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    Wednesday

    Innovation Clusters Round-up

    1. Venture Capital Hubs> Fascinating Harvard paper on VC clusters, DFW ranked 6th, down from 1990 peak, ATX not ranked.:. http://bit.ly/2hG3rz
    2. Top 10 Nano Metros> ATX and Houston rank 9th and 10th among nanotechnology cluster cities .:. http://bit.ly/DUtCC
    3. Small is Big> Texas ranks 4th in nanotech among states, PDF of nanotech resources here.:. http://bit.ly/YLEIz
    4. How much the Apollo Program would cost today .:. http://bit.ly/U0nw9
    5. Tech Empires> Rome wasn't built in a day, neither are technology powerhouses .:. http://bit.ly/3Q1xuK
    6. IPOs in the Lone Star> How Texas stacks up in public offerings over last 10 years .:. http://bit.ly/qMYlb
    7. Arcologies for Innovation> Nations invest big in research & tech parks to attract corporations .:. http://bit.ly/1oTWPu
    8. Creator Class> Film-maker Mike Judge and who Butt-head really was based on .:. http://bit.ly/OCBw0
    9. Aerospace Clusters> #AlamoCity fights for aerospace work, borne of Air Force presence, plenty of competition .:. http://bit.ly/AFDSe
    10. Cluster Power> How a small California #industrycluster gave rise to the Information Age .:. http://bit.ly/D4hyv
    11. Physicians heal themselves > Houston Medical Center giants seek to mend past wounds, bring back breakthroughs.:. http://bit.ly/4ToXI
    12. Think Different> Richard Florida tells Fort Worth to get creative to prosper .:. http://bit.ly/6PYRu

    Friday

    Get Up and Go

    Even with solid economy, startup activity strong in Texas

    When economic conditions deteriorate, the pace of entrepreneurial activity quickens. The Kauffman Foundation, a treasure trove of entrepreneurship-related information, released its national study of entrepreneurial activity in 2008.

    As the Dallas Morning News noted in its article this morning, Texas ranked 13th overall. Out of the 15 largest metropolitan areas (of which DFW is 4th and Houston 8th), the Metroplex tied for 7th place with San Francisco with 0.42% (420 entrepreneurs per 100,000 population), and the Houston area came in 9th with 0.34%. [Ed. Note: I read the stats differently than DMN.]

    The national average was 0.32%, so DFW was significantly above average. That information can be interpreted different ways, and may actually indicate a bit stronger economic situation in H-town and its environs since job loss is a major catalyst for individuals to start their own ventures. .:.

    Tuesday

    Kickstarting Innovation Engines

    New firm provides spark for startups

    Last week TechCrunch reported that the Capital City added a new fuel for entrepreneurs with the debut of the Capital Factory, an incubator for young enterprises founded in January. Modeled after YCombinator, a successful incubator in Silicon Valley, Capital Factory terms itself a "seed stage mentoring program."


    The firm is accepting applications until 11:59 pm PACIFIC TIME April 3 for startups interested in joining the inaugural class. Capital Factory will provide $20,000 for up to 5 percent equity in the company, as well as run entrepreneurs through a 10-week course run by 10 experienced business leaders. To view Capital Factory's YouTube video, click here. .:.

    Wednesday

    Texas' Top Social Media Minds

    Newspaper names 25 winners

    T
    he Austin American-Statesman did its bit to promote Texas' technology community today, naming the 2009 Texas Social Media Award Winners.

    Not surprisingly, the winners were weighted towards the capital city, but the winners represented a broad cross section. From Texas Railroad Commissioner Michael Williams to J.R. Cohen, owner of The Coffee Groundz in Houston.

    In between there's a wide range of interesting social media entrepreneurs that are worth checking out. The overall winner will be announced at an awards banquet on March 15. The newspaper also makes available a list of the nominees for the award. .:.

    Tuesday

    Austin's Fastest

    19 Austin firms named to Inc. 5000

    AustinStartup.com, the nicely put together blog/online publication, recently listed the 19 Austin-based outfits named to Inc. Magazine's ranking of the country's 5,000 fastest growing companies. Altogether, AustinStartup.com reports 378 Texas-based companies were named to Inc.'s list this year, representing 7.5% of the whole list.

    On a per-capita basis, that is actually a touch low since Texas now has about 7.9% of the United States' 301 million people (find Census Bureau data here). Put another way, Texas' location quotient for fastest-growing businesses was 0.946 (an LQ >1 would mean a higher-than-normal distribution).

    Surprisingly, with just 19 companies on the list, the Austin-Roundrock MSA has an even lower LQ than Texas overall--just 0.72. Of course, the Inc. 5000 is just a list created by a magazine publisher, but it's interesting to note the discrepancy none the less. .:.

    Friday

    The New New Math

    Fuzzy wuzzy was just an idear,
    Fuzzy wuzzy was worth $1 million squared.
    Fuzzy wuzzy's buyer wasn't very good with math was he.

    The New York Times reports on the vertigo-inducing valuations Silicon Valley companies are receiving lately. Money quote from Right Media’s chief technology officer, Brian O’Kelley, who became a millionaire after Yahoo! acquired his company for $850 million: “I have to say I giggled. There is no way we quadrupled the value of the company in six months.” GEO

    Thursday

    Middle Eastern Boom

    Economic expansion taking place in former "economic backwaters"

    Although explosions are what one thinks in terms of the Middle East and North Africa (MENA), the region is seeing an economic expansion that is giving new vitality to the region, The Wall Street Journal reported on July 19.

    Inflows of foreign direction investment in MENA has quadrupled over the past six years from less than $5 billion to nearly $20 billion. That number doubles when including Turkey, a Muslim country that straddles the divide between Middle East and Europe. (Isreal is counted separately, but it too is experiencing rapid growth.)

    Overall the economies in that region are growing at more than 5% a year, which beats most developed countries (though not as fast as China's 8% growth). Although oil is still the big story, oil-producing countries brought in $1.5 trillion in revenue between 2002 and 2006, those economies are looking to outside investors to diversify. Leading the charge are places like Dubai and Abu Dhabi.

    The paper notes: "The real test of the Middle East's unprecedented investment boom will be whether it creates jobs--and with them the sort of budding middle class that is driving the dynamism of China and India."

    Demographically speaking, half the 300 million people in the region are under 20 years old, and employing them will be essential not only to economic prosperity but also security, because poverty and violence go hand-in-hand. So much remains to be seen if this growth can continue, and what ultimate effect it may have. GEO

    Friday

    View from the Inside

    Influential bloggers calls for downturn in Silicon Valley

    Web 2.0, as the recent surge in Internet ventures has been termed, is re-igniting the innovation engines in Silicon Valley. But not everyone is happy with that.

    Utilizing a new, flexible but powerful compilation of software programs, termed AJAX, new companies began popping up a few years ago. Michael Arrington, created a blog in 2005 called TechCrunch.com, to cover the then burgeoning trend. With insider insights and interesting companies to write about, TechCrunch became a massive hit and can claim close to 500,000 visitors a day.

    On May 22, however, Arrington wrote that he missed the old days, circa 2004, where burgers, beer and backyard parties offered the setting for entrepreneurs to network. No longer is that the case. Easy capital has changed everything, he intones. Put another way, Web 2.0 has jumped the shark. [Money quote: "Times are good, money is flowing, and Silicon Valley sucks.” ]

    He suggests Silicon Valley needs a good downturn to set things right again. Strangely, another blog superstar Robert Scoble, followed up with his own similarly-themed post "Why I'm in a malaise ..." [Money quote: "I too look wistfully back at the days when we had almost the entire Social Software industry in one little coffee shop back in 2002 — none of whom were talking about making billions of dollars. "] It's a strange call to arms, to be sure, but the insights they provide offer an insider's look into a boom as ownership is transferred from the innovators to the exploiters. GEO


    Capitals of Clean

    Regions vie for clean tech crown

    Several months after The New York Times ran its piece , on May 24th, the Wall Street Journal offered its own take on Silicon Valley's drive to become the clean technology capital.

    Although not news anymore, WSJ writers Pui-Wing Tam and Jim Carlton authored a more balanced piece on the subject.

    NYT slanted its piece as if Silicon Valley's dominance is a foregone conclusion, but WSJ clearly spelled out the Valley has plenty of competition: particularly from Austin, Texas. Even citing a study by an independent research firm, SustainLane, in San Francisco ranking Silicon Valley, gasp, #2 behind Austin. (Click here for Google Map.)

    The story was also more detailed, honing in on San Jose (the 1M person capital of Silicon Valley) and its efforts to lure a start-up solar power company called Nanosolar, Inc. Salient points: San Jose city officials scouted sites for a 647,000 s.f. building to save Nanosolar on real estate broker fees, offered expedited permits, and provided a $1.5 million grant to be used to retrain local workers. All of that to attract a facility that will create 200 jobs, which will hopefully grow.

    Still, the article points out that San Jose is an expensive place to startup a business: average salaries are twice the national average ($66,200 v. $37,870) and other items, such as electricity costs, are high. However, there's plenty of money thanks to VC-extraordinaire John Doerr of KleinerPerkins, who's pushing clean tech. (Check out the excellent new Portfolio magazine for a profile of Doerr's efforts. Money quote: “When you get into energy, you’re going up against Exxon and Chevron and cattlemen and corn.”) And local techies like Google co-founders Sergey Brin and Larry Page are putting their own money into outfits, such as Nanosolar (which has raised $100M to date).

    So far, reports the article, San Jose has 22 firms involved in researching and producing clean tech, an 83% jump from last year. One of which, SunPower Corp., has 300 employees and plans to double that workforce by the end of 2007. Austin, however, claims 50 such companies.

    Other top spots for clean tech, according to SustainLane, include: Berkely, CA; Pasadena, CA; Boston, MA; and runners-up San Francisco, New York, Seattle, San Diego, and Houston. GEO

    Emerging Clusters

    Government outsourcing cluster develops outside D.C.

    WSJ (March 30, 2007) highlights the growth of a new industry cluster in Northern Virginia. The newspaper notes that federal procurement money for work performed in Fairfax County, Va., has risen from $10 billion to more than $15 billion since 9/11. And Tyson's Corner, previously a small town halfway between Washington, D.C., and Dulles Airport, has benefitted.

    "Once known mostly for its shopping malls, it's now a land of glass towers, manicured office parks and Tiffany boutiques, where private-sectorbudget analysts, project managers and highly paid executives do the work that clock-punching civil servants in downtown D.C., 10 miles to the west, can't do."

    The town has attracted large firms, such as Booz Allen. The $4 billion firm formerly focused on providing management consulting to New York City-based corporation chieftains, but now derives half its revenue from government work. The effect is so pronounced, WSJ calls Tyson's Corner a "Mecca" for government outsourcing.

    It's interesting to note the increasing use in U.S. media of the word "Mecca" to describe what amount to clustering. When large-scale human endeavors become geographically concentrated, from a cultural point of view, the zone where the activity takes place becomes a common point of reference for all parties engaged in the enterprise. From a physical point of view, such concetrations become hubs for related activities.

    Urban economists use the term "agglomeration economies" to describe the efficiencies that follow from locating within the zone. Silicon Valley is the perfect recent example. The region known as Silicon Valley today began as an outpost for computer chip makers in the 1970s.

    Growing from that base of knowledge, additional information technology firms sprouted up, such as computer and networking hardware makers. The wave after that was computer software. And following that, Internet technology. Silicon Valley is the acknowledge world leader in those areas.

    Today, "Silicon Valley" and "Mecca" are becoming almost synonomous. (The connections are more than figurative. Academics have pointed out that for some technology has become a religion.) And "Silicon Valley," like "Mecca," is now shorthand for what amounts to the clustering process. So much so that regions around the U.S. and around the world seeking to emulate the economic development process, began by emulating the name resulting an abudance of imitators. Here's a few taken from the Siliconia, which provides an exhaustive list:



  • Silicon Alley (New York City, new media)
  • Silicon Prairie (Austin, Texas or Chicago)
  • Silicon Forest (Pacific Northwest)
  • Silicon Beach (Santa Barbara or Florida)
  • Silicon Wadi (Israel)
  • Silicon Triangle (Raleigh-Durham-Chapel Hill)
  • Silicon Tundra (Ottawa, Canada)
  • Silicon Alps (Austria)
  • Silicon Bayou (Louisiana)
  • Silicon Desert (Phoenix)
  • Silicon Bog (Ireland)

  • Since the end of the boom, these silicon appellations have become fodder for jokes and derision, but the original Silicon Valley remains.

    The flipside of agglomeration economies are agglomeration dis-economies. Boom towns, since times imemorial, have led to inflationary pricing of local goods and property, increased traffic and congestion, and, often, higher crime.

    The WSJ article on Tyson's Corner highlights this in its concluding paragraph: "The one drawback is the traffic. 'We work 7 a.m. until 4 to avoid the worst of it,' says Judd." GEO

    Thursday

    Profit Takers, Job Makers

    P.E. in full effect

    Private equity firms (both VC and BO) are not, apparently, barbarians at the gate. Management consulting firm A.T. Kearney analyzed performance from its database of more than 30,000 companies to determine whether private equity (including venture capital and buyout firms) results in job loss or job creation.

    The answer, according to A.T. Kearney, is that private equity creates jobs. A good synopsis is available from Dan Primack at PEhub.com. He links to the study, which you can also access directly by clicking here. GEO

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