Building an Entrepreneurial Buffalo

16 Aug

innovation

“If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley.” – Paul Graham in his essay “How To Be Silicon Valley

In many ways, the notion of “imported innovation” is the core tenet of our local economic development strategy.  We strive to identify companies who will move here or we struggle to keep existing companies here, but we do little to help generate innovation and entrepreneurship.

This is odd as Buffalo has a rich history of innovative entrepreneurs who powered the growth of Buffalo and WNY at the turn of the last century.  At some point, we seem to have lost our way, we lost our network effect.

The reason Buffalo struggles to innovate is related to the lack of an innovation community, a self-perpetuating problem.  We lack a thriving community of innovative and energetic entrepreneurs who are willing to take risks.  Sure, there are some, but they are a disconnected group and access to capital to fund their ideas is limited, at best.

There is no center of the city which fosters shared ideas and creative entrepreneurial energy.  Sure, we have a couple of areas in the city chasing the Richard Florida model of huddling hipsters and creatives into small alcoves to create an economic impact, but there is no effort to create an Artspace-like environment for business.

In cities where innovation thrives, you’ll find strong academic universities surrounded by an urban area populated by entrepreneurs with access to investors who are willing to fund risky ideas. You need a confluence of wealth and energy to create a network effect.

Chairman Emeritus, IBM Academy of Technology, Irving Wladawsky-Berger had this to say about innovation and network effects:

Throughout history, certain cities and the regions around them have been the major centers of innovation in a variety of different fields as a result of their unique accumulation of talent and wealth. Innovation is very susceptible to network effects – that is, the more talented people you have in close proximity, the more their ideas and their work influence each other and stimulate them to innovate. While talent is necessary to becoming an innovation hub, it is not sufficient. You need wealth, in order to support the talented people and bring their work to market. You also need an open culture that values a diversity of ideas and experiences.

So, we lack a thriving urban area which creates shared energy.  We lack access to innovation capital as most of our local wealth is inherited and descended from the casino capitalism tree (those interested in collecting wealth for the sake of collecting it).  Our talent base is drained each year as they migrate to greener pastures.  Most importantly, we lack people willing to invest in what Keynes called the “real economy”, the economy of production capital, long-term investment and job creation.

So, how do we overcome all of these factors?  The answer from the likes of BNE/BNP and most IDA’s is to keep paying a vig to companies like Geico and Yahoo! to set up shop in our fair region and bless us with midlevel jobs.  Those jobs are designed to create wealth for plutocrats in other regions of the country.  While this strategy has merit as a force multiplier for the local economy, it’s shouldn’t be the primary driver of economic development, it should be a tactic in a wider strategy.

I’d posit that we need to build our own network effect.  No longer should we look to the local “business leaders” for handouts and capital.  We should rebuild our culture of innovation from the ashes of closed steel mills and shuttered auto factories.  Looking to ourselves to fund a new wave of innovation, a rising tide of locals who want to build a better future for themselves and their neighbors.  To give this city back the entrepreneurial roar that was heard around the world at the turn of the last century.

So, I’ll leave it to you to tell me what you think.  I have a skeleton of an idea that I’ll discuss tomorrow. But first, I’d like to hear what you think. How do we begin to create our own network effect? How do we begin to bring capital to bear for innovative ideas? How do we build a community of ideas?

It’s time we took control of our economic future, help make it happen.

22 Responses to “Building an Entrepreneurial Buffalo”

  1. tom August 16, 2011 at 8:26 am #

    i thought NxtArrow was a great start.  Not sure what Buffalo Pundit thinks of that one?

  2. kbecker August 16, 2011 at 10:03 am #

     This is great Chris. You’re super smart.  I agree with all of this. Howeves, it seems that Buffalo’s economic downturn for DECADES  has created an environment of  ‘holding on to what you have, with everything you have’ .
    I have been fortunate enough to find some amazing mentors  in town that have fostered my entrepreneurial spirit, but generally speaking, folks seem so concerned with not losing the few crumbs they have that anything new and young is a  perceived as a threat.  

    We need young folks and their innovation to stay in town, but those who came before us         ( many of whom still maintain power from our city’s exceptionally nepotistic past) have no idea how to foster growth, so those trying to stay leave frustrated.  Of course, the generations before us have no experience with fostering growth since the last 3 generations of people have just left town. 

    How do we convince the generations who have toughed out the lean years that we aren’t here to take, but to give. and most importantly, how do we get them to focus on the fact that we ARE HERE, and not in Charlotte?

    • Christopher Smith August 16, 2011 at 10:19 pm #

      This is great Chris. You’re super smart. I agree with all of this.

      You could have stopped here.

      However, it seems that Buffalo’s economic downturn for DECADES has created an environment of ’holding on to what you have, with everything you have’ .

      This is indeed the very core of our problem. It is reflected in nearly all situations. Politically, our elected officials spend all their time playing picayune games to shuffle patronage jobs around from one constituency to another. Our non-profit community suffers from constant infighting as they line up to slob the collective knobs of the four powerful foundations in town to maintain funding. Our business community are all dogs attempting to gnaw at the same bone. It’s a mess.

      How do we convince the generations who have toughed out the lean years that we aren’t here to take, but to give. and most importantly, how do we get them to focus on the fact that we ARE HERE, and not in Charlotte?

      If I figure this out, I’m running for Mayor. But, I think we need a large swath of people to get involved at a small level in funding entrepreneurship in the region. Overcoming the “Mother, May I?” attitude that is required when starting a business in this town.

  3. Leo Wilson August 16, 2011 at 10:39 am #

    My take would be to have the biggest employer in WNY – the government – tout its efficacy and efficiency, how it delivers more bang for the tax dollar than any other municipality in the country. Yes, we have big taxes and are heavily regulated, but that translates into economies of scale that lower cost and allows the delivery of more services per tax dollar than anywhere else in the country. You don’t just pay more, you get far more back, too, relieving the innovative investor of concerns she’d have to address herself in the absence of our public burden.

  4. Brian Castner August 16, 2011 at 1:24 pm #

    I generally agree but would take your analysis a step further. Buffalo has been a blue collar unionized town far longer (and certainly more recently) than it was an innovation town (air aonditioning and power generation and all). I think that has changed the psyche fundamentally – the management/worker conceit is invoked and applied to all manner of challenges in this town, from church closings to waterfront development. With a shrinking pie, the focus is on maintaining and protecting what you have, not growing something new. The average worker waits for a new job to be created and doesn’t create it themselves. Unionization brings all sorts of benefits, but my gut sense is that its rate is inversely proportional to entreprenuership.

    Second, kbecker makes a great (and related) point – our culture in Buffalo is to plan to mitigate failure rather than push for success. Esmonde represented it well when he was more concerned that about a new outdoor market at Canalside failing than he was promoting it so it could take off. This guarded attitude is well placed: annouced new projects aren’t built, businesses fail and politicians disappoint. But unlike in NY or San Fran or Silicon Valley, where profitable success can follow failure, there is a much better chance that a bad deal wipes you out here and you aren’t coming back. Conservative investment is the learned behavior when opportunity isn’t growing on trees. I like your ideas, but I don’t know how to overcome the hurdles.

  5. Russ August 16, 2011 at 2:08 pm #

    So it comes down to a giant chicken/egg argument then.  

    We can’t attract a networked and dynamic creative/entrepreneur class because we don’t have the appropriate capital pools and we can’t build the capital pools because we have no creative/entrepreneur class.

    To overcome this cycle we need the ENTIRE region pulling together but as the local government downsizing efforts have shown, the Buffalo body politic just isn’t interested.

  6. Dan Pellegrino August 16, 2011 at 2:39 pm #

    I think that we need to leverage the resources that we have. In many other cities, such as New York and Boston, organizations and businesses have set up what are essentially entrepreneur incubators. In New York for example, General Electric has a program where they give college students with a new business idea living and office space for the summer to work on their idea. To lure young entrepreneurs back to the Buffalo, I think the City should create a similar type of program but on a larger scale. Buffalo has scores of abandoned houses and buildings that we could easily convert into living and working space. If the City were to take these assets and fix them up, we could lure recent college graduates to the city with the prospect of having a place to live and work while they try to turn their ideas into real businesses. This would not be the only solution to our problems but I think it would help bring young entrepreneurs into the City, hopefully for good.

  7. Starbuck August 16, 2011 at 3:27 pm #

    allows the delivery of more services per tax dollar than anywhere else in the country. You don’t just pay more, you get far more back, too

    @Leo
    Far more? What are some major demonstrable ways in which we get far more back per tax dollar?
    – and compared to which of our competitor metro areas, for examples?

  8. Leo Wilson August 16, 2011 at 3:36 pm #

    @Starbuck, I apologize for attempting sarcasm in this medium. I’ll try not to do it again.

  9. Starbuck August 16, 2011 at 6:28 pm #

    @Leo – sorry, that sailed right over my head!

  10. Gabe August 16, 2011 at 6:34 pm #

    Too bad ye local yokels are still fully in charge. This area has the sort of institutional conservatism and risk aversion that would rival a tribal state.

  11. jimd August 16, 2011 at 9:32 pm #

    It seems to me there is no lack of ideas, we have bright people here and certainly would welcome more. What we need is a revenue stream, a fund. If there was a pool of money available, and people were invited to compete for it, I think we would see results. Kind of like a professor writing for grant money. I would definitely keep the establishment out of it. Strictly grassroots.

  12. jimd August 17, 2011 at 6:51 am #

    Chris, why can’t we establish such a fund? If it took two years to build up enough seed money who cares? The fund could eventually own a percentage of whatever start-up was decided upon and with a good result, investors could make a few bucks or roll it into the next project. Worse case, you lose a few bucks. It’s a risk like any other investment.

  13. Jesse August 17, 2011 at 9:17 am #

    @3: Leo, it’s good to see your sense of humor remains as always!

    I hope you figure it out Chris, but all this talk of doing it ourselves and building it up outside the political mainstream has a distinct libertarian flavor to it… scary!

  14. John Paul August 17, 2011 at 12:34 pm #

    Buffalo has actually moved up the small business rankings dramatically from 2008-2010.  This could create a whole new entrepreneurial mindset for the area.  Which could spark innovation.  Buffalo has went from 80th to 29th in small business rankings.  This should be highlighted: 

    http://www.bizjournals.com/buffalo/news/2011/04/11/buffalo-climbs-small-business-list.html

    A discussion on this topic is encouraged.   Whether Buffalo can become a city of entrepreneurs or not.

  15. Eric Gersbacher August 18, 2011 at 5:06 am #

    First off I’d like to say this article is great and thought inducing so you certainly succeeded Mr. Smith. I have alot to say, so please bear with me. Buffalo is a city of great history, and at the time of now, is beginning a new growth mode of the 21st century. We seen what happened with the central wharf and our rocks the harbor series. They certainly were pains in the ass to put through, could’ve possibly been better, but the point is that they have upside and have created activity within our city. The Buffalo River is being dredged and toxic sediments are being removed by the Army Corps of Engineers starting next month. This will also become a Green Space with parks and events and retail along Rte. 5 in South Buffalo. Decent cornerstones to harness and build off for years to come.

    Emerging into this century we need to redefine our goals. No longer is it production for consumption, becoming more important is what your doing, how your doing it, your message, and how what your doing benefits the community. One huge factor is sustainability, now crucial on a local, national and global scale along all economic and social systems. We have multiple neighborhoods where the unemployment rate breaks 40%. To become sustainable we must flip our tax burdens (those living on assistance) into tax contributors (those working.) The beauty of being a small city is that any small creation essentially has a greater impact.

    As the nineteenth century began to chase the twentieth, Buffalo was undergoing drastic economic reformation. Changing from a commerce based economy to an industrial based economy. Key INDIVIDUALS as well as the LOCAL PRESS cultivated an atmosphere which would produce industry. John Bell seen the canal was diminishing, and believed we must transition to manufacture and production FOR THE SAKE OF SELF-PRESERVATION. His vision led to him starting the Association for The Encouragement of Manufactures in 1860. Bell held his 1st Annual Industrial Exposition in 1869 as head of his Mechanics Assc. His goal was simple; to encourage people to think about manufacture by spreading knowledge of machinery and mechanics. It successfully garnered grassroots movement as people came from all over the northeast to submit industrial machinery to the Expo. John Bell created a consciousness centered around what he envisioned as the “next economical evolution”…there is much to be learned simply through our past and its experiences.

    Decades later it was one man with the courage to approach a stranger with an idea that created Buffalo into the second largest steel manufacturer in the USA during the early 20th century. It was John Milburn’s knowledgeable seduction of Walter Scranton, President, Lackawanna Steel. He knew the company was looking to expand, and he knew Buffalo had everything Scranton needed. We had, and have; a large inexpensive workforce, strategic location, cheap power, and transportation lines to markets. On the 4th of July weekend 1899, Milburn went to wine and dine Walter Scranton to present the idea that he bring his operations to Buffalo. He offered a nice piece of lakefront property for him to develop. The offer was gladly embraced and accepted and the massive facility which was also once Bethlehem Steel, was built. We need to bring in the next economic guru/visionary; for if we can we will emerge as a leader this century.

    Currently, I say we must do our best to preserve as well as to grow. We need socially responsibly businesses, and civic spaces where the work of peaceful people can take place. General Electric is turning their brainpower towards meeting human needs, instead of manufacturing weapons. There are models which are sustainable, supporting the environment. There are ways to save capital resources and human beings by turning tax burdens into tax payers. It is like leveraging progress with progress.

    A tax burden is a person who is creating an expense for us and the government. They are often jobless, on medicaid, and they can be someone who is truly good inside. They are people who struggle with no guidance and because of so they can’t stay away from minor criminal offenses so we pay to keep them in jail, then get out, where they are unsupported, only to become jailed yet again. It costs upwards of $40,000 to imprison someone for 1 year. If you give people like this sustainable jobs which also incorporate humane support programs, everyone benefits and everyone saves. You also would have a training and placement program as part of it. The model also utilizes and includes veterans into the target category. Veterans need support in so many ways today; they are overridden with stress and their suicide statistics climb daily. That, my friends is preservation and growth all in the same bucket. You will find that these people become amazing, thankful employees.

    Who’s ready for the golden (more like green) idea? It’s amazing, and its green. It’s a water treatment system. It’s an air treatment system; a CO2 destroyer as well as an O2 creator. It’s a machine which increases the lifespan of your roof. It’s a rooftop garden. It’s a business and job creator. A food and awesomeness producer. I once found myself atop the Liberty Building Downtown, from there you can see just how toxic and ‘grande en mass’ rooftops are. I would like to share some pictures as a visual. They funnel nasty chemicals, acids and sediments onto our streets and into our sewers. Our sewers which we pay to treat, and pour into Lake Erie. Imagine how grande our downtown city district with rooftop gardens would be. “The Buffalo Green Zone.” Cities would follow, there are already state and federal incentives to do this. Cities are already progressing with ideas related to this. It is more prevalent in Europe. They’ve even found decreases in Health Care costs! Who knew living in a concrete wasteland could be bad for you!? Cities save money, people breathe cleaner air, people who would otherwise be on ‘our payroll’ earn their money and contribute to the grand payroll.

    The future must be greener and cleaner. (Idk though Rick Perry just said man induced global warming isn’t real.) That is if you want to leave a better America for your children. This is something realistic and it needs a starting point. Where is it? I’m not exactly sure. I know I’ve ranted alot here but I know I couldn’t find out alone. I am willing to collaborate and ‘get doing going’ because like everyone else I’m pissed off at the world for suckin ass. Let’s discuss the points here and find the way, together..

  16. Leo Wilson August 18, 2011 at 8:04 am #

    OK, sarcasm aside… I still think that making @3 a reality would go a long way towards alleviating concerns about local investment. Efficiency and bang for the buck from our government is the only alternative to lowering tax and regulatory burdens that might appeal to entrepreneurs whose ideas are portable and will work as well or better in locations where thos burdens are less.
    One idea I’ve had to ensure this is to forbid issuance of parking tickets unless the street has been plowed, swept or potholes filled within the past fortnight. This wouldn’t lower revenues! Rather, it would ensure that the services that alternate parking laws in Buffalo were created to facilitate would actually get done.
    Other, similar performance measures ahead of revenue collection could be figured out by those who pay for services that they pay for and can only hope will be delivered today.

    Nobody complains sincerely enough to go to other venues if they receive actual services that are worth as much as or more than they pay for.

  17. Eric Gersbacher August 22, 2011 at 5:11 am #

    Chris Smith, and some other bystanders

    I regret that you chose not to embrace my statement at all. Perhaps you truly are a female dogg and a sad blogger. I thought to give you some benefit of the doubt, but I now think you suck. One day, you will realize when your dreams and good intentions fail, all you needed was another idea machine like myself. A fresh perspective outside of your pedestal. Lucky for you, everyone will be able to enjoy the fruits of my labors and victories which are sure to come.

    Peace

    • Alan Bedenko August 22, 2011 at 6:12 am #

      Wow.

  18. SteveWa August 22, 2011 at 10:27 pm #

    @Eric Gersbacher: Welcome to Earth. But no need to learn not to insult people if they don’t respond to your statements. Now no one will take you seriously.

  19. Eric Gersbacher August 23, 2011 at 3:27 am #

    I certainly was short sighted in my remarks and if this site had a deletion feature my statement would’ve been relinquished or edited for the sake of respect. I do believe that I wasn’t wrong to expect a blogger of high esteem to take a second to say thanks for sharing your insane thoughts, and then elaborate to create a positive discussion [which a blogger should dynamically create after encouraging comment. The writer should poke a little bit into each new interested readers’ mind. Not merely those which are already a part of the group.]. I decline to argue further.

  20. Alan Bedenko August 23, 2011 at 6:00 am #

    Wow. 

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