Seeing Memphis as a Startup

Paul Graham has written extensively on this topic in essays like How to Be Silicon Valley and Why Startups Condense in America. Much of his thinking no doubt played into the decision to base Y Combinator entirely in Silicon Valley. Boston’s loss was the Bay Area’s gain and a striking example of why it’s important for mayors to view their cities through an entrepreneurial lens. Paul viewed Y Combinator through that lens and it led him to believe that Silicon Valley simply had more of the ingredients that would make his companies successful than Boston did.

So let’s take a look at those ingredients. Making products and services people want to buy has to be at the top of the list of any forward-thinking mayor. Extensive research by the Kauffman Foundation shows that virtually all job creation comes from companies less than five years old. So if you’re running a city and want to increase the number of jobs in your city, you should be doing whatever you can to encourage more viable startups. It’s something that Ed Lee, San Francisco’s newly-inaugurated mayor seems to understand, telling TechCrunch back in November “I want them [tech companies] to start here in San Francisco, and I want them to stay and to grow.”

Talent is another important factor and lies at the heart of Bloomberg’s efforts in New York City. Creating a world-class engineering campus in New York can be thought of as the municipal equivalent to Facebook’s acquisition of FriendFeed or Gowalla. By having more talented people in the city, New York is better able to compete with other cities in the same way that Facebook better competes with rivals by having more talented engineers under its roof. (What’s more, Facebook recently announced that it will open an NYC engineering office in 2012.)

Of course, getting top engineers and designers to actually work for a city might prove challenging (with a notable exception to be seen in the success of the Code for America program), but mayors can have a significant impact on helping a city to attract the best and brightest.

I recently spoke with Daniel Huttenlocher, the dean of the Faculty of Computing and Information Science (CIS) at Cornell University, who played an integral role in Cornell’s bid for the Roosevelt Island campus (read more about this effort in Eric Eldon’s interview with Huttenlocher).

His observation that Bloomberg’s history as both a technologist and an entrepreneur helped him and others in his office to better understand the need for New York to increasingly be a hub for the best technologists on the planet. Bloomberg is to New York City as John Calipari is to Kentucky basketball, intuitively adhering to Vinod Khosla’s notion that CEOs should be spending a very high percentage of their time recruiting.

Capital is another necessity for a city’s success. In some cases this might mean mayors actively courting angel investors and venture capitalists. The success of the Silicon Valley ecosystem is due, in no small part, to the availability of early-stage capital and its density of investors. Other metro areas have historically struggled to replicate this investment ecosystem but more attempts are underway.

Sergio Fernández de Córdova, the founder of Fuel Outdoor and chairman of New York Entrepreneur Week, pointed me to an effort underway in the state of Connecticut to provide more funding to early-stage companies in the state. In addition, New York City announced $150 million in funding solely devoted to startups in the city as part of the tech campus announcement. While these efforts might pale in comparison to the latest billion-dollar fund raised by a Silicon Valley venture firm, they are a step in the right direction for states and municipalities trying to spur innovation.

A final ingredient is culture which can loosely be translated to livability when we think about cities. This was impressed upon me recently during a meeting with Eric Garcetti, the former Los Angeles City Council President and leading contender to become the city’s next mayor. Garcetti recognizes the challenges that LA has when competing against the Bay Area to be the home base for the next great technology company. Indeed, Los Angeles has lost a number of its most promising companies to the north such as Lookout and Yammer (born out of Los Angeles-based Geni).

Still, Los Angeles is one of the most desirable cities in the country to live in and the recent Silicon Beach resurgence is due in part to this. Listening to Garcetti talk about LA’s strong points reminds you of Larry and Sergei discussing why Google’s culture made it possible for them to attract so many outstanding engineers or Tony Hsieh sharing why Zappos’ quirky, fun work environment helped them retain top performers. By emphasizing LA’s strengths, Garcetti hopes to retain talented USC, UCLA and Cal Tech grads who might not be so keen on spending “Junuary” in San Francisco.

As we roll into an election year, many cities are in a state of crisis. Budgets are a mess and job growth has been minimal for a good swath of the country. Cities in need don’t just need strong leadership, they require transformational leadership. It’s no easy feat but it’s likely that the more that mayors view their cities through an entrepreneurial lens, the better they will be able to adapt to a rapidly-changing world.

Bloomberg seems to be leading this charge with his efforts in New York City and mayor’s offices around the country are taking notice. Others like Ed Lee, Garcetti and Newark mayor Cory Booker appear to be taking a similar tone in their respective cities. Perhaps these are the first examples in what will become a long line of mayor-entrepreneurs.