Recently, I joined tens of thousands of people in the technology/startup space in Austin, TX for South by Southwest. Because I was primarily there working for a San-Francisco-based client, I spent a considerable amount of time with Silicon Valley-ers.
While making small chat at various networking events and parties, the conversation always turned to location. I’d proudly explain that I live and work in Columbus, OH. Without fail, people would quizzically look at me and then ask when I was moving to San Francisco or New York.
Initially, I’d laugh it off. After all, more than half of my firm’s work is with technology/web companies based outside Ohio, so it’s not that far-fetched to wonder why I’m not located in NYC of SF. But, as the week went on and I continued to get that some question, I realized we have a problem.
Columbus has a strong tech scene. Sure, you’re familiar with TechColumbus. Maybe you’ve even heard of Wakeup Startup. But, Columbus is full of hidden talents – people who are working on game-changing products, services and technological advancements.
So, what’s the problem? Those success stories are under our collective radar. And, if local residents are out of the loop, then it’s no wonder potential investors, development talent and customers/users are in the dark. (While I’m speaking from my experience in Columbus, I bet the same holds true in other Midwestern cities.)
From mobile commerce to social media … crowdsourced product development and online customer service – technology is disrupting the status quo. It’s changing how business gets done. And, Columbus has a major opportunity to capitalize on these emerging economic opportunities. But, that requires us to embrace risk, innovate best practices and stop being so humble. We have to showcase the local talent, availability of investment dollars and resources, and the diverse success stories with Columbus roots.
My PR and social media firm has deep ties with startup communities in San Francisco, New York City, Seattle, and even London; however, I believe we can continue to flourish here in Columbus. I’ll continue to attend events with my bi-coastal clients and sing Central Ohio’s praises. But, if we’re really going to seize this opportunity – and make Columbus a significant player in the national startup dialogue – it’s going to require a full community effort.
Who’s in?
A version of this article initially ran in Columbus Business First.
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{ 24 comments… read them below or add one }
I think it comes down to one thing, Heather — dollars (or the lack of enough in the midwest to make it an attractive place for tech start ups to take root.). Yes, TechColumbus has some cash flow and facilities to support early stage start ups, but when the rubber meets the road and a start up needs 10-20MM in funding to really grow, there just simply isn’t enough capital available in Columbus (unless you name has something to do with “medical devices”).
I’m not at all surprised at the reaction from Austin as I had a few conversations like that as well. In my time in the scene in Columbus, I have seen more start ups die or move because of this problem.
For instance, anyone remember a little website called Toobla developed by Brian Link and Jake Zaxby back in 2008-2009 at TechColumbus? The whole idea was a pinboard concept where you could collect content and then use Toobla to embed it on other sites. They couldn’t get any funding from the midwest for the idea and it eventually died. Bummer.
Today, we know of an almost identical concept called “Pinterest”. Seems like that idea had some merit, right? The difference? Pinerest secured more than 37.5 MM in funding and is based in Palo Alto (where all those dollars are readily available — but only for folks who live or move to the local backyard).
Until Ohio and other midwest states can bring in the levels of dollars that support real and sustained start up growth, this will continue to be a problem. The result will be good ideas, good people and incredibly potential leaving the midwest to find the seeding that helps them achieve their dream. No one can blame any entrepreneur for doing what they have to to make their dream come true.
I’m no start up expert so don’t take this comment as anything more than observations and opinion. But, the midwest start up dilemma is real and like everything else in business, I think it has to do with the availability of dollars.
Amen! RT @prtini Elevate the Columbus startup scene to national prominence by embracing risk & being less humble: http://t.co/ZmMmuIND
@bbillingsley If you’re tweeting “Amen,” then maybe I’m on to something. Now, let’s go take some smart risks!
@nateriggs I agree with Nate. Unless Wexner wants to pony up cash and invest in start-ups…it’s not going to happen in Columbus.
@BobbyRoberts And that’s what is one of the most frustrating things about the whole debate. Somehow people seem to think that kind of capital doesn’t in Columbus. Apparently those people have never had lunch at Easton Town Centre…
Thanks Heather for helping to bring attention to this topic. There *is* plenty of money in Columbus, especially with the likes of 10x and The Brandery in Cinci (for which I know Columbus based companies that have gone down there to participate). We may not have $40MM deals starting here but I’d settle for a company that raised $500K and built a killer product. That takes gumption, hustle, creativity and talent – not big money. I would then gladly do what i could to help that company land some big SF money if they needed it.
Also, with the new law (hopefully this week) we may see even more crowd funding helping to launch new startups and Columbus has one of the best angel investment networks in the US.
And thanks Nate for remembering Toobla (I agree it was better than Pinterest in concept, but we failed on simplicity of design unfortunately).
Columbus does have the makings for some great startups. There is more activity than ever going on today, so don’t count us out. Swing by WakeUpStartup.com and register for the next event. New startups of all kinds pitch every month and get noticed. We have over 150 people come at 7:30 in the morning, many of which are investors. All you need is a good idea and some traction — anything is possible.
Brian
@nateriggs Nate, you raise a really interesting point. Dollars certainly matter and can help scale a startup – often much faster than a similar bootstrapped org. Is this a chicken-egg question? Do we need to create ideas and show that we can turn bring concepts to fruition to attract investors? Or, do we need the investors to provide seed funding that enables people to truly focus on making their idea a reality? A decent amount of dollars are already circulating in Columbus. People know about TechCrunch, but do you know about any of the successful companies that have come out of there (or the other local incubator/accelerator programs)? I don’t. Maybe the tech scene needs a collective PR push to show *why* investing in Columbus companies is a smart business decision?
@blinkdaddy I’ve been to a few Wakeup Startups and agree that those kind of events are helpful. When SF companies get investors, they also get a valuable wealth of knowledge. We need to grow that mentor base here in Central Ohio. By collaborating and sharing knowledge, I think we can help push a few of these local successes into major successes. Then, it’s even more likely to land more opportunities, dollars and talent, right?
I think the challenge with any movement is getting outsiders to buy in and push the conversation. We need the tech community to support each other. Columbus’s tech community is a supportive group. Maybe the bigger opportunity lies in reaching outside our bubble to connect with potential users, customers, investors, etc. What’s the secret sauce to get those people involved? And would that spur additional awareness, growth and progress?
Brian, hope our paths cross soon. Maybe I’ll see you an an upcoming WUSU. Thanks for chiming in!
@BobbyRoberts I’m not sure I totally agree with that. There’s a decent amount of money floating around Columbus startups. And, why can’t locally based companies get money from angels and VCs in other areas? Money doesn’t have to be restricted by geography, right? The question is, how do we convince those VCs who are accustomed to supporting SF & NYC-based companies that investing in the Midwest is a smart use of dollars?
@HeatherWhaling Probably true. Hasn’t happened yet because it seems that every time an idea gets momentum to the point where it’s worth talking about, the concept leaves for the coast. Big checkins and big eggs if you ask me.
I like that people are discussing this. I’ve been in Columbus almost three years, and have no immediate plans on leaving. When we moved here, we decided to help create the place that we wanted to live, which rolling up our sleeves and getting involved in making things here in Columbus.
I got involved and now lead the local IxDA (Interaction Design Association) and I (along with a few others) founded the Midwest UX (User Experience) Conference here in Columbus. We are currently organizing this year’s conference which is June 1-2. <http://2012.midwestuxconference.com/> I think there is a disconnect between some of the local design communities and the local startup communities. I’m working to bridge that gap, but would love to talk with others interested in doing the same.
I agree with @blinkdaddy - there is money in Columbus.
This argument has less to do with an availability of funds than it does the technological appetite of the community as a whole, in my opinion…
From a population standpoint alone, the sheer number of people living in areas like NYC or Silicon Valley provides a larger base of people willing to try new things. As a startup looking to learn and gain traction through beta users, it makes sense to be in the biggest pond to find as many early adopters as possible.
Secondly, because those cities are known as tech hubs, their residents are going to be more inclined to follow trends, try new technologies, etc. Without this pool early adopters, it makes less sense for Midwest founders to build the next disruptive technology – and subsequently raise millions of dollars in testing that giant leap of faith assumption.
Thirdly, every startup (both successful and failed) knows the importance of being in the right place at the right time. I was unaware of Toobla before this article, but it sounds to me like their ultimate demise had less to do with their ability to raise $40MM and more to do with being a concept that was ahead of its time in a market too small to reach its full potential.
(Side note: just because a company can attract millions of users and raise millions in funding doesn’t make it a success. Too many people forget this.)
Columbus has no shortage of talented or passionate people, lack of great concepts, or access to funding. But until Columbus residents realize Manta.com is not a website about scuba-diving, founders will continue to flock to the coasts to build their companies.
Lastly, I wanted to share this Columbus startup resource list I created a while back: http://bit.ly/CbusStartups. If you’re reading this article and think of anything I’ve left off, please feel free to add it in the comments section.
@eadahl As a designer-turned-tech guy, I agree there’s a lot of synergy that can take place between the design and startup communities – especially here in Columbus. Design always seemed like such a isolated/specialized field of study in school, but I realized that using my creative problem solving skills along with the visual skills opened a lot of doors in the real world.
I’d love to meet up to learn how the two communities might be able to better collaborate in the future.
@MatthewRusso Love, love, love this comment. And, I think that pool of people with an appetite is especially critical for consumer-based startups. Do you think business-focused companies need that same pool? Or, can they build momentum with a smaller base? Fantastic point of view …
@eadahl YES! I think one of the big challenges is that people have a somewhat narrow view of “startups.” In an earlier comment, I noted that we need to reach beyond the standard tech community. How can we broaden the people involved in the creating and building of startups? Design is a perfect example. I don’t know a ton of designers here, but I bet there’s a sizable pool of people doing amazing things. Imagine if the talented designers joined forces with some of the talented developers, or the people who have ideas and just need help executing? That’s when the magic happens …
@MatthewRusso @eadahl Aww, I LOVE that people are connecting here in the comments. You both rock!
I believe that there is “collective money” in Columbus, but that usually leads to watered-down ideas. When I use that term, I mean a group of people who would fund a start-up. If a person give money to a cause/charity/business, they usually want a say in its activity. If you have a single person or a small group as your investors, you are able to have more of a precise business plan. I would use that “too many Indians & not enough Chiefs” idiom, but I find it in ill-taste.
SF & NYC have more millionaires than the Columbus area. There is money here, but it doesn’t seem located in the population that want to invest in technology innovation. Until that section of the population increases, you’ll have to go after investors and pool their money together.
In reference to the “why do people/companies have to invest in their area?” comment, it’s a habit. You want to buy American, then buy local food & products…so investing your money in another area just seems foreign. Unless that person really believes in your idea and/or has local ties to your area, it would be advantageous to go after non-local money.
I never get to talk about this stuff, because I usually write/comment about things that does not actually benefit anyone (sports, music, etc). It is nice to contribute to an actual discussion.
@BobbyRoberts All good points. Glad to have you chiming in … valuable perspective!
Great post heather and I am excited to have you carrying the Columbus banner as you travel the county. I’ve heard this story, and experienced it, since I started in the business development space in the late ’90′s. While it is difficult to believe things are so much better now than they were even five years ago it is amazing. Having said that we are no where close to where we need to be.
First things first, People in Silicon Valley are going to thing the sun rises and sets on them and pretty much regardless of who they are talking to. They think Austin is a cow town. Having said that there is a huge perception issue about Columbus and the Midwest in general. I think that typically we are more modest when we discuss our accomplishments.
Here are a few things that I know are happening:
Columbus 2020 is aggressively traveling the county talking up Columbus and Central Ohio both on the business attraction side and the business creation side.
The First Customer initiative of Columbus 2020 is getting promising Columbus medical and IT Start-ups introductions and engagements with some of Columbus’ largest companies such as the Limited, Nationwide and Ohio Health.
The Third Frontier funding in TechColumbus has helped many companies launch that five years ago would not have had a shot at getting seed level funding.
The Ohio Tech Angel Fund is one of the largest, in terms of number of participants, in the country.
Trust me, Les Wexner is writing a lot of checks that end up in companies and that help build companies, you just don’t know it.
The next steps:
The lack of A round and later funding is a major obstacle to the growth of Midwest companies. Obviously Brian would know better than me but Toobla’s inability to attract follow-on funding eventually suffocated the company. Until VC’s come here to and establish a presence they will continue to think of Columbus as a fly over area.
The great thing about Columbus is that we have a strong base of young, smart people at our local educational institutions like Ohio State. Most places have nothing like OSU to generate talent. It is critical that we support these young entrepreneurs because they are the one’s that will build the companies that you will talk about at the next SXSW. They have the luxury of indulging their passion and we need to foster that passion. We need more investors and advisors to provide experience in company building that will augment the domain expertise of the young entrepreneur. We need more serial entrepreneurs that have been there done that who can help the young start-up scale. The value of Wake Up Start Up to an early stage company is in the ability to possibly connect with someone that has sat in the big meeting before and sold products.
@MichaelBowers Thank you for sharing what’s going on and what’s in the works. We need more people like you touting these stories so that as we’re traveling around, we can share the facts and clarify misconceptions. Thanks for doing what you do.
Two quick updates…
Manta Announces $44M in Funding: http://techcrunch.com/2012/04/02/online-community-for-small-businesses-manta-raises-44m-from-norwest-venture-partners/
Bridging the Gap Between Design and Startups: http://startupsthisishowdesignworks.com/
I’m going to come in from a little different angle and touch a little bit on what Heather said about humility in her post.
) I took an informal poll on Twitter recently to ask how people in the Midwest view business vs. in the big cities. The top three responses:
I’m actually not sure that “humble” is the word I’d necessarily use, but there is something about growing up and working in the Midwest that teaches you to take a backseat to your accomplishments and hope that your hard work simply speaks for itself. People here who “hustle” and have a no-holds-barred approach to promoting themselves, their products and their personal brands are often later mocked and dismissed (as they quietly, and sometimes not-so-quietly, amass their millions from people who could care less about how often they brag about their accomplishments).
Let’s face it, we are taught some really great things here that have both good and bad sides to them. Without knowing this particular discussion was coming (thanks, Heather!
1. We are folk who work, prepare and invest for the long haul and “hard winters”
2. We are people who work hard, because we value hard work as its own reward
3. We are, collectively, a nice, polite bunch, who don’t necessarily always see a need for the spotlight, but instead value our long term clients and relationships.
The good side to this is that we end up being home to very reputable companies with steady, profitable histories. They’re not always sexy, but they fill a niche and do good work.
The bad side is that the risk required to get something like a Toobla up and running is just not seen as a priority. After all, where’s the proof that something creative like that will stand up to the “long winter” of a fluctuating economy and the fast-paced overturn often seen in the digital space?
All in all, while I know there are folks like us who want to see the rise of Columbus as the “cool kid” I’m just not sure that we’ve got the investment people who see it as a good long term strategy for us just yet. The trick will be to educate potential investors that having both the long term, solid businesses AND the startups are profitable for Columbus.
Interesting conversation here. We just had one from the KC area development council asking similar questions about how we can better promote our city for startups or larger companies. And how we can make it a “destination location” for people to live their lives.
This is a hard one for me because I like what sarahjstorer found in her survey about the Midwest. It’s why I love the Midwest. There are amazing, nice, down-to-earth people here. I think the best way for us to grow is continue promoting our people and cities and shine a light on the stories we bring to the table.
As for the startup specific question, I know Zaarly eventually opened its doors in NYC and SF, but i set up shop in KC first, as I know you know prtini . So it can be done. And we can help by using our platforms to share the amazing people and stories we know in our communities. Call me glass half full, but…
@jgoldsborough Yes, thank you! Great perspective!