It has been an exciting few weeks here in Davis in the area of startups and economic development. We had the announcement that Panattoni was going to create a 225,000 square foot office park in Davis, we had the TedxUCDavis event, the Pollinate Davis Co-working space had an open house and will be opening next month, Wednesday’s Jumpstart Davis continued that momentum, and, of course, there have been ongoing discussions on Nishi and the Davis Innovation Parks.
A couple of the comments made by the presenters this week – some in interviews with the Vanguard – got me thinking and wondering if we are actually doing enough to help promote economic development, not just in Davis, but in this region.
Matt Miller said he was looking to create a co-working space which was centrally located, where people could come together and create a critical mass in developing startups and cross-pollinating ideas.
He mentioned to the Vanguard, “Your paper published an article by Rob White who listed four ingredients critical to creating a startup scene in Davis, one being a centrally located co-working space!”
Rob White’s article from November 6, 2014, cited an article by David Lum on the Fast Company Magazine website, entitled, “The Recipe for Building a Startup Scene in Any City.” Rob White, for about a year and a half, published columns in the Davis Vanguard like the one on November 6. Some of them offered information about local issues, but many of them took ideas that were happening elsewhere and situated them within the Davis ecosystem.
In this case, Mr. White quoted four key ingredients: “There are four things that need to be in place in order to build a startup scene. The first is a venue that is cheap and central, where meetups can take place. The second is a monthly event where all of the startups gather. The third is an established hashtag everyone in the community can use to share photos and event info. And finally, a coworking space that is open 24/7 so that when an outsider lands in the city, they have a place to go and meet tons of people in the scene.”
In fact, if you read the four ingredients, this is what is happening in Davis. As the Vanguard reported yesterday, there were people who had come from across the state to see what is happening in Davis.
But, of course, we need to go further. Rob White points out that “this recipe establishes a tech community and helps them market their accomplishments to the outside world, creating a narrative of a cohesive and collaborative local scene that journalists, politicians, and investors can follow.”
Tyler Crowley’s model for success “was first achieved in Los Angeles’ now famous Silicon Beach in 2007.” According to the article, “Sequoia Capital and many other venture capitalists at the time wanted the companies they invested in to be based in Silicon Valley. Crowley was down in Los Angeles” at the startup Mahalo.com, and “when the company got the financial nod from Sequoia and others,” the founders refused to move to Silicon Valley.
“Instead, they decided to build their own version of the Valley. After raising $20 million, Mahalo moved to Santa Monica and started hosting meetups in their office. The company needed developers, and hosting meetups was the best way to find them.”
Mr. Crowley explains, “So our strategy was to go on places like Meetup.com, get all the Python, Django, and Ruby developers and say, ‘Hey, we’ve got an amazing venue in Santa Monica, we’ve got free parking, and I’ll throw in beers and pizza and a projector.’ Within six to eight months, all the tech meetups were happening out of our offices every day around 6 p.m. It was a really organic process. We didn’t know we were building Silicon Beach at the time.”
But part of the key was raising $20 million, and that is where another presenter, Ethan Garrett, was quite critical of the local scene and Sacramento region’s efforts to help and nurture startups. “I want to say that this area is horrible,” he said. “I know there’s a lot of money but a lot of people talk about wanting to see entrepreneurs stay here… I don’t see any movement in cash. I see a bunch of talk.”
“Do you want some of the talent that’s coming out of Sac State or UC Davis to stay here and build companies?” he asked. “It starts with money. People have to know that there’s money.”
On Wednesday, he would add that starting a tech company is extremely difficult.
“Sacramento and Davis, we talk,” he said. But he said, “I don’t know what direction we’re going. I don’t know what’s going on.” He added, “There needs to be cohesion.”
Part of what we need to be talking about is not only the successes but the failures.
“We need to talk more about the failures here because I don’t know about any failures, at all,” Mr. Garrett told the audience. “I want to learn about the failures.” He said he wants to be able to read about “all of the people that have failed, all the of the mistakes that have been made, that’s what I want to see. I want people to talk about it like it’s crazy.”
Mr. Garrett raises two very important points in talk. The first is the lack of venture capital in the Sacramento region to help foster startups. The second is the lack of a support ecosystem. It is easy to tout the successes – and to some extent that reflects the fact that history is told by the winners and we do not pay attention to startups that never got off the ground.
We may analyze why an established company failed or when the city or region lost a given company, but we don’t analyze those companies that fail at the startup stage.
While there is increased optimism in the air both locally and regionally, the Sacramento Business Journal on Wednesday reported that “more slow economic growth (is) predicted in 2015.”
There is good news: “The region has added 85,000 jobs since 2011, and next year may bring up to 4,000 new jobs in both health care and business services, plus another 2,000 in retail.” There is also bad news, and a report from Sacramento State and the Sacramento Metro Chamber “predicts moderate growth in government, education, leisure and hospitality, and manufacturing.”
So there are exciting times, but without the ability to get money to startup ventures, perhaps we are just not doing enough to foster economic growth locally and in the region.
—David M. Greenwald reporting