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Hear me out: Audible CEO makes case for Newark

Says city needs better plan to attract new companies

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    Newark companies should invest more in startups to build the business climate, says Donald Katz, who brought Audible to the city in 2007.
    Newark companies should invest more in startups to build the business climate, says Donald Katz, who brought Audible to the city in 2007. - (AARON HOUSTON)

    Audible.com's move to Newark in 2007 has been well chronicled and widely praised, but it hasn't been imitated as much as CEO Donald Katz might like.
    It's with that in mind that Katz has raised his voice in recent months about the need to rethink how business leaders and policymakers tackle economic development in the state's largest city. His end game seems fairly straightforward — drawing more technology-driven, growth-minded companies like his own to Newark — but his methods might be on a different wavelength from what seems like conventional wisdom.

    The city's corporate citizens should focus more on direct investment into startup companies and street-level amenities that draw young professionals, rather than nonprofits and incubator facilities, Katz said. His formula also calls for lawyers, accountants and other professionals to "offer services that a young company needs — that will create dozens of jobs a year — as part of your pro bono effort," rather than simply handing out business cards.

    "It's just a different way of thinking, because there are plenty of smart people, there are plenty of well-meaning people, and there's even plenty of capital," said Katz, whose 18-year-old company pioneered online audio books. "It's just how that's deployed, and it cuts across — from the public policy level to the economic policy level."

    Katz said a strategy focused on venture capital has worked well in places like Detroit, where Quicken Loans founder Dan Gilbert has led an effort to revive the city by investing in tech firms and real estate. It's also one that business leaders here aren't averse to: In April, the Newark Regional Business Partnership honored Katz for Audible's move to the city, helping him spread his message directly to fellow business leaders.

    The next step is "to figure out exactly how we implement the kinds of things that Don is proposing," said Chip Hallock, the business group's president and CEO. "But I think what he says does make a lot of sense, so certainly people will listen to it."

    Audible, which had 125 employees when it moved to Newark, expects to have 600 by the end of this year. The company has expanded its offices atop 1 Washington Park and Rutgers Business School, occupying the type of bright, wide-open and collaborative space that's less familiar to New Jersey and more so to Silicon Valley, or parts of Manhattan.

    "This is how you make employees excited, this is how you make yourself feel like you're part of a progressive new company environment," Katz said. He noted, however, that he's "a little frustrated" more businesses don't see the opportunity to build such an office in Newark's transit-rich downtown at much lower costs than Manhattan.

    Audible expects to employ 600 in Newark by year’s end, according to founder Donald Katz. He says other companies can grow here through a venture capital-focused development strategy.

    Katz also touts that his employees stuck around after the move to Newark, contrary to what some consultants said would happen, and said the staff has embraced the company's mandate to be socially engaged there. He estimated about 60 students from North Star Academy, a city charter school, have been paid interns with Audible, some of whom were later supported through college scholarships.

    Philanthropy and social engagement are in fact longstanding practices among Newark's big companies, but they also may be evolving. Alfred Koeppe, a former PSE&G and Bell Atlantic New Jersey executive in the city, said corporations have historically "filled the gaps that weren't being handled by either state or local government," providing a safety net of social services, mentoring programs and "human and financial capital."

    But he also noted that "when you do that, there's a certain dependency that comes with it" that can stall economic development. That's helped fuel a shift over the past decade, in which "the focus for corporate giving in Newark more and more is on workforce development" in current industries through groups like the Newark Alliance, the 14-year-old nonprofit Koeppe helped found and now leads as CEO.

    Such a change might sit well with Katz, who insists "nobody is doing anything wrong, because so much of what happens here is well intentioned. But that is damning with faint praise." He said Newark's business leaders must strike a better balance between filling the gaps through philanthropy and finding better ways to create tax revenue and job growth.

    "You're not trying to tell people they're not doing a good job," he said. "At some point it's a leadership role to step up and make some changes that become paradigms for other things."

    E-mail to: joshb@njbiz.com
    On Twitter: @joshburdnj

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    Joshua Burd

    Joshua Burd

    Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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