I had an energizing conversation Thursday with the guys at Element Six Media, a green advertising and branding firm in Minneapolis that builds campaigns around sustainable earth materials and social media buzz. I’ll be unpacking my interview notes in the next couple of weeks for a story on The Line, but I wanted to share one snippet now that particularly lingered with me: This is the New Economy. If we’re waiting for things to turn around or resume to normal, we’re wasting time because this is the new normal. Here’s how co-founder Maikel van de Mortel put it:

“We don’t talk in terms of things turning around. This is the new reality, and we’re at ground zero. The question is: how are we going to build up. The problem is that not everybody has come to peace yet with that new reality, and as long as that doesn’t happen, if you’re not at that point, then you’re going to struggle. The truth of the matter is it’s not going to go back to what it was. We’re not going to see profit margins as high anymore as they used to be. We’re not going to be able to charge those dollar amounts anymore as we were used to. Every single industry is going to have to face some realities, because people are going to object. It’s just part of the new economy. Every day that we talk about how things were, we’re waiting for things to turn around, is time that we spend wasting. That’s what’s really unfortunate. We can’t waste our time. We can’t afford it.”

It may be the last remnant of “a bygone era when the Twin Cities was one of the nation’s top technology centers.” The region has just a few large tech operations left (Lawson, Digital River, Seagate), and venture capitalists say most local software startups are tiny and will never grow into market leaders or large companies.

Gary Smaby, managing partner at Quatris Venture Capital Fund of Minneapolis, tells the newspaper that venture capitalists now expect a tenfold return on their investment and the ability to reach $100 million in annual sales. “I don’t want to leave the impression that there are not good startups,” he says. “It’s just that there are not many good start-ups with that kind of potential.”

So we’re not likely to find the next IBM or Oracle or Microsoft bubbling up from the Twin Cities startup scene, but maybe that’s not the point. Instead of asking who’s going to be the next big tech blockbuster to come out of Minnesota, should we instead be asking who’s going to be the next hundred successful small companies?

Large companies are may be good for the region’s economic stability, and it will take a lot of successful small businesses to replace the up-to-1,000 jobs thought to be at risk because of the ADC sale. But a conversation I had the other day with local entrepreneur/technologist Dan Grigsby has me wondering whether small companies might play a much more significant role in the future tech scene of the Twin Cities.

(Update 9:38am: Just got a phone call from Garrick Van Buren, who wanted to question whether large companies actually are good for a region’s economic stability. I made the comment offhandedly as a way to say I’m not completely writing off the value of large enterprises, and I’m quite certain I’ve heard that point made, but I can’t prove it. So there’s another can of worms: What is the value of large companies? One theory Garrick had is that they have traditionally been a magnet for attracting talent to the Twin Cities.)

Grigsby says the Twin Cities tech economy is already seeing a shift. It’s nothing unique to our region, and it has to do with the cost of computing power. Moore’s law is a prediction made by a Caltech professor in 1970, and it says that computer power basically gets twice as efficient, and thereby half as expensive, about every other year. He’s been almost spot on so far, and for the past 40 years the cost of computing has continued to plunge.

The cost of computing resources has fallen so much that very tiny companies or even individuals can now attack problems and develop ideas that just five or ten years ago would have been too costly for anyone but a large company to pursue.

I’ve written before about the opportunities cloud computing has presented for startups, which no longer need to pay to set up server rooms and hardware before launching a business. Instead, they can contract with a service like Amazon Cloud Services and only pay for the resources they use. Even without leveraging the cloud, things have gotten cheap. Grisby notes that he has a $1,000 server with enough capacity and redundancy to support any business he wants.

“So my cost of running a business has gone to basically zero,” says Grigsby. “That’s not universally true. There are still big, hard problems, but there’s enough problems that have the scope of business that I can make a living, and a very nice living, and at the same time don’t require a huge infrastructure to do it.”

He was talking specifically about software businesses, but other types of freelancers and entrepreneurs that depend on computing are starting to realize the same efficiencies. And the economics are becoming empowering.

“If I can find 2,000 people to pay me $40 a month for a product, I make $1 million a year. The economics of that are liberating. When I can build a company that costs nothing to operate, that changes the way I can live,” Grigsby told me. “Now, instead of having to spend 9-5 in a dull cube, I literally work from my patio. I look across my yard at a lake, and I love it.”

So what I’m throwing out there is that maybe — maybe — there’s less reason to worry about a bygone era if the next era in Minnesota high-tech looks like Dan Grigsby’s patio.

(Update 12:08: Twin Cities Business Senior Editor Gene Rebeck wades into the same territory on his BTW blog. See my comment over there, too.)

I’m going to get straight into the links now:

SUSTAINABILITY
The Seward Co-op celebrated its new 32-kilowatt rooftop solar photovoltaic system with a “commissioning party” on Thursday. The array was installed by Solarflow Energy, a Seward neighborhood company that is trying to prove a solar leasing model. I wrote about ‘em this week for The Line.

MEDICAL DEVICES
ProUroCare , an Eden Prairie medical device startup, announced an extra infusion of cash from its existing investors. The company makes an imaging product that it believes can help doctors diagnose and document prostrate cancers. Thomas Lee wrote late last year that the company may have a hard time convincing reimbursers that the product is necessary. I was humming the Yeah Yeah Yeahs after reading this story in the Star Tribune this morning: an airline worker in Arkansas came across a container of human heads and head parts on their way to Medtronic that were apparently not packed or labeled properly. The state confiscated the body parts until it can confirm they were obtained legally.

ECONOMY
The Minnesota Department of Employment and Economic Development announced May job numbers on Thursday. Minnesota employers created a net 5,600 jobs during the month while unemployment fell to an even 7 percent from 7.1 percent in April. It was the second consecutive month of job gains — a first since Jan.-Feb. 2008. U.S. Census hiring is responsible for a large chunk of the increase, but private employers in the state still created 2,600 jobs. Construction and financial services were the only sectors that didn’t see growth. I spoke with an official from an IT staffing agency in the Twin Cities, who told me that it’s placing a lot more web and app developers than it was a year ago, although much of the activity is temporary contract work.

Today, I’ll be reading, digesting and starting to write something about the Minneapolis Chamber’s new 2010 MSP Business Vitality Index (PDF here). Thoughts/impressions?

I’m also following tips and tracking down companies to cover in next week’s issue of The Line. If you know of local startups that are growing or doing something cool, lemme know.

Here’s some links:

TECHNOLOGY

TEKSystems, an IT staffing firm in Minnesota, has filed a lawsuit against a former employee alleging her LinkedIn connections violate a non-compete agreement (Wired/Computerworld)

SUSTAINABILITY

Cap and Trade will burden the rich, but ease energy costs for the poor (Fast Company)

More push back against wind power. A group called Goodhue Wind Truth has put up a billboard accusing T. Boone Pickens of giving residents “the shaft.” (Finance & Commerce)

Advanced Bioenergy, a Wayzata ethanol company, disclosed Wednesday that it’s seeking to raise $10.35 million in equity. (SEC Edgar)

ENTREPRENEURSHIP

Pine Technical College in Pine City is using a federal grant to set up a $2.4 million entrepreneurship center and technology business incubator. (Finance & Commerce)

ABRA’ Auto Body & Glass is touting CEO Rollie Benjamin’s Entrepreneur of the Year award. I had the chance to interview Benjamin a couple of weeks ago about how he grew the company from a single repair shop in Fridley to a 100-location chain. You’ll be able to read my story in the August issue of Twin Cities Business magazine. (BusinessWire)

JOBS/ECONOMY

The Federal Reserve Bank of Minneapolis predicts Minnesota might not return to pre-recession employment levels until 2013. (Finance & Commerce)

mono, a branding agency I wrote about for The Line a couple of weeks ago, continues to grow. It just added two more creative hires. (PR Newswire)

A study showed up in my inbox this morning that suggests the MOJO team will have their work cut out for themselves. The Kauffman Index of Entrepreneurial Activity (PDF) is an annual survey of new business starts. This year’s report shows U.S. entrepreneurial activity in 2009 was at its highest level since 1996. More new companies were formed in this country last year than during the 1999 or 2000 tech boom years. Minnesota, however, is singled-out for having one of the lowest rates of entrepreneurial activity.

In 2009, Minnesota recorded 220 new businesses per 100,000 adult residents, just beating out Alabama (210 per 100,000), Pennsylvania (200 per 100,000) and Nebraska (200 per 100,000). Mississippi was last with 170 new starts per 100,000 adult residents. I’m admittedly still learning this beat, but the numbers surprised me. I’d have guessed we’d be in the middle of the pack somewhere — not the bottom five.

Maybe it’s just that I’m better tuned in to the conversation, but it seems like there’s an awful lot of talk lately about how to make Minnesota more entrepreneurial. Can we do it? There’s excitement about the angel investor tax credit passed by the Legislature this session. I’ve also heard concerns that it’s not enough, that we need to do something bigger to overcome our cultural resistance to risk-taking.

Guessing I’ll hear some ideas later today.

I’m back at my desk now, and here’s my quick summary.

We heard presentations from ten Minnesota companies (and one from Canada) about how they’re currently using nanotechnology and how they might use it in the future. The uses were all pretty varied. Some companies are using nanotechnology to develop cheap, disposable diagnostics tools (Diagnostic Biosensors, Douglas Scientific). Others are using nanotech to make tools last longer by coating them with thin, near indestructible layers of particles (Phygen).

Darrel Untereker, vice president of technology for Medtronic, started off the morning by explaining what nanotechnology is, and how it can be difficult to comprehend. “It’s everything, and yet it’s nothing.” In short, it’s any technology that centers around manipulating materials at a spectacularly small scale — a nanometer is one billionth of a meter. Scientists have discovered that materials behave different when isolated at that scale. The Periodic Table? Forget it, said Emil Hallin, director of strategic scientific development at Canadian Light Source. At the nano scale, materials may have entirely different properties.

A few of the presentations were too technical my novice brain to keep up with, but several were quite accessible. Here’s a few very small summaries of some of the presentations:

• Douglas Scientific, a company based in Alexandria, is developing a tool aimed at cutting the cost and time it takes to analyze biofluids. Currently, much of that work is done using micro test plates, a compact tray that can hold dozens of liquid samples. Douglas Scientific’s product compacts that even further by sealing nanoliter samples inside a thin plastic tape, which can be fed through a machine and scanned for data.
• RJA Dispersions is a Maplewood company led by two former 3M employees. It produces nano-particle and pigment dispersions that are used to make ink jet ink. The particles need to be small enough that they won’t clog the ink jet nozzles and stable enough so that they won’t coagulate inside the cartridges.
• And Kevin Kluggtvedt summarized efforts by the Rushford Institute for NanoTechnology to make the southern Minnesota town a hub for nanotechnology (Little Particles on the Prairie?). Companies include Rushford Hypersonic and Kluggtvedt’s company, Rushford NanoElectro Chemical Co.

Were you there, too? What did you take away? Feel free to share in the comments section.

If you’ve ever dropped an idea into the suggestion box at a store or your workplace, chances are pretty good that nothing ever happened with it. A manager maybe emptied the box at the end of the month, skimmed through the notes, possibly relayed one or two to his manager, then tossed them all into the nearest blue recycling bin.

The time you spent scribbling with a stubby pencil on a quarter-sheet of paper probably went to waste.

Idea flow is a challenge even for companies with a reputation for feeding off employee and customer suggestions. Take Best Buy. The consumer electronics retailer has a culture that encourages employees to speak up when they have thoughts for improving the company. But until recently it hasn’t had a place to collect and organize those suggestions where they wouldn’t get lost in shuffle.

“It was a part of our nature that we weren’t fully taking advantage of,” says Joshua Kahn, manager of emerging media technology for Best Buy.

That started to change a few years ago with the advent of social media, including Blue-Shirt Nation, the in-house network that allows Best Buy employees from around the world to connect with one another.

Now, the company is developing a new tool: a social, virtual, online suggestion box aimed at capturing — and capitalizing on — ideas submitted by its customers and employees from around the world.

The project is called Best Buy IdeaX, and it launched in May 2009. In a few weeks, the company expects to publish an open-source version, allowing anyone else to use the code for free as long as they share improvements with Best Buy and all other users. The release will mark the first time the retailer has ever issued a program as an open-source project.

The bulletin board might be a better analogy than the suggestion box, because notes submitted on Best Buy IdeaX aren’t tucked away into a dark chest. They’re posted on a public website for the whole world to see.

Customers, employees, investors, vendors, activists, competitors, or anyone else with a suggestion can visit http://bestbuyideax.com, type their idea into a text box, add category tags, then click a ‘share my idea’ button to post it.

Once an idea has been added to the site, other users can vote to support the idea and/or add their comments to the discussion. A ‘Popular Ideas’ page lists the ideas that have received the most votes from users.

About 4,600 ideas have been submitted so far. The most popular: “Get rid of those stupid plastic boxes that are way to hard to open,” which has 58 votes.

Offering electronic receipts instead of paper receipts is among the most popular ideas with 53 votes. Free in-store wi-fi has received 36 votes. Other suggestions include doing a better job promoting recycling, giving customers in-store instead of mail-in rebates, and featuring more compact discs by local musicians.

Kahn can’t point to an example yet of an idea that’s gone form IdeaX all the way to implementation. But a few of the more popular ideas cover areas the company was already working on, including electronic receipts and in-store wi-fi. In those cases, IdeaX has helped to affirm “customers or field employees are caring about the same things we’re thinking about at corporate,” Kahn says.

Customers and employees have used the site, although users skew toward employees because there’s been minimal external promotion as of now. Best Buy is currently working with an agency to prepare a campaign to get the word about IdeaX out to the public. In addition to raising awareness and branding the site, the next stage will include coming up with a method for making sure ideas are being connected to the right people within the company.

“What we need to do is operationalize that kind of activity so that the ideas aren’t starting to pool and flood,” says Kahn. “Otherwise, if we don’t get this chain, then we’ll just have stagnation and it’ll feel like a black hole to people who are submitting ideas, and they’ll stop.”

The other, next big phase of the project will be taking it open-source. Kahn was estimating the open-source release would be ready in a few weeks, although an official release date hadn’t been finalized.

Giving away a program may seem like an unusual step for a large, Midwestern retailer, especially an electronic retailer that sells software and applications, but Kahn says the move fits into Best Buy’s open-social strategy of doing business. In part, sharing IdeaX is about “good business karma,” he says. But the program stands to benefit by making it a community project.

“We felt like we stood to gain more by doing it open-source than not. There’s no risk to us. In fact, it’s all upside. When you open source you have other developers, other brains looking at it and figuring out what to do with it, different ways to improve it,” says Kahn. “It’s almost like letting an ecosystem grow around the thing you built, and that actually makes it healthier, where if you put walls up around a thing, you don’t have the same opportunity for collaboration, for learning, for improvement.”

So was there hesitation within the company about sharing an application that might even be used by a competitor? No, not really, says Kahn.

“The features on the site, the way the platform works, all that stuff, there’s value in it, of course, but it’s not the value from which we make money,” says Kahn. “The value from which we make money is the intellectual property that comes from ideas being generated on the site.”

Kahn says he’s heard from a couple people who have expressed some interest in using the open-source version. It’s not the only product of its kind. SalesForce.com, for example, offers a product that can do essentially the same thing. Best Buy built its own because it was able to do so (with BustOut Solutions) for about a tenth the cost of a year of SalesForce’s product.

Small companies or organizations with a do-it-yourself cultures will probably be the ones most likely to take a look at the open-source version (which is called BBYIDX). It’s not an off-the-shelf product. The open-source package includes the code for the engine, but companies will still need a developer to build the design and host and maintain the site.

Originally published Feb. 8, 2010, on BringMeTheNews.com.

Nelson is coordinator for Project Haiti, a medical relief group that’s delivered doctors and supplies to the country during annual mission trips since 1989.

It’s among the dozens of small organizations nationwide rushing to help meet the big need for food, water and other essentials as the nation digs out from the rubble of last Tuesday’s deadly 7.0 earthquake.

“The outpouring of help has been just phenomenal,” said Nelson, a retired nurse who is also secretary and treasurer of Project Haiti.

Since Tuesday, the organization has received more than $16,000 in donations. Those gifts are being used to purchase food and medical supplies, which are now piling up in boxes in Nelson’s garage.

The truck that leaves on Wednesday will drive to Miami, Fla., where its contents will be transferred onto a military cargo jet and flown to Pignon, Haiti, about 60 miles north of the capital of Port-au-Prince. The supplies will be accompanied by a team of doctors and nurses, including Nelson, she hopes.

Project Haiti has a long-running relationship with a village hospital in Pignon. Past mission projects have focused on expanding and improving the facility, including the addition of a second floor, two new operating rooms and upgraded equipment.

The top priority this time around will be making sure the hospital has enough staff and supplies to operate, said Nelson. The facility wasn’t damaged in the earthquake, but it is now contending with a surge in patients along with a dwindling supply of food, fuel and other necessities.

“They’re in a real hard way,” said Nelson.

The shipment will include things such as needles, medicines and feeding tubes, she said. They’re also packing food for themselves and the people of the surrounding area.

For Nelson, it will be her 42nd trip to Haiti. The first was in 1989 after Project Haiti co-founder Dr. Paul Severson, a surgeon at Cuyuna Regional Medical Center in Crosby, Minn., asked her to join a mission.

Aside from the compacted schedule, preparations for this trip haven’t been too different from those for Project Haiti’s annual trips.

“It’s pretty much the same routine,” Nelson said, “only on a bigger scale.”

Thankfully, that bigger scale has been accompanied by a bigger outpouring of support, she said.

“The people in Haiti suffer so much, but the world didn’t really know that until this earthquake,” Nelson said. “Finally people are really taking notice that these are the poorest of the poor people.”

Project Haiti donations may be sent to Project Haiti, 123 Minnesota Ave. S, Aitkin, MN 56431. Nelson can be reached at 218-927-2634 or projecthaiti@charter.net.

“We appreciate everything everybody is doing for us,” Nelson said. “We won’t let them down.”

Originally published Jan. 18, 2010, on BringMeTheNews.com.

A pair of “co-working” centers opened this week in St. Paul, one in downtown and another in the St. Anthony Park neighborhood.

The centers are independent of each other, but both were inspired by similar hubs on the East and West coasts. The idea is to create a place where self-employed and telecommuting professionals can come together to work, and also benefit from some of the socializing, networking and collaborating that happens in a conventional office.

“It’s not really an office, and it’s not really a coffee shop, but it’s this other, third place and we go there to get work done plus socialize,” said Garrick Van Buren, a Twin Cities web developer who has followed the co-working movement on his blog.

The economy makes it an especially good time to experiment with co-working because many workers are in transition and there’s a surplus of commercial office space, he said.

Members pay daily or monthly fees for access to a workstation, an Internet connection and other office amenities such as a conference room, projector and kitchenette.

Zack Steven co-founded The 3rd Place with his partners at Monkey Island Inc., a technology and social media consulting group whose projects include a hyperlocal classifieds website and a local Twitter directory.

“We want it to be a place where curious, creative people come to get stuff done,” Steven said, “and a place where people can be a part of a community.”

The 1,200-square-foot storefront on Como Avenue has room for about a dozen telecommuters. The price model encourages people to pay $55 per month to use the space one day a week, with each weekday geared at different group of professionals.

Mary Lou Sweet, a neighbor of Steven, is one of The 3rd Place’s first members. She’s an independent consultant for a custom publisher that turns family histories and photo albums into professional-looking hardcover picture books.

Up until now, she’s had to ask customers to come to her home to compile information and scan photographs. Now, every Tuesday she can offer public office hours when customers can visit with less hassle. “It’s a huge solution for me,” Sweet said.

Across town, another group of entrepreneurs is trying a bigger and broader co-working experiment in the Lowertown neighborhood called CoCo, which also opened Monday.

CoCo consists of more than 8,000 square feet of downtown business loft-style space with capacity for up to 40 telecommuters to make themselves at home. The center sells day passes for $35, with larger commitment deals that bring the price under $20 a day.

Co-founder Don Ball sees it as an “innovation hub” with co-working at the center. It also offers meeting room rental and is seeking to attract a mix of permanent tenants, even from larger companies, that want to be a part of the atmosphere.

“You’re tending to your own stuff, but in the spare moments you’re throwing comments at each other,” Ball said. The hope is those small interactions lead to some serandipity, perhaps business connections or partnerships that wouldn’t have otherwise been made.

A third Twin Cities co-working effort is waiting for just that – partnerships – before launching an entirely different concept later this year.

Stephen Filing is glad to see co-working experiments popping in the Twin Cities, but he’s skeptical about their business models. He’s exploring what he calls “more of a strip-mall concept,” inspired by the success of places like Snap Fitness and Anytime Fitness.

“The proliferation of the compact fitness center played on two things: price and proximity,” Filing said.

He’s doesn’t believe most telecommuters will pay much or travel very far to use a co-working facility. That’s why he’s looking to partner with a larger company to help launch a chain of small and easily franchised facilities.

“I’m not altruistic about it, and I think too many people are,” Filing said. “I don’t want to put something together than can’t sustain itself.”

Van Buren is another co-working booster who has questions about the sustainability of some of the models that have been attempted or discussed.

A few have failed because they took on too many expenses, buying high-end Herman Miller furnishings, for example, instead of seeking out discount or second-hand products.

Another challenge will be retaining members as the economy picks up and more workers re-establish themselves, either with new nine-to-five jobs orsetting up a home office.

“Short-term, to somebody who’s recently been let go from an employer, who wants the comfort and community and socializing that an office gives, the value pretty clear,” Van Buren said, “but I think after a few months that value proposition needs to change.”

Originally published Jan. 8, 2010, on BringMeTheNews.com.