Paul Graham wrote recently about start-up hubs.
Paul’s central points are Silicon Valley has:
– investors who understand start-ups and are not risk adverse
– world leading experts in key technologies
– relationships with the markets for products
It’s hard to argue with those points. Density and specialization have advantages. That said there are disadvantages (and with them opportunities). As he pointed out US immigration law opens an opportunity for another city to challenge it (Bangalore anyone).
What’s needed to be a successful start-up is access to talent, advise, investment and markets. All of these can be gained through population density/diversity, cultural processes or specialization or a combination of them. From the start-ups perspective the issue is the likelihood of connecting with the right resources at the right time – and each of these factors make that more likely.
Let’s take these individually. First density/diversity. Jane Jacobs argued that cities are innovative because they increase the opportunities for ideas to cross social/occupational boundaries and as a result be created anew based on the influences of the new group. So it is with innovative start-ups. This may not appear true because Silicon Valley is not a large a London – however while London may be a hub for Great Britain – Silicon Valley is the hub for the world.
For smaller municipalities, like Ottawa, part of the solution has to be in increasing the opportunities for interaction with other tech communities – increasing the idea and expertise flow. I’ve long argued that from a government perspective Ottawa /Toronto/Montreal should be seen as a single economic region. Strategies need to be developed to increase interaction between the people in these communities (because the benefit happens at a personal level). The BarCamp movement presents some opportunities – and similar things need to happen with investors and to a lesser extent, corporate advisors. It’s through interaction that ideas and expertise are exchanged. Here I question the value of OCRI’s constant fee/event practices. These simply serve to exclude many start-ups and both decrease their visibility while slowing the spread of knowledge and connections. Is the purpose of Zone5 to raise money or to raise marketing awareness?
Cultural processes are important for smaller municipalities as well. One of the things I know about Silicon Valley is that they meet a lot to discuss aspects of business, markets technology etc. We must do the same. I take heart in the number of events that are springing up that allow individuals to self identify the networks that are the most use to their start-up and stage – from VCG to BarCamp, Social Network Theory Think Tank, Third Tuesday Ottawa etc there are more opportunities to connect than their once was. But we need to bridge this to include events in other cities (and need the support to ensure this connection becomes a cultural pattern). In fact the ability to influence culture is one of the reasons I am so supportive of the CodeFactory – by setting up a site were network events can occur and people can gravitate we increase the opportunities for people and ideas to connect. We could go further and equip this site with telecom infrastructure to connect with our sister cities – further developing this ability.
Paul talks about the ability of Silicon Valley investors to understand an opportunity and support it. Clearly that type of insight comes from experience – and that can only be gained by doing. Here tax policy is important. Austin Hill, and a number of Montreal angels, have developed a proposal to improve the rewards for angel investing by offsetting the tax burden on reinvestment. We need to review this and support if appropriate – using the advantages of our location.
Specialization is another way to compete – though I personally believe we are not at the point in the cycle where that is appropriate for Ottawa. For years Ottawa used its knowledge and understanding of telecom to its advantage. That served us well while telecom spending was exploding. The market has changed and we too need to shift with it – and become more general in our investing and support in the process. We are developing some expertise in social web applications. ECommerce and SaaS businesses though the start-ups lead investors and government in seeing the influence and opportunity.
Fostering a vibrant start-up community is in the end about knowledge – and knowledge is in the end a function of the cultural processes that exposure and integration into people businesses and lives.
If Ottawa, or London, is ever going to rival Silicon Valley we need to focus on the cultural processes that facilitate people and ideas connecting. Do that and the rest will follow.