How the internet ushered in a new era for entrepreneurs in the urban ecosystem.
For years we’ve heard that geography doesn’t matter, we’ve conquered distance and the world is flat. Modern communication and transportation technology means it doesn’t really matter where we live or work. Even with the ongoing back-to-the-city movement, high-tech startups and the ecosystems in which they flourish are supposed to be the last bastion of suburban nerdistans—arrayed in office parks in Silicon Valley or the suburbs outside of Boston, Austin, and Seattle.
The reality is that startups and high-tech industry have become urban. Downtown San Francisco now has more high tech startups that suburban Silicon Valley. Urban areas from Lower Manhattan to downtown London, Berlin, and Toronto have become the new entrepreneurial zones.
All of this is laid in out in Boyd Cohen’s new book written with Pablo Muñoz, The Emergence of the Urban Entrepreneur which came out earlier this year. (I liked the book so much I wrote the foreword to it.) The book highlights the rise of the “urbanpreneur”—not just in the private sector, but how urbanpreneurship can be channeled in ways that can help us solve our most pressing urban and civic challenges.
As a professor of entrepreneurship and sustainability at EADA Business School in Barcelona, Spain, and joint professor at the Universitat de Vic, Cohen has thought a lot about how to take theories taught in entrepreneurship classrooms out into the laboratories of ideas that are cities. He recently took some time to speak with CityLab about what transformations technology has brought to entrepreneurship in cities.
For decades, we were told high-tech entrepreneurship was the product of suburban nerdistans like the office parks of Silicon Valley or the Route 128 suburbs outside of Boston. Tell us about this new era of urban entrepreneurship.
The book explores the changing trends in entrepreneurship and how it has been urbanizing in recent years. We know the creative class has started to migrate to urban areas in cities around the globe. Lower-cost innovation and less need for physical space have converged and changed the way we work. As part of the creative class, tech entrepreneurs and their staff are increasingly preferring to live and work in dense, diverse urban areas with excellent public transit, cultural amenities, food, and night life.
You have coined a new term, the “urbanpreneur.” Why and how exactly does an urbanprenuer differ from an entrepreneur?
Entrepreneurs can live anywhere in the world and focus on any industry. Urbanpreneurs embed in their socio-ecological environments—cities and towns—to draw influence. They’re tapping into what cities have to offer so they can collaborate and innovate in their community.
There’s a lot of interest among urbanists in the sharing economy. You draw a link between what you call sharing platforms and urban entrepreneurship. Can you tell us more about that?
The sharing economy is predominantly an urban phenomenon. The density of urban spaces, combined with more mobile and web access, help real-time sharing with peers. The sharing economy is having profound impacts on cities, and on urban entrepreneurship. Bike-sharing and car-sharing are both entrepreneurial opportunities that help entrepreneurs and their staff. Co-working and fab labs are fabulous resources for early-stage and independent entrepreneurs. We are really in the early stage of discovering the entrepreneurial opportunities for urban entrepreneurs in sharing, as well as the socio-economic and ecological impacts that different sharing activities have on cities.
You’ve been teaching innovation and entrepreneurship for a couple of decades. You say that business schools are not serving entrepreneurs (I don’t disagree). Why is that, and how might we fix it?
I have taught entrepreneurship for 15 years now. When I first entered the field, most schools used business planning as the primary method for understanding what entrepreneurship is actually about. I also taught business planning but then I became an entrepreneur and realized that the real world was much more than business plans. Most of us were not even writing business plans. Luckily since then, pedagogical methods such as design thinking and lean startup have emerged as much better ways to get future entrepreneurs to solve real problems.
Another change we need to see is a shift away from treating startups as primarily focused on venture capital and global domination. Urban entrepreneurs come in all shapes and sizes and not all of them fit that mode. Many young entrepreneurs aspire to have an impact on their local communities more than becoming the next Bill Gates or Mark Zuckerberg.
Here is the United States we tend to see urban entrepreneurship happening in cities like San Francisco and New York, but you’ve spent a large part of your professional career and your research outside the U.S. How is urban entrepreneurship playing out in cities around the world?
This is a fascinating area to explore. I have spent much of my career outside of the U.S., Canada, Latin America, and now, Spain. Many regions want to replicate the Silicon Valley model but many others outside of the U.S. do not aspire to develop a global monopoly supported by venture capital and an ultimate goal of an exit either through an IPO or acquisition. In Latin America and Europe, the goal of independence and making an impact locally or regionally seem to be more ubiquitous. Culture plays a role here but this may also be true in parts of the U.S. as well.
What do you mean when you say “indie entrepreneurship”?
The growing numbers and diversity of independent entrepreneurs who do not fit the mold of startup entrepreneur who forms a company, raises money and hires staff. They are a type of entrepreneur that taps into the hard and soft infrastructure of their urban environments to make a living, and sometimes much more.
I write about three distinct types of indie urbanpreneurs: makers, digital indie, and on-demand or gig economy urbanpreneurs.
The makers are artisans, making wares from local resources or leveraging fabrication and 3-D Printing. They produce and sell items locally or even around the globe via platforms like Easy or Shapeways for 3-D printed goods.
Digital indie urbanpreneurs work from their home or a co-working space. They use IT skills to run websites often with the benefit of cloud servers. In the book, I tell the Markus Frind, who founded the dating site, Plenty of Fish in his apartment in Vancouver. For years, he was making tens of millions of dollars running his website from his downtown apartment with two half-time employees.
The on-demand or gig economy urbanpreneurs are the “independent contractors” such as Uber drivers and Task Rabbiters. Yet this gig economy, which is controversial, is expanding to touch on many sectors including doctors and lawyers among others.
In your view, entrepreneurship extends far beyond just tech startups. You devote an entire chapter to civic entrepreneurship. How is civic entrepreneurship reshaping our cities?
My colleague Pablo Muñoz and I have been researching civic entrepreneurship for the past few years. While traditional tech entrepreneurs seek to address market opportunities based on meeting explicit or latent unmet consumer demand, civic entrepreneurs focus on solving quality of life problems in their cities and beyond.
In fact, after interviewing dozens of civic entrepreneurs we determined there are three types of civic entrepreneurs.
There are neighborhood-based civic entrepreneurs who frequently do one-off projects, sometimes funded via civic crowdsourcing platforms, like Neighbor.ly, to solve very local problems.
City-based civic entrepreneurs address city-wide challenges with solutions like a local bike-sharing service, the development of a waste to energy facility, or a Repair Cafe to bring the community together to repair household items otherwise destined for the landfill. Of course, there are now nearly a thousand such Repair Cafes around the globe which leads us to the third form of civic entrepreneurship.
Platform-based civic entrepreneurs who recognize problems in their city and realize other cities share similar problems and develop platforms to support improving of civic life in many cities. Here there are companies like CityMart who serves as a connector between urban technology startups and innovators and cities in search of solutions to their challenges. Again what unites all these forms of civic entrepreneurship is a drive to solve quality of life challenges in urban environments.
When we look at urban entrepreneurship, big cities such as New York, London, San Francisco, Berlin, and Tel Aviv stand out. But how can smaller communities engage and benefit from this shift?
One major challenge many of the cities you mention have, such as London, San Francisco and New York, are rapidly escalating costs of living. If the future of urban entrepreneurship is not just venture capital backed startups, but indie and civic entrepreneurs, cities that fail to provide a range of housing opportunities will lose them to smaller towns and cities. Those towns and cities with good public transit connections can leverage this to their advantage to recruit and attract talent that can’t afford to live and work in the larger cities.
They could also commit to high speed bandwidth to become, like Kansas City, a Gigabit City. Some of these towns just do not have enough human, natural or community capital to thrive in the 21st century but with vision, commitment and collaboration many could thrive in an urban entrepreneurial future.
Paul Graham, the venture capitalist, argues that entrepreneurship by definition exacerbates inequality. What can mayors, cities and governments do to better ensure that the benefits of urban entrepreneurship are more inclusive and extend to greater numbers of people and neighborhoods?
The Airbnbs and Ubers of the world may not help inequality, they might even exacerbate it. But the sharing economy is more than those venture capital backed behemoths. Time banking, local peer to peer (P2P) services, and new P2P food recovery and redistribution projects provide insights as to how sharing and the circular economy in urban environments could help support inclusion.
This is a big question for all of us, economists, urbanists, technologists, and of course, economic development officers, mayors and their city councils. In fact, I live in Barcelona now and the city, behind the current mayor, Ada Colau, are trying to tackle this very issue. Barcelona Activa, the city’s entrepreneurship agency, has now created a new line of activity under a director for alternative economies. I have been working with this group to explore how cities can embrace innovation in the sharing economy, cooperative business models, and the circular economy to include lower income residents.