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Scott Case

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Startups: Not Just for Silicon Valley Anymore

Posted: 09/07/2012 8:40 am

What do Tampa, Charlotte, Des Moines and Boulder have in common? Many would answer these cities and their respective states are center stage right now in the presidential campaigns: hosting conventions and playing important roles as "swing states." The hidden secret is that the future of our economy is currently being determined under the radar in these places and others like them.

Attendees of Republican and Democratic Conventions, which took place in Tampa, FL and Charlotte, NC respectively, focused on job creation as the way out of our economic doldrums. The choice to hold the Conventions in these two cities, neither of which rank in the top 15 most populous in the country, gives us a chance to reflect on the importance of smaller cities and towns throughout the U.S. They can make or break a politician's career and, more importantly, are driving America's economy through job creation, though not necessarily in the way you might think.

Take Iowa for instance, the heartland of America. Every four years, the entire country focuses on Des Moines for the state's caucus. We witness candidates visiting the local mom and pop businesses- the pizza parlor, barber, ice cream shop- and these types of businesses are undoubtedly important to our economy.

But we don't see the team that just ordered three pizzas at midnight as they prepare to pull another all-nighter working on their new business. We rarely see anyone stopping by the local incubator, Startup City Des Moines, which hosts young companies solving the world's problems, growing their businesses and, most importantly, creating jobs. Have you heard of Dwolla? They're a fast-growing startup focused on disrupting the payment space and they're not based in Silicon Valley or New York or Boston. They're sticking to their hometown of Des Moines, and they've created 30 jobs there since being founded in late 2010.

As young companies grow and generate revenue they hire more employees, creating more job opportunities. Data from the Ewing Marion Kauffman Foundation show that young companies (those less than five years old) accounted for nearly all of the net job growth in our country between 1980 and 2005. Despite the doom and gloom that we see in the daily headlines, startups remain incredibly optimistic about the economy and their chances at success. In collaboration with Oliver Wyman, a leading global management-consulting firm, we implemented an ongoing poll of the more than 9,000 members of the Startup America Partnership to take the temperature of the economy in which these entrepreneurs are trying to gain a foothold.

Our members look to us to provide valuable resources and connections to help their companies grow and to support regional startup ecosystems throughout the country. We look to them for perspective - how do the men and women on the ground floor of job creation feel about the economy and their companies? Their point-of-view is a key perspective that should be taken into consideration as the conventions shine a light on our economy.

Eighty-four percent of our members were optimistic about the prospects for their businesses in the next 12 months, while 40 percent of those rated their view of the future as "strongly optimistic." When we broadened the focus and asked about the overall economy, they were somewhat more balanced - 50 percent said they were growing more confident in the US economy. Only 20 percent are growing less confident. More importantly, how does this confidence manifest itself in real terms as we enter election season? Confident startups lead to job growth. A full 85 percent of respondents are planning on hiring in the next 12 months. Eleven percent of those said they would hire ten or more employees, and 42 percent said they would add between 3-10 employees.

These are startups based in Nashville and Burlington, Boulder and Detroit, Tampa and Charlotte. These companies focused on growth have the potential to employ dozens, hundreds, even thousands of Americans. Job creators in every state of the union.

As the conventions goers head home and the associated rhetoric from both sides of the aisle continues to heat up, all parties should focus on the young companies sprinkled throughout hundreds of communities across the country that truly have the potential to pull us out of the recession. What are the delegates from around the country doing to help their local startup ecosystems? How can Governors, Representatives and Senators go back to their home states and foster innovative, startup-friendly environments? Hopefully their time spent in Tampa and Charlotte, two cities with their own incredible entrepreneurial activity, inspired some great ideas to take back.

For more information on Startup America's Optimism Survey, please visit www.s.co/OptimismSurvey

 

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