Seattle Seeks to Stir Up More Startups With New McGinn Initiative

5/9/13Follow @bromano

Seattle is the latest big city government to throw its weight behind the technology startup community, as mayors and economic development officials across the country grasp at an elusive formula for fostering more new companies with potential to create jobs.

From New York City to San Francisco to state and national capitals, governments are trying various combinations of financial support and tax breaks, promotional campaigns, and “startup neighborhood” development plans to attract and grow young companies.

It’s a potentially fraught exercise and one with few definitive success stories so far. Entrepreneurs often view government as an obstacle to be overcome rather than a platform for success. And in many existing innovation hubs—Seattle certainly among them—grass-roots efforts by the entrepreneurs themselves are rightly highlighted as the source of startup community momentum.

The people behind the Startup Seattle initiative—being announced this morning by Mayor Mike McGinn at the headquarters of erstwhile Seattle startup-cum-billion-dollar company Zillow—know all of this. Their relatively modest plan, in the works for the last year, is patterned after the city’s long-term efforts to promote its film and music industries, and is also in line with an emerging—though still unproven—set of strategies for local government support of innovation.

Startup Seattle will consist of a full-time city staff person—to be hired later this summer—working as liaison to startup businesses and supporting organizations.

The city is adopting the startupseattle.com Web site, which was started by Red Russak last April with support from Startup Weekend, Microsoft, TechStars, and Founders Co-op. It will continue to serve as a “startup concierge”—as Russak puts it— aggregating information on startup events, resources, and job openings.

The initiative will include a marketing campaign to “help attract talent to Seattle from across the country,” the city says. And it will work on ways to develop more home-grown technology talent with programs for high school students, and connections between Seattle Public Schools and groups including Code.org.

Plans also call for an assessment of the University District with an eye toward creation of startup-friendly office space there—part of a broader transformation of the neighborhood expected over the coming decade, spurred by new transit development.

The initiative’s 2014 budget is $145,000, similar to the City of Music initiative, which is the specific model for Startup Seattle, according to the Mayor’s Office.

“I don’t want people to be disappointed that the startup initiative is relatively compact,” says Chris DeVore, general partner at Northwest-focused early-stage investment fund Founder’s Co-op, and one of 15 people on the Startup Seattle advisory committee. “I also don’t want them to get their hopes up that their worlds are going to change tomorrow.”

With upwards of 700 technology startups, the city is already—and should remain—”one of the innovation hubs globally that matters for the next 20 years,” DeVore said during a recent interview in South Lake Union, as Amazon workers chattered over lunch in the sunshine. “It’s not going to happen by accident, but there are a lot of people operating on lots of levels diagonally through the economy—education, government, small companies, big companies—that are putting their shoulder to the wheel for that to happen.”

Startup Seattle is evidence of “commitment and support and enthusiasm for innovation as a major vector for the health of the city going forward,” he says.

Cities across the country and around the world are trying new approaches to economic development, and specifically targeting early stage companies and entrepreneurs. And for good reason. Seattle’s renowned global companies—the anchor tenants of local industries—are still closely associated with the individual entrepreneurs who founded them. Everyone wants the next Boeing, Bezos, or Gates to set up shop in a garage or storefront or loft in their city.

In February, New York, under technology entrepreneur and three-term Mayor Michael Bloomberg, launched a campaign to promote its digital and technology startup community. We Are Made in NY has many of the elements of Startup Seattle, including a resources Web site and advertising campaign.

Philadelphia Mayor Michael Nutter last October launched Startup PHL, which includes a $6 million seed fund, and another $500,000 pool of funding for startup support organizations.

Boston and Cambridge, MA have initiatives targeting affordable office space and concentrated areas of services for startups.

In San Francisco, tax breaks encourage companies to locate in the mid-Market district.

Many other city governments have or are planning similar initiatives. The Ewing Marion Kauffman Foundation, which focuses on entrepreneurship, has fielded more enquiries from city governments in the last two to three years about how to attract high-tech companies, venture capital investment, and startup incubators, says Yasuyuki Motoyama, senior scholar at the Kansas City, MO-based nonprofit. (The foundation is an Xconomy underwriter.)

Economic development tactics over the last 20-plus years have a mixed record, at best. Motoyama calls out in particular city and state efforts to recruit companies from elsewhere with financial incentives. These often lead to companies coming for the money and then closing or going somewhere else, he says.

“Many efforts by city governments to get into the arena of entrepreneurship have not been successful,” Motoyama says. “It’s more like the more they try to do it, the more they will be getting in the way of entrepreneurs.”

DeVore

In Seattle, DeVore says there was some initial skepticism—since allayed, at least among the entrepreneurs participating—about a productive role for government in supporting startups, and about whether this was just a political exercise in a mayoral election year. Entrepreneurs “tend to be capitalist libertarians by politics who don’t look to government for help,” he says.

Motoyama is starting to see a change in the approach of city governments that could be more successful—it’s too soon to tell—particularly in growing startup companies locally: Rather than taking a top-down approach, governments are trying to support and facilitate work that’s already being done by the grassroots, private sector organizations in their cities. “Especially in the case of Seattle, vibrant startup organizations abound,” Motoyama says.

Examples include Startup Weekend, Northwest Entrepreneur Network, SURF Incubator, and dozens of other events, casual meet-ups, work spaces, educational opportunities, incubators, and early-stage investment groups.

Motoyama—and just about anyone else you talk to on this topic—refers to the work of Brad Feld, the investor, TechStars co-founder, speaker, and author on the subject of entrepreneurship. In October, he published Startup Communities: Building an Entrepreneurial Ecosystem in Your City.

Not surprisingly, city governments frequently hit Feld up for advice, some of which he put in a blog post last fall.

“The most important thing members of city government can do is focus on policies and initiatives that are friendly to startups, remove administrative barriers, and shine a bright light on the great things going on in the startup community,” Feld wrote.

Startup Seattle is set up to check at least some of those boxes through the city liaison position, promotional campaign, and Web site.

(In an e-mail, Feld says he hasn’t focused on Seattle’s initiative. He’s withholding judgment on this “new phase” of government efforts, “looking carefully to see what works and what doesn’t.”)

DeVore says startup communities—made up of nose-to-the-grindstone entrepreneurs trying to make their small companies succeed—”don’t naturally federate their work or their storytelling.” There’s a need for a non-partisan, non-commercial entity to do that. Media can do it to a certain extent, he says, but media has its own incentives and objectives.

“To have a commitment on a part of the city to do that—again, no matter what city you’re in—it allows the community to speak with a crisper voice than it would normally because it is so fragmented and so under-resourced,” DeVore says.

In the blog, Feld also points to the “entrepreneurial density” of successful startup communities, even within large cities: Union Square in New York, Kendall Square in Cambridge, for example. “These are ‘startup neighborhoods’ that roll up into a startup community,” Feld says. “This concentration of entrepreneurial activity—or entrepreneurial density—is critical.”

Feld

Seattle has Pioneer Square, South Lake Union, and Fremont—neighborhoods the city intends to continue supporting as “startup hubs” through Startup Seattle. It is also focusing on the University District as an emerging hub, one already equipped with the entrepreneurial assets of the University of Washington, and set for a transformation thanks to the arrival of light rail, which will better connect it to the city’s other startup centers.

DeVore says the biggest potential benefit of Startup Seattle could come from strengthening the connection between the startup community and a broader network of economic development activities.

“It has the ability to federate and participate in this much larger, bigger dollar, longer-lead-time efforts, and to me that’s what’s most exciting about it,” he says.

 

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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