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A City Is a Start Up, Except When It Isn’t

January 16, 2012

Writing in Tech Crunch, Jon Bischke draws the analogy:

…it seems to follow that if “a city is a startup,” then the best mayors are the ones who are looking at their cities in much the same way as entrepreneurs look at the companies they have founded. The ingredients for a successful startup and a successful city are remarkably similar. You need to build stuff that people want. You need to attract quality talent. You have to have enough capital to get your fledgling ideas to a point of sustainability. And you need to create a world-class culture that not only attracts the best possible people, but encourages them to stick around even when things aren’t going so great.

The tone of the article is positive, and it’s interesting to think about ways city governments can encourage small business creation, but if Bischke is going to make comparisons, then he should make accurate comparisons. While Bloomberg may seem like King of New York, the incentives he faces as a ruler are very different from those of a firm’s founding team. For one, he has no ownership stake, and, therefore, less energy and commitment to his endeavor’s success than the typical start up founder. It is true that, roughly speaking, both founders and mayors “need to build stuff people want.” But the historical track record shows that mayors are very poor at customer need discovery. They can launch products no one buys or likes, coerce non-users into paying for them, and still get reelected to boot. Think about Marion Barry, Kwame Kilpatrick, and John Lindsay, for starters. Now Bloomberg will have three terms, which is surprising for a Republican in NYC, and he appears to care about the long term viability of the city’s economic dominance. The partnership struck with Cornell and the Israel Institute of Technology might help diversify the sectors of the city’s economy, but it’s also important to know that these “investments” aren’t paid for entirely with private capital, but instead with other people’s money and donations. The upside could be nice for some number of the city’s residents (their economic projections are very rosy), but, ahem, the downside is socialized–again a very different set of circumstances from those facing a start up’s team.


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