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TechVibe Radio Geeks Out on the SOI Report and Transcenders

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TechVibe Radio is back on air at ESPN 970 AM every Saturday at 8:00 a.m.

On this episode, hang out with Justin Kaufman, Pittsburgh Office Managing Partner at PWC, to discuss the key findings of the Pittsburgh Technology Council's "2020 State of the Industry Report."

Get high-level numbers on how the Pittsburgh region's tech industry is growing and shaping the entire economy. Plus, Justin has fantastic insight on trends driving success in tech companies.

He will tell you all about the Transcenders! These companies have the tech, processes and culture to thrive in an uncertain future!

 

 

Transcription:

It's the best time of the year here in Pittsburgh Technology Council, you know it's fall outside like temperatures are getting a little cooler out there investable, our annual State of the industry report is out in the wild right now. So exciting. Every year, we gather the data as to how its protec ecosystem is growing, moving, shaking, accelerating, decelerating, which I doubt, all comes together. And we do it with the help of our friends at PwC PricewaterhouseCoopers. And this is like it's one of the big things we do every year is to get this data out and watch our family. Hopefully we can, you know, get some good in insight in terms of some bite sized pieces. But if you want to know more about it, just go to PGH tech and login to TEQ. And you'll be able to see some of the data there as well. Absolutely, that the whole issue there for people to kind of nerd out on if they so please. And on today's show, I'm just pumped because like this is like I can see it's such as partners that we have. It's like family that we have when it comes to getting this report out. And I'm really excited today because we have Justin Kaufman with us today, Justin, thanks for hanging out with us. We are dedicating our entire show to talk about not just a the industry, but also what's happening at PwC. And some of the stuff you're doing around your transcenders reports. I think it's just super exciting stuff. And we're so glad to have you all with us today, Justin.

Well, thanks for having me, Jonathan and Audrey and the Pittsburgh Technology Council overall, you mentioned fall going the way 2020 is I'm expecting a blizzard in the next three or four days.

Don't say that, Justin, please.

And if we do get one, I'm gonna blame you. Okay, that's, that's fine. As a snowblower, I'll help you out.

Oh, perfect that i would i would like that, I would like that. So just make sure take the time to hang out with us today. Before we get rolling and kind of talking about some of the stats and everything. Like I wouldn't know more about you, we was just in coffee and give a little bit about your background. And then we will learn a bit more about what PwC is doing here, obviously, in the Pittsburgh market, because you guys are doing some great research, do some great work going and more about that stuff.

Great, great. So my life story in 60 seconds, or maybe 120 seconds. I'm actually originally from Boston, or outside of, say the suburbs of Boston, I grew up with two parents very both career focused individuals. My mom was a, you know, transition from teacher to superintendent of schools, extremely driven, and showed me the way of how you deal with all that in between. and my dad actually was an entrepreneur running his own telecom company. So there'll be some technology flavour. Obviously, throughout this whole discussion this morning. I have two older brothers who are both entrepreneurs in their own rights, some one finance and operations and then the other, more of a marketing focus. So I really didn't have a choice growing up where I was going to have from a career perspective. So you know, not sure how but I always got, I was always into tech technology and gadgets. I was the kid who used to display his tech gadgets on my dresser when all my friends at superheroes. Okay.

Your favorite tech gadgets? I'm just curious.

Yeah, well, you'd appreciate I had my headphones laid out whichever ones I had. Of course, I probably had my Gameboy or whatever version it was on. And then of course, I had the eye problems growing up more during the CD players or cassette players. So I had that lined up. But you know, that's that, you know, everybody wonders where I got into tech gadgets. I obviously, I remember converting the first cassette store to CDs. I know the night right at national chain. And I quickly I I know you'd appreciate that being the radio side right of the transformation of of content, right?

Absolutely, man. Absolutely. What was your first computer mine was mine was a Commodore VIC 20 Just saying.

I think I had it. trs 80, which I don't even know, I think I put the floppy disk in. And that's probably I was playing spelling games and math games, I think that's probably what I remember. And then, yeah, I've come a long way and then pivoting, I actually was a, I wasn't employed as a bank teller in the local credit union. So knowing that this segment is not that long, I will quickly Fast Forward went to undergrad at University of Massachusetts Amherst, and then went into it consulting, and then quickly realized, you know, I want more I want more education. And of course, that brought me to Pittsburgh in the early 2000s. where, you know, Carnegie Mellon was the place for me, I knew it from the get go. And that's why I came to Pittsburgh from the technology focus of not just seeing you, but all the great universities and companies here. And, and yeah, and then I met my wife also getting an MBA at the top of Business School.

A lot, of course.

That's it, right. So I still have vivid memories of driving the storage truck with all my stuff on the turnpike and breaking down twice. So that was my, you know, my beginning to Pittsburgh. Yeah, but it turned out okay. It's certainly not moving soon. No, no. Well, I ironically, we graduated from school, I went to work for a firm named diamond cluster, my wife went to work for Unilever. And that's in Chicago at last night's global, obviously, as you guys would know. And then I was in Chicago for a number of years. And we decided to move back to Pittsburgh, at which point PwC acquired the firm I was working for. Okay, PwC in Pittsburgh, you know, we're still relatively known as like, you know, the largest audit and tax professional services firm. But, you know, my role in the last few years, and we'll continue to do this with our partners and our employees to really educate the city on, you know, more than one third of PwC business now is on the management consulting side, which we're going to touch here in this report quite a bit. So, so fast forward again, because you know, we have time here, I spent many years as our m&a leader and consultant for financial services. And then about four years ago, or five years ago, I took on a Midwest consulting role to lead our market here across a number of states. And then two years ago, I took on one of my dream roles when I came to PwC, which was the office managing partner here, of PwC, in Pittsburgh, where we have, you know, more than 550 employees. And, you know, we obviously do work with all all the companies here.

Do you guys like the footprint here in Pittsburgh, and that's why it's such an honor for us to be working with you guys to bring this report out every single year. So really appreciate your partnership, Justin, that's for sure.

Without a doubt, great stuff. So a couple numbers. I mean, before we jump into everything, I mean, obviously we don't want to just like shoot things at people as far as that goes. But part of the conversation that we're gonna have today, you know, he's also going to talk about some of the transcenders reports that you guys have nothing to do often to talk about. I know people are kind of dying right now, just to kick off some kind of high level numbers as to our state of the industry report as to really like numbers of tech companies that are here, Audrey, I mean, obviously, do you always tell just the workforce and the payroll that goes on within these companies, which I think is always really good, just to kind of show the presence that Tech has in the Pittsburgh region, if people know, we define the Pittsburgh region, it's 13. county region, basically what most people would call Southwestern Pennsylvania, I guess, for lack of a better term. So it's all the region together kind of that we kind of called Pittsburgh, I guess. Does that sounds fair enough. So what do you think are some of the highlights?

So, you know, it's funny, as, as we think about the technology report, you know, to me, it's clear that, you know, 10,000 companies being surveyed or the data coming back, you know, representing, you know, 13%, you know, in the region, it's quite clear that, you know, we continue to forge ahead, right, in the last 30 to 40 years. I think Pittsburgh continues continues to elevate its presence from a tech perspective, not just nationally, but globally. Yeah, right. So go ahead, go to john Ozzie. Yeah,

I mean, that that's what we think it's we've seen these numbers increase, you see that it's like, you know, it's a huge chunk of our economy. And people see the schools like Carnegie Mellon and pitch, and they start realizing that Pittsburgh is a center of innovation, and it's a tech hub.

Yeah, I would say that, you know, we face in the economy now. And I think Audrey you serve these words in the report, just weathering the storm, like this city, is will will be in, you know, it'll show quickly that we will weather the storm because of the foundations right now in the last 30 to 40 years around technology itself, right. small companies in large companies, right. So, you know, the headwinds are there, right. I think that, you know, most cities will face it, but it was the cliche with chaos comes opportunity. If you think about technology, healthcare, pharma, you know, manufacturing, which were rich in retail, education, financial services, right, they're all gonna find their way forward. And, you know, having the backdrop of the city and the skills and the talent, you know, will be vital to that are pivotal.

Let's talk about workforce as well. Just notice, I mean, cuz I mean, workforce. When you look at the numbers this year, the workforce numbers really show how important tech is to our region. What are your thoughts on that?

Yeah, I think from a standpoint of the workforce is always going to be important that region, right, and how do we actually think about, you know, how do you continue to upskill that region? Okay, and something that, you know, from a PwC perspective, you know, it really became a must not even a question. Right. So how do how does this region continue to reimagine the possible or like what I like to say, you know, reimagine the impossible. Right, so how do we get greater quality, greater efficiencies? You know, out of the organizations that are here locally? That's what for PwC? Obviously, oh, yeah, we had to disrupt our audit tax and consulting businesses, right. I mean, disruption is key, and, and the companies locally here that are disrupting their organizations and upskilling their workforce, you know, we'll obviously went out in the end of this day.

Absolutely. I mean, when I look at the digits, just the sheer numbers of people, when you look at just the size of the payroll that you have going on, I mean, it's like a $25.2 billion payroll we have here with tech. And that represents, like, 34.8% of our wages. Like, I mean, this goes to show you that mean, these aren't just jobs, but these are high paying jobs. And just Yeah, I just, that always blows my mind.

So yeah, and they'll, they'll continue to be right. So you know, there's always just concern around what happens with automation and RPA driving learning and things that matter, it's going to be a consistent shift to more higher value, you know, you know, roles and responsibilities, right. So when you talk about the wages from a tech perspective, it's going to continue that way, right? Because the importance of it, underpinning the organizations and the foundation of what's going to come in next five to 10 years, you think about what just happened in the last six months, the velocity of change of organizations going through here locally and globally. You know, we talked about supermarkets, you remember back in the early 2000s, the startups trying to figure out how to deliver your groceries. Right? A failed miserably, right. miserably, excuse me. And then you think what some of our, even our local, you know, nice companies here have done, I picked up my groceries yesterday, right, I pulled up, I hit the app, and somebody was coming outside with 53 items. And it was a seamless as can be last week, and you know, again, another, we'll call it a big box store, I picked up my son's tennis racket sitting in the parking lot. While I went there and picked it up that stuff. It was taken us years to do that. But yet, you know, and again, I try not to use any of the related words of why we are where we are, I'll say the pandemic, you know, companies were forced to make that change, right? Think of health care how the medicines been talked about for decades. Both of you would know that well, right? decades. And all of a sudden, you know, we were forced to talk to your doctor or specialist on FaceTime. I couldn't get, you know, family members to talk on FaceTime. So back to your question on workforce, these are all the skills that people are having to learn on the run. And, and, you know, organizations have to figure it out. And you know, we'll talk a little bit here soon about transcenders. But, you know, from a PwC perspective, we disrupt ourselves three to four years ago, to prepare ourselves for chaos, right? Not that we were going to predict a pandemic but you know, estimation I'll say it more gently.

And that's what I'm excited to talk about. And we're gonna take a quick break. We're gonna come back with some more numbers from the CRISPR Technology Council speedy industry report 2020, along with talk about the transcenders reports from PwC hanging out with Justin coffin here. So glad to have you here. Taking a quick break. 

Audrey, I tell you what to see the industry report this year, I'm just so pumped to say that the Pittsburgh region has almost 10,000 tech companies hanging out here and it accounts for almost 24% of the workforce. And 34% of the wages, it is big stuff. If you get a PGH tech or you can nerd out and all the numbers, we break it down by six sub clusters, you can learn about what's with what's happening in it, Life Sciences, advanced manufacturing, and so on. And you got some some cool detail you want to talk a little bit about and kind of riff off of, with Justin, as we move into the whole idea of transcending companies, the transcenders, the companies that are there ready to move in shape to survive anything that comes in front of them. Because you know, there's always some rough waters, we have to navigate in every region. And I think you got some of that detail you want to share with us, Andre, especially when it comes to SPR funding and so forth. So what are your thoughts on that, Audrey?

Well, I mean, I think it's interesting that, you know, we do this, and you can go to PGH tech.org. And you can do a deep dive, and you can look up state of the industry and find this. So I mean, I think it's interesting that something called the SPR, which is really the Small Business Innovation Research and the Small Business Technology Transfer. And these are awarded to different, you know, startup companies. And there's there's lots of incentives. And they're not easy to get. But what's very fascinating is that across all it looks like in the region, we've been just slowly decreasing in terms of that funding. Meanwhile, some of our revenue in terms of investment in technology has been increasing, run simultaneously, our science and engineering and health grabs students while high proportionately actually high. It's it remains flat, it remains like a flat, steady, strong part of our ecosystem. But at the same time, r&d expenditures at universities and colleges is actually increased. So there's lots of different moving pieces and parts. So it might be helpful for Justin to really talk about the work that you've done when you surveyed almost 2400 executives in 76 countries and you came to what makes the magic work for Exactly, exactly. And I think so well, I'm interested in sort of the detailed data, I think it would be awesome to hear from you, Justin at PwC to talk about this research that you did and the findings.

Right? No, definitely. So, you know, transcenders, in general, we're going to talk a little bit about that now. And as you said, We surveyed 2400 companies, and we do this year over a year, we refer to it, you know, we have a CFO of what we call CFO pulse survey. And then we also have a digital IQ survey and, and some of this information kind of pulls in from both. And really the the most recent one, we start to figure out from a data perspective, what makes you know, a digital winner in today's environments. You know, think about this year, especially, we looked at how companies operated prior to the crisis, and then you know, how, how are they going to be power companies in general going to be prepared to come out of it or emerge stronger. You know, we discovered, you know, a group, a subset that consistently generates, you know, payback and get significant value across their digital investments, from growth of profits to resilience, customer experience, people, you know, better insights, and more. And that's really what we start to call the transcenders. And it only makes up, you know, 5% of the companies, you know, that were that, you know, really have that that core pay back. Yeah. And then, you know, if you start to think about the companies, and you mentioned r&d as an example, but I would also push to say, well, the overall investment from a technology perspective, right? And so what does that mean? So there are really four actions that we say these transcenders take. And by the way, I'll give a couple of examples. And second here, like before actions are, I'll go ahead and read like examples. And when you bring it to bring you bring it to reality, because some great companies, you guys have been tracking on this.

But we're gonna, I'll give you so let me give the four actions and I'm gonna give you a bunch of examples that, you know, a company that everybody knows. One is, you know, from our survey in our data, and again, there's plenty of data that we can share on ptc.com. And you guys can probably have the links out there too. But building resilient culture that doesn't care extension, right? I've worked with companies locally here that, you know, definitely, you know, some are on the right path for a digital transformation. And some have, you know, have hesitations, right? You know, when you start to look at the size and the budgets that it takes to really, truly go after digital in the right way, it takes capital, right. And, you know, I joke that remember the days when, you know, big companies would say, hey, let's have a.com site to, well, we're there now, right, where you can't have a separate you know.com site, they have to be all integrated as one. So again, you know, it's a never ending journey. And by the way, 67% of transcenders have lived through a disruption, whether it's a merger acquisition, or significant business model change, or executives, a big executive change over, right. So companies that had that practice, you know, clearly are out in front, too. Another thing we see is mandating change, not just talking about it, right. So, you know, I find that talking with many of our clients a lot, you know, do the right thing, but a lot of us will talk about so how do you actually make sure it's not just big talk, but how do you actually act on it? and focused on collaboration cross functional, we've saw that 84% of these transcenders, you know, actually mandate change and mandate cross collaboration. I mean, this day and age, it's amazing, Jonathan, and Audrey, how you still find companies that, you know, operate in silos? Yes. And that's, that's just not helpful. I was saying, that's for sure.

Yeah, definitely not. So the third thing I would say, is invest with a purpose, you know, transcenders invest more than 33% in comparisons, and others, from a technology process, model, and so on. And then lastly, and john, I got a feeling you're like this one is, you know, the transcenders make their people you know, their superpower. Right? So, you know, Bill, exactly transcendence will say that people who are innovative, able to work in ways that impact the bottom line. And by the way, they're massively obsessed with upskilling their people, right? massively obsessed, not just having training programs, but to you know, to nauseum, right? And, and a little self promotion of PwC, I can't tell you a day that goes by that I don't get a pop up on my monitor that says, Justin, here's a, you know, here's a quick digital pop up quiz, would you like to take it? So it has to be endless. And, you know, at PwC, we took 3000 of our employees and put them, you know, took them out of our client sites and put them through rigorous training, everything from AI, to machine learning, etc. So, you know, pivoting quickly, you want examples. So here we ready for the examples, Jonathan?

Really, Justin for sure.

net, Netflix is a good one, right? So I remember going into my hotel in early 2000s. And saying, you know, Justin, your your DVDs arrived, you think about Netflix, and how that position, took more content and disrupting your typical, you know, players out there. Another one is Sony, right? So we think about their evolution over decades. And they figured out how to now you know, be a major player in the gaming industry as another example. You know, another good one is a Microsoft, right? They, they have in the know it all culture, which now if you speak to them, they refer to as you know, learn it. All right. So again, the learning and upskilling of their people, and you see the transition of operating system to, you know, LinkedIn, Skype. And now obviously the clap.

Absolutely. I think I think Porsche was also on your list as well, too. I know, they've disrupted the auto industry in many ways.

Yeah, totally. And, you know, in 2018, they announced at 50% 50% of their IT budget would be all digital. Right? And what does that mean, you know, they they recognize that the driver, you know, it's all about the experience, right, and that their target market for a Porsche. And then, you know, thinking about Pittsburgh, they took a one step, you know, future looking to, you know, space and the leveraging cars, collectively, if they sit idle, right, 95% of the time, and you think about autonomous vehicles, and you think about, if your car's just sitting there, we have the data, why would it not just, you know, be used on an on demand service, right, you can think about the local companies here that are also playing in that space, right, whether it's the Uber the Argos, etc. So that's a force one. You know, it's funny, I think, a Porsche I think I like john deere as like the opposite side of that spectrum. Right, which I you know, they made in recent years really pushing to upskill all their employees from an agricultural perspective and you know, how to use AI and data and autonomous farming from you know, the machinery right to pinpoint unhealthy crops and reducing pesticide usage, etc. And that's 182 year old company. 182 year old company. That's right. Yeah, that's awesome, man. Think about that. Some of that type of depth and history. bracing tech like that?

Totally, totally. And then, of course, the easy one on the list is Amazon, as we all remember from books to, you know, pretty much, you know, across the board being a retail provider, and then obviously, you know, 40% on the cloud market, right? If that's not a transcend router, no one is. But again, the themes across all of these, all of these, it's just the the upskilling, and the focus, the relentless focus on being out in front and not being afraid of disruption and being okay with chaos, and moving after it right, or ahead of it. So, anyways, I digress. But that's one of the themes. And those are some of the companies that we kind of, you know, articulated in our report.

So when you talk about companies, which is just fabulous, give us a wrap up. And as we think about Pittsburgh collectively, exactly.

Well, what's good is, you know, the companies I mentioned, really cross sectors, and we have an amazing opportunity here locally, with all the large, small and large companies as one is how to they, you know, and some of them have done it, but how do they get out in front? Just like this list, right? How do they digitally upskill their people? How do they, you know, get in front of the chaos? And, you know, traffic chaos? How do they use this as a time to evolve their own strategies? Right. So as I said earlier, you know, the velocity of digital transformation happened in months, right, where, you know, years, you know, we should be able to, we should all recognize that now, it's possible to move faster. Right. And we have absolutely some of the greatest organizations here in Pittsburgh across all sectors. Right. I think we mentioned them earlier. Retail, manufacturing, healthcare, I mean, you name it, retail education, you name it. So Audrey, there's a real opportunity for Pittsburgh to continue to be out in front when it relates to technology and digital and I would just say innovation in general, with the universities we have here with a talent with organizations like the you know, Technology Council, right, all of us together collectively to take Pittsburgh to the next level and continue down that journey that I think we've all been happy to see in the recent last, let's say 20 years or so.

Absolutely, Justin fantastic stuff. And it really goes to show you that I've we all feel like Pittsburgh is really positioned to keep growing as you see by our CD industry numbers, you see how tech is this massive part of our economy. And I think we have some transcenders that are in our ranks. You think of the companies like the auroras in the Ubers of the world that call Pittsburgh home. It's just exciting. I love that PwC has such a massive presence in Pittsburgh because you guys keep us on the street near you do the research, you let us know it's up, and you help the companies out all at the same time. As far as that goes. And Justin, I can't thank you enough for hanging out with us today and being part of our state of the industry report. And people want to get PVC and learn more about the transcenders where can they go and make sure that they can kind of nerd out on all things. PwC Yeah, PwC dot com is definitely the easiest way. And you'll find all of our reports there as well as course all the things we do.

And we put a nice little insert of the transcenders in GQ magazine with the state of the industry report as well. So you can you can learn all about the qualities you just talked about with some examples of some of the key companies while you also kind of get to geek out on some of the Pittsburgh tech numbers as well to create great stuff, Audrey. So much fun hanging out with you guys today. Absolutely love it.

Thank you. Thanks for being here.

Hey, thanks for having me. As always good talking to you.

Justin, you are the best from an everybody tech vibe review here every single Saturday on ESPN 970. If you need to fix outside of your Saturdays just go to your favorite platform to download your podcasts you can find tech vibe. Right there. We have content coming out of our ears. Do we not are?

We sure did it everywhere. Any good hanging out with you guys. Everyone have a wonderful weekend. Thanks for listening to tech vibe radio coming at you from the Huntington bank studios. And thanks to our sponsors, see leveled PNC Bank, my benefit advisors, three to one blink chorus call copy genetics and sdlc partners with us each and every week.

Transcribed by https://otter.ai