Last Tuesday, I stood in a crowded
coworking space in Myrtle Beach, South Carolina, watching a ribbon cutting. The
occasion was the expansion of eMYRge, a city-supported coworking and
entrepreneurial hub that had just doubled its footprint. The new space brought
eMYRge to roughly 10,000 square feet, adding offices and room for a growing
community of entrepreneurs. Even before the ribbon was cut, all of the new, long-term, private offices had been leased.
There was also a graduation taking place
that evening. Ten young companies had spent the previous 12 weeks
participating in Launchpad, Myrtle Beach’s first startup incubator program, and
their founders took turns pitching from the stage. They weren’t competing for
an investment check. The pitches were instead a public introduction of sorts:
entrepreneurs explaining what they were building to a room filled with people
who had increasingly come to see entrepreneurship as part of the city’s
economic future.
The combination was fitting. One
graduation was explicit: a group of founders completing a program intended to
help them build companies. But there was evidence of another kind of graduation
nearby. TransPerfect Legal, the global language and technology company, had
established a Myrtle Beach presence at eMYRge and subsequently grown beyond the
coworking environment, purchasing its own downtown property as its local
operation expanded. The point of a publicly supported coworking space, after
all, is not to keep successful companies inside forever. Success is when they
leave.
I had seen pieces of this story before.
Two years earlier, my organization, RIoT,
was hired by the City of Myrtle Beach’s economic development team to help think
through the foundations of a technology-based economic development strategy,
particularly one centered on startups and entrepreneurship. At the time, eMYRge
already existed. The city had made the investment, entrepreneurs had a place to
work, and the commitment to the idea was real. But activity had not yet reached
the level city leaders hoped to see.
Our conversations therefore weren’t
primarily about the coworking space. They were about everything around it.
What incubators and accelerators existed
to help companies develop? Who were the community’s conveners? The people and
organizations capable of getting entrepreneurs into the same room repeatedly.
Where would those gatherings occur? Were there formal event spaces, but also
informal places where people could encounter one another? Were there coffee
shops, restaurants and parks within walking distance? Were universities,
established businesses and investors connected to entrepreneurs? Was there a
rhythm of meetups and events that would give someone a reason to participate
not once, but again and again?
The discussion was really about a system.
Two years later, standing inside an
eMYRge that had doubled in size and watching its first incubator cohort
graduate, I was seeing some of that system taking shape. The following morning
provided another glimpse. I attended Myrtle Beach’s weekly 1 Million Cups
gathering, part of the national entrepreneurial program built around founders
presenting their companies over coffee. The room was remarkably full. Myrtle
Beach’s chapter has developed a reputation as one of the program’s most active
communities.
None of these things, considered
individually, would constitute an economic development strategy. Together,
however, they begin to look like one.
Infrastructure is not an economy
I’ve spent a fair amount of time recently
writing aboutinfrastructure for the emerging Data Economy, particularly the
rapid construction of data centers and the difficult questions communities face
as they decide how these facilities fit into their economic futures. But data
centers are only the newest layer of digital infrastructure. Long before
communities began debating where AI computation should occur, they were
confronting a similar question around broadband.
Myrtle Beach has an interesting advantage
in that regard. Horry Telephone Cooperative, or HTC, has built an extensive
fiber network throughout the region. As a cooperative, HTC has an unusually
local relationship with the economy its network serves. A new company created
in Myrtle Beach isn’t merely an abstract contribution to regional economic
growth; it is also a potential new HTC customer. A stronger local economy
produces more businesses, more households and more demand for the
infrastructure the cooperative has already built.
That alignment has helped make HTC more
than a utility provider. The cooperative contributed financially to the
creation of the HTC Aspire Hub that houses eMYRge and has supported the
entrepreneurial activity surrounding it. It is an investment in activating its
own infrastructure.
There is a striking parallel about 150
miles north in Wilson, North Carolina.
Wilson is a city of roughly 50,000 people
that made a consequential decision two decades ago to build its own municipal
fiber network, Greenlight. Myrtle Beach has a full-time population of only
about 40,000, notwithstanding the much larger population that arrives with its
enormous tourism industry. These are not Austin and Boston. They are relatively
small cities attempting to participate deliberately in an economy increasingly
organized around technology and data.
Wilson’s Greenlight network gave the city
exceptional digital infrastructure, but city leaders gradually recognized that
connectivity alone was not an economic development strategy. Wilson
subsequently developed the Gig East Exchange coworking space downtown and
invested in programming designed to bring entrepreneurs into it. RIoT began
operating startup programming in Wilson, including accelerator activity, and
the city developed the annual Gig East Summit as a gathering point around
entrepreneurship, arts, science and technology.
Greenlight has invested financially in
this activity for much the same reason HTC has done so in Myrtle Beach.
Municipal fiber and cooperative fiber are different ownership models, but they
share an important characteristic: their economic incentives are unusually tied
to the places they serve.
A national telecommunications company
certainly benefits when a community grows. But its capital can flow across
thousands of markets. Greenlight cannot move its fiber network from Wilson to
Charlotte because Charlotte is growing faster. HTC cannot relocate the fiber
buried beneath Horry County to a more promising market in Texas. Their
infrastructure is geographically anchored, which gives both organizations a
particularly direct interest in helping the economies sitting above that
infrastructure become more productive.
That distinction shouldn’t be interpreted
as an argument that municipal or cooperative broadband is inherently better
than commercial broadband. Rather, it illustrates something important about
economic development: infrastructure is most powerful when the institutions
surrounding it have incentives to activate it.
Building the connections
The traditional concept of infrastructure
tends to emphasize things that can be built and photographed. Roads, airports,
industrial parks, fiber networks and, increasingly, data centers are obvious
examples. Coworking facilities fit comfortably into this category as well. They
have square footage, construction budgets and ribbon cuttings.
Technology-based economic development
requires another kind of infrastructure that is harder to see. In previous
articles, I’ve described this as institutional infrastructure.
Accelerators and incubators are part of
it. So are mentors, entrepreneurial support organizations, universities,
workforce programs and capital networks. Conferences and pitch events matter.
So do the people who organize a meetup every Wednesday morning even when only a
handful of people initially attend.
There is another layer that is easier to
overlook because we generally categorize it as quality of life rather than
economic infrastructure. Entrepreneurs need places to encounter one another. A
downtown coffee shop can be part of an entrepreneurial ecosystem. So can a
park, a brewery or a walkable block connecting a coworking space to restaurants
and other businesses. Some interactions can be engineered through accelerators
and conferences. Others emerge simply because the same people keep finding themselves
in the same places.
Fiber connects machines. Entrepreneurial
ecosystems connect people. Both networks become more useful as the number and
density of connections increase.
This helps explain why simply
constructing a coworking space rarely produces immediate results. A beautiful
building filled with desks is still just a building. An accelerator
disconnected from entrepreneurs, mentors and potential customers is simply a curriculum.
A broadband network without businesses using it is underutilized
infrastructure. Economic value begins to emerge from the connections among
them.
Cocoflo offers an interesting example of
how those connections can extend beyond a single city. The Canadian technology
company participated in a RIoT Accelerator cohort several years ago while
exploring the U.S. market for its public-sector technology platform. As part of
its customer discovery, RIoT introduced the company to Myrtle Beach. That
relationship continued developing as Myrtle Beach’s entrepreneurial activity
expanded. Cocoflo ultimately chose to establish its U.S. headquarters in Myrtle
Beach.
That isn’t the traditional economic
development story of a community winning a corporate relocation through a large
incentive package. It is something more organic. A company encountered a
community through an entrepreneurial network, developed relationships there,
watched the ecosystem evolve and eventually decided that it wanted to become
part of it.
This is what technology-based economic
development can look like before it becomes large enough to appear prominently
in economic statistics.
The patience problem
There is an uncomfortable reality about
this kind of economic development: at the beginning, success can look
remarkably unimpressive.
Imagine organizing the first
entrepreneurial meetup in a smaller city and six people arrive. By the
standards we often use to measure economic development, six people gathering
for coffee is meaningless. There is no announcement of hundreds of jobs. No factory
is breaking ground. No governor is arriving with an oversized pair of scissors.
But if those six people return the next
week, something has happened.
Perhaps eight attend the time after that.
One is an entrepreneur. Another works for an established local company that
eventually becomes the entrepreneur’s first customer. Someone knows a software
developer looking for a new opportunity. Another knows a banker willing to
explain what financing might be available. Months later, one of those founders
hires an employee. Eventually, a successful entrepreneur becomes a mentor for
the next company. This accumulation is difficult to capture in a ribbon cutting
because it doesn’t happen all at once.
Technology-based economic development
requires patience precisely because ecosystems compound. The first investment
makes the second somewhat more useful. A coworking space makes an accelerator
easier to operate. An accelerator produces companies that need coworking space.
Those companies give mentors and investors a reason to participate. Regular
meetups make the community easier for newcomers to enter. Successful founders
become mentors, customers and perhaps eventually investors themselves.
At some point, the pieces stop merely
adding to one another and begin multiplying one another. Wilson has had
considerably more time to experience that process. Myrtle Beach is earlier in
its journey, which is part of what made returning there this week so
interesting. I wasn’t looking at a finished entrepreneurial ecosystem. There
may be no such thing. I was seeing the early signs that a collection of
investments was beginning to behave like a system.
Graduating from the infrastructure
This is why the stories of companies
leaving a coworking space deserve as much attention as the companies moving
into one. Municipally supported entrepreneurial facilities sometimes face a
peculiar measurement problem. A full building looks successful. An empty office
looks unsuccessful. But if the mission is economic development, occupancy isn’t
really the ultimate metric. Graduation is.
A company should enter when it is small,
when flexibility and inexpensive space matter disproportionately. Ideally, it
finds other entrepreneurs nearby. It encounters mentors, potential employees
and customers. Perhaps it participates in an accelerator or presents at 1
Million Cups. It begins hiring. Eventually, the company needs something the
coworking facility can no longer provide.
Then it moves down the street. Now it
leases or purchases private real estate. Its employees buy lunch downtown. The
company pays taxes, purchases professional services and creates jobs. Its
departure from the entrepreneurial facility makes room for another company to
begin the process.
Seen this way, eMYRge isn’t simply a
coworking space. It is one piece of an economic development pipeline. The same
is true of the Gig East Exchange in Wilson. The economic development objective
shouldn’t be to fill these facilities permanently. It should be to create
enough throughput that they need to keep finding room for the next generation.
The least expensive infrastructure may be the part we underfund
There is another lesson here that may be
particularly relevant as communities across the country consider enormous new
investments in the infrastructure of the Data Economy. Physical infrastructure
is expensive. Fiber networks can cost tens or hundreds of millions of dollars.
Buildings require substantial capital. Data centers are measured in hundreds of
millions or billions.
Institutional infrastructure can be
remarkably inexpensive by comparison.
A meetup doesn’t cost much. Neither does
a pitch night. Even a professionally operated accelerator serving a small
cohort of companies represents a modest investment compared with constructing a
building or laying miles of fiber. Mentorship, founder introductions and
recurring community gatherings can often be created for a fraction of what
communities routinely spend on traditional economic development infrastructure.
Yet these are the investments that help
activate everything else.
There is something peculiar about
spending millions of dollars building infrastructure and then becoming
reluctant to spend thousands activating it. We wouldn’t build a park and expect
that the existence of grass and sidewalks alone would create a thriving civic
gathering place. Parks require maintenance, programming and people who give
residents reasons to use them. Entrepreneurial infrastructure isn’t
fundamentally different.
This is especially important for smaller
communities that look at places such as Silicon Valley, Boston, Austin or North
Carolina’s Research Triangle and conclude that they could never assemble
comparable technology economies. They are probably right. But they don’t need
to.
Wilson did not need to recreate Research
Triangle Park. Myrtle Beach does not need to become Austin. The objective is to
establish enough connected pieces that a local system can begin producing
momentum of its own.
That might start with broadband. It might
start with a coworking space. It could begin with a university, a community
college, an unusually committed group of business leaders or simply six people
willing to meet for coffee every Wednesday morning. Different communities will
assemble the pieces in different orders.
What matters is understanding that none
of those pieces is the economy by itself.
This week’s ribbon cutting in Myrtle
Beach celebrated another 5,000 square feet of physical infrastructure. But what
interested me most wasn’t the additional space. It was everything happening
around it: offices already occupied, entrepreneurs completing an incubator, a
crowded 1 Million Cups gathering the following morning, companies growing
beyond the facility and another company that encountered Myrtle Beach through
an accelerator elsewhere and ultimately decided to make the city its home.
Two years ago, Myrtle Beach had many of
the pieces. Today, more of them are connected. Wilson offers a glimpse of what
can happen when a community keeps making those connections over many years.
Neither city’s work is finished, and
neither provides a formula that another community can simply copy. Their
experiences instead suggest something more encouraging for the hundreds of
small and midsized American communities wondering how they can participate in
the next economy.
Start with the infrastructure you have.
Identify what is missing around it. Create places for people to collide. Give
entrepreneurs reasons to return. Celebrate the first six people who show up
rather than wondering why there weren’t 60. Connect the pieces, and then
keep showing up long enough for those connections to compound.
Infrastructure can be built on a
construction schedule. An economy cannot.
