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The Great 2009-2010 Hawaii Brain Drain

brain drain

At recent developer events, including today's UX Design Meetup, the effect of the great 2009-2010 Hawaii brain drain was readily apparent. Seth Ladd, Anthony Eden, Sam Joseph, Truman Leung, Ken Mayer, David Neely, Sherwin Gao, Seri Lee, Gabe Morris, Alex Salkever, Laurence Lee, Ken Berkun...this is just a handful of quality people I know personally. The list of talented tech industry people who have left or will soon be leaving over this very short period of time is truly depressing. Hawaii has experienced a series of brain drains over the past two decades, the most recent being in 2003/2004, but this is the worst I've seen by a long shot.

As Hawaii tech companies (largely 221 funded) collapse, the engineers and designers who were working for them aren't looking locally for new jobs. They are leaving our state, and it won't be easy to get them back. If we can't retain talented developers and creative personalities in our state the innovation economy is in serious trouble (not that this is news to anyone in the industry.) Any tech business owner who has recruited from the mainland or internationally knows its hard to relocate people to Hawaii. Many people view Hawaii as a vacation spot, but not a serious place for technology innovation. Employers have a hard time with questions such as, "I have three children. How is the public school system?" or "Will I be able to afford a house?" For younger professionals from the Bay Area or East Coast who don't have connections to Hawaii it can be hard to settle socially. Many relocations, which can be very expensive, fail in the first year.

I'm an optimistic person by nature. I believe we can still build an innovation economy in Hawaii, but we need to learn from our mistakes, identify our strengths, apply a healthy dose of pragmatism and a whole lot of elbow grease. Aside from fixing our horribly broken public education system, there isn't a lot the government can do to solve this problem for us. Its up to entrepreneurs and tech business leaders to come up with a plan for sustainable growth of a uniquely Hawaiian innovation economy.

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Comment by Shiva on August 31, 2010 at 8:19am
@Boris.

I've been living in San Francisco for the past 5 years.

Homes: Depending on which city/neighborhood you live in, I think Hawaii might be cheaper. Ex. You cannot get a Condo for less than 500K in San Francisco. Think similiar situation in parts of Silicon Valley, Palo Alto, Cupertino, San Jose, Sunnyvale. As for single family homes, in San Francisco, you can forget about it. In average neighborhood, you won't find anything for less than a million, usually more like 1.2 to 1.5 million.

Salaries: You are right. The financial crisis doesn't seem to be having an effect on IT / Software, if you are on top of your game that is. Average / below average developers are probably taking more time to find new jobs, but neither me, nor any of my other friends have ever faced the possibility of layoff since I got here. All of us have moved companies for our own personal or professional reasons.

I was eying the tech scene in Hawaii in 2008 and 2009. And like many folks here have stated, I was disappointed to find that there are not that many well paying and Challenging tech jobs out there. Also the ones I saw advertized on dice.com or monster or craigslist were all for Defense / Miliary Positions which require Citizenship, security clearance etc. Even for those that had salary range, I found that it was on average about 30 to 40 percent less than what a similar position would be making here in San Francisco or Silicon Valley

-Shiva
http://myCodeTrip.com
Comment by Boris Ning on August 27, 2010 at 6:41pm
What is the standard of living like in the Bay area (sorry, never been to California)?

Are homes as pricey as they are in Hawaii? (350k median price for condo, 550k median price for single family homes - Hawaii prices)

Last I heard, the state of California's still in a huge financial crisis but it doesn't sound like the Bay area is affected at all (good developers still earning six figures according to you).

What's the school situation like in the Bay area?
Comment by Mark Boon on August 26, 2010 at 12:24pm
Given its small size and isolation it's easy to see how you get a self-enforcing situation where tech companies can't get enough staff so they move to the mainland. Which means existing tech staff can't find any (suitable) work and also move to the mainland.

To break this vicious circle you need a catalyst. This can be many things, anything that makes Hawaii attractive to both tech people and tech companies, even if it's only temporary. Either a local company suddenly getting into the limelight and attracting both people and (other) businesses, or some other confluence of circumstances that suddenly make it attractive to settle here. This can turn the vicious circle into a virtuous circle. If a company or project has success and depletes all local resources it may attract more people to move here. That in turn can attract more businesses to move here, as clustering businesses is often advantageous.

The problem is it's hard to predict how and where such a catalyst will happen. Even if the local government creates the most advantageous of circumstances, it's still not guaranteed to happen. And the chance of such a catalyst is proportional to your size, so Hawaii being small doesn't help there.
Comment by Dan Starr on August 26, 2010 at 10:11am
I concur that Hawaii draws creative professionals. In Hawaii I've experienced a high concentration of people who place creativity and other values far above salary. It seems I'm always bumping into them at gatherings (most recently in Kauai). As probably most people in this forum recognize, creativity can manifest itself in a variety of ways: entrepreneurism, research, software development, really any field with innovation. I even see this in the field I'm familiar with: scientific research and astronomy. Here, salary is not a driving concern (even mid-level and tenure-like positions pay enough to raise a family, although maybe without the luxury of land ownership and private schooling).

Also, I see the poor education system in Hawaii as an unfortunate, but potential advantage for a population of post highschool/university people who've gained far better mathematical and science foundations from a mainland or international education. This potential workforce could be highly motivated, independently driven and achieving, and with less constraints on salary due to their youth, idealism, and lack of family. This generation seems to be quite comfortable with co-working and hacking cooperative spaces (e.g.: Mountain View Hacker's Dojo (http://hackerdojo.pbworks.com/) and even, to some extent, using couch-surfing style living arrangements for a bit longer than what the older generation is comfortable with (very common in San Fran). It seems there is a lot of opportunity if the intellectual and technology incentives are available. I'm thinking of vibrant co-working / cooperatives / places like the Mountain View Hacker's Dojo (http://hackerdojo.pbworks.com/) and even unconferences as the community grows. Is the establishment of an environment like this dependent solely upon having an established tech community already in the area, or could it be nurtured in creative ways, preferably without city or government initiatives?

By the way, I think Techhui is a brilliant resource, and just the activity and quality of ideas in this thread is a sign, to me at least, that this topic will persist no matter which way the brain flow goes at any particular time.

As a final comment, for me the 4-5 hour flight is really quite manageable as a bi-monthly commute. It has little difference from a coast-to coast trip, and with WIFI on board planes this seems barely a chore. Plus, flights from the Bay Area (SFO, OAK, SJC) to Hawaii are consistently cheap (300-400 rt) for someone with a flexible schedule. The future completion of BART and eventual high-speed rail between OAK & SJC only improves the easy of connecting this young tech crowd with Hawaii.
Comment by Ken Berkun on August 26, 2010 at 8:43am
There are well paying jobs here in Hawaii. A friend of mine moved here this year and both he and his wife found jobs that paid better than they did in Seattle. Of course the housing situation more than made up for that, but at least it made the move possible.

There just aren't all that many of these jobs.

I do think there is hope for Hawaii in high tech, as I stated earlier, focus on where we have strength. Seattle is really a software town (Microsoft), Bay Area has a lot of silicon. San Diego, Biotech. Here? Sun, wind, ocean, geo, agro. Those just don't happen to be my area of expertise or interest.

Ken
Comment by Daniel Leuck on August 26, 2010 at 7:31am
@Brian While I agree with much of what you said, we have a few clear advantages. There are a number of large defense contractors such as BAE and Lockheed that have a presence in Hawaii. When they win large awards they are often required to subcontract a percentage of that work to small businesses. This, along with SBIR and STTR awards has created an ecosystem of smaller dual use companies such as Oceanit, Referentia, Pukoa Scientific, etc. They have been around for many years (25 in the case of Oceanit) which demonstrates a viable business model. Government focused tech provider Akimeka sold last week for $44M ($33M plus $11 million if targets are met.) Its clear that you can build a successful tech company in Hawaii that directly or indirectly services government customers.

Secondly, I agree with John that the lifestyle Honolulu offers can be a draw for some engineers and creative professionals. We have certainly benefited from that draw.

re: I think the real answer nobody wants to talk about is simply that the oft-cited "east-west crossroads" nature of Hawaii is overrated. We're not "a bridge". We're.. a layover.

This is true to a point. Try hiring Japanese or Chinese speaking engineers in a city of similar size in Iowa :-) For the localization side of our business, Hawaii has been a definite advantage. Hawaii also has a good number of people with experience doing business in Asia. Additionally, I've seen local companies take advantage of the fact many wealthy Japanese and Chinese investors have property in Hawaii and regularly visit. There is some cross pollination.

@John The Manoa Innovation Center has a good community of companies that cooperate and provide services to each other. Five companies in this building are customers of ours. Our first two customers were neighbors, so its benefited our company greatly. If I want to get some tips on writing a SBIR proposal I can walk 50 feet to Kuehnle AgroSystems and ask their CEO how its done.
Comment by John on August 26, 2010 at 6:38am
The lack of 'good' jobs in Hawaii is directly related to the lack of large, profitable tech companies here. Valley companies can afford to pay $150,000 for mid-level people because they make billions in revenue. Valley startups need to pay relatively high wages or else they won't be able to attract people from the local big, profitable companies. It does not matter how good you are, in almost all Hawaii companies, you generate less value for your company and therefore command less pay (not because of your abilities but the position of your employer).

Why Hawaii tech companies are in this position is the other issue. One thing that is now clear is that Act 221 was an 'all or nothing' / 'shoot for the moon' bet that failed. It would appear that we are back to square one or worse.

To Dan's original question on what to do, I'd like to see local tech entrepreneurs work together (more than I'd like to see a 'plan'). If there was a 'Manoa Geeks/Unconferenz' for tech entrepreneurs that could be useful.

Finally, as to our strengths, I think the lifestyle that Honolulu offers will be an increasingly strong competitive advantage. To earlier points about telecommuting, if we can encourage tech jobs that do not require a physical presence in the mainland, we could attract a lot of people who would love to live in Hawaii. As a place to live, the Valley (and other tech/financial centers) have a lot of downsides of their own.
Comment by Brian on August 25, 2010 at 11:59pm
There's nothing in his article (which is otherwise well-written) that addresses salary directly from what I can tell. He does address income within the context of affordability (And highlights housing costs as you mention). I don't really disagree with anything he writes but I'm unclear how that explains the relatively low technology salaries found here.

Low income.. lack of affordable housing.. departing skilled labour.. and a glut of unskilled jobs are merely symptoms of a crowded locale with a lousy economy/job market where vacation homes, rental investors, et al are crowding out local residents. Yep, that's Hawaii!

I can go to NYC and pay high real estate prices, witness large income disparity and still make way more money than in Hawaii.

I'm starting to think the "cost of living" wild card is just a lame cop-out. It doesn't explain WHY there aren't good jobs here - it just tells you that there aren't. Of course the salary question I asked is easy. Supply & demand. First day of an intro economics course. Obviously there is a lack of companies operating here that are willing/able to pay well.

I think the real answer nobody wants to talk about is simply that the oft-cited "east-west crossroads" nature of Hawaii is overrated. We're not "a bridge". We're.. a layover. If you want to do face to face meetings you can fly to Japan or China or whatever.. or just call them/VTC. There's little benefit in being in Hawaii for this. Oh sure that ~12 hour flight.. is 6 instead. So what? It's not a day trip either way. What's that leave? Local businesses? We already established there really aren't (well.. enough). Government? Federal doesn't really care if you're a Hawaii company. Besides, people from the mainland are all too happy to fly out and demo things.

So perhaps Hawaii is simply no good for high tech in the vein of Silicon Valley, et al. As others have said.. that leaves bio-ag and related industries.. Personally I feel even the reasons cited for Hawaii are overrated. Growing season? Who cares. A lot of that stuff happens in caves or giant buildings because you can precisely control humidity, growing season, day length, temperature, limit cross contamination.. etc..

Anyway, I could go on. I realize most people here probably don't want to hear this stuff but thusfar while I've found this discussion immensely fascinating I've also felt it's rather disingenous in the sense that people are unwilling to confront the reality that Hawaii is not good for business and may simply never be very good for many sectors.
Comment by Boris Ning on August 25, 2010 at 8:10pm
@Brain:
Hawaii certainly don't have size.

On a short term basis, it's necessary to promote long term technology growth. Of course, this has to be technology growth in area that Hawaii is already specialize in and has an advantage in. As Ken Berkun mentioned earlier as to why he's leaving, "The question to me is not so much "What are the disadvantages of being here?" as "What are the advantages?" For Hawaii, for what I am doing (consumer electronics) the only advantage so far is that it is closer to China. Oh, and the weather is nice. I think Hawaii has a serious advantage in certain areas of energy and bio-agra.",

On a longer term basis, the economic model needs to factor in renewable energy. There needs to be independence (not talking about the Akaka bill) from else-where for electricity and gas. The trash that Hawaii produces needs to be renewable.

Renewable energy goals: http://www.csmonitor.com/Environment/2010/0202/Hawaii-on-track-to-m...
Comment by Boris Ning on August 25, 2010 at 7:32pm
@Brian:
Michael Rota addresses some of the historical factors as to why salaries are so low in technology jobs in Hawaii.
http://thewavehawaii.com/index.php/archives/download-pdf/44-our-inc...

The reality that his simple yet detailed statistics bring up is rather alarming...
1) housing prices - ridiculously high
2) job vacancies - service based (hotels, health-care, government)
3) personal income - rather low compared to high cost of living
4) exporting the educated - brain dump

I feel he addressed the low salary for tech jobs best with his summary. The economic model since the 60s have not changed for Hawaii. Looking at the 300% growth in hotels and health-care and large increase in government jobs since that time, the model is nowhere suited for high technology growth (hence the low salary in tech jobs).

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