5 trends in growing startup cities from the last decade that you should understand - Technical.ly Philly

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May 25, 2019 9:56 pm

5 trends in growing startup cities from the last decade that you should understand

Startup culture as commodity, income inequality and (much!) more.

Starting up all over the world.

(Photo by Mimi Than via Unsplash)

Correction: Ronald Reagan called Chester County, not Montgomery County, the "Silicon Valley of the East." (6/3/19, 4:06 p.m.)
If you’re moving to a city elsewhere in the world soon, never fear. You’ll never be far from the makings of a modern startup cluster.

In the last 25 years, the neatly packaged concept of “startup” that has been largely defined and marketed by the modern concept of Silicon Valley went global. Have coffee with an organizer of the Startup Grind meetup in Bali. Take a coding bootcamp in Medellin. Get a coworking membership in Dakar.

We at Technical.ly have spent the last decade reporting on local economies shifting in a post-web world, largely following the Silicon Valley playbook. The pieces are familiar now: universities, accelerators, coworking facilities, investors, technologists and entrepreneurs. The enthusiasm comes from a mix of fashionable buzz and well-founded hunger for new stages of economic growth.

Plenty of other trends seem apparent. That became the focus of a presentation this reporter gave back in February as part of a lunchtime speaker series held by Thomas Jefferson University’s Innovation department. The riveting hour-long video of my lecture was recently published by Jefferson, so I wanted to share some of those broad trends I’m watching.

1. Commodification of startup culture

It’s easy to overlook just how consistently the basket of goods that make up today’s startup scenes have been replicated around the world. In part it’s because the ingredients seem necessary, but it’s also in part the braggadocio of today’s startup culture that insists what they’ve created should go global.

Yes, today’s largely urban clusters of technology and startups benefit from regular, frank conversations with founders — so that has been neatly packaged and branded in 500 cities across 125 countries by the aforementioned Startup Grind.

Yes, a degrees mismatch has helped fuel a software-focused retooling of mid-career vocational training — so General Assembly, among others, is building a network of 20 campuses on four continents.

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Yes, the rise of remote and independent work, plus declining costs to test big goals, has fit into a refresh on short-term leases — so WeWork has a (contested) $47 billion valuation against its network of members in 700 locations in 117 cities around the world.

With these massive global successes, there are plenty of critics (just ask the many locally nuanced meetups, vocational programs and coworking communities around the world). But that doesn’t change how easy it is to plug into any fairly consistent experience in most major cities in the world.

That’s the good. The bad? It takes real work for communities — like Philadelphia — to develop their own identity, lest they be awash in a soulless bore of a modernized economy.

2. Mega-regions, not quite globalization

It’s easy to assume we’re in a global economy. After the fall of the Soviet Empire, Margaret Thatcher said an “epoch of history is over.” The 1990s came to be dominated by the rapid removal of trade barriers and a rising wealthy class in developing economies. Travel (and tourism) surged. Then the truly global web (sorry France) gave us email and video conferencing and social media. Suddenly we were all meant to be citizens of the world.

But it’s not quite what happened. Though no doubt, digital nomads represent a nice lifestyle, the tech startup boom still represents a fairly localized story. In more recent years, the rise of nationalism has been a political issue, but our social networks remain quite limited.

“Typical American Facebook users have 70 percent of their friends living within 200 miles and only 4 percent abroad,” as the Economist reported earlier this year. “In total, the top 1,000 American digital, software and ecommerce firms, including Amazon, Microsoft, Facebook and Google, had international sales equivalent to one percent of all global exports in 2017.”

I’m thinking also about the time I spent in Lithuania, writing this profile of a startup cluster blooming in Eastern Europe. It wanted to talk to the world, but its real business was done in the European Union and, even more locally, among its Baltic neighbors.

This remains logical. Humans evolved as a pack animal. We actually rather like each other. We still build a lot of trust with in-person experiences.

3. Income (and geographic) stratification

In the late 1960s, real income stagnated for Americans. In the 1980s, only the wealthiest 10% accelerated, as Forbes reported. As a result, in 1980, we had more distributed income growth but we were setting a course for the gaping income inequality we have today, according to The New York Times.

Once primarily a poor city, Philadelphia, in particular, has growing income inequality, as islands of wealth are created in an ocean of deep poverty. As more innovative firms find productivity gains and form credible niches, cities are finding economic gains. But many neighbors are falling behind. Even more complicated is the painful decline of rural America. (We looked at that with our Grow PA reporting series last year)

That will be a major challenge of the coming years.

4. Urban center specialization

Make no bones about it: Whereas the first wave of densely clustered information-technology companies was purely a suburban story — 30 years ago Ronald Reagan called Chester County the “Silicon Valley of the East” — this one is an urban story. Back in 2016, Technical.ly visited six U.S. cities in a project called the Tomorrow Tour and there were no exceptions. Though older founders lingered in their suburban homes, the real action is taking place in cities today.

5. Workforce development obsession

Mixing together income inequality, a skills mismatch and the density of cities, the hottest battleground for the development of a tech startup cluster is around the attraction and retention of talent.

I remember a conversation last year I had with Lakshmi Shenoy, who is leading Embarc Collective, a kind of hybrid startup acceleration effort in Tampa, Florida. She wanted to see more founders and serious companies in her community but she was unwavering in what the highest priority was: how to attract new high-skilled professionals and train up others.

Likewise, for all the (justified) coverage of the tax incentives offered to Amazon HQ2, one takeaway stuck with me the most throughout the process — and was why my bet was with Northern Virginia all along. Amazon did not go with what bid offered them the most money — not the $6.5 billion from Montgomery County, Maryland, over the $573 million from Northern Virginia; not the $7 billion from Newark, New Jersey, over (at first) the $1.5 billion from the NYC bid.

Amazon chose talent readiness and pipeline (with a mix of infrastructure). These are not issues most cities and states have succeeded in prioritizing. It will be what they need to succeed.

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