Entrepreneurs need housing more than tax breaks

Entrepreneurs don’t choose places to start companies. Entrepreneurs choose places to live, and then start companies where they live.

The trouble is the competition for attracting new residents is getting fiercer. 

For econ dev leaders, the obsession over millennials in the 2010s was entirely rational. Regions and colleges and corporations fought over millennials because there were boatloads of us. Our jeans may be too tight and we may overuse the tears-of-joy emoji, but we breathed life back into American cities. You’re welcome. 

A few more new millennial parents might still move from Brooklyn to Philadelphia, and Hopkins and CMU post-docs might bring their partners in tow to Baltimore and Pittsburgh. But the Millennial dividend is over. We are mostly settled where we’re gonna settle. 

Gen Z presents lots of virtue but it is a far smaller generation than millennials. Retaining college grads is still important, but the gains will be smaller in the 2030s than in the 2020s, and smaller in the 2020s than in the 2010s. We’re getting less juice from the squeeze.

So where will our entrepreneurs and tech workers come from?

Well, regions can poach from each other. That’s something. As Americans have fewer kids, and our birth rate declines, any regional talent or business attraction strategy looks very zero sum. Tulsa lures remote workers from Rochester, NY; Virginia courts entrepreneurs from North Carolina. Texas and Florida say we won’t have schools, roads or functioning electrical grids but your taxes sure will be low. 

Two other tools we have. 

The first is immigration. This won’t last forever, the global population is expected to decline by the year 2100. But for now the United States is still the most desired destination for people migrating to a new country. Where are your region’s immigrants and why aren’t they a focus of your innovation strategy?

The second tool we have is your existing population. Develop more of your neighbors becoming the entrepreneurs and tech workers you desire. This includes older residents, poorer residents and even the ones in boring jobs. The apprenticeship is still underused in tech because it takes a daunting upfront investment.

As more of your residents opt for independent contractor work, your entrepreneurship and tech workforce strategies must merge.

Embrace density, expand the workforce lens and invest in community progress

What’s my advice?

For entrepreneurs, there really is no magical place to go to start your company. Urban density does appear to help your outcomes. The agglomeration effects of being able to work alongside other entrepreneurs are real. Spending as much time with paying customers is good, and any place that makes that easier is justified. 

Tech employers that don’t support workforce programs and local tech events are free-riders

For people who hire tech workers, your toolbox is widening. When possible, hiring in lower cost centers, be it in the United States or internationally, is a 30-year trend that has now become normal as noted in Technically’s recent four-part series. Additionally, retaining older workers and making investments in your local ecosystem are not just civic goods, they are necessary for your workforce. Hot take: Tech employers that don’t support workforce programs and local tech events are free-riders. 

For ecosystem builders, your views of entrepreneurship ought to change, including how and who you’re attracting to your region.

Keep two tracks: Entrepreneurs that might be better seen as part of your regional workforce, and entrepreneurs aiming to grow in a way that might just have a major economic impact. They need different support and they offer different outcomes. 

More generally, you should be the fiercest champions of policies that may not sound all that directly tied to tech: Build more housing to make it cheap; encourage walkable density, care about pre-K-12 education; encourage pro-immigration and childcare policies as a bipartisan, pro-growth agenda.

In Austin, for example, housing costs have declined over the past year. It’s no sign of a distress, but rather that one of the country’s fastest-growing big cities has invested in density and speeding housing supply. That’s better news for Austin’s workforce and entrepreneurship circles than it is for VC charts. But it affects founders just the same.

Entrepreneurship is an extension of workforce

Local tourism and business attraction strategies are merging. Before anyone moves anywhere, they visit first and before they visit they have to have heard of the place. Economic storytelling is a necessary part of this work. And there is a story. 

One of the biggest economic stories of the pandemic era was booming rates of business incorporation. A main contributor? Sole proprietors.