John Connors describes himself as a "Montana guy," but the former chief financial officer at Microsoft doesn't necessary like what he sees in the state's economy.
The 46-year-old Miles City native, now a Seattle venture capitalist, says the state needs to make itself more attractive to outside investors, improve its educational system and be more open to energy development. He noted that Montana's neighbors in the Dakotas, Wyoming and Idaho have developed an image as places welcoming of new business.
"I would rate all of those other places more attractive from business and tax perspective," Connors said in a recent interview. "How does Montana get a similar reputation as a good place to do business? I think a really good, bipartisan approach to some of these things would really help."
Connors shared his ideas for "making Montana competitive" with members of the Montana Ambassadors, a group appointed by the governor to help promote the state. The group met in Whitefish in February. Connors comments and observations appeared to be very well received, said Webb Brown, a member of the Ambassadors group and president of the Montana Chamber of Commerce.
"He said we need to make Montana's business environment as beautiful as its physical environment," said Brown. "I thought that was a heckuva of a statement. He did a lot of research into the issues he was addressing. He obviously still has a strong passion for Montana. He's an insider looking in from the outside."
After leaving Microsoft after 16 years in 2005, Connors joined Ignition Partners, a venture capital company that invests in technology companies. Connors says he is involved in a number of "free-market" economics initiatives. Connors has also taken part in economic forums organized by members of Montana's congressional delegation and others in recent years.
While Connors and a partner raise Black Angus bulls on a ranch about 50 miles southwest of Miles City, he visits the state maybe a dozen times per year. Four of his six siblings live in Montana, including a sister, Peggy Manning of Great Falls. Connors, who lives in Bellevue, Wash., a Seattle suburb, says he has no plans to return to the state.
"It's still home," said Connors, who graduated from the University of Montana in 1984 with a degree in accounting. "I think there are plenty of things that can happen in Montana to make it a better place for families and still preserve the natural beauty that's there."
Connors recently became an investor in New West, a Missoula-based online publishing company that describes itself as the "voice of the Rocky Mountain West."
New West was founded by Jonathan Weber, who in the late 1990s created The Industry Standard, a weekly business magazine and focusing on technology. The magazine and its online component folded in 2001, amid a dramatic slowdown among U.S. technology companies.
"From a technology standpoint, Montana has some real opportunities in online publishing," Connors said, explaining his investment in the venture. "Jonathan chose Missoula because it's an emblematic city of the New West. I'd like to see an online publishing business succeed in Missoula, Montana."
Here's more of what Connors had to say about Montana and its economic future:
Q: Does Montana have the potential to attract technology companies and jobs?
A: In a global economy, there are is an increasing number of skilled workers in places like China, India, Poland and Romania that are willing to work for lower wages that what people expect in the United States. In certain respects, the competition is getting tougher for the developed world and states like Montana.
As for companies making computer hardware or software, that's a really tough industry for Montana to crack. While a number of Bozeman-area technology companies are doing well, such as RightNow Technologies, which makes customer relationship software and TransAria, a data services provider, there may be limits to that growth.
You have to have competent employees. Nobody is going to start a company somewhere they can't find competent employees.
Montana State University in Bozeman can be good source of tech employees, as can Montana Tech in Butte, especially for energy-based technology companies. Universities can play a big role in economic growth. Look at the Silicon Valley, which has good weather and schools like Stanford and the UC-Berkeley nearby, both of which have good business and engineering schools. There is a lot of technology transfer that can take place because of that. Google is a good example of that. Cisco is an example. It's just a great entrepreneurial engine.
Q: Is there hope for technology jobs away from the universities, in places like eastern Montana.
A: It's going to be a much bigger challenge to have significant economic development in eastern Montana than in western Montana. Over time, those areas will see a rebirth of sorts. Investments in agriculture and energy are the two key advantages and opportunities. In relation, to the Dakotas and Wyoming, Montana is very, very far behind in terms of energy development. I think that potential can be developed in an environmentally compatible manner.
Q: Are there other barriers to economic growth in Montana?
A: The tax structure is an issue.
It's still very surprising that a state sales tax doesn't get considered. Montana has a big tourism industry and most of those people are coming from states with a sales tax. There is a need to move to a more equitable tax system, to make the state more conducive to technology investment.
There are many economic studies that show income taxes are the least effective and most damaging to economic development.
Q: You say Montana can do more to take advantage of its educational system?
A: Good public schools are important to attracting investment. I live in Bellevue and my kids go to public schools. All of my friends in Seattle, they pay to send their kids to private schools. People are willing to chose where they live based on the quality of schools.
For the dollar spent, Montana has terrific public schools. The state should strive to have the best public schools in the United States. That's important. Because people are so connected with communications, people can live just about anywhere they want."
While improving schools will likely mean higher taxes and there is opposition to tax increases, most people will agree to invest the money if we can see the return.
Q: Credit Suisse First Boston recently backed out of a deal with the state board of investments, saying it was unable to generate enough interest among investors to raise $15 million for a venture capital fund in Montana. Is there demand for venture capital in Montana?
A: There is an old saying that says 'capital goes where it's needed and stays where it's well treated.' I think that's probably true in Montana. It's kind of a chicken-and-the-egg problem.
There are Montana companies have attracted the interest of venture capitalists and there are several venture capital funds in the state, including the one run by John O'Donnell and the folks at TechRanch in Bozeman. But right now, Montana is pretty darn unpredictable. The tax situation is high. The environmental hurdles are legendary.
The state could benefit from a more even-keeled regulatory approach in regard to energy development and timber harvesting. There have been dramatic improvements in the extractive industries that make them a lot more palatable.
Q: What about your Microsoft experience. What was it like to work at a company that really changed the world in terms of technology and how we use it?
A: It was a remarkable experience. (Bill) Gates and (Steve) Ballmer and some of the other guys -- they are extraordinary. Their ability to see where things would go and recruit people to help them get there was pretty remarkable.
A large number of the leaders at Microsoft are from small farm and ranch communities. I could easily name 25 or 30 Montana people off the top of my head who are still there. A lot of the UM people ended up in sales and marketing, while most of the folks from MSU are on the development side.
"There are a lot of rural kids that made it big. They are used to getting up early and working hard. If something breaks, you fix it and you stay until the job's done. That mentality is still really pervasive there."
When I started in 1989, there were about 2,800 employees and about $500 million in revenue. Now there are 60,000 employees and $45 billion in revenue. It grew at an incredible pace over those 16 years.
Q: Do you miss working there?
A: Not one bit. It's been a really good shift to move into the venture world. I really get involved with a lot more small businesses and I enjoy that. I have more time for family things and community involvement.
The years at Microsoft were great but for me, it's all windshield and no rear-view mirror.