Lies, damn lies, and HQ2 – TechCrunch

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There are few things certain in our world except for the uplifting tendencies of technology. I’ve spent the past few years trying to prove this to myself, at least, by interviewing hundreds of thinkers on the topic. I’ve come to a singular conclusion: when tech moves into a city, be it an iOS dev shop or a robotic facility for making widgets, things change primarily for the better. Given the recent rush to gain 25,000 or so jobs from Amazon’s HQ2 and the subsequent grumbling by cities passed over, it is difficult to refute this, but I’d like explore it.

Many cities have gained from tech, both historically and recently. Pittsburgh, for example, had a plan to become a tech city back in the early 1990s after seeing the value coming out of Carnegie Mellon and the other universities in town. Anecdotally, Pittsburgh remained a fairly depressed steel town until at least 2000. I recall walking on CMU’s campus one weekend, long after my graduation in 1997, and marveling at how the small school had blossomed thanks to an influx of tech money. Next to halls named after dead and gone thinkers and makers was the Gates building, built with the largesse of the biggest tech maker in recent history. Then Uber moved in and all hell broke loose. In 19997 the Lawrenceville neighborhood was a rundown riverfront redoubt full of brown fields and finely-made hovels. Then Uber landed there. Now it’s become the hub for multiple research and tech companies and the neighborhood has blossomed, even rating it’s own corporation and team of boosters who invite you to dine in a spot once associated with dive bars and non-ironic pierogi. A few weeks ago I enjoyed Nashville hot chicken and Manhattans in what was once a funeral home for steel workers.

In short, having tech brings about what Richard Florida called the “creative class.” This group of makers, be they chefs, artists, coders, or engineers, all come to a place and almost inevitably improve it. In some cases this creative class is disparate, spreading throughout a city like a symbiotic fungus. In other places they are centered in a single neighborhood, working their magic from the core out. I’ve seen this in many places but none more clearly than in Toledo, Ohio or Flint, Michigan where a small core of artists are working mightily to turn a city in ruin into a place to live.

And I understand that all is not rosy in the world urban growth. Uber drivers in creative-classed cities are usually people displaced from their cheap rents by rich hipsters. As a friend noted, when you gentrify a place where to those who cannot afford artisanal kombucha, let alone the rent, go? They are either thrust into the suburbs – an irony that should give cities like Grosse-Point-ringed Detroit pause – or they vanish from view even though they exist in plain sight. Nowhere is this clearer then in the refuse-strewn streets of San Francisco.

Yet cities with deep, systemic problems still debase themselves to get tech jobs. They offer tax abatements, $1 land leases, and produce cloying videos to prove that they, alone, are the hardest working of the bunch. The first and most galling effort appeared when Foxconn, a massive manufacturing company, promised to land like an alien invasion force in rural Wisconsin. The idea there was simple: Foxconn wanted tax cuts in exchange for “creating” “jobs” – scare quotes in both cases necessary. As it had in Brazil before, Foxconn promised more than it could ever deliver. From a Reuters report:

Foxconn has created only a small fraction of the 100,000 jobs that the government projected, and most of the work is in low-skill assembly. There is little sign that it has catalyzed Brazil’s technology sector or created much of a local supply chain.

Manufacturing jobs are not tech jobs. In the end these true manufacturing jobs will end up going to countries with historically cheap labor pools and Foxconn will use its tax breaks to build a facilities in the US to help it abate future cross-border taxes. The jobs that it will create will be done by robots and only the smartest in these rural counties will get jobs… watching robot arms lift flatscreens off of an assembly line for years. Gone are the days of ubiquitous middle class manufacturing jobs and they will never come back. The sooner the heartland accepts this the better.

So cities turn to true tech. Cities know that tech helps and they bow to its captains of industry. But why won’t tech help cities?

Tech companies reduce inefficiencies. Self-driving car companies are aimed at reducing the number of inefficient truckers on the road. Drone companies are aimed at reducing the number of inefficient postal carriers on the sidewalk. And always-on audio assistants and smart devices are there to reduce our dependence on nearly every facet of a local ecosystem including the local weatherperson, the chef with an empty restaurant but hundreds of Seamless orders, and the local cinema. They know that when they land in a place they take over, much like Wal-Mart did in its early heyday. The benefits of this takeover are myriad but the erosion of culture they bring is catastrophic. Yet mayors still don silly hats and dance a merry jig to get them to move to their blighted areas. After all, it’s far easier than actually doing something.

The answer for cities, then, is to build from within. Pittsburgh didn’t get Uber because it prayed for that rude beast to stalk its shores. It got Uber because it built one of the best robotics programs in the country. Denver and Boulder aren’t tech hubs because they gave anyone a massive abatement. They became tech hubs because they became places that techies wanted to congregate and they built networks of technologists who left their cubicles on a weekly basis and met for lunch. That’s right: in many cases, all it takes for a tech scene to thrive is for the CTOs of all the major organizations to meet over curry. The network effects created by this are manifold. In fact, some of the biggest complaints I heard in many cities was that the CTOs of corporations who called those cities home – Chase Bank, GrubHub, etc. – rarely stepped out of their carefully manicured cubicle farms. An ecosystem cannot thrive if its most successful hide. Just ask Detroit.

Cities must subsidize creative districts, not creative destruction. Cities must woo technologists with a network of rich angels, not bribery. Cities must prepare for a future that doesn’t yet exist and hope that some behemoth will find a home there. Otherwise they’re sunk.

This sort of forward thinking is done in dribs and drabs across the country. Every city has its accelerators full of potential failure. These companies quickly discover that without seed capital, St. Louis or Chicago might as well be the Death Valley. Detroit has worked hard to create a startup culture and it seems to be working but in many cases these startups are folded, Borg-like into Quicken Loans and cannot stand on their own. The south is stuck in energy production and invests little in things that would draw technologists to the beautiful cities along the coast.

Maybe this is because startups make no money. Maybe this is because innovation is expensive. And maybe the lack of long-term strategy exists because mayoral staffs turn over so quickly in these convoluted times. These are valid excuses but woe betide the city that clings to them.

New York and Virginia got HQ2 because their cultures are mercenary at worst and transient at best. They already knew the hard bargain of technology versus culture and were willing to make the deal. The tens of thousands of folks who will walk through Amazon’s doors on the first day will change Long Island City for the better and no other city will claim those benefits (and detriments.) Tech is a business. It doesn’t care where it lands as long as there are enough college-educated behinds to sit on blue inflatable desk balls and enough mouths to drink free nitro coffee. It bypasses places that are seemingly entrenched in political infighting and failed innovation and it will continue to do so until cities do for themselves what Amazon will never do: future-proof their place in the world and create a place for generations to grow and change.

 

Photo by Michael Browning on Unsplash



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