Banker leads governor’s charge to boost Arizona knowledge economy

January 13, 2004

By hammersmith

The streets of the Bronx…the football field at Rutgers University…rugby fields throughout the world. 

These are the landscapes that molded Ed Zito, teaching him the value of endurance, hard work, and perseverance. They helped to lay the groundwork for his eventual success in the banking industry in Arizona and the Southwest, and for his role as a powerful local mover and shaker. Among Zito’s many community contributions, his recent chairing of the Governor’s Council on Innovation and Technology (GCIT) is likely to have the greatest impact.

In January 2003, Governor Janet Napolitano asked Zito to lead a 30-member committee of business, legislative, and academic leaders charged with strengthening Arizona’s knowledge-based economy. After months of exhaustive research and deliberation, the panel released its final recommendations in December. Reviews have been positive–perhaps none more so than that of the Governor herself. Napolitano embraced the recommendations and urged the Legislature to take action this session. She will reiterate their importance when she outlines her technology agenda at the Governor’s Technology Forum on February 10.

The GCIT plan offers a spate of recommendations in the three specific areas: capital formation, technology commercialization, and technology business infrastructure. Many items are integral to the biosciences; the capital issues, in fact, are virtually identical to those stemming from Arizona’s Bioscience Roadmap, the state’s long-term bioscience strategy. The two groups shared membership and worked closely on capital issues.

The GCIT recommendations include:

  • Tax credits for individuals or corporations investing in early-stage technology research and companies.
  • Renewal and expansion of the state’s research and development tax credit to encourage research in Arizona by private companies.
  • A “supercredit” for in-state university research.
  • A $100 million statewide “fund of funds” to raise venture capital for start-up companies.
  • A state strategic-investment board to manage venture funding.
  • Strengthening of the Arizona Department of Commerce.
  • Passage of a Constitutional amendment to allow universities to take equity in spinoff firms emanating from their scientific discoveries.

Zito is known as a hard-working, straight-shooter grounded in integrity–traits that can be traced back to his early days on the East Coast. His interest in banking was fostered by his father, an advertising professional who instilled in Zito a sense of conservatism and an appreciation of capitalism. Zito learned street smarts and hard work in the Bronx, qualities that helped him to earn a partial football scholarship at Rutgers University in New Jersey. After three years on the gridiron, he turned his athletic attention to rugby, and played for the Manhattan Rugby Club for a decade. The team often toured internationally.

Zito spent 11 years with the U.S. Department of Treasury in New York City and Washington, D.C., then moved west in 1981 to take a position with First Interstate Bank in Phoenix. He served in various banking positions, eventually becoming president of the intermountain region of Comerica Bank after it merged with Imperial Bank in 2001. He retired from that position last year—though rumor has it that he won’t remain “retired” for long. Zito is well known in community circles, having served in various roles on numerous boards, including the recent chairmanship of Social Venture Partners Arizona, an innovative philanthropy that encourages the giving of time and expertise in addition to financial resources.

Zito spoke with us on the importance of the GCIT recommendations and Arizona’s outlook concerning technology and the biosciences.

Building a base in the knowledge economy is a complex, long-term prospect. What philosophical approach has GCIT employed in pursuing this goal?

The GCIT employed a “best practices” and comparative analysis approach as the underpinning of its research for the recently released recommendations.

We utilized more than 1,800 person hours and in excess of 100 research reports, public-interest group and academic studies, and strategic plans from other states. We based our recommendations on the premise that this endeavor is “a marathon, not a sprint.” The council recognized that the key ingredients of LEADERSHIP AND COMMITMENT were in place to make it happen. It is happening, and it will continue to happen.

The council is now developing metrics to evaluate the progress of the state’s 21st century knowledge-based economy–two of the important elements include shared responsibility and accountability.

The tech-transfer ballot initiative in November is ultra-important to the future of Arizona’s tech industry–yet it will likely elude the grasp of most voters. What is the plan to assure that the issue is fully understood?

The Technology Commercialization Campaign commenced on January 7. This will be an “educational” campaign targeted to inform the Arizona voter of the importance of this modification to the Constitution. The amendment would allow our universities to take an equity position in technology or intellectual property that originates within NAU, ASU, or UA, and is being commercialized into a private-sector business.

The campaign will focus on core quality-of-life issues: pro-education, pro-healthcare, pro-economic development and diversification. For example, regarding the educational system–it will help to improve our academic standing and ratings. It will help Arizona attract more research and development-oriented professors, federal grants, and research dollars. It will assist in integrating the R&D functions of our universities to more closely align them with the students who are into R&D and the business community. In short, it will help us build new companies, such as Ventana Medical Systems (in Tucson, via UA), and Molecular Imaging (in Tempe, via ASU).

Additionally, the voter populace will be informed of its importance as it relates to healthcare, and specifically the building of our biotech industry. This benefit will be a major plank in the campaign from Sun City to Green Valley, from Yuma to Prescott/Cottonwood/Sedona/Payson/Flagstaff. This amendment can help Arizona become a major biotech research center, attracting the intellectual and financial capital required for development by leveraging Arizona’s Bioscience Roadmap and the collaborative relationships that worked tirelessly to create TGen.

Increased venture capital is an obvious need in Arizona, but few pay attention to earlier-stage funding. Which is more important to Arizona right now?

Improved capital access is Arizona’s most critical economic development requirement in order to promote home-grown companies, thereby creating knowledge-based jobs, raising our per-capita income, and improving our education status by retaining, attracting, and developing talent (i.e., “intellectual capital”).

The GCIT recommendations for capital formation: 1) represent enhancing Arizona’s public/private partnership; 2) are comparable to what many other states have pursued successfully; and 3) represent a reasonable, albeit salient, “investment” for our state to make even in these challenging budgetary times.

The public and the executive and legislative sectors have already made a substantial “investment” in nurturing our knowledge-based 21st century economy, considering the voter passage of Proposition 301 and the $440-million research facilities legislation–not to mention the public/private support for TGen and related projects. Now, additional public/private support is necessary to provide capital access, especially in the “proof of concept” pre-seed and seed stage, for development of new companies. This early-stage capital availability is especially vital in leveraging our impressive biotech initiative.

How will the current metamorphosis of Arizona’s universities affect the tech industry?

The beauty of the current transformational changes with Arizona’s university system is that the goal–i.e., to integrate the universities into the state’s economic fiber–is embraced by both the public and private sectors.

Our universities and their core competencies enhance several of our state’s key business strengths, thereby creating important leverage and creating a university “push” and business sector “pull” dynamic. It also supports promotion and retention of our existing technology base, and the knowledge workers that are so critical for future economic development.

Virtually all states are racing to stake a claim in the biotech revolution. What sets Arizona apart from the crowd?

Arizona’s rapidly progressing biotech initiative is differentiated from other states’ efforts due to the unique alignment of visionary and proactive leadership from the governor; transformational leadership within the academic sector; and the engaged and committed leadership of the business community–including support from the foundation and philanthropic sectors.

Simply put, a vibrant and embedded LEADERSHIP base is the key. This has created momentum–a buzz, if you will. Arizona is “the new place to be,” especially in biotech. There is excitement in being frontier pioneers. Only this time, it is the NEW BIOTECH frontier.