I think the primary factor currently stifling innovation and start-ups is the crippling student loan debt we’re asking young people to take on as a matter of course.
- $1 Trillion Debt Crushes Business Dreams of U.S. Students : Meera Louis, 6 June 2013, Bloomberg
- Is Student Loan Debt Stifling Young Entrepreneurs’ Dreams? Megan Tranfaglia, 16 July 2013, Empowerment Legal blog
- Graduation 2013: Massive Student Loan Debt Stifles Innovation and Creativity : Ola Abiose, 8 June 2013, PolicyMic
- http://www.rocketbomber.com/2011/08/05/engines-of-industry, 5 Aug 2011
There are other factors, too, of course and that’s what the rest of this post is about. But the scale and scope of the student debt burden needs to be addressed, because as an economy we might choke on it.
This is a longer post, so here are some waypoints:
Cities as incubators of great ideas
Is Innovation Cemented to ‘Place’? A different way to phrase this question is: Why Silicon Valley?
Cabridge, Palo Alto, and Brooklyn are already on the map — where do we look next?
Looking Downtown, Again
The New Urban Campus
Cities as incubators of great ideas
[image source: Wikimedia Commons]
Whether one is a single twenty-something with no cash but a lot of ideas, or the old archetype of the engineer in a garage, to succeed as a business (let alone a tech business) you need access to bright people: staff, skilled subcontractors, and specialty services. Everything that a big company might have “in house” you’ll need too, but not at the same scale or all of the time. If you’re thinking of physical products, you’ll need access to rapid prototyping, maybe even custom PCBs and software. For a company selling software or services, you’ll need computer infrastructure and maybe a web designer or five. And no matter what you do, you need design.
This needs to be a course at business schools, actually: “Why You, Yes You Future MBA Graduate, Need Design”.
Some will say that — of course — in the age of the internet you can source your staff and your services from anywhere in the world and of course — of course — you can and many do. Your back-end DBS was set up by a programmer in Estonia, your web design was done by an outfit in Israel, your end-user UI was designed in Finland, and before launch you outsourced both the user docs and press releases to a housewife/freelance writer in Dayton, OH.
Nothing wrong with that. But imagine if your programmers, designers, writers, and Idea Guys could all meet in a single room? How much more productive would that be? I’m not saying you need all of this “in house” because you don’t. But there are synergies when even your subcontractors and freelancers all live in the same city — only a phone call and thirty minute cab drive away — and though I hate to use the word ‘synergy’ it fits.
“All this running around for face time is part of the tech culture, said Stephen Ciesinski, who teaches entrepreneurship at Stanford’s Graduate School of Business. ‘When you do start-ups, you’re not investing in a company, it doesn’t exist,’ he said. ‘You’re investing in people who’re going to make this company happen.’”
The part of Silicon Valley that can’t happen online : Queena Kim, 31 October 2013, Marketplace
There are also other ‘halo effects’ [getting deep into the BS-biz-speak now] that you can’t even anticipate — if a number of innovative business are already in the same neighborhood, what happens when all these creative people are at the same pub on a Saturday afternoon after an intramural softball game? Networking and talking shop (and yes, hooking up) leads to seredipitous discovery and chocolate-and-peanut-butter-type combinations.
“[I]nvestors need ideas perhaps more than ideas need investors, particularly in an age when starting a web business is amazingly cheap. So the real question is: how did New York find itself generating so many interesting ideas?
“The physical density of the city also encourages innovation. Many start-ups, both now and during the first, late-1990s internet boom, share offices. This creates informal networks of influence, where ideas can pass from one company to the other over casual conversation at the espresso machine or water cooler.
“Economists have a telling phrase for the kind of sharing that happens in these densely populated environments: “information spillover.” When you share a civic culture with millions of people, good ideas have a tendency to flow from mind to mind, even when their creators try to keep them secret.
“All of these spaces – the graduate schools, the co-working offices, the media environments – exhibit the final trait that has been key to New York’s technological success: its diversity.”
Lightning in a bottle : Stephen Johnson, 30 October 2010, The Financial Times : excerpted from Johnson’s Book Where Good Ideas Come From: The Natural History of Innovation, isbn 9781594485381 [IndieBound,Amazon]
[image source: http://www.flickr.com/photos/tonythemisfit/2532039277/, flickr user Tony Fischer]
Is Innovation Cemented to ‘Place’? A different way to phrase this question is: Why Silicon Valley?
In the case of Silicon Valley, we could perhaps point to the late 1960s and the trinity of Stanford University, Hewlett-Packard, and Fairchild Semiconductor. Similarly, in Cambridge, MA, there is of course MIT, Harvard, and a lot of old manufacturing roots (and money); in New York the mix of talent, money, and comfortable density is leading to a tech renaissance in Brooklyn (and other boroughs).
Here’s another fact to wrap your brain around: In the 60s, tech was manufacturing. The pioneers in Silicon Valley were making chips, semiconductors — and putting those chips into calculators and business machines. You know, the boring stuff used by accountants, and university eggheads. Think Bell Labs, not PARC — at least, not yet. But the manufacturing base was at least as important to Silicon Valley as its proximity to San Francisco. We could also easily cite military contracts and the California aerospace industry in this context. It wasn’t just that Steve Jobs got up one morning and had his friend Steve Wozniak build a PC: Silicon Valley existed for 20 years (or more) before that. It’s in the name: the silicon chips came first.
You need at least the tradition of manufacturing even if the plants are no longer churning out widgets — if nothing else, it gives you great big (cheap) buildings to renovate into open-floorplan loft office space. Snark aside: while it is possible, now, to launch a software-only tech surge, and the biggest success stories are all about internet services, when Google and Amazon had to grow, and compete, they turned to hardware — as did Microsoft (the Xbox predates the Surface by 12 years). Apple has been a hardware company since the beginning. Industrial Design isn’t something you ‘pick up’ as a sideline, or leave to the end of a project. Industrial Design can matter more than the software.
This is another case where it’s in the name: Industrial Design came from industry and manufacturing.*
You need density because you need people bumping around and bumping into each other. You need a lot of people trying a lot of things and failing, and getting up, and trying again. You need cross-discipline interaction: designers meeting coders, ideas meeting implementation, hardware meeting use-cases. To launch a new tech hub, it is not enough to teach kids code — Though That Is An Excellent Place To Start — you need to nurture a whole ecosystem.
The real answer to the “Why Silicon Valley” question, though, is a matter of critical mass:
“This helps mitigate the risk of joining a company that might fail, as most startups do. None of the developers will be out of work more than a few weeks full of interviews surviving on their ‘bonus’ of all the vacation time nobody ever takes. This means companies can take bigger risks, that the culture doesn’t bat an eye at spending a few million doing something crazy, cause after it all falls apart everyone is going to land on their feet and have another year of cutting edge work stacked onto their resume.”
The San Francisco Safety Net : Mikeal Rogers, 6 April 2013, Future Aloof
(I might also point out that the venture capital market in the San Francisco area is, collectively, nuts. And that, unfortunately, can’t be duplicated. To make a case for a start-up anywhere else means clearing a higher bar.) (…or finding more crazy rich people.)
One more before moving on — while the interview wasn’t on the topic, this was the money quote that made it into the headline: Marc Andreessen: The World Would Be Much Better If We Had 50 More Silicon Valleys : Billy Gallagher, 20 April 2013, TechCrunch
Alongside a growing awareness of the importance of place in tech, what usually follows are some rather stumbling efforts to just “copy” the Valley…
—or worse, to just talk and talk about “becoming a tech hub”, as if Press Releases alone are some kind of magic spell that will conjure start-ups into existence.
Many efforts miss the point. The place existed first.
Cabridge, Palo Alto, and Brooklyn are already on the map — where do we look next?
I think the Research Triangle only needs a ‘celebrity’ home-grown startup company to break out and really make a mark on the map. I don’t think North Carolina has a venture capital ecosystem—yet—but I’ll remind everyone that outside of New York, there are more US banks in Charlotte than anywhere else.
Innovative business needs a mix of hungry young professionals, other talent (including the older, wizened vets of past bubbles to provide mentorship, and in some cases – also money), supporting services, and ideas — but mostly ‘the kids’, either fresh graduates or talented folks still in grad school, mostly in their 20s.
Silicon Valley is not just the brainchild of Stanford — it’d be more accurate to call it the intersection of Stanford and Berkeley (and a half dozen other schools). MIT has the luxury of Boston, where one person in five is a student, a professor, a researcher, or otherwise affiliated with higher education. [New York is an outlier; it’s fair to say they already have everything, the trick is finding space for it at a rent you can afford.]
Colleges are the most obvious way to begin to collect a “young urban base” – but the more complicated part is retention: it does us little good to train programmers and engineers, only to watch them move out after graduation to take jobs in Boston and San Jose. Tech in isolation is also bad; Georgia Tech is a very fine school (I say, as someone who went there) but the reason Atlanta is not a tech mecca like Cambridge or Palo Alto is because “there is no there, there”. Atlanta, poster child of sprawl, lacked ‘comfortable density’; there is some Old Money but Coca-Cola heirs do not invest in startups; and perhaps most vitally: GT Engineers graduated into a desert. Even if you stayed in-town, eschewing the suburbs, there wasn't* the opportunity to mix with designers, film-makers, graphic artists, social scientists, young MBAs with an entrepreneurial bent, older engineers with the skills but getting bored at 70s-vintage corps, and yes, English majors.
In the 90s, Atlanta sucked. Even the Olympics in 1996 couldn’t fix that, and in many ways it actually stunted the development of Atlanta’s start-up ecosystem for a decade. Believe me on that one. I live here.
[* this is changing.]
Atlanta is changing. I feel the most important change is the Savannah College of Art and Design, which opened an Atlanta Campus in 2005. Georgia Tech is, of course, still Georgia Tech, and Georgia State is undergoing a 30-year shift from a commuter-only college to a vibrant downtown residential campus (I’d say they’re about 10 years in on that one). Atlanta has a film industry now (I’m shocked too), Turner continues to thrive as a mostly-ignored outpost of the Warner empire, young professionals have places to live and work in-town, and yes, Atlanta is also home to some pretty hardened veterans of the past two tech bubbles. Like the Research Triangle, Atlanta is going to be a place to watch. Atlanta in 2030 will be amazing, if we can afford the global-warming-inflated air conditioning bills.
If I had to do this tommorow, I’d be in Oakland. You don’t reinvent the wheel if you don’t have to, and Oakland combines crumbling 50s era manufacturing neighborhoods with close proximity to Silicon Valley plus mass transit; call it a slam dunk, and someone is going to do this, maybe even accidentally, because honestly in the Bay Area there just isn’t any more room. Renewal Ahoy. (the same goes for Richmond, CA by 2020, and watch the North Bay SMART corridor right after that.)
If I had to do this in my own hometown, I’d be stuck, because property values on Marietta Street may already be too high, and too many of Atlanta’s other neighborhoods are way-too-residential (almost suburban in character, actually). [There is one excellent in-town industrial strip that I’m keeping tabs on though, just in case I win the lottery; sadly it’s also mostly active, and not nearly as ‘run-down’ as I might like]
If I had an opportunity to pick anywhere: New Orleans has the most potential — and also the most risk. Also NOLA lacks even a fossilized industrial base, and while I’m sure Tulane, Layola, and Xavier are excellent schools we’re missing a marquee Tech school here. Austin, Portland, Charleston, and a number of other Very Fine And Liveable Places™ present the same challenges: either a lack of comfortable density, graduate schools, tech and manufacturing base, or all three. Not saying you can’t launch a company out of Austin; many have – just that we’re missing at least one vital piece before “Silicon Hills” becomes something you have to google to even get the reference.
Innovative business needs a mix of hungry young professionals — but what do those hungry young professionals need?
Cheap places to live and eat. Things to do on a Friday Night and on Weekends. Engaging, challenging work. Opportunities to meet like-minded folks for all kinds of things — yes, dating, sure: but also those multitudes of social interactions that fall short of a hook-up but are even more important. It’s not enough to have a decent job and a nice apartment if you’re stuck out in the suburbs and have to drive 40 minutes to get to anything interesting. Believe me: Sprawl kills innovation just as surely as student debt does. (To date, I have not heard of any world-changing businesses that got their start because some innovator was stuck in traffic.)
It doesn’t have to be Manhattan, or Hong Kong — when I talk about density, it’s more about being able to walk to a dozen places for lunch from your office (and cheap delivery from another dozen). Density is about knowing the copy shop is 15 minutes away, and the offset printer no more than twice that. Density is beers after work because you and your co-workers all walk, or take transit, and there’s only one or two who would have to call a cab. The problem has always been that once you build up a great, walkable neighborhood — with dining and entertainment options, plus a mix of small office and apartments — hell, everybody wants to live there. The rents go up. It’s a catch-22; after enough gentrification the artists, shops, and restaurants that made it such a nice neighborhood can’t afford the rent either.
Silicon Valley is beginning to suffer from this as well; despite all the advantages they currently enjoy as both a community and a tech hub, no one can afford the rent. (This is one reason I cited Oakland, above. The tech center in the Bay area is going to shift to where the young people can afford the rent.) “Rent” is just an indicator for larger costs-of-living, not to mention the costs of doing business. Even if you wanted to start a company “out of your garage” in the grand American tradition, a house with a garage will run you at least a half million out there.
“Comfortable Density” doesn’t have to be downtown — in fact, most downtown areas are too dense. After a few decades it’s all big business and big towers and maybe a conference center or stadium or three. Getting downtown is a chore. I personally like ‘rescued’ urban neighborhoods, either converted industrial or renovated historic. I would insist on mixed-use: it does no good to build a commercial-only district, because after 5pm they roll up the sidewalks and your neighborhood becomes a ghost town. The same goes for shopping malls, and commuter college campuses: these can be great social spaces, but everyone goes home before the sun sets.
[image source: http://www.flickr.com/photos/johnnyenglish/73875044/, flickr user David aka JohnnyEnglish]
A lot of small college towns have a great character — they can be really fun places to live, punching well above their weight class because of the mix of interesting people, fun and funky stuff to appeal to students, plenty of cheap places to eat, and a lower cost of living that attracts artists as well as the students. My ideal “urban campus” might try to capture a lot of small-college-town-downtown, just in a place where we have a mass-transit rail station to tie us into a much larger metropolitan area.
If we take several of these threads — renovating neighborhoods, mixed use, live-work-play, walkability, and access to a larger community — we can see the outline forming. And also, we have a test case:
- An Enclave of Entertainment in Cleveland: East Fourth Street was developed slowly by the Maron family, who studded it with eating and entertainment options. : Keith Schneider, 7 July 2009, The New York Times
- How Cleveland Could Rise Again : 29 May 2010, NPR Weekend Edition Saturday
- Rust Belt Reboot Has Downtown Cleveland Rocking : 11 June 2012, NPR Morning Edition
- Cleveland’s Empty Spaces Brim With Potential : 12 June 2012, NPR Weekend Edition Saturday
- A Metro ‘Revolution’: Cities, Suburbs Do What Washington Can’t : 25 July 2013, Fresh Air from WHYY (also via NPR)
- If You Build It, They Will Come: How Cleveland Lured Young Professionals Downtown : Sophie Quinton, 2 August 2013, The Atlantic Cities Blog
Want To Make A Creative City? Build Out, Not Up : 31 July 2012, NPR Talk of the Nation
[yes, that’s Cleveland: East Fourth Street Downtown. image source: Wikimedia Commons]
The place comes first, before you can make it “The Place” for… whatever. In the case of Cleveland, a project to redevelop old commercial and warehouse space into viable apartments had to be accompanied by a parallel development of restaurant and entertainment space: Not just a place to live downtown, but places to eat and meet, things to do, and stuff that’s open evenings and weekends.
That was well underway by 2009, and then in 2012 (at least according to the NPR Story) the tech firms were following.
Cleveland has a new downtown that is drawing new residents (and given the usual demographics, these residents are young and educated). Cleveland also has Case Western Reserve University and the Cleveland Clinic. Add on University Circle, plus a number of distressed urban properties ripe for renovation and Cleveland looks like a great place to build a tech incubator campus.
— except maybe we’re ten years too late. I’m not saying it can’t be done, I’m just saying that it’s going to be more expensive. (And if the added expense means corporate partners to finance the deal: the final result may be a little too ‘corporate’ for innovation.)
So it’s not just a matter of finding the next Silicon Valley, we need to find the next Cleveland.
Many people have seen the need for bits and pieces, building a coworking space or a single project in isolation. These work, on their own, but if there were a concerted effort to build a “campus” then I strongly suspect the whole would end up as much more than just the sum of its parts.
The New Urban Campus
…3000 words in and finally getting to the topic. Fantastic.
“So What In The Hell Is Your New Urban Campus, Prof. Blind?”
I’m so glad you asked!
Like a college campus, it is more than just a couple of classroom buildings and an administrative office. To be a Campus, in addition to the “work” space, we need places to live, places to eat, open&green space, flex space for impromptu meetings and other ‘nonoffice’ office space. Campuses are comfortably dense, and walkable. Campuses are multidisciplinary and inherently multi-use. When I went to college, I had access to a wood shop and welding equipment in addition to the library and computer labs — and the college had a print shop, a newspaper, a bowling alley, even a small grocery store.
Some campuses have walls and gates and parking lots, but the best of them are certainly much more like neighborhoods: the campus empties out onto the city streets. Uses and cases blend into each other — a single sidewalk linking labs to classrooms to greens to dorms to offices to restaurants and bars and shopping.
So now follow me:
Let’s say we’ve identified a site — as stated, my preference is for urban re-use, so either converted industrial or renovated historic — and as the property is “distressed”, we’ve picked up the land and some bare-bones buildings on the cheap. Ideally we’d be looking at 5-6 story, low-rise architecture; not so tall that residents feel apart from the new neighborhood, but enough to give a sense of privacy to the upper floors, and also enough to pack the residents in. Ground floor, everywhere, is retail and restaurants, the upper floors can be a mix of office and appartments on a building by building basis.
[image source: http://www.flickr.com/photos/exothermic/3637093415/, flickr user Exothermic]
And this would be fine for a commercial venture: renovate, market, lease, and then cash out.
Let’s go one step further: imagine a “block”, a stretch of street a quarter mile long. (A quarter mile, for those of you who no longer walk city streets, is 400 meters: 4 football fields, or perhaps it might be easier to visualize if you imagine walking at a leisurely pace of 1.5 miles an hour; you could traverse it in 10 minutes. If you were window shopping, you’d walk down one sidewalk, then cross over and walk back in less than half an hour. If you were in a hurry, you could make an appointment one block away in five minutes.
As far as scale goes, I might want to develop both sides of a given street for two blocks, a half mile. If we can close this off to cars and restrict it to pedestrian and bike traffic only, so much the better. The ground floor everywhere along these blocks is retail: shops, restaurants, maybe a theater, certainly some bars and other entertainment venues. The next floor up (the 1st floor in Europe, the 2nd floor here in the States) would be additional office and retail: maybe an upscale shop, or 2nd-floor seating for a larger restaurant, or a dentist, a hair salon — or an agent to help you find and rent a local apartment. Above those two storeys would be the rest of the mix, offices and apartments, or even condos.
At one end of the strip, we’d have an Incubator: Shared loft office space above a copy shop, with a machine shop/3d printer/fab lab in the back somewhere for prototyping. Designate additional shop space for Artists in Residence – know a woman with a deft hand, a knowledge of welding, and some sculptural experience? I’d like to offer her a 6 month paid residency. If we have the space, heck, we might even have a full-scale offset printer on site, but with that said:
At the other end of the strip, we’d have a Big Ass Bookstore — no, not just a corporate big box, but something more of a scale with Portland’s Powell’s and keeping the spirit of Gaiman’s quote, “What I say is, a town isn’t a town without a bookstore. It may call itself a town, but unless it’s got a bookstore it knows it’s not fooling a soul.”
In keeping with the “New Urban Tech Campus” vibe, I might start with the technical bookstore use case I spelled out three years ago, but past that: a modern bookstore needs to be more, just to compete with internet options, so maybe the bookstore becomes it’s own mixed-use model: a coffee shop, sure, but also the local civic center, default meeting place, and Heart of the neighborhood. Indeed, with the bookstore as a anchor on one end, we’d be able to easily duplicate the development for another two “blocks” – we could go for a mile long stretch or just work radially, a block north and south, perhaps with other “incubators” or maybe even an actual school [OG Campus] somewhere in the urban mix.
This idea is actually being tried:
“You’ve probably heard something about the Downtown Project, the $350 million initiative spearheaded by Zappos CEO Tony Hsieh that’s aiming to bring a renaissance of sorts to Downtown Las Vegas, the old city center several miles away from the touristy Strip. But unless you’ve been there and seen it with your own eyes, it’s hard to really grok what’s happening there — the scope of the project is so grand and its aims are pretty ambitious.”
A Look At The ‘Downtown Project’ That Wants To Bring A Tech Renaissance To Old Las Vegas : TechCrunch, 28 March 2013
In all of this, it is perhaps most important to remember The Lesson Of Cleveland: It’s not an ‘if you build it, they will come’ proposition. First you start with the neighborhood, the place. You make that enticing. Make it livable, and a place the young professionals want to live in. You don’t build a tech park: you open coffee shops and restaurants. You offer living options that don’t involve 50 minute commutes. You follow the indy bands: Where can I hear a great band playing good music for under $10 (not including a bar tab) — and why can’t I live there?
The Lesson of Cleveland is that Yes, given a 10 to 15 year time frame and a patient developer: you can get out ahead of the trend and actually build a neighborhood that people want to live in.
So where can we find plenty of distressed real estate, a strong design community, a manufacturing base, and (in the suburbs, at least) some capital that might be tapped to build a New Urban Campus?
[It’s a shame about the state government up there though; otherwise This Might Already Be Happening.]