Atlanta, Badgy, startups, Technology

Why Midtown must be the center of Atlanta’s Startup Community

I recently discussed how Startup Communities are Neighborhoods, Not Cities, building on Brad Feld’s thoughts on the role of “Entrepreneurial Population Density” in accelerating startup activity and success. The SalesLoft team, fresh back from TechStars and Boulder’s vibrant startup community, have been riffing on these topics as well.

The clear truth is that cities with the most effective startup communities are build around physical hubs. Atlanta, consistent with its’ urban sprawl, has attempted to scattershot its startups across the city and drive around and hit meetups to build community, but three potential startup cores have been identified – Buckhead, Westside, and Midtown. I’ve done startups in all three areas, so I can speak with some knowledge on all 3.

Let’s first take a look at criteria that can make a great startup community:

  • Density – Feld suggests that the “total number of entrepreneurs and employees of entrepreneurial companies divided by the total number of all employees in a region” divided by the size of the region. More entrepreneurs surrounded by fewer non-entrepreneurs in a small area gives much more opportunity for intentional and serendipitous events that help startups. Related but separate is:
  • Walkability (within the community) – being close together is more effective if there are reasons and room for people to walk around and meet people beyond just people they have specifically scheduled time with. People often walk to:
  • Meeting Spaces – formal and informal. Free or cheap spaces for small meetings and preferably for larger meetups make it easy to gather people who are just a walk away. Coffee shops, preferably good ones, and affordable, decent restaurants are good for meetings and helpful in recruiting. Some of the people you want to recruit are:
  • College Students – Proximity to young talent can help startups staff up, but proximity to startups can also help students get excited about awesome career options besides larger corporate jobs. Colleges are a home of future founders. Some college kids have cars, some don’t. Either way,
  • Transit and Transportation – are important. Students and many younger potential startup workers prefer to walk, bike or take transit (preferably trains rather than buses). In a city where some people choose to live 45+ minutes from most startup jobs, you can’t please everyone who drives their commute, but the more people who can do a <30 minute commute, the better. Some work can be remote, but before product-market fit, it helps to have good:
  • Work Spaces – Companies need room to start, and room to grow. A variety of office space, preferably creative space, older buildings, higher ceilings is nice. Flexible lease terms are nice, but challenging in a town where few commercial real estate agents understand startups and insist on a 2 year minimum lease. Free space is nice, but startups who will choose free workspace outside of a community rather than paying a few bucks a month for space within a community just don’t understand the value of community. Free and cheap space within a community is best, but in Atlanta, most of our rents are cheap compared to other startup hubs.

So where does this leave Atlanta? Some thoughts based on my experience:

Buckhead is a finance and real estate neighborhood that tolerates startups. The best office space is designed for high-end law firms. Lesser office space is designed for lesser law firms, and still feels oppressive for startups. There are some great companies, solid transit access for intowners and college kids, but a crummy commute for most drivers. Meetings spaces are corporate and overpriced, and ultimately, any startup density is overpowered by those seeking to set up shop in Atlanta’s most prestigious business district. In my 2 years working in Buckhead, even walking to meetings and lunch, I don’t think I ever encountered someone from the startup ecosystem unless I planned it.

Westside oozes cool. I wish I could crown West Midtown as Atlanta’s startup epicenter. I’d save 2 hours a week on my commute, have awesome office space, and enjoy some of Atlanta’s best food at my lunch meetings. This neighborhood is NOT walkable. Not without a concealed carry permit. Apart form being sketchier, there are geographic factors that make density VERY difficult in this area. You could pack most of the office space over here into a single office building in midtown or Buckhead. Octane Coffee might be THE best serendipitously cool meeting spot in town, with great coffee. Transit access is awful. Meeting space for larger meetings is hard to come by without ponying up.

Midtown is anchored by Georgia Tech and ATDC. Some people wish that we could escape from the state-sponsored influences, and while ATDC’s office space is suffocating and sterile, it also concentrates some of the best startup talent in Atlanta, including tentatively acquired BLiNQ Media and $3.75 million funded consumer health care revolutionaries PatientCo, as well as so many other companies I expect, GREAT meetups, and excellent mentors and advisors. Atlanta’s marquis startup accelerator, Flashpoint, is down here. I’ve chosen to run Badgy out of Hypepotamus, one of THE best free working spaces and meetups spots I’ve seen. Georgia Tech students can walk to this area. Whenever I walk to a meeting in this area, I see people, especially at the Tech Square Starbucks. I wish we had better coffee shops with better coffee and without long lines of students, but I truly believe that this would be the best spot in Atlanta for an unfunded, hungry entrepreneur to spend a week working and meeting people. The casual relationships built in this neighborhood, over time, are undeniable.

Thoughts on other areas:

Decatur – driving to Decatur from anywhere else in town is a horrible experience. Game over.

Dunwoody – lots of other businesses, unwalkable, limited student access, and horrible commutes for many

Galleria / Vinings – NO transit, not walkable, very corporate, no students. (I worked here too, LOVED the commute, but it’s not a startup area)

Technology” Park – Undrivable, unwalkable, no students, no meetings, no density. I don’t understand.

Alpharetta – 30-60 minutes from everywhere else in town. Could become a secondary startup core, but we need a first core first.

Old Fourth Ward – MAYBE in 10 years, if Atlanta has the courage to build comprehensive rail around the Beltline

This analysis is ALL about finding the best advantage for young startups that need every advantage they can find. Proximity to knowledge, resources, and people is a MASSIVE advantage. Startups that have found product-market fit often relocate outside of the core startup neighborhoods, and that’s fine and expected.

So what do you think is the best neighborhood for Atlanta startups to rally in and thrive? Why? What criteria did I miss?

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Startup Communities are Neighborhoods, Not Cities

When we talk about thriving startup communities, we often talk about “New York” and “the Bay Area” (or less so, “Silicon Valley” and “San Francisco”, but this is lazy shorthand. We don’t mean the Upper West Side, or the Financial District, or Harlem. We don’t mean Outer Sunset, Oakland, or Sausalito. Thriving startups may exist in any of these areas, just as they may exist in North Dakota, but they are not the hubs of activity.

Brad Feld discusses the significance of this, observing that serendipity in Boston’s startup community happens in Cambridge, not in “Boston”. While other, smaller startups hubs exist, Cambridge, with its proximity to Harvard, MIT, and other successful startups creates a critical mass.

You would think that with the massive financial resources of New York, any location in New York would be good for a startup, yet there is a reason that the pulse of the startup community emanates from the Union Square / Flatiron area. Startups weren’t always prominent in the city of San Francisco – for a long time, the locus of innovation sat many miles south in Silicon Valley. When startups crept up into the city, they didn’t start everywhere – they started in SoMa.

Startups need EVERY advantage they can find. It can be easier to work from home. It can be cheaper to work from some outer suburb. When I started working on Badgy full-time last summer, I began spending some days working for free in a local ad agency’s warehouse space in a sparse industrial neighborhood, and some days working from Tech Square, a midtown Atlanta area right next to Georgia Tech and quite close to ATDC, one of the oldest startup accelerators out there. When we spent 5 months in Georgia Tech’s Flashpoint Accelerator, this happened even faster. I still stop through there regularly – there are TONS of serendipitous opportunities, and it’s a 2 minute walk from our HQ.

The difference was night and day. Working from the agency meant a slightly shorter commute and unbelievable proximity to an awesome korean taco joint, but that was about it. When I worked from Tech Square, people who have changed the trajectory of my company passed through shared offices I worked from. I’d run into these people walking down the street, or set up a future meeting with someone I ran into during another lunch meeting.

In a world where email, mobile phones, and video chat connect people instantly, it’s easy to underestimate the value of physical proximity. Boulder, Colorado has a thriving startup community, driven by startup density. In Atlanta, we would just call Boulder a suburb – it’s as close to downtown Denver as many of Atlanta’s outer suburbs are to downtown. I am certain that if an entrepreneur claimed that putting their office in Denver was just as good as setting up in Boulder, they would be roundly chastised, but in Atlanta, we pretend that all locations are equal, and that spreading startups across our metro area’s 8,000 square miles is competitive with Boulder concentrating its startups into 40 square blocks.

Any startup community that wants to replicate Silicon Valley, New York, Cambridge (Boston), or Boulder cannot ignore these facts. Proximity matters. Not linearly. Exponentially. Imagine that raising your seed round isn’t a matter of getting introductions to people you’ve never met. Imagine it’s having follow-up conversations with people you were first introduced to when you met a friend for lunch, then ran into them half a dozen times as you walked down the street to other meetings, then you talked to them about investing.

It’s easy to look at the Bay Area with its multiple startup communities and believe that your city can accomplish that same thing. In reality, you can get there, but before you can succeed in multiple areas, you have to find a way to succeed in one neighborhood. Series of serendipitous meetings add up to meaningful outcomes. Stubbornly trying to succeed 5 minutes from your house isn’t startup suicide, but your chances of success are remarkably higher in a thriving startup community.

If you’re near a startup hub neighborhood, embrace it. If you’re not in a startup hub, help lead your community by identifying a neighborhood with a chance to become a hub and embrace it. Don’t work from your neighborhood, an irrelevant suburb, or a slightly cheaper vacuum. Your startup needs serendipity – communities accelerate serendipity.

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Hopeful For Atlanta, Even After We tspLOST

The partisan pundits will be out in force today, each with their own opinions on the 2:1 defeat of a proposed 1% regional sales tax to support Atlanta transportation.

Conservatives will thump their chest at some supposed rejection of big government.

Progressives will thumb their nose at the backwards suburbs who lack the sophistication to understand the need for strategic regional transit.

I, for one, am hopeful and optimistic that this sound rejection will lead to better policy and projects. The entire T-SPLOST process was established by the Georgia legislature. They chopped the state into 12 regions, each of which had the option to pass a 1% sales tax to fund transportation initiatives. The first evidence that this process is more about pork and cost-shifting is that EVERY SINGLE REGION in Georgia asked their citizens to pass this tax. It’s easy to understand how Atlanta has critical transportation needs. It’s less clear how EVERY other region in Georgia has such pressing needs, unfundable from federal highway dollars, gas taxes, and property taxes.

How did every region decide to propose this tax? The law creating this process makes the counties in each region responsible for proposing the list of projects, and here begins the problem. Counties are not going to turn down a chance for extra revenue, so they all got together and proposed lists of projects, some of which are strategic, but in many, many cases, are merely local projects.

T-SPLOST proponents pointed out that money from this tax could ONLY be used for allotted transit projects, which is true, but the remainder of their budget is fungible. This allowed counties to plan to take already scheduled projects, throw them on the project list to force neighboring counties to help fund them, and then plan to allocate the county money elsewhere. This also means that a number of T-SPLOST projects are going to happen even though the tax failed.

One of the worst offenders in this was Clayton County. Clayton de-funded their county bus service in 2010. They then added a $100 million “project” to pay to re-instate this bus service and pay for ongoing operations. Asking citizens of Cherokee County to chip in to revive local bus service for a county 60 miles away that already decided it didn’t need that service and calling it “strategic” is insulting. It’s pork. It’s cost-shifting. It’s wasteful.

In case you would assume that Georgia is just a bunch of rednecks who hate taxes, consider that 3 of the regions in Georgia DID pass their T-SPLOST. One of these regions, “Heart of Georgia”, is overwhelmingly Republican. I don’t know the details of their proposals, but I imagine they were more strategic and focused on legitimate projects.

Proponents of the Atlanta T-SPLOST were never able to build a strong factual case for the tax. For every game-changing, strategic project like the Beltline, there was a ridiculous non-infrastructure project such as “enhanced bus service” to somewhere, and dozens of single-county bridge and road projects that should obviously just be funded by their county. At this point, proponents resorted to hyperbole and fear-mongering. The suspiciously well-funded “Untie Atlanta” campaign promised to fix all of our problems if we would just vote “Yes”, without substantiating anything – a remixed version of Obama’s 2008 “Hope” and “Change” sloganeering – too optimistic to ever deliver on the catchphrases. Much like the 2008 election, some were sucked in by the slogans, but many more simply believed that this action was better than deferred action.

The other non-logical tactic was one of fear. Ideas like “If we don’t pass this now, we never will.”, or “If we don’t pass this now, other cities like Nashville will steal our economic crown.” If that’s true, we’re really in trouble. Nashville has a 9% sales tax and NO income tax. They don’t have some big rail transit system. Why are they going to eat our lunch? The fact is, counties can increase their sales taxes, property taxes, and (I think) gas taxes if they want to buy local bridges and roads. There is no proof, only wild speculation, that rejecting T-SPLOST dooms Atlanta economically. Few sensible policies are enacted from the basis of fear. We can consider a new, hopefully less selfish and more strategic vote in 2014. While perfect may be the enemy of good, mediocre is the executioner of good. Poor proposals, once enacted, create even further distrust and solve few problems.

While critics like to simply call out suburban Atlantans as racist and paranoid, there is ample reason for skepticism. Our existing transit system doesn’t run to our baseball stadium because the city was afraid of losing parking revenue. In spite of spending millions of dollars on strategic transit authorities that are supposed to be thinking about how to make Atlanta transit work, it was a Georgia Tech grad student that noticed miles of disused rail line encircling the core of Atlanta that will become the Beltline, arguably Atlanta’s most defining transit project. What were the MARTA and GRTA employees doing?

I am hopeful and optimistic that metro Atlanta voters have the sense to reject a corrupt and flawed transit proposal. Some suggest that our T-SPLOST rejection signals to the nation and potential corporate HQ relocations that we are clueless. I believe it signals that we are not sheep. We will not accept naive and selfish proposals backed by catchy slogans that are only barely strategic in nature. One T-SPLOST proponent I read bemoaned that “rejection of the T-SPLOST is rejection of the process” as some tragic outcome. We SHOULD reject this process. It rewards counties for masking local projects as regional ones. It is tactical and adversarial, not strategic. Companies should embrace a workforce able to resist fancy marketing to reject such a flawed proposal.

I am more hopeful that the most impactful or necessary projects will still be funded. The already scheduled local projects that counties tried to spew into the T-SPLOST will happen like clockwork. In my opinion, THE most important project in the mix is the Beltline. I am hopeful that Atlanta mayor Kasim Reed will not allow the T-SPLOST rejection to be an obstacle. The benefits of light rail encircling the city are indisputable – development will surround Beltline stations and build property tax revenue that should more than cover the cost to build. Fulton and Dekalb counties need to stop begging other counties for support on the Beltline – they should lead, make it happen, and reap the tax rewards from growth.

I used to agree with those who believe that Atlanta needs to build transit to reach the outermost suburbs. I now disagree. Atlanta needs to build more internal communities with friendly commutes on transit. If that’s what people want, they will move to these areas, and I think they will. If people want to live 20 miles outside of town and rot in traffic, that’t their choice. If in-town transit doesn’t drive growth and increase population density, it certainly isn’t going to work along 20-mile long rail lines to the suburbs.

Atlanta was smart to reject the deeply flawed T-SPLOST. We should now be defined by how our leaders move forward. I hope the Beltline is funded. I hope Dekalb builds a rail line out to the hopelessly inaccessible Emory area. I hope other counties cooperate to fund necessary inter-county initiatives, and I hope counties figure out how to fund their own road, bridge, and bus projects they wanted to foist upon neighboring counties.