Communities Across America Are Harnessing Entrepreneurism to Drive Growth

Establishing entrepreneurial ecosystems generates new businesses and jobs.

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By Victor Hwang


Opinions expressed by Entrepreneur contributors are their own.

At a time when policy consensus at the federal level seems impossible, a grassroots movement is sweeping the nation and kindling a radical transformation in how Americans grow their local economies. Cities, communities and regions are building "ecosystems" of entrepreneurial innovation to generate new businesses and jobs that America needs. It's no longer enough to recruit businesses from other regions in a perpetual zero-sum game. Nor is it enough to construct buildings, infrastructure, airport terminals or other projects that require heavy subsidies. Instead, we're witnessing the birth of a new model of economic development -- one based on collaboration among entrepreneurs and innovators that elevates culture as a driver of economic growth.

These ecosystems are not only located in the coastal states most readily associated with innovative economies, they are emanating from the center of America. Midwestern cities like St. Louis are offering both hope and optimism for renewed economic growth. With the presidential race providing seemingly no new solutions, Americans should support and expand this movement, for it provides the best hope of revitalizing economies throughout the nation.

Related: Creating an 'Ecosystem' for Minority Entrepreneurs

Among the top five metropolitan areas in the Kauffman Foundation's 2016 Index of Growth Entrepreneurship are Columbus, Ohio and Nashville. Among the top five metros in the 2016 Kauffman Index of Startup Activity are Austin and Las Vegas.

These are not isolated examples. A majority of U.S. states saw a resurgence of startup activity in 2015. Ninety-two cities are participating in an initiative that began in Kansas City called "1 Million Cups." Educating, engaging and connecting entrepreneurs, this activity is based on the notion that entrepreneurs discover solutions and network over a million cups of coffee. The number of cities involved in the Startup Champions Network, a coalition of leaders building ecosystems in their respective communities through a variety of activities, is expected to reach 50 this year.

"Ecosystems" are entrepreneurial environments that reflect an organic dynamic quality, rather than a planned linear progression. They are more like rainforests than cultivated fields. They thrive on a culture of encouraged yet unpredictable interactions, rather than on prescribed plans.

Cities and communities create their own designs by connecting existing ingredients to form environments that spawn businesses in new and unexpected ways. How those ingredients are connected is the key: who meets whom; what culture they share; why people collaborate; how much freedom they have to strike out in new, even wrong, directions and then start again.

How then can these connections be encouraged? The first step is to recognize the available local assets: they may be cultural, historical, educational or attitudinal. Every community or collection of communities has them; that's why this model is so equitable and far-reaching. But they need to be acknowledged, appreciated and unlocked.

Related: Feeding The Entrepreneurial Ecosystem With Fresh Recruits: Injaz Qatar CEO Emad Al Khaja

The next step is to connect individuals who can put those assets to work, which may involve introducing dissimilar people for the first time. Startup community guru Brad Feld calls this the "collision of the tucked and untucked," referring to startup entrepreneurs (wearing untucked shirts) and startup supporters (wearing tucked shirts in government, academia, finance or other professions). The collaboration of disparate individuals to forge shared goals is the secret sauce of this movement. That's an especially important point today when we see so much tribalism in the national dialogue, in the paralysis in Congress and on city streets where anger and even violence erupt from fragmented communities.

In the context of entrepreneurship, diversity is crucial: in background, heritage, perspective, skills and experience, among other attributes. It is the mixing of those attributes in unexpected ways that becomes so dynamic. It is, therefore, not surprising that immigrants have played such a central role in the evolution of so many high-growth companies in America.

Education, too, is key: providing quality education at all levels, increasing access to knowledge, facilitating the transfer of knowledge to market. Education should be more hands-on, more project-based and more design-based to give students skills to transform their ideas into real-world practice.

Most of all, in dynamic entrepreneurial ecosystems people listen, share dreams, take risks and endure failures together. Deep cultural values provide those ground rules.

There's a pay-it-forward mindset in healthy ecosystems. Although businesses must compete, people still help each other. People recognize that they need each other to build their futures together. Trust is critical when people seek long-term benefit more than short-term gain. Among the many lessons that I learned from years in Silicon Valley is that handshakes are more durable than contracts and altruism is more efficient than selfishness.

Related: Bringing Balance To The Entrepreneurship Ecosystem In MENA

Listening and sharing are core values of 1 Million Cups. The linking of 92 cities in that endeavor is more than a number -- it's a sign of a broader movement emerging. Those 92 cities are in more than 35 states, one U.S. territory and six time zones -- from Alaska to Puerto Rico.

Creating effective entrepreneurial policy is not simply about helping entrepreneurs. It's about unlocking local assets, connecting individuals of diverse backgrounds, improving practical skills and training, and assembling a distinctive environment of trust where innovation can flourish.

That's what Americans are doing for themselves in communities across the country. They're not waiting for their leaders. It's time for our nation's aspiring and currently elected officials to jump in and fuel this movement. As Mahatma Gandhi said, "There goes my people. I must follow them, for I am their leader."

Victor Hwang

Vice President of Entrepreneurship at the Ewing Marion Kauffman Foundation

Victor W. Hwang is vice president of Entrepreneurship at the Ewing Marion Kauffman Foundation.

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