Collaboration, Underutilized Assets, and Entrepreneurship in Pittsburgh

 

Last month I attended a discussion in Pittsburgh hosted by GTECH Social Capital Council around the issue of innovation in the reuse of underutilized assets. The event brought together a cross-section of interested participants, including lawyers, entrepreneurs, community and economic development professionals, and artists.

Of course when you hear ‘underutilized asset’, buildings and land automatically come to mind. However, the folks at GTECH, who are already working with assets such as waste vegetable oil and dirt, encouraged us to broaden our definition – and so our discussion turned to assets like neighborhood stories, rivers, hillsides, and people. That last one is important in two ways. Abe Taleb, of ReWork, mentioned that according to 2010 census data, when compared to the 40 largest population centers in our country, the Pittsburgh region has the highest poverty rate among working-age African-Americans. Success stories abound about how Pittsburgh is reinventing itself, but imagine how successful we could be if those efforts included everyone in our city? Second, we have existing networks of people and organizations working towards the city’s success, but many have different ideas of what success looks like and how we can get there. In and of itself, that’s not a bad thing, but it tends to mean that our efforts are often siloed. Bringing all of those organizations together to share ideas and resources could help push everyone’s agenda forward.

Sara Thompson, of Pashek Associates, brought up the concept of economic gardening, a strategy focused on building economies from the ground-up. Instead of the traditional model of economic development, where municipalities participate in the zero-sum game of recruiting large employers to relocate, economic gardening encourages entrepreneurship. This is a comprehensive approach however, which relies on data to make informed decisions; coordinates continued learning and access to educational opportunities; sees community development and place-making as key components of economic development; and facilitates connections between a wide variety of stakeholders. The questioned that summed up our discussion that evening was, “How can we utilize this model in Pittsburgh to bring together the amazing organizations already working in the city to build platforms for entrepreneurship, especially while engaging the most disenfranchised citizens?”

Enter, the Pittsburgh Central Keystone Innovation Zone, or PCKIZ. PCKIZ is a consortium of higher education institutions, businesses, government agencies and community organizations, collaborating to enable the neighborhoods in central Pittsburgh to realize their potential within the knowledge-based economy. Last year, PCKIZ reached out to several local non-profits to create a winning proposal for U.S. Economic Development Association’s coveted Jobs and Innovation Accelerator Challenge.

According to Carolina Pais-Barreto Beyers, Vice President of PCKIZ, “The complexity of this RFP made it clear that we needed to leverage the strengths and expertise of several organizations to craft a proposal that was appropriate for our region.” Furthermore, PCKIZ recognized this as an opportunity to address the needs of the region’s underserved communities. “When such a great number of people are completely disenfranchised from all the good things that happen here, our entire region is compromised,” says Beyers.

Working with the Hill House Association, Innovation Works, Duquesne University Small Business Development Center, the Community College of Allegheny County, and the University of Pittsburgh Institute for Entrepreneurial Excellence, PCKIZ created the Southwestern Pennsylvania Urban Revitalization Project (SPUR). The overall goal of SPUR is to connect residents from underserved communities—particularly the Hill District—with the local energy and health care industry clusters, in part through the creation of employee-owned and/or community based businesses.

And the key to the SPUR’s success? Collaboration, of course. In Beyers’ opinion, “Collaboration among organizations is essential to make an impact of magnitude. Inviting partners of diverse expertise can tackle issues from various angles and in a holistic manner.”

This is just one example of how Pittsburgh is coming together to leverage our existing assets for the continued prosperity of our city. There are lots of ways to get involved, including the upcoming Pop City’s social innovation eXchange (SIX), January 31st at Point State Park. If you have other ideas for how to promote this work in Pittsburgh or elsewhere, leave a comment below!

Pittsburgh: The Entrepreneurial City (Part 1)

The short answer? Entrepreneurs.  A recent study by the Kauffman Foundation found that the rate of business startups is very stable from year to year, varying between 3% to 6%.  Entrepreneurship is resilient to both economic booms and busts which is good news for policymakers interested in a sustainable growth strategy that doesn’t suffer from cyclical downturns.

What does this mean for Pittsburgh?  We have tremendous research enterprises – both in our universities and a growing base of innovative firms.  The City of Pittsburgh – led by Oakland – is the region’s seedbed of innovation, accounting for more than one-third of the patents, more than two-thirds of the SBIR awards in the region, and three-fourths of the venture investment.

But to rely on entrepreneurship to drive growth in the region, we have some work to do.  Pennsylvania competes for last place among states for new business creation. The Pittsburgh region ranks in the bottom fifth of the nation’s metropolitan areas on the same indicators.  We have produced some notable entrepreneurial successes, but on the whole, we are the tip of the tail of entrepreneurship.

Why?

It’s not taxes.  Massachusetts and California both had higher taxes than we did and still grew faster. A true entrepreneur is a change-maker driven to overcome obstacles.  They don’t look at the wall and say, “If it were two feet lower, I might try to climb it.’  Similarly, an entrepreneur with a disruptive business opportunity is not likely to be scared away by the tax rates.

In a study on why places have different levels of entrepreneurship,  Edward Glaeser and William Kerr found that the number of smaller suppliers and pool of qualified workers. within an industry can promote the creation of new firms in that industry. In response to the crisis of the 1980s, our mantra was diversification.  Our success in diversifying the economy has now hurt us in this area of creating enough depth for new industries to prosper.

IT as Bright Spot

One success in our region is the information technology sector.  It’s taken more than twenty years, but we have developed a talent pool of technical and management talent with varying experience levels. Three regional startups: Transarc, FORE Systems and Carnegie Group – have spawned a dozen startup firms that are seeding future generations of entrepreneurs.

For the first time since its start in 1983, Innovation Works has more good deals than they can fund.  We can now say that we are approaching a critical mass of second and third generation entrepreneurs and we may be only a few years from seeing that the tangible economic impact.

We have often explained our lagging entrepreneurship as a cultural residue of our industrial past, blaming the old steel mentality and being adverse to risk.  A 2002 study found that firms in the region were less likely to share information than in other regions.  But this may be fading, due to three trends:

  1. Regional entrepreneurs have progressed on the learning curve, creating not just 2nd and 3rd generation entrepreneurs but a whole new crop of innovators like Joshua Dziabiak of ShowClix – one of Inc.com’s top 30 under 30 Entrepreneurs.
  2. Mainstreaming of entrepreneurial achievement—think Microsoft, Apple, Google, Facebook and even the movie, The Social Network–has improved understanding of how we benefit from local startups like FORE Systems, Spinnaker and FreeMarkets even as they fade away.
  3. The return of Boomerang Entrepreneurs.  We lamented every time a firm was recruited away in the 1990s but we are seeing those entrepreneurs return, bringing with them the expertise and networks from other regions. One example: Nick Manolis who went to Boston with Internet Securities but has now returned as CEO of TrueCommerce, an Innovation Works portfolio company.

Moving forward, we must avoid the temptation to pick the “one approach that works best.”  The reality is, you have to do a lot of things well. One of the strengths of Pittsburgh is that we have not put all of our eggs in one basket. The failed efforts to consolidate economic development has left us with a dynamic and flexible eco-system akin to a cloud-sourcing network for entrepreneurial support.

The notion of a One Stop, One Size Fits All approach is not suited to the diverse needs of a vibrant entrepreneurial climate.  It takes some effort to navigate, but the resources in Pittsburgh allow an entrepreneur to select the services and programs that best fit their needs.

While there is no silver bullet to promoting growth or entrepreneurship, whichever path you choose you have to be able to do many things well to enjoy sustainable growth and prosperity.

 

 


This article originally appeared in PopCity on 11.03.10.