Today, American cities are at an important crossroads. A year ago, there would have been little that would lead entrepreneurs outside of metropolitan New York, academic Boston, and startup havens of San Francisco and Silicon Valley. Now, COVID-19 has made these ultra-dense urban oases less attractive. Entrepreneurs are still looking for opportunity-rich places to build and expand their businesses. American second and third tier cities need their energy, creativity, and commitment in order to survive into the next decade.
I am not the first to envision "The City as A Startup." Cities and startups share much of the same DNA. Both need to attract and retain talent that is willing to work passionately while not being paid top dollar. Both are familiar with being strapped for capital as they move forward with improvements for their stakeholders. But there is a troublesome difference.
The City As A Startup Conundrum
A startup's primary advantage over corporations is their size. An ambitious entrepreneur and a small-but-mighty team can move mountains at lightning speed! Startups bring a product to market in months while similar solutions would take years to move through corporate bureaucracy. Metropolises, on the other hand, work faster to bring innovation to their streets and institutions, while smaller cities and towns work at a similar pace to large organizations.
The reason seems obvious: the larger city has a larger budget and many more staff members than their small-town counterparts. However, startups lack both and are still much quicker to move than the established industry titans.
Many are quick to lay blame on municipal leadership for a lack of forward-thinking on behalf of their city. The lion's share of public officials are born of a legal or educational background. Neither of these conservative industries are recognized for their innovative thinking. However, in recent years, we have seen the rise of the "Mayor Entrepreneur," whose cities are more enabling to innovation.
One such leader is Mayor Greg Fischer of Louisville, Kentucky. Mayor Fischer entered public office as a successful entrepreneur, investor, and cultivator of innovation. Some of his most notable accomplishments include his strategic leveraging of Louisville's bourbon history to make the city a global center for businesses in the industry, attracting $1B investment to lower income neighborhoods, launching Code Louisville, and partnering with Microsoft to launch a localized focus on internet of things (IoT) and artificial intelligence (AI). In just 9 years, Louisville's economy added 80,000 jobs and more than 2,500 new businesses.
While Mayor Fischer's initiatives set a high bar for fellow second tier city mayors, these great works are replicable. Small cities can achieve similar greatness with leadership that guides promising elements into alignment.
The Power of Yes
Why do we see these types of successes from Mayor Entrepreneurs? It's not just from their experience building and operating a company, but also from their core entrepreneurial spirit. An entrepreneurial spirit is one of enablement. It's a mix between the optimistic "everything is possible" mentality and the realism of finding the right elements to bring ideas to life. It's an enthusiastic response of "yes," then working on the details, versus an automatic "no" for fear of taking a risk.
Much has been written about the intrinsic power of saying yes to choices in life, as this positive mindset facilitates greater experiences and opportunity. In my own life, I can truthfully say that I have never regretted something I have done - only the things I was afraid to try. An entrepreneurial spirit is one that is open to what is new and embracing the risk. This thrill is what motivates entrepreneurs to overcome the obstacles they face along their journey. This is not just my opinion, but something we see time and time again in the world of innovation: startups survive - and thrive - even with limited funds and staff.
Countless regulations have complicated the decision-making (and doing) processes for second and third tier American cities. I remember when I first arrived in Hartford and wanted to place a 30+ foot blow-up robot on top of Upward's flagship building - something that would impress and inspire everyone who drove into the city. As a private actor, I didn't need money from the city - merely their permission. I didn't get the robot.
Entrepreneurs only need 5 minutes to recognize if a city is enabling or blocking. A founder is ready to give a location their heart and soul, but if they only hear "no," they will pick up and move on to cities with promise and permissibility.
The Missing Piece: Startups
Innovation ecosystems around the world have shown that startups form in clusters. If a city can ignite the start of a cluster - 5 to 10 startups - more will form around them. A cluster can grow from 10 to 60 startups in less than 2 years. The reason it is so critical to begin with the attraction of startup companies to a second or third tier city is because they are vast enablers. Once they have established themselves in an area, small businesses form around them: cafés, restaurants, pubs, breweries, and other niche activities. Many startup founders and their teams want the accessibility of a downtown lifestyle, which attracts developers to begin constructing or rehabilitating apartments in the urban core.
Startups are also an ideal vehicle for building equitable innovation programs. Every entrepreneur I know is hardwired to help other entrepreneurs; nearly all of them act as a mentor or advisor to budding entrepreneurs or growing startups. Most entrepreneurs are socially conscious, building diverse teams and very much open to creating apprenticeship programs. Bring 10 startups to your city and each one will work to empower 5 more to grow. Not to mention, local talent is increasingly more likely to stay local within a thriving innovation ecosystem where they can work for - or work on - cutting-edge companies.
Unfortunately, this city of permissibility concept is foreign to most local and state leaders. They aren't entrepreneurs and have never seen or experienced a true innovation ecosystem firsthand. I believe many would be pleasantly surprised by the strong allegiances they could build with startups in their cities, as entrepreneurs are motivated to help solve local challenges and promote all of the city's positive elements to attract outsiders.
In recent years, states have tried to attract startups using economic development grants and loans. This is a grave mistake, as state governments are not venture funds, thus, they are not equipped to conduct due diligence or understand how to support the needs of each startup. Also, while money is undoubtedly important to scaling companies, many founders would admit that capital is less of a priority in the starting and scaling phases than opportunity. Each American city has a unique set of opportunities that would help certain startups soar to their greatest heights: whether through pilot partnerships, targeted apprenticeship programs with local talent, or other forms of non-monetary growth and development that are unique to the history, geography, or key industry of the city.
Imagine if a city announced it was designating a section of the municipality to be fully autonomous, and that startups from around the world could come and pilot their technologies on the ground for real-time feedback and validation. Hundreds of startups would be on the next plane to this autonomous city. Envision America's farm states allotting acres for agriculture and food innovation for any promising startup to come and plant a flag.
Sound familiar? This is what our forefathers did almost 250 years ago when America was colonized. We need to apply the same basic rules while enabling a similar level of permissibility that was available then. Of course, I'm not promoting a full-on return of the Wild West - safety is key, but let's lower the barrier to entry instead of blocking opportunities to innovate.
Entrepreneurs are willing to work tirelessly for the success of their companies and the cities in which they live and work. I urge mayors and governors around the country to understand the unique opportunity with which they are faced today: the opportunity to rebuild their cities with entrepreneurial spirit at the helm. Right now, there are thousands of entrepreneurs looking to leave cities known for their culture of permissibility for up-and-coming alternatives. It's time for these local and state leaders to not only make a statement about how they are enabling these communities and larger innovation ecosystems to form, but to take action.
American cities can continue as they were - losing talent, losing business, and on the verge of bankruptcy. Or, leadership can start saying YES!
About Shana Schlossberg
Upward Founder & CEO Shana Schlossberg is a serial entrepreneur across industries with a vision to reactivate second and third-tier American cities through strategic public-private collaborations. A technologist and social entrepreneur from the age of 19, Shana has built businesses designed to positively impact the lives, safety, and happiness of U.S. citizens through access to disruptive opportunity. In 2016, Shana’s will to build a future of inclusive innovation and widespread eligibility for success in America drove her to found Upward, a real estate and community advancement venture that promotes entrepreneurship, innovation, talent refinement and retainment. In the decade ahead, Shana's commitment to creating a tech-enabled, talent-driven, and equitable nation will manifest through innovative spaces and opportunities for Americans to live, work, and thrive.
Upward is determined to reinvigorate our nation's second and third tier cities by transforming them into thriving hubs of innovation, community, and co-creation. America's most critical industries are in need of mature innovation and our multi-city network connects unique and viable resources with local industry titans and progressive educational institutions in vibrant downtown areas. Our goal is to stimulate regional development, strengthen native talent, foster opportunities, and create economic prosperity and Upward movement for all. Join us at www.moveupward.city.