(A Better Way to Say) Philly is for Entrepreneurs

This morning, I’ll be joining a few of my friends and the Mayor of Philadelphia as he announces a new City of Philadelphia initiative called StartupPHL and I wanted to share a few thoughts in the moments beforehand.

There’s been a very interesting swell around startups and the city recently, specifically with the attraction of Josh Kopelman’s First Round Capital to a downtown office that is in no small part due to support and interest from the city. This latest initiative centers around our “startup scene” by funding new company creation out of a $3MM pool of seed capital, and a $500k grant distribution (over 3 years, ~$25k or less per grant) for ideas that will spur entrepreneurial growth.

And of course, mixed in with this money is the marketing pitch for why Philadelphia is the place for entrepreneurs. Well. A pitch.

“New opportunities are here for thinkers, innovators, idea makers.”

I think we can do better.

When I first heard the pitch, I was underwhelmed. Even the quotes from prominent entrepreneurs who I really love and respect were totally non-differentiating. And in some ways, didn’t paint a complete picture of the realities of entrepreneurship in Philadelphia.

Every city in the country, if not on the planet, is currently competing to attract and retain companies. As the economy continues to fragment, this only accelerates. When every city that’s trying has the same pitch, “we have a vibrant community for startups,” those cities are competing…but aren’t competitive. The reality is that there’s a national – if not international – match for cities to become more entrepreneurial, and Philadelphia is acting like it’s just decided to jump into the ring.

One of the important things to remember is that so far, the entrepreneurial spirit here has been driven by the citizens. The City is just starting to catch up. That’s a very good thing, in my mind, but it also means that our efforts need to be a Citizens AND The City partnership, not one or the other.

One of the things I’ve learned from my dear friend Amy Hoy is that the most effective marketers learn how to “punch above their weight”. Philadelphia needs this approach, badly.

Further, I think the city needs to be honest about the fact that while they’re making strides – or perhaps baby steps, but I recognize forward motion and the effort it takes the city to make it – the business creation climate in Philadelphia is not a reason for entrepreneurs to be in Philadelphia.

I can prove this, simply and quantitatively, and even without pointing fingers at a specific problem in tax code or support networks.

Check the #whyilovephilly hashtag, or any of nearly 100 Philly Love Notes, and not one of them mentions “the business ecosystem” as a reason they love Philadelphia.

Not convinced? Ask anyone you know why they’re in Philadelphia. I’ll challenge you to find a single person whose first answer  is “because it’s a great place to start a business.” There’s a reason that the big companies move to the suburbs unless the City goes out of its way for them (I’m looking at you, Comcast).

I’ve heard a myriad of answers from entrepreneurs first hand, and not one of them has said “this just seemed like the best place to start a company.” Instead, we have people who were in Philadelphia for other reasons, who wanted to start a company, and they were already here.

I’ve even asked some of the noisiest cans who rattle about the challenges of capital and talent in Philadelphia, “why are you here?” and have gotten a range of answers from “My wife/family loves it here” to more broadly, “I love the culture here.”

So the accepted answer to “Why Philadelphia?” by every measure I’ve seen or heard, is the  High Quality of Life. This high quality of life factors in a relative cost of living for a city our size, access to great cultural and historical resources, a burgeoning food and drink culture, quality nightlife and entertainment, a mix of urban and suburban lifestyles, and of course easy access to other major cities like NYC and Washington DC in under 2 hours.

I’ll include myself in this mix. I almost left Philadelphia for San Francisco in 2006, but actively chose to stay in Philadelphia because I loved living here and my love for living here has only grown in the last 6 years of working to make the city even better. I’ve started a business – in fact, a couple of business, in spite of the business climate because I love everything else about this city so much.

Chris Wink doesn’t think this is enough, and I sort-of agree. His recent attempt at a regional distinction suggested that we should work harder to own Social Entrepreneurship. I like this pitch for a lot of reasons, but I find it challenging for a couple of reasons.

First, the term “social entrepreneur” is weighted heavily against “opportunity” in a business sense and towards “opportunity” in a social improvement sense. It seems to suggest that social entrepreneurs are special in some way, when I believe we should simply all strive to be better entrepreneurs, considering our impacts beyond our bottom lines instead of excusing those who prefer financial return by making up a new term. I know many entrepreneurs who are socially conscious but don’t self-identify as a social entrepreneur, ultimately breaking this approach as a sustainable pitch.

Second, and perhaps more importantly, positioning ourselves as a leader in Social Entrepreneurship isn’t punching above our weight. It’s suggesting that if we grow the Social Entrepreneurship ecosystem, that we could own it as a regional distinction. What we need is something that is regionally distinct, and already present.

And we shouldn’t forget that Quality of Life metric. Alone, it’s not enough, but it is the kind of strength that we can use to punch above our own weight.

The Trouble with Money

My other struggle with the StartupPHL pitch is that it is centered around money. I understand that the goal is attraction of capital. In favor of not repeating myself, I also recognize that the rallying of capital is ultimately a good thing for the region. But we need to be careful about how it is positioned.

In entrepreneurship or otherwise, I’ve never seen money make people do smart things.

Smart people do smart things, and money can make them go faster.  

The role of money and the growth of our entrepreneurial community should be carefully considered, and balance itself between new company creation and entrepreneurial attraction. Given the groundswell of energy we’ve seen from the citizens of Philadelphia over the last 5 years that has been almost entirely bootstrapped, I’d hate to see that energy get distracted by a shiny pot of gold. Instead, I’d like the money to be seen as a way to seize more of the opportunity that we’re already building for ourselves.

Truthfully, I believe this is what the city wants as well, but they haven’t done an awesome job of saying it in their message.

Balance Growth with Resilience

My primary concern with the term “start-up” is that it connotes high growth, job-creating businesses. We need these companies because we need these jobs. Or do we?

Given that high-growth companies are also high-risk companies, by focusing on growth startups we’re effectively placing our  job market in the hands of the risk takers. This isn’t inherently a bad thing, but I do think that the risk is understated.

Only a small percentage of high-growth companies last long enough to provide dozens, or even hundreds of jobs. Some argue that we need that numbers game. Personally, I don’t like that gamble.

What’s the alternative?

We already have an influx of population in Philadelphia, for the first time in 50 years of census data. And home ownership is on the rise in Philadelphia. Clearly people are moving here with intentions to stay…but our job market doesn’t reflect availability. What’s going on?

Small business & independent entrepreneurship is happening. Not just here, but everywhere. Most people aren’t suited to successfully create jobs for dozens or hundreds of people, but with a little help they’re perfectly suited to create a job for one person: themselves. With practice, they can provide a job for a few people, maybe up to a dozen, without stretching their abilities or risking their quality of life.

Working to spur high-growth entrepreneurship is important for the region, but like social entrepreneurship that’s only a slice of the pie.

We need support for all levels of entrepreneurs, including the people who choose to create a job for themselves instead of seeking employment. For every measure taken towards “growth”, we must balance it with resilience. It’s not an either-or.

The ecosystem depends on both to thrive.

Learning to Punch Above our Weight

I initially declined involvement in the StartupPHL campaign, concerned about everything that I’ve noted so far.

Bob Moul challenged me on my declination, and asked to speak about the efforts so far over a beer.

You could say that Bob and I embody the yin and yang of growth and resilience. Bob’s experience with building and selling Boomi makes him one of the rare candidates with the kind of experience to lead the growth startup community in Philadelphia. He’s thoughtful and diligent in his work, but he’s wired for growth and he’s the first to admit it.

Meanwhile, as a friend and colleague, I’ve been able to act as a foil for Bob’s character, often reminding him that growth without resilience is not sustainable. It’s led to wonderful conversations, and a lot of mutual respect earned between us.

Over a couple of beers at Race Street Cafe, we discussed everything I’ve outlined in this post so far. His concerns, my concerns, and our shared desire for something better. Over the course of the conversation, we agreed that the financial part of the StartupPHL pitch needed to be led with something stronger, more unique, and defining for Philadelphia but the best thing we could come up with was the usual “Quality of Life” angle.

As I sipped a beer, Bob very casually said (paraphrased), “I’m here for the quality of life, and I don’t really feel like I’ve missed out on that much in terms of business opportunity.”

I almost spit out my beer. That was it. Quality of Life alone wasn’t enough. But stack it up against what is still a city that is full of opportunity – in spite of it’s business challenges – and maybe we’ve got something.

Philadelphia Has The Best Ratio of Quality of Life to Business Opportunity

There are other cities that do better on the vector of Quality of Life, especially depending on what you’re looking for. But Philadelphia is capable of performing above average, especially when you factor in cost of living. This city is not without it’s social and economic challenges. We have poverty and crime and other big-city challenges. But those problems are deductions on our otherwise high ranking potential.

There are other cities who do better on the vector of Business Opportunity, especially depending on your industry. But Philadelphia is capable of performing above average, especially when you factor in cost of living. Philadelphia’s large industries are dominated by life sciences & biotech, with much of our money and talent tied up in the suburban pharmaceutical industry. We have Comcast as an industry superpower as well. And our tech industry seems to have a unique strength for e-commerce with companies like Urban Outfitters and Monetate being based here. But we also have representation from many other industries, making it possible that your first customer or client, regardless of your industry, could already be in your own backyard. You might have to look a bit harder, but I’m consistently surprised who’s actually here when I take a moment to look around.

It’s true that other cities have more business opportunity. New York for instance, is an undeniable superpower for media, finance, and most recently high tech entrepreneurship. And New York offers remarkable access to it’s own wealth of resources and by virtue of being a melting pot for the world. But it comes at a cost, literally. The cost of living (and running a company) in New York City means that it’s risky to your existence to stand still or take a pause to think.

Philadelphia is the place where you can enjoy life AND start a great company. Growth AND resilience. Citizens AND the city.

Are you seeing the theme?

After that beer with Bob, I sent over a 6 point pitch for him to share with the StartupPHL team.

Ignoring my broken bullet points, here they are in text:

  1. We must lead with our defining strength: “the best ratio of quality of life to opportunity in the world”
  2. We must weave that strength through as many stories/industries as possible. Balance growth & resilience. References to history and contemporaries. Illustrate that it’s already in our DNA.
  3. We want the world to realize that Philly has “the best ratio of quality of life to opportunity in the world” but some “thing” is in the way? Can money make that thing go away?
  4. The City as a partner in us – the citizen’s – in our ambitions. They’re following OUR lead, and supporting us.
  5. We must remember that money is rocket fuel for participation. It doesn’t take you from inaction to action. It takes you from action to MORE action.
  6. We must be upfront that the money is a catalyst, and that people must look for their own reasons beyond the money to make a difference in Philadelphia.

I’m excited, and admittedly anxious, about this morning’s press conference. In spite of sharing this message and Bob Moul’s tireless work to help the City and their partners adopt it, I don’t know what will come across and what won’t.

But I wanted to share this perspective and story for the people who remember that we are the ones who will make Philadelphia known as the entrepreneurial city that it’s been since it’s inception.

The first business started in Philadelphia was The United States of America.

It has been alive and resilient for over 200 years.

It’s done so by balancing quality of life with opportunity.

It’s motto is “Life, Liberty and the pursuit of Happiness.” 

Of course, Philadelphia is a great place for entrepreneurs. That’s not new. We just need to get better at how we say it.

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  • pascale / Lyon /france

    Thank you for this post. It is going to serve as a reference for “startup ecosystem ” in Lyon :)

    Small note: I feel that in France, the term “startup” takes on new meaning. We talk about startup to define a common state of mind very different from traditional businesses. It is with this word that the new generation of French entrepreneurs manage to define themself

  • http://twitter.com/LtMichaelJMaher MJM

    Alex, superb post. I couldn’t agree more about “The Pitch.” Would love to chat about this over a post-masterclass beer. ps. great Top Gun reference. :)

  • Joseph

    As a software engineer moving to Philadelphia within the next few months, I’m so happy to see the city taking investment in startups and technology seriously. I’ve been watching for a while now, and the amount of interest in getting its tech act together by various parties in teh city is heartwarming and exciting. I can’t wait to come be a part of it.

  • http://www.dangerouslyawesome.com alexknowshtml

    Welcome, Joseph. Please stop by Indy Hall when you get to town!

  • http://www.dangerouslyawesome.com alexknowshtml

    Words are so interesting, especially the fact that one word can take on so many different meanings!

  • http://www.dangerouslyawesome.com alexknowshtml

    Absolutely.

  • http://twitter.com/mikey_p Michael Prasuhn

    Wow, this really covers alot of ground and it really reminds me of the process the city of Portland went through almost exactly 2 years ago when they were trying to figure out how to grow the software/tech/startup industry in Portland. They ran a series of surveys and asked for community feedback and tried to figure out what really defined Portland to the type of people who are in the software industry here. The top two items from their list?

    1. Quality of life
    2. Community

    (presentation available at http://www.chesnok.com/daily/2010/12/05/pdx11-community-as-competitive-advantage/)

    At the time there was alot of talk into how to lure business away from the valley and bring it to Portland, and if you closely read the the reports the conclusion is that basically Portlanders value their quality of life too much to align their values with portions of the wider startup culture that value money or fame.

    While I’m glad the question of “how to be the next silicon valley” faded quickly, Portland did end up starting their own seed fund (http://portlandseedfund.com). While that’s well and good I think that Portland still has a lot of room for improvement. At one of the meetings the development commission had about growing our software industry, Sarah got up and asked the mayor what the city would do to support smaller services based companies, and if they would consider measures such waiving registration fees for small and single person businesses (as the surrounding community we lived in at the time was doing). Such a simple question was met with a dismissive answer and nothing has been done for those solo entrepreneurs yet.

    All in all this is a brilliant piece and it’s fascinating that the bottom line and key differentiators for Philly are pretty much the same way that we view our city, even through we’re 2500 miles apart. I really wish that I could make everyone I know who talks about the software industry and startups in Portland read this.

  • http://www.dangerouslyawesome.com alexknowshtml

    Really cool insights, I love reading this kind of story from people in other cities.

    Thanks for sharing, and spreading the word. If you’re ever in Philly…you’ve got a place to hang out here!