Why Economic Developers Should Care About Their Startup Ecosystems
At a fireside chat with Cintrifuse’s Wendy Lea, cofounder of America Online (AOL) and billionaire venture capitalist Steve Case had some bold words to share:
“Disruption is going to hit [big companies] in the face.”
Case is making a point to invest in communities like Greater Cincinnati because he believes the next age of innovation will emerge from revitalized industrial centers. And, we agree.
Technology innovation ushers in an age of disruption
In what Case dubbed the “third wave of the Internet,” technology is touching every aspect of our lives. With technology that allows consumers to order food on the go, power autonomous vehicles and even receive eye examinations through their phones, companies across all industries face the possibility that their core practices will be revolutionized.
Case said the food industry is one that is often taken for granted, despite being worth more than $1 trillion.
“The fast-casual segment is disrupting the fast food segment, and the technology aspect is really accelerating this disruption,” said Case. Consumers at fast-casual restaurants can use mobile phone apps to receive a more personalized experience at every stage of the ordering process.
“It’s much more convenient for the consumer, and even though it’s the food industry, technology is a key aspect to it,” said Case.
We believe that for big companies to prosper in an age of accelerating change, they need access to and the support of a strong entrepreneurial base. Here’s why REDI Cincinnati values the region’s startup community:
- Nearly all net job creation comes from young companies. Case cites research from the Kauffman Foundation. It’s true, small businesses and big companies create a large number of jobs – but the turnover in both those segments means job creation balances out in the long run. Young, high-growth companies, on the other hand, account for almost all net new job creation. In real terms, startups created approximately 30 million new jobs in the last decade.
- Innovation sustains the business cycle. As economic developers, we must prove that a company that locates in our region can find the tech and innovation that can take it from persevering through disruption to prospering in it. A healthy startup community can generate solutions to rejuvenate a stale product, service or process. Last year, REDI Cincinnati and Cintrifuse partnered on an initiative to help the region’s big companies source breakthrough technologies from Israel, a country renowned globally for its innovation and technology advancements.
- Competition is good. Innovation introduces competition into markets where big businesses may have absorbed their competitors. Furthermore, startups are required to develop products quicker, more efficiently and at lower costs. Not only does this revitalize the regional economy, it can improve the region’s standard of living as consumers have access to more choices at lower cost.
- Startups help retain and attract high-quality talent to the region. Young, innovative companies are talent-attraction engines – so much so, we’re devoting a separate blog post to it. But we’d be remiss to leave it off this list. Follow us on social media to receive updates from our blog.