Why Startup Hubs are Not the Answer

It is the current fad – and indeed, no city with any ambition at all is without its “startup hub” development policy. The idea appears to make sense. After all, Silicon Valley, Boulder, Boston, New York, etc. all have vibrant startup cultures that add value. Why not us?

The answer is two-fold.

First, start ups are inherently high risk operations. Most fail. That failure rate may go up to 90% or so, depending on how you measure failure  Not only that, serial entrepreneurs often fail numerous times. In other words, the reality of nurturing a startup hub is nurturing a huge amount of failure. Most people do not have the inner fortitude to live with those kinds of risks, praying each night that a few of these ventures will hit it big and lift the city.

Keep repeating this mantra

Very few creative sparks result in an invention and very few inventions become innovations.

Not only that, it often takes a long period (upwards of 20 years) for inventions to beomce innovations that are widely adopted. And startup hubs are investments in creativity to produce invention that leads to innovation.

Just as concerning, the startups that do not fail do not necessarily contribute back to the community where they started up. Some grow fast and then fizzle.  Some move out altogether. Some stay but benefit only a few employees and owners, exaccerbating income inequality.

The data on this is murky, but looking at it from the  most opimisticperspective, you have to scratch your head. We need more and better thinking about how to promote locality.

Here are a few thoughts on what should work better

  • better strategic positioning of firms to identify where innovation will pay off.
  • better promotion of “rising local standards”. Local residents are more likely to invest locally when they believe in the future prospects of their home town.
  • better networking between folks who see opportunities, folks with ideas about how to exploit opportunities, and folks who do the actual exploiting.

You might notice that the above focuses on informatoin flow. You might think of it as a process of creative collaboration.


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