The 2009 990 filed with the IRS shows SPARK claims job creation numbers that are different than those you were given. Thank you for making clear that the number of jobs created is difficult to verify. However, there's more to the story and I hope AA.com will pursue it. Finally, though the SmartZone extends to Ypsilanti, only the AAPS is tapped for money.
Cash
Wed, Mar 30, 2011 : 2:28 p.m.
<a href="http://www.mercurynews.com/ci_17454951?IADID=Search-www.mercurynews.com-www.mercurynews.com" rel='nofollow'>http://www.mercurynews.com/ci_17454951?IADID=Search-www.mercurynews.com-www.mercurynews.com</a> This is the pick, really?
Cash
Wed, Mar 30, 2011 : 2:21 p.m.
<a href="http://www.arounddublinblog.com/2010/11/dublin-ca-school-board-trustee-tied-to-san-jose-financial-scandal/" rel='nofollow'>http://www.arounddublinblog.com/2010/11/dublin-ca-school-board-trustee-tied-to-san-jose-financial-scandal/</a> <a href="http://www.mercurynews.com/scott-herhold/ci_17050156" rel='nofollow'>http://www.mercurynews.com/scott-herhold/ci_17050156</a> <a href="http://robocaster.com/pasadenastarnews/podcast-episode-home/california-ci_16527215/san-jose-chief-development-officer-paul-krutko-resigns.aspx" rel='nofollow'>http://robocaster.com/pasadenastarnews/podcast-episode-home/california-ci_16527215/san-jose-chief-development-officer-paul-krutko-resigns.aspx</a> Something smells fishy.
annarbor.mom
Wed, Mar 30, 2011 : 1:23 p.m.
Great, another person hired from out of state. Good message to send Michigan job seekers.
BornNRaised
Wed, Mar 30, 2011 : 2:03 p.m.
Tricky Ricky said he's create more jobs. He never said for who. Just like through the entire election, he never mentioned ONE step to his 'great plan'. Yet everyone who voted for him voted for a man that refused to disclose any of his plans for Michigan. Too bad you don't need a license to vote.
trespass
Wed, Mar 30, 2011 : 12:30 p.m.
Is this another "friend of Rick"? It seems like SPARK and MEDC are just ways to reward political friends of powerful politicians and UM.
Cash
Wed, Mar 30, 2011 : 11:18 a.m.
Nathan, I am afraid your post only raises more concerns about "independent media coverage". I would suggest that Ann Arbor.com not write any articles about SPARK but have them linked from other media, like you do so many stories. I think its' difficult to be impartial about an organization when you are on the board. And I can understand that. But as it was once said "No one can serve two masters". Sadly, this would also be true for any stories about UM with their PR person on your board. This is really depressing.
Alan Goldsmith
Wed, Mar 30, 2011 : 10:14 a.m.
So we take 'we're not telling you about the starting salary' at face value. And we say it's too hard to sort out how many jobs are actually created? Can you explain to me what journalism is again? "(Editor's note: AnnArbor.com Executive Vice President Laurel Champion is treasurer of the Ann Arbor SPARK Board of Directors.)" I guess Mr Champion is sworn to secrecy and values her membership on SPARK as more important than her journalistic ethics running AnnArbor.com?
Above AvgCitizen
Wed, Mar 30, 2011 : 4 a.m.
@Nathan - though you make good points about the benefit of boot camps - these were being conducted long before the launch of SPARKS (which was really just a reformation of other regional economic development entities and initiatives), and with far less employees and at much smaller salaries. SPARKS is primarily a puppet organization that everyone loves to hold up as some great benefit to the area. The net benefit of the re-formatted economic development initiative now known as SPARKS has been nearly negligible except for the far greater cost of running SPARKS and splashier self-promotion activities. But hey, they can at least count their own job growth, nobody will contest that.
Nathan Bomey
Wed, Mar 30, 2011 : 1:06 a.m.
@Townie, @David Briegel, @Cash, The next time I speak with SPARK executives, I will ask whether they would consider having an independent auditing firm conduct an analysis of how many jobs were created as a result of SPARK's efforts. However, I can say with confidence that it's next to impossible for anyone to ascertain that figure. Why? SPARK interacts with hundreds -- probably thousands -- of companies on an annual basis. The vast majority of companies in this area are private companies -- and therefore they have absolutely no obligation to tell me, SPARK or an auditor how many employees they have. More notably, though, many of the services SPARK provides cannot not be tied directly to new jobs. For example, SPARK holds regular entrepreneurial "boot camps" to provide training for aspiring entrepreneurs. The companies launched by those entrepreneurs may not add significant number of jobs for years. Does that mean the services were a failure? Many of SPARK's activities are meant to provide services to bolster entrepreneurs and existing companies so that they'll be better positioned to add jobs in the future. That said, I understand where you're coming from because SPARK makes some pretty significant claims. The story states: "According to its latest annual report, SPARK claims companies it has assisted announced business expansions from 2006 to 2009 with a promise to add 9,049 jobs. That figure is very difficult to authenticate, however, and the number of jobs that were actually created is probably much lower." The annual report specifically refers to this as "job commitments," not jobs actually created. This is a reference to the number of jobs that companies *announced* they would add as a result of tax relief they earned with SPARK's help. Google, for example, said it would add 1,000 jobs here by 2011 but has only added 250. So clearly there are instances in which a company doesn't meet its promise. That, as you suggest, is not reflecte
Nathan Bomey
Wed, Mar 30, 2011 : 1:08 a.m.
*reflected in SPARK's reports about its success.
Townie
Tue, Mar 29, 2011 : 10:58 p.m.
Gyre - I don't understand why you don't think an independent accounting of the real number of jobs created is not worthy of doing. If the purpose of the agency is to produce jobs then the numbers should show if it's doing the job or not. There are audits for business financials and there's no reason why we shouldn't know how SPARK is doing. Letting the agency establish the number is a very questionable practice. I remain surprised that no one on the SPARK board doesn't agree. If not, then why not?
David Briegel
Wed, Mar 30, 2011 : 12:26 a.m.
is there a reporter on this story?
MjC
Tue, Mar 29, 2011 : 10:25 p.m.
I hope someone told him to bring a winter coat with him... and boots.
grye
Tue, Mar 29, 2011 : 8:38 p.m.
I would venture to say that without SPARK, the number of created jobs would be substantially less. At least we are fortunate to have an organization whose purpose is to help create jobs in this area. Keep up the good work SPARK. Ignore the naysayers.
BornNRaised
Wed, Mar 30, 2011 : 1:59 p.m.
Keep up what good work? Where is ANY evidence that they've done anything but take money? SHOW US SOMETHING! You call us naysayers? How about opening your eyes to the reality that they refuse to show what they've done. I'd rather be a naysayer than living in the dark.
David Briegel
Wed, Mar 30, 2011 : 12:26 a.m.
Tell us how many! Please?
Dr. Rockso
Tue, Mar 29, 2011 : 8:35 p.m.
I hope this guy can count better than the last CEO!
Cash
Wed, Mar 30, 2011 : 6:02 p.m.
Well now, that remains one of the questions. "The city's economic development director at the time, Paul Krutko, abruptly quit his position last fall after an apparent breach of city policy that the city manager would not discuss, citing personnel privacy." "The recent resignation of San Jose's Chief Development Officer Paul Krutko is just the latest chapter in the unfolding financial scandal with deep ties to Dublin, CA. At the center of the financial scandal is Team San Jose, a non-profit organization that runs San Jose McEnery Convention Center, Parkside Hall, the Center for the Performing Arts, Montgomery Theater, San Jose Civic Auditorium, and California Theatre. Earlier this year, the City of San Jose declared Team San Jose to be in default of its management agreement and moved to restrict Team San Jose's access to public funds for unexpectedly overshooting its budget by more than $750K. Around the time details of the $750K budget overage came to light, Team San Jose "dismissed" its Chief Financial Officer Dan Cunningham, who was elected to the Dublin Unified School (DUSD) Board of Trustees in 2008." See links I posted below.
Townie
Tue, Mar 29, 2011 : 8:32 p.m.
Hey, SPARK - how about an independent audit of your job creation numbers this time around? And performance based funding. Oh, I forgot that's not fair is it?
Wolf's Bane
Wed, Mar 30, 2011 : 12:23 p.m.
First, @ Marshall Applewhite, huh? Second, an independent audit with regard to SPARK is a great idea because it would give citizens a heads up on the activities and 'progress' and help the new CEO figure out how to prioritize and set up a new agenda. Just saying.
Marshall Applewhite
Tue, Mar 29, 2011 : 11:01 p.m.
@Cash It's good to see you didn't deny it. We're making progress here.
Cash
Tue, Mar 29, 2011 : 9:50 p.m.
Which has nothing to do with this article....as usual.
Marshall Applewhite
Tue, Mar 29, 2011 : 9:39 p.m.
@Cash There's one thing we know for certain. More of those businesses would have failed if they were unionized!
Cash
Tue, Mar 29, 2011 : 9:11 p.m.
Excellent idea. And it would be equally interesting to know how many jobs REMAIN after one year. If you create jobs and those businesses fail....that doesn't count. That is IMPORTANT.