VOL. 128 | NO. 25 | Wednesday, February 6, 2013
Michael Graber & Jocelyn Atkinson
Economic Development Through Entrepreneurism
By Michael Graber & Jocelyn Atkinson
Last week we visited downtown Las Vegas to tour and learn more about what Zappos founder Tony Hsieh is doing to stimulate entrepreneurial activity and urban revitalization through his Downtown Project initiative. Hsieh is personally investing $350 million to transform downtown Las Vegas into the most community-focused large city in the world in less than five years.
Investment dollars are allocated to real estate development, residential development, small business, education and a fund for start-ups. The Downtown Project is a for-profit entity that aims to garner a return on invest after it successfully realizes a return on community. Hsieh is aggressively recruiting smart and passionate people to Las Vegas, to inspire and empower people to follow their passions, thus creating a vibrant, connected urban core.
Hsieh’s team bases the investment thesis on many of the principles in Harvard Economics professor Edward Glaeser’s book “Triumph of the City.” Glaeser’s work focuses on the determinants of city growth and the role of cities as centers of idea transmission.
Glaeser’s findings indicate that when people live closely with one another, the opportunities to interact serendipitously increase, which increases the sharing of knowledge, ideas and improves productivity. Urban residential density of at least 100 people per acre combined with ground-level gathering places such as cafes, interesting small businesses, and public spaces increases economic output and happiness. They are rethinking everything as they design this new community focused on both personal and economic growth.
An audacious project and certainly inspirational as Memphis continues its revitalization work Downtown and builds its entrepreneurial community. The revitalization of downtown Las Vegas and Memphis share many challenges in common but there are also big differences. In some ways, Las Vegas is at the starting line because it lacks infrastructure. Hsieh’s team is remodeling buildings where possible, but quite a bit of capital intensive new construction is needed.
We are leaps ahead in this area thanks to pioneering efforts from real estate developers and the Downtown City Commission. We have a strong foundation in the core tenants needed for a community to take hold: restaurants, education, retail and green space. Our visit brought to focus how far Memphis has come in the last 10 years and we felt appreciation and pride for our own community.
However, seeing the work under way in Las Vegas in the entrepreneurial arena was like salt on old wounds. In last week’s column we discussed the growth capital shortage in Memphis – very few venture capital firms, an underground angel network and a risk adverse culture.
Meeting with Hsieh in Las Vegas made us wonder where our benefactor and talent magnet may be hiding. Great things are happening there because he has attracted passionate and smart people to a place where they have the resources they need to make great things happen. At the heart of it is Zappos, the anchor spilling its highly successful yet unconventional core values into the community.
Our corporate anchors Downtown and elsewhere in the city support the infrastructure but do little to participate in the type of ground level community happening in Vegas.
Our entrepreneurial community has the infrastructure, passion and creativity but we lack the capital, risk tolerance and the national network. This is the quicksilver needed to really make it happen. While we don’t have an answer for the capital or risk tolerance challenges today, we do have an idea for broadening our national network.
We invite Memphis corporate executives to play a more active role in the entrepreneurial community – invest, mentor and sit on the start-up boards. Accelerating our start-up scene will make for a more vibrant culture and improve our city’s economic development – a benefit to us all.
Jocelyn Atkinson and Michael Graber run the Southern Growth Studio, a strategic growth firm based in Memphis. Visit www.southerngrowthstudio.com to learn more.