Can Innovation be the Savior of Legacy Cities?

The heroes of America have always been the start-ups, the innovators, job creators, entrepreneurs and the risk takers, those who believe in an idea and run with it against all odds and succeed by sheer will. It’s a narrative upon which this nation was founded and that has grown mythical proportions. It may have reached its most fevered climactic expression in Ayn Rand's "Atlas Shrugged," still the favorite story of Republican presidential contenders. But it gets new juice from a totally different angle: Figures we call techies, hackers, and disrupters are in many respects a re-incarnation of this American hero, and once again high hopes are pinned to their success.

 

Top five States by employment in IT industries

The intensity and power of the innovator-as-hero energy was on display last week when the "creative class" took a couple of hours out of their busy schedules to celebrate a godfather of IT disruption who came to Baltimore on the occasion of Innovation Week. The locus of the event was ironic, but also intentional: the Museum of Industry, a place where Baltimore's past innovation heroes and their inventions, from passenger rail to bottle caps, each have their shrines.

A high intensity hum filled the space in part caused by eager networking and in part by the expectation to see innovation veteran Steve Case, who hadn't arrived yet because his was still hopping from one Baltimore start-up to the next (see BBJ blog). Case is the man who co-founded AOL, a company now almost as quaint as Bell Labs or the B&O Railroad. Steve Case was in town as part of his bus trip across America, intended to bring attention to "the rest" through a tour dubbed "Rise of the Rest."  Not a very flattering designation for the cities along his route. Case's stated purpose: to distribute venture capital from going at a rate of 75% to only three states (California, Massachusetts and New York) to going "anywhere and everywhere". To show that he means business, he brings $100,000 start-up checks to each of the 19 cities he visits, offered to the one innovator who (according to his jury) provides the best "pitch" at the presentations that follow his introduction. 

In overall startup activity...the top 10 metros are in this order Austin, Texas; Miami, Fla.; San Jose, Calif.; Los Angeles; Denver; San Francisco; New York; Houston; San Diego; and San Antonio, Texas. (Kauffman).

His stops are the places absent from that glamorous list, the, well, "the rest":

Pittsburgh, Cincinnatti, Detroit, Madison, Minneapolis, Des Moines, Kansas City, St. Louis, Richmond, Raleigh-Durham, Charleston, Atlanta, New Orleans. Baltimore, Philadelphia, Buffalo, Manchester, and Portland.

Not entirely a list of losers, but close to it, right? Well, not so fast! Case's very American message, that anybody can be somebody is according to him now truer than ever because location is less important. The large amounts of capital "vagabonding" around the world and sometimes lovingly Silicon Prairie.

Future Makerspace Open Works, Baltimore

called "venture capital" has long sniffed out that the places that used to be considered "flyover country" by many. Silicon Valley meets 

Startup activity bounced upward in 32 of the 50 U.S. states last year, and 18 of the nation’s top 40 metropolitan areas also saw increases in new venture activity, according to the 2015 Kauffman Index:

To be sure, tech industry (typically called IT for the purpose of statistics) is not the leading producer of GDP, jobs or income, (it comprises only 5.7% of overall US employment) but it caters best to the myth of the bootstrapper who is able to pull him or herself out of whatever morass. Maybe even more importantly, the start-up movement addresses another very American concept, the one of second chances, the idea that failure is no stigma and that being down is a condition that must lead upwards. This narrative naturally is attractive to cities like Detroit, New Orleans, St. Louis and Baltimore, all on Case's travel itinerary and all plagued by a large set of systemic problems but also bitten by the start-up bug.

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In Baltimore the start-ups are no longer just a few geeky folks huddling in the shadows of their respective diaspora, isolated by the fact that nobody understands what they are up to. The robust turnout at Case's pitch-party didn't look like diaspora at all. Indeed, Baltimore has a few start-ups like Parking Panda or Order-Up  that are now household names across the US and even overseas.

And then there is, of course, Under Armour, a Baltimore firm that started in Kevin Plank's grandmother's basement not all that long ago, even if the company, now public, was never IT or tech and by its sheer size cannot be called a start-up anymore.

But Plank's multi-billion company provides an interesting twist not only to Baltimore's start-up scene but to the entire question how large a portion of the economy IT start-ups really are. Under Armour as well as real legacy companies and foundations distort the statistics because they feed and infiltrate the start-up scene and fuel it with capital, resources and support, all things previously expected from universities or government. Under Armor, for example, created several subsidiaries such as Sagamore Ventures and Lighthouse to promote innovation and they tie the innovation and start-up narrative to the one of a manufacturing renaissance through local production. The anything, anywhere credo applies to production as well, the argument goes because robots, 3-D printers and various other innovations do not require an economy of scale any longer and the large capital needs for investments in fixed assets like buildings and machines. Here, the interest of legacy industries and those of disrupters begin to overlap with the interest of IT and start-ups.

For the local, customized and specialized production to take off, of course, local education and cultivation of the local start-up scene is needed. Hence Under Armour's big interest in Innovation Week in Baltimore.

Under Armour invested millions in a former city bus garage where it offers hundreds of thousands of newly renovated square feet as a "maker space" for which UA brought in the local start-up the Foundery, an outfit that has a few years of training others under its belt.

Innovation Week in Baltimore was kicked off with Makescape, held in a similar sharing place created in a former parcel post facility near the train station, funded and financed by the Baltimore Deutsch Foundation and its BARCO organization. But the final big party of Innovation Week took place in Plank's bus barn with nearly five hundred participants.  Plank is not only investing in makerspace but also in a local whiskey distillery (to sell his own Sagamore brand whiskey), in a hotel across the water from his current headquarters, a 120-acre new company campus that is supposed to give Nike's campus a run for the money, and also in – wait for it – salad dressing. Tessamae's salad dressing and catsup company as well as the whiskey enterprise shows how broadly the start-up concept can be defined, and how far afield it can run from the core of IT and tech. All these investments are part of the bigger still emerging Plank brothers contribution to the narrative of American inventor. As Kevin Plank puts it:

Under Armour supported: Local Tessamae salad dressing

The

"We tell stories for a living — we tell great stories and we build products to support those stories," Plank

Steve Case and Kevin Plank both believe in innovation, bootstrapping, second chances and a new dawn in America. They both are living proof that this narrative can be more than a myth. Whether they and the start-up movement have the power to lift cities from being characterized as part of the "rest", whether they succeed in transforming these cities from leaders in poverty, disparity and crime to leaders in venture capital, investment, and growth remains to be seen. If America's history is any guidance, real prosperity and progress must be built upon a broad base, but they also need leadership, guidance, and philanthropy. This combination got a test run during Baltimore's Innovation Week.

Corporate support of a diverse, bottom up movement of innovative makers is certainly welcome. The winners of Case's $100,000 dollar check in Baltimore are a great example: Three young Baltimore women who developed an auto-blood purification device that could improve the health of 11 million people, especially in Africa. Their enterprise, Sisu Global, did not come from a corporate donation and it will not fall without it, but their innovation company can surely use a shot in the arm. But the really exciting news is that the new American heroes come from within communities, that their power are ideas and their arms are creativity, innovation and autenticity. 

Klaus Philipsen, FAIA

Center for Urban Innovation, Aspen Institute
Urban Innovation LAB
Bilbao Urban Innovation and Leadership Dialogues (BUILD)

CISCO Urban Innovation
What Does It Mean to Be a Startup City?

Washington Post: Where is America's next Silicon Valley?

2015 Cyber States

See also my other blogpost about Baltimore's Innovation week