It was July 2018, and Bruno Wu was a few minutes late for an interview with Hartford Business Journal at public relations firm Sullivan & LeShane’s office, across the street from the state Capitol.
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It was July 2018, and Bruno Wu was a few minutes late for an interview with Hartford Business Journal at public relations firm Sullivan & LeShane’s office, across the street from the state Capitol.
When he finally arrived, Wu — then executive chairman and CEO of Seven Stars Cloud Group, now Ideanomics — didn’t look like a billionaire entrepreneur. He was dressed casually in a grease-stained navy blue polo shirt, high in spirit and laughing often.
He pointed out a muffin he ate early in the morning left the mark on his shirt.
During an hour-long interview Wu talked about how blockchain technologies and his company would revolutionize the financial services industry, particularly how businesses and individuals obtain and access credit, and how Ideanomics’ planned $400-million Fintech Village in West Hartford would become “the world’s leading fintech hub.”
It was the first and only in-person interview my colleague Matt Pilon and I had with Wu, now Ideanomics’ chairman, and we came away from it with many more questions than answers. In fact, we never wrote a story based off that interview because we didn’t know what to make of Wu or his business, which at the time was partnering with, investing in, and growing a portfolio of artificial intelligence and blockchain technology companies.
Privately, we had serious doubts about the project — backed by a $10-million incentive deal offered by then Gov. Dannel P. Malloy — becoming a reality.
It was difficult to parse out the company’s business model, and how it would attract startups and entrepreneurs from across the globe to UConn’s former suburban campus.
Fast-forward to today and the project appears all but dead, after the company in March declared Fintech Village a “non-core asset” that it was looking to divest.
More recently, the town of West Hartford inked a right-of-first-refusal agreement with Ideanomics to potentially take back the 58-acre property located on Asylum Street, another sign the project isn’t likely moving forward.
Meantime, short sellers have accused the company of being a fraud and misleading investors.
Ideanomics, whose main business is now in electric vehicle sales, refuted those claims, which, to be fair, were brought by parties with a vested interest in seeing the company’s stock price tank.
This column isn’t meant to place blame on public officials who backed the company and project.
However, we should learn from it. And it reiterates a point I’ve been making for years, that Malloy’s economic-development strategy of pouring hundreds of millions of dollars into economic incentives for businesses and developers is a wrong-minded and costly policy that ultimately yields questionable economic returns.
Malloy promised Ideanomics up to $10 million in incentives under his First Five Plus program. However, the company never began construction of its proposed campus — it only tore down buildings — which meant it couldn’t access any of the funds.
Taxpayers were lucky because in many other deals, Malloy provided companies up-front incentives that weren’t always returned when firms didn’t live up to their promises.
Gov. Ned Lamont, who was skeptical of Ideanomics early on, has rightly decided to pivot away from Malloy’s strategy. His administration, led by Department of Economic and Community Development Commissioner David Lehman, wants to move toward a performance-based, “earn-as-you-go” system, meaning employers won’t reap state incentives until they create a certain number of jobs or make a certain level of investment.
Lehman was planning to get the state legislature to sign off on that new policy during the 2020 legislative session, but that didn’t happen as the state Capitol shut down in mid-March due to the coronavirus pandemic.
COVID-19 has obviously changed the economic landscape and it could spur lawmakers to want to return to Malloy-era incentives to stimulate the economy and help small businesses.
That would be a mistake. Connecticut doesn’t have the money to do any widescale stimulus program that would have meaningful economic impact. Instead, our best bet is to pressure Congress to make more aid available to small businesses and avoid tax hikes to deal with expected budget shortfalls.
In January, when the next regular legislative session begins, Lamont and lawmakers should commit to a pay-as-you-go system and stop supporting large-scale development deals that turn out to be more fantasy than reality.
