How Can Madison Attract More Entrepreneurs?

Over at the Atlantic Cities blog Richard Florida writes about a report on what entrepreneurs seek out in cities where they would locate their companies. The report was done by a group called Endeavors Insight did surveys and interviews with the founders of fast-growing companies. The results were interesting.

For one, size matters. These top business-creators gravitated towards cities with at least a million residents in the metro area. This offered the scale and diverse array of offerings needed to attract talent.

A city also needs to be able to appeal to the young and the restless. The entrepreneurs surveyed were a highly mobile bunch when they first started out...But eighty percent of respondents had lived in their current city for at least two years before launching their companies, meaning that cities had to catch them early. And once they started their first company, these business leaders rarely moved. So attracting this mobile group at an early age is key.

The top rated factor by far was access to talent. Nearly a third of those surveyed mentioned it as a key factor in their decisions for where to live and work (many specifically prized access to technically trained workers). Entrepreneurs explained that they proactively sought out the places that educated and ambitious workers want to be.

The study found that two other key factors in the location choices of entrepreneurs are major transportation networks (like airports and highways that can connect them to other cities) and proximity to customers and suppliers.

Can Madison learn anything from this?

We are not a metro area with 1+ million people. A strike against us. But Madison surely does have some appeal to the young and the restless. We have bike lanes, farmers markets, and a good cultural scene for a city our size, though it cannot compete with that of larger metros. (On a side note, I will say that I met a gentleman at last year's Gamehole Con from out of state who said that Madison has the best cultural scene in the Midwest outside of Chicago.) I would think that the UW provides a good pool of technically trained workers but perhaps they all leave after graduation because Madison is not large enough.

The whole customers and suppliers part isn't really something I can comment on since I don't know enough about those factors. But the transportation bit made me think. We've got the highways that lead to Chicago, Milwaukee, and the Twin Cities in addition to much smaller cities. While we do have an airport that offers some direct flights, it shuffles many people off to larger cities where airlines have hubs that can take them onto their destination. While there is just no way for Madison (nor any city in the entire Midwest) to compete with Chicago here, might it still be possible to leverage the Dane County Regional Airport to our advantage?

Recall the report by the Progressive Policy Institute which was released last autumn. It ranked Dane County 9th in growth of tech/IT jobs from 2007-2012. The Milwaukee Journal Sentinel article on the report quoted a Madison computer science professor and entrepreneur named Paul Barford who said, "There's no direct flight between Madison and San Francisco. If we could get that, it would unlock amazing opportunities in the state."

When I first read that I thought, "Well, Mitchell Field in Milwaukee has direct flights to and from San Francisco." Then I heard that the state of Indiana was subsidizing direct flights between San Francisco and Indianapolis in order to bolster the latter city's tech sector. Even the state's Republican governor was in favor of the subsidy. Given the Endeavor survey results, the testimony of one entrepreneur here in Madison, and the desire for such flights from Indianapolis' tech community, it is certainly something for us to look into. Has the Madison tech community approached the governor and/or the WEDC about a similar setup here? In another article, which I cannot locate the moment, someone from Indy was criticizing the the times of the service offered there. He maintained that they need an earlier flight to Indy as apparently venture capital likes to get in, get down to brass tacks, and then head home that same day. So it's worthwhile to keep an eye on how things go down in Indianapolis.

The Endeavor report also noted, in Florida's words:

At the very bottom of the list were taxes and business-friendly policies, which are, unfortunately, exactly the sorts of things so many states and cities continue to promote as silver bullets. Just 5 percent of the respondents mentioned low taxes as being important, and a measly 2 percent named other business-friendly policies as a factor in their location decisions.

I have to wonder just how much common ground tech entrepreneurs in Wisconsin have with the "old guard" WMC members. The former group is asking for an educated workforce, infrastructure, and quality of life while the latter is seeking tax cuts and supporting politicos who cut education, seem to ignore infrastructure if it's not a road, and don't seem to care much about quality of life issues because taxes must lowered at all costs.

And I can't help but tie this into Madison's preternatural preoccupation with having a public market. The article at hand doesn't mention it but it can surely be argued that it falls under quality of life for attracting a talent pool. But does it really help all that much? The last time I wrote about this subject, local tech entrepreneur Phillip Crawford left a comment saying, "We don't need a public market. That's a boondoggle. High speed internet _everywhere_ which would have been just as amazing 10 years ago as it would be today, would be great." I don't mean to imply that Mr. Crawford's opinion prevails amongst his peers but I do think that pitching a public market by saying that it is a big quality of life factor to attract young tech people is a claim to be skeptical about. In light of the Endeavor report, perhaps investing in high-speed internet access would be a better use of public money.

Soglin Looks To Get Tough on Poverty

Finally! It was good to read this morning that Mayor Soglin has started advocating for a new economic plan for Madison to address the growing poverty and racial disparities here in Madison (and Dane County at large). This is why I voted for him. Mayor Cieslewicz really turned me off with the vast amount of political capital he spent on pushing the Edgewater Hotel remodeling plus the fact that he drank the Richard Florida Kool-Aid on a near daily basis. Urban analyst Aaron Renn once noted that "the creative class doesn’t have much in the way of coattails" yet it seemed that the only things in Cieslewicz's arsenal to combat rising poverty in Madison were tech startups and amenities for the vaunted "creative class".

Recently a group called Race for Equity released a report detailing vast economic and educational disparities between whites and blacks in Dane County. Amongst the findings:

-- In 2011, the unemployment rate was 25.2 percent for Blacks compared to just 4.8 percent for whites. Nationally, the unemployment rate was 18 percent for Blacks and 8 percent for whites.

-- In the same year, "over 54 percent of African American Dane County residents lived below the federal poverty line, compared to 8.7 percent of whites, meaning Dane County Blacks were over six times more likely to be poor than whites."

-- More than 74 percent of Black children live under the poverty level as opposed to just 5.5 percent of white children. The report suggested "that this 13 to 1 disparity ratio may constitute one of the widest Black/white child poverty gaps that the Census Surveys reported for any jurisdiction in the nation."

-- "In 2011, African American youth in the Madison Public School District had about a 50 percent on-time high school graduation rate, compared to 85 percent for white students."

-- "African American adolescents, while constituting less than 9 percent of the county's youth population, made up almost 80 percent of all the local kids sentenced to the state's juvenile correctional facility in 2011."

To address these issues

Soglin released a 15-page Madison Employment Plan that will focus on five areas over the next year: housing, quality child care, transportation, health and education/employment.

He said a team of government, community and business leaders needs to work together quickly in three areas:

Youth internships

Building trades apprenticeships

The creation of more full-time — not just part-time — jobs for adults

...

Increasing the number of full-time jobs overall is “as big as the universe itself,” Soglin said. “It is simply creating more jobs in locally based companies.”

There's much to like here although I am skeptical of the notion that existing companies can provide all the work that is needed. A recent blog post by Pete Saunders remarked upon a report from last year on the Chicago mega-region, i.e. - the area from Milwaukee south along the Lake Michigan shore to northwest Indiana. This region has the same racial disparities as Madison and what caught my attention was this part of the report: "Skills mismatch lies at the heart of these challenges. Low-skilled workers are not finding jobs, while manufacturers can’t fill medium-skilled job vacancies." If creating full-time jobs that pay well enough to support families is the goal, Madison needs to look for new blood, in my humble opinion. One would think that existing companies would already be creating more jobs if the demand was there.

A few things that come to mind in light of all this:

1) Money is tight. Every drop of utility will have to be wrung from the money available.

2) Governor Walker has declared Wisconsin to be open for business. Can Madison/Dane County have him put his money where his mouth is? Can the WEDC be of help in increasing/diversifying the range of employment opportunities here?

3) Partnerships. Can Madison/Dane County partner with neighboring municipalities?

4) Can we better leverage our existing strengths? Take, for instance, Dane County's agricultural sector. Can we leverage it into something more than a public market?

5) We've got Jennifer Cheatham, Nancy Hanks and a whole cabal of former Chicago Public School system administrators running the Madison public schools right now. They bring a wealth of experience from a system struggling with large numbers of poor minority students. Let's listen to them. We should also be open-minded about revisiting Kaleem Caire's Madison Prep Academy. I was certainly ambivalent about it and thought tweaking was necessary but, as my political science professor Charles Anderson described his philosophy of pragmatic liberalism, if something isn't working, try something else.

In the years 2000-2005, the top two counties that people moved to Madison from were Cook and Milwaukee - Chicago and Milwaukee. It seems likely that a fairly significant number of these people were poor minorities. If Lisa Bullock's story is any indication, that trend hasn't stopped.

Bringing together "government, community and business leaders" is a good idea. Prof. Anderson would call this a community of inquiry. But Soglin needs to keep this issue front and center. He cannot keep quiet about it for a Friedman unit or two. Instead, he must keep talking about it, keep explaining how investing in children mired in poverty and their unemployed parents will benefit Madison and Dane county as a whole. Soglin, et al need to make a case to the business community that his plan will benefit them; they need to make a case to the "creative class" explaining how his plan will benefit them; they need to explain to the very people they seek to help what the plan is and how it will help them. Make sure these people have some control over their lives instead of it just being Big Daddy Soglin dictating everything.

It's going to be a long row to hoe which is why the mayor needs to advocate for his plan loudly, publicly, and often.