Spokane Smoke Stacks

The New Economic Mirepoix

Economic development was once all about primary job attraction. Enticing large scale manufacturers or corporate offices is still a worthwhile exercise but those who profess primary job attraction as their number one economic development priority are those that have chosen to forego acknowledgment of larger economic forces at play.

Consult any oracle, and they’ll tell you that 21st century economic development hinges on two simple ingredients, data and energy. Both intimately related, both easily broken down into industry sub-sectors, and both, happily, Spokane is flirting with from several different levels. Data and energy are the ingredients that will create the foundation for 21st century Spokane.

Let’s sweat out the basics:

 

Data Collection 

Why do credit cards offer points? Ask Mr. Money Mustache and he’ll tell you to do all your spending with credit cards that offer points and then promptly pay off balances as transactions post. That’s what I do and the kick-backs underwrite my leisure travel habits. Visa is not making any significant interest from me and, on the surface, they’re losing money because of me. On the other hand, courtesy of my credit card, Visa knows more about my life than my own mother. The value of knowing the spending habits of a middle income, middle-aged white guy? Priceless.

Amazon is not in the business of selling you things, Amazon is in the business of collecting data on your spending habits. Google is not in the search engine business, Google is in the business of knowing what you’re searching for and why. Facebook, Microsoft, Apple, yeah, they’re selling you things but it’s the data collected from the products they provide that’s the vein of gold. The product itself is nothing more than a vector.

Need more convincing, how about this nugget of trivia: the average self-driving car will collect more data in a day than Facebook collects in a year. I learned that during a three-minute pitch presentation in Silicon Valley whereby the pitch person was looking for more capital to build better data collectors, as opposed to better self-driving cars (though one leads to the other). Selling a self-driving car is pretty cool but leveraging all that data is where the real magic happens.

And don’t even get me started on all the data being pulled from smart homes.

 

Data Storage

Proper data storage is as critical as proper data collection. For instance, Visa is responsible for 60% of all monetary transactions that take place in the world. I learned that from the senior VP at Visa who is responsible for all their servers. What happens if Visa’s servers go down? The answer is simple – the world’s economy grinds to a halt.

Server farms is not the right phrase, economy farms is more appropriate. The who’s who of the international economy are scaling their server and storage needs at a blistering pace just to keep up with demand and the new products that are collecting new data.

And then there’s the crypto-currency miners. My, oh my, I feel like I need a shower just saying the phrase. Nevertheless, there is very real value in the crypto-currency world and those seeking to extract such value have converged upon the inland Northwest in search of…

 

Affordable Energy

Data-storage facilities draw an unholy amount of energy from the grid. There’s two parts of the nation data-storage facilities love: inland Washington State, and northern Virginia around DC. Both have the cheapest megawatt hourly rates around. An interesting exercise, to the extent the information is public, would be to analyze how much information is processed and stored on a per state basis. I’d venture to bet Virginia is number one with Washington a close number two.

All that cheap hydro energy pays dividends, but it’s not enough. Providing reliable, responsible energy to the region is one thing. Scaling to the household consumer level, even the commercial manufacturing level is easy, but the draw for data processing and storage eclipses standard operating procedures by factors of 10. Those regions that host data processing centers are those regions that will thrive in a 21st century economy because it also means they’re providing an affordable, responsible energy supply.

 

Energy Storage

Providing affordable energy is good. Figuring out how to store affordable energy is better. There’s a reason why Elon Musk is developing a wall with a battery in it. The multipliers of energy storage are deep and vast. The world needs more batteries and building them takes a lot of energy and natural resources. Those who disrupt the energy storage business are those that will thrive in a 21st century economy.

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Data and energy are entwined and one can’t thrive without the other.

The good news is metro Spokane is in the game. Urbanova is experimenting with smart city data in the University District. Itron is building smart meters for homes and businesses (data collectors). Effervescent Avista is in the background quietly and not so quietly making strategic investments. Leaders at Spokane City Hall are quite conscious of the opportunities that will arise if we lead the nation for all things smart cities. And large-scale economy farms are found throughout the region (and there’s more to come).

Spokane is in the game. The challenge now is to enhance our position by experimenting with new and creative data collection strategies, building more renewable energy sources, and actively engaging with job creating data and energy sub-sectors.