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EXCLUSIVE: “Ohio, Rock on Fintech!” – Ron Rock, JobsOhio and Jim Marous, The Financial Brand in ‘The Fintech Magazine’
If Ohio isn’t on your destination list, it should be, says the state’s fintech flagwaver Ron Rock. And fellow Buckeye Jim Marous tends to agree!
Among its many claims to fame, Ohio is the birthplace of rock’n’roll – music that didn’t just take the world by storm, but changed the attitudes of an entire generation, breaking down social barriers and promoting collaboration. Back then, the so-called Buckeye state was one of America’s industrial furnaces, largely built around the car industry; today it’s a financial powerhouse, ranked the fourth largest financial services economy in the US. Legacy institutions like US Bank and JP Morgan loom large. But then there are the fintechs, the rock’n’rollers of their day, agitating for change and livening up the status quo.
They sit alongside tech giants contributing to the digital economy, like chip-maker Intel, which recently committed a mammoth $20billion to build a manufacturing mega-site locally.Setting the rhythm for this dynamic ecosystem and helping the members find their partners, is the fintech and financial services unit of the state’s private economic development body, JobsOhio. It was, uniquely in the US, spun out of state ownership with a commercial revenue stream strapped to it – it manages the state’s lucrative alcohol distribution franchise.
Heading up the unit is Ron Rock, a highly-driven executive who spends most of his waking hours extolling the virtues of Ohio as a base for startups and scaleups around the world. Who better to interview him, we thought, than fellow globetrotting Ohioan, fintech influencer and publisher of The Financial Brand, Jim Marous.
JIM MAROUS: What is JobsOhio – and how come it’s in the liquor business?
RON ROCK: JobsOhio is Ohio’s private non-profit economic development organisation. We privatised about 10 years ago to become extremely resilient to economic challenges like recessions. Typically, when states are going through a recession, and their tax revenues are down, the first thing to go is economic development. So, we decided we needed to come up with a different model… and now we own and run the state’s liquor business, and the profits all go to economic development. I’m responsible for one of nine sectors that JobsOhio is focussed on. My colleagues and I are all looking for international companies, foreign direct investment.
When it comes to fintech and insurtech specifically, there are a lot of organisations innovating well beyond where we are in the States, and I’d love to bring some of those companies to Ohio. So, when I go to events – be it in London, Amsterdam, or France – I’m highlighting the ecosystem that we have here.In 2019, we created the JobsOhio Growth Capital Fund, which gives us an equity stake in a portfolio of earlier stage companies. There are tonnes out there that I want to put in that portfolio!
JM: I was born in Ohio and I live here now, but it tends to be seen as a ‘flyover state’, right? Is that a challenge for you?
RR: It’s true that people tend to focus on New York and California. The earlier stage companies especially think, ‘I have to be close to the money’, or, ‘I have to be close to this large city’. But I think Ohio’s finally shedding that reputation of the Rust Belt, or the flyover state. We’re making a name for ourselves, with our three Cs: Cleveland, Columbus, and Cincinnati. We have a healthcare cluster in Cleveland, a lot of startups, banks and insurance companies in Columbus, and banks and insurance companies in Cincinnati, too. There are innovation centres in all of those cities.Then there’s the talent: 40,000 tech graduates a year from each university – Ohio State University, University of Cincinnati, and Cleveland State.
There are lots of community colleges, too, and we’re changing how education is attained, by working with educators on developing micro degrees and other training programmes, which can be very specific to tech-driven jobs. Going back to location, remember it can be more of a challenge to turn a profit in those high-cost cities I mentioned; the cost of talent is going to be higher because the cost of living is higher. I’m talking a third of the cost in Ohio, and about a quarter of the cost in rental expense. So, when you take those expenses out of the equation, or at least reduce them, you can get an earlier-stage company to profitability a lot quicker in Ohio than you can on the coast.
And we definitely have a friendly business climate – we don’t have any state corporate income tax for a start.Another thing to note is that we have 50 different regulatory bodies in the United States, which I think turns a lot of people away. But in Ohio, the attitude of the Department of Insurance, for example, is ‘let’s have a conversation about what you want to do’. We’ve also just launched a financial regulatory sandbox, so it’s all about making it easier to do business.
JM: We know that, in tech jobs in particular, there’s been a huge trend towards remote working. Has that affected Ohio’s pulling power?
RR: Remote working is a double-edged sword for us. People aren’t buying a building, or building a building anymore; they’re being very hybrid, very virtual. Typically, as I said, people want to operate in Silicon Valley, for instance, to be close to the investors. Then they realise they can get tech talent in pockets that they haven’t been dipping into before. So, we have people here working for Google in California, for example. But that works the other way, too.
There are 240,000 other individuals in the state who are working in financial services, so it’s not just about pulling talent. If you have a presence here, you’re also part of a community where innovation breeds innovation – you’re incubating ideas, and you have a lot of people doing the same thing, and wanting those types of new, innovative solutions.
JM: There was a lot of noise around Intel arriving in Ohio. Does its presence here work to your advantage?
RR: I feel there’s going to be a halo effect to Intel’s arrival because it’s going to create a couple of thousand jobs directly, but, indirectly, tens of thousands of jobs are going to be created and that means tens of thousands of people who need financial services. Even if a company isn’t a financial services company, it has to pay people, and it needs to get paid. Technology is needed for that and I could potentially meet a fintech company, or an insurtech company, that might help with that and other cross-sector opportunities. There’s also been another effect. Prior to the Intel deal, when I was at an event, telling people about Ohio, they’d wonder where it was – sometimes you’d actually have to circle it on a map. After the Intel deal, they don’t wonder as much.
JM: You’re building an external ecosystem for financial services in Ohio, but individual companies, like Progressive, are also creating their own. How does it all fit together?
RR: Yes, there’s Progressive with Level20. We also have Grange, which has an innovation department, whom we’ve done work with, and they have another partner in Rev1. Nationwide has Nationwide Ventures. Fifth Third has an innovation team that I’m working with constantly
In terms of how it fits with what we do, it just makes it more of a team effort in being able to comb the landscape, and make sure that, if there’s anything out there that any one of us isn’t seeing, we don’t miss it. We’re talking all the time.
“You can get an earlier-stage company to profitability a lot quicker in Ohio than you can on the coast”
I think Ohio just has all the pieces of the formula that are necessary to attract businesses. And it’s my job to shout about it. People laugh… they say I’m everywhere! But I try to find platforms to get in front of as many companies as I can because my goals are to create new jobs, create new payroll, and secure capital investment by talking to the companies in Ohio, and also to the companies outside of Ohio who can be introduced to our community.
There are a lot of organisations that they can partner with here and we are known for being a test market. I think that’s a great selling point for a company that’s looking to scale into the States JPMorgan Chase has a large presence here, U.S. Bank too, as well as Nationwide – so lots of huge companies with large assets. You have legacy systems in insurance companies and in banking, and they are all looking to innovate. Western & Southern, for instance, a 135-year-old company, is partnering with Fabri, a new insurtech. That’s the epitome of the type of partnership we’re looking for because larger organisations might not be able to organically create innovative solutions.So, when you’re thinking about getting into the ecosystem here, it could be for market share, or for a different customer base, or helping another organisation springboard to the next level. Whichever it is, there’s lots of opportunity.
JM: You’ve given plenty of sound business reasons for coming to Ohio. What’s the personal appeal?
RR: I work in the metropolitan area. But I basically live 15 minutes away – I have green grass, a nice house. I wouldn’t be able to afford that in another city. And then there’s the people. In the Midwest, they’re very willing to help out. They’re going to answer the phone to you, they’re going to answer your emails, they’re going to be helpful to you.
I think that’s key, especially when you’re looking for partnerships. If you’re an insurtech or a fintech coming into the States, and you’re wanting people to answer your call, we’re definitely going to do that and be very genuine about it.
This article was published in The Fintech Magazine Issue 28, Page 49-50
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