Sunday, July 27th, 2008
Paul Graham is a noted technologist, venture capitalist, and writer. He may be best known for his essay “A Plan for Spam” which popularized Bayesian spam filtering.
His web site contains a collection of his essays, many of which are well worth reading, particularly if you are interested in starting a software business. One recent entry called “Cities and Ambition” caught my attention. Here is the opening:
“Great cities attract ambitious people. You can sense it when you walk around one. In a hundred subtle ways, the city sends you a message: you could do more; you should try harder. The surprising thing is how different these messages can be.”
Continuing, “How much does it matter what message a city sends? Empirically, the answer seems to be: a lot. You might think that if you had enough strength of mind to do great things, you’d be able to transcend your environment. Where you live should make at most a couple percent difference. But if you look at the historical evidence, it seems to matter more than that. Most people who did great things were clumped together in a few places where that sort of thing was done at the time.”
The example he gives is Florence during the Renaissance. Presumably there were lots of talented painters in other cities, but it seems that all the best and most famous work was done in Florence. In the modern day, Graham believes in New York the message you get is to be rich, in Cambridge, MA to be smart, in Paris to be stylish, etc. The message a city sends is incredibly powerful and shapes so much of how people behave there. Continuing:
“A city speaks to you mostly by accident—in things you see through windows, in conversations you overhear. It’s not something you have to seek out, but something you can’t turn off….No matter how determined you are, it’s hard not to be influenced by the people around you. It’s not so much that you do whatever a city expects of you, but that you get discouraged when no one around you cares about the same things you do.”
Perhaps this goes to my idea of the brand promise of a city. What is it you are all about? Why would anyone care to live there? Why would anyone put a stake in the ground there and say, “This is where I’ll make my fortune“?
In a 21st century economy where it seems that there are increasing returns to talent, and where there appears to be a great bifurcation of people, cities, regions, etc. into the haves and have-nots, ensuring a supply to smart, talented, ambitious people is fundamental to civic success. As I’ve noted before, those types of people want to live with others who share their own values, and indeed in a city that shares them. They want to live in a place where the civic aspiration matches their personal aspirations. A city where good enough is good enough is going to attract residents who feel the same way. And in an ever more competitive, globalized world, good enough just isn’t going to cut it anymore. It certainly isn’t going to be what it takes to build competitive entries in businesses like high technology or life sciences, where the quality of talent is one of the absolute most critical success factors.
But as Graham notes, cities can have different ambitions. Being a great city doesn’t mean being like New York or Cambridge. It means finding your own message, your own ambition. Alas, back to Graham, “Not all cities send a message. Only those that are centers for some type of ambition do.” Right. And not all cities are going to prosper in the 21st century either.
There are a lot of other thought provoking essays on Graham’s site. You could easily kill a few hours there. I’ll leave most of them for your own perusal, or perhaps a future blog posting, but will note one other essay here, one called “Why Move to a Startup Hub” This is a pretty harsh and direct essay that basically says that if you want to start a software company, you’d best get yourself to Silicon Valley.
“You can easily reduce the opposing argument ad what most people would agree was absurdum. Few would be willing to claim that it doesn’t matter at all where a startup is—that a startup operating out of a small agricultural town wouldn’t benefit from moving to a startup hub. Most people could see how it might be helpful to be in a place where there was infrastructure for startups, accumulated knowledge about how to make them work, and other people trying to do it. And yet whatever argument you use to prove that startups don’t need to move from London to Silicon Valley could equally well be used to prove startups don’t need to move from smaller towns to London. The difference between cities is a matter of degree. And if, as nearly everyone who knows agrees, startups are better off in Silicon Valley than Boston, then they’re better off in Silicon Valley than everywhere else too….I’m not claiming of course that every startup has to go to Silicon Valley to succeed. Just that all other things being equal, the more of a startup hub a place is, the better startups will do there.”
Note that like AnnaLee Saxenian, Graham compares not struggling places to Silicon Valley but top flight, successful cities in their own right such as Boston and London. If those places can’t compete, why would any Midwestern city believe it can? Even Chicago, the new economy success story of the Midwest, has largely failed to penetrate this industry. It has had a few startups and such, but how many top software companies of today can you name that are based in Chicago? I can only name one decently successful startup there: Orbitz, and it isn’t a startup in the traditional sense. I’m sure that there are others, but this is clearly not the Silicon Prairie local officials had hoped for.
When Jack Welch ran GE, he famously would only stay in a business if he could be number one or number two. Similarly with cities, the top handful of industry cluster locations seem to reap a disproportionate share of the rewards. Of course, there are plenty of counter-examples of how large, seemingly unstoppable industry leaders stumbled in the face of more nimble competitors. Microsoft seems to be having a rough spot making the transition to web computing, for example. But this is usually as a result of some fundamental revolution in technology or business models. For the Midwest to find a way to truly have a high technology breakthrough, it needs not just to beat Silicon Valley at its own game, but rather to figure out where the hockey puck is going and leapfrog to the next big thing, getting the jump on the competition.
Obviously this is easier said that done. If I knew the next major disruptive technology out there, I’d be starting a company to go build it right now. Not to brag (ok, I guess I will) but Yours Truly is a world class technologist in Real Life.
Another possible alternative is to find a unique market niche and figure out how to take over that corner of the technology world. Warsaw, Indiana basically did just that with implantable orthopedic devices. They don’t want to own life sciences, just their little piece of it. Of course, this renders a town vulnerable to niche exhaustion. What’s more, it’s again difficult to do consciously. We operate in a free market world where local officials can’t just decide what industries will magically appear. They can only decide where to focus their economic development resources, and try to create the conditions in which targeted industries can thrive. The rest is up to entrepreneurs.
I know I often come across as skeptical of high tech and life sciences. I want to be clear again that I am not opposed to it and think that these industries are so ubiquitious today, that it is simply not possible to ignore them. However, given the roulette wheel nature of these industries, and the huge amount of competition from every other city out there, I don’t believe these industries alone constitute a sufficient target base for a metropolitan economy outside of a handful of places. And any city that plans to attract them must figure out how to address the problem Graham highlights in his essay.
PS: I’m awarding an Urbanophile gold star to the first person to correctly identify the source reference of the title of this post.