Thursday, July 23, 2009

Shrinking Cities Growing Opportunity

The latest issue of Entrepreneur magazine is now available online. If you are wondering what the fuss is all about, then check out Tyler Clark's post. Reading through the magazine, Youngstown could have easily been replaced by New Orleans for "The Dreamer" category:

New Orleans has always welcomed the unique and the creative; just think of the Mardi Gras revelry, the city’s jazzy soul, the vibrant Creole and Cajun cultures. But it was almost never the place entrepreneurs thought of when they were ready to set up shop. Any prior associations between business and New Orleans were more likely related to big industry confabs at the city’s Ernest N. Morial Convention Center and the staggering conventioneers on nearby Bourbon Street. Even longtime residents were challenged by the notion of New Orleans as a startup city: They knew the back-office machinations of government and old-line business practices would make it difficult to transform entrepreneurial thinking into a thriving young business community.

That all started to change in late August of 2005. Hurricane Katrina brought unspeakable tragedy to New Orleans and the other Gulf Coast regions it hit. More than 50 levees and floodwalls gave way, flooding 80 percent of the city. Endless media coverage locked in images of the city’s devastation and the years of blight that followed. But if the storm did nothing else for New Orleans, it began to wash away an outdated, stifling way of doing business.

“The city had kind of a parochial, non-diversified business community,” says Robbie Vitrano, co-founder and CEO of Trumpet Ventures. Vitrano started Trumpet 10 years ago as a branding firm; in post-Katrina New Orleans the outfit cultivates startups focused on digital media and other disciplines new to the region. “Katrina disrupted people’s comfort zones and forced them to confront some of the issues of the past,” he says.

This rust belt burnout hit the skids in the late ’70s and early ’80s when the steel industry packed it in, cutting 30,000 jobs and leaving the town synonymous with hard times (listen to Bruce Springsteen’s “Youngstown” for details). But in the last decade, something special has happened in this northeast Ohio city. Jim Cossler and his innovative Youngstown Business Incubator, which offers fledgling B2B software companies mentors, networking and services like office space and bandwidth for free or at a deferred cost, are taking Youngstown’s business future into their own hands. The incubator concept was revolutionary enough to help ignite a renaissance in this small city. “Youngstown fell so far, traditional community leaders threw up their hands and told the younger generation, ‘You guys try,’” Cossler says. “The new generation is envisioning things we wouldn’t have talked about 10 years ago.” Cossler points to the work of the area’s dynamic congressman and energetic young mayor as examples. “They said, ‘Let’s clean the slate and start over again,’” he says. “There’s a radical transformation going on here right now.”
While the economic catastrophes are quite different, the opportunity landscapes are almost exactly the same. The slate has been cleaned, opening the space for innovation. The political legacy costs that long have stifled growth in Youngstown and New Orleans were wiped off the map.

Besides the size of each city, the in-migration of aid and talent to New Orleans is the glaring disparity. Perhaps Detroit will follow the path of New Orleans. But Youngstown has first mover advantage. The urban transformation is more mature and Detroit is still working through its own economic collapse.

There is a sense that it is still business as usual in Youngstown. Youngstown isn't Cleveland, which is a good thing. However, I don't think it is too late for Cleveland to employ the redevelopment model of Pittsburgh, a city which hasn't cleaned house. Fresh approaches to economic problems have a better chance of taking root in Youngstown than they do in just about any other Rust Belt city.

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