Making a future, one job at a time

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Stephen Tang, CEO of the University City Science Center, visits the labs of Integral Molecular, one of the center’s life-sciences start-ups.

TODD DECATO was the victim of an industry shift writ small.

Decato had been a watchmaker - not a big growth industry to begin with in the bare-wristed era of the iPhone. "I don't even wear a watch," he acknowledges.

Then Lehman Bros., the stock market and luxury retail all tanked, wiping out demand for the precision mechanical watches that it had been his job to build, "working on the movements, putting the hands on, putting the faces on, putting it all together." His boss laid him off.

Now Decato fixes and sells bikes at Volpe Cycles, a business he opened last May in Fishtown. Repairs and sales are both booming. "People need a bike a lot more than they need a watchsmith," he says.

Tony DeFazio's decision to launch his own company was an industry shift writ larger - in finance and real estate, as opposed to watch parts.

Formerly an in-house public-relations executive for American Financial Realty Trust, DeFazio was caught "in the vortex of both of those industries tanking at the same time," he says, and was let go with 30 other senior executives in 2008.

Due to ongoing consolidations in both realms, some of his former colleagues are still looking for work. Meanwhile, his start-up consultancy, DeFazio Communications, is in the process of making its first hire.

"I'm going to create a job," DeFazio says. "It's one job, but it's a job."

That's precisely the entrepreneurial effect that the Philadelphia region is counting on to help recover lost jobs - some likely gone forever, according to senior economic analyst Timothy Schiller at the Federal Reserve Bank of Philadelphia, as business sectors like retail, financial services, pharmaceuticals and the chemical and automobile industries (including dealerships) retrench and realign.

Creating jobs the start-up way is a reasonable proposition. Nationally, companies less than five years old created all of the net job growth between 1980 and 2005, according to the Kauffman Foundation. But it's a proposition that comes with some substantial challenges for the region - especially in the super-jumbo-size industry shift that's happening here thanks to global consolidation in the pharmaceutical industry.

Therese Flaherty, director of the Wharton Small Business Development Center, says that, by her count, the region's pharmaceutical companies laid off 2,000 to 3,000 workers over the last year. "We're really at a crossroads here right now as a region, in respect to life sciences," she says. "The opportunity is to get those laid-off professionals and scientists redeployed into a more entrepreneurial system."

Flaherty has the layoff numbers at her fingertips because the Wharton SBDC is one cog in a regional effort to redeploy the life-sciences troops here in the Philadelphia region so they don't decamp to San Francisco, Boston or some other red-hot locale for life-sciences start-ups.

The Philadelphia area is the country's No. 2 life-sciences "cluster," just below Boston and above both San Francisco and New York, according to a 2009 economic analysis by the Milken Institute. But it's a disappointing ninth in "small-business vitality" in the life sciences - not far above Seattle and Minneapolis.

Next month, the Wharton SBDC and some local partners will roll out a new "Entrepreneur OnRamp" initiative - details are below - designed to teach Big Pharma types the bootstrapping skills they'll need to help them get a fledgling life-sciences company off the ground.

The program will also offer introductions to some movers and shakers in the region's entrepreneurial ecosystem. Budding entrepreneurs from the corporate ranks don't always appreciate the importance of these connections, says Stephen Tang, CEO at the University City Science Center and another OnRamp collaborator. "They need someone to pull them aside and say, 'Hey, did you talk to so-and-so?' "

The Science Center - actually a cluster of buildings along Market Street on the fringes of the Penn and Drexel campuses - is another major cog in the effort to keep the region's life scientists local. It rents out 60,000 square feet of "incubator" space (labs and offices) for start-ups in the life sciences, clean energy and high tech. Across town, at the Navy Yard, there's another 80,000 square feet targeted as incubation space.

Important sources of cash for the Big Pharma effort include "greenhouse" capital for life-sciences start-ups from BioAdvance (conveniently situated in the Science Center) and money from the state's Ben Franklin Technology Partners (who've been hit with a 42 percent budget cut - down from $27.6 million to $16 million for this fiscal year). Regionally, Ben Franklin operates from offices in the Navy Yard.

Along with square-footage, the Science Center is positioning itself as a clubhouse and drop-in working space for start-ups. Tang envisions a public area called the Quorum, now on the drawing boards, as Philadelphia's answer to the North Carolina Biotech Center, where entrepreneurs, university thinkers and even high-tech visual artists cross-pollinate to create the kind of buzz that can put a region on the E-Class map.

(In a buzzworthy convergence, the 8th-floor space at 3711 Market St., where the Quorum will eventually reside, is the same space where the innovative DreamIt Ventures - see Page P-3 - will host its frenetic three-month entrepreneur "accelerator" program starting in early May.)

One hurdle for the region, Tang says, is to get past the myth that career employees from Big Pharma are too set in their ways to bootstrap as entrepreneurs. "These are skills that can be learned," he insists.

He enumerates a list of old-guard life-sciences companies that started in the region as offshoots to the Philadelphia College of Pharmacy: "Wyeth, Eli Lilly, both Johnsons . . .

"As Philadelphia, we created the industry," Tang says. "We need to see, can we do it again?"