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Last week, the Ewing Marion Kauffman Foundation released its annual Kauffman Index of Entrepreneurship, detailing “new venture creation” in the United States through 2016. The index reported that the rate of entrepreneurship in America held steady last year, up sharply from lows reached during the Great Recession.
Also included are measures across all 50 US states, the 40 largest metropolitan areas, and along various dimensions of entrepreneur characteristics (race, gender, nativity, education, and age). Colorado ranked sixth in terms of “startup density” (new firm formations per capita) and Denver was tenth among the largest metropolitan areas for the same measure.
But, these rankings mask important details—they doesn’t distinguish between growth-oriented entrepreneurship and small business formation (this distinction matters for public policy and for economic growth), and the geographic boundaries may be too broad. Fair enough, data limitations abound for this high-level view of activity, and Kauffman provides an informative, timely, service no less.
What remains clear is that density matters a great deal for growth-driven, innovative enterprise, and we can learn something from the places that continually produce these types of businesses.
In previous work for the Kauffman Foundation and Engine, I took a look at new firm formation rates specifically in the high-tech sector—where firms are substantially more likely to be growth-oriented and innovation-driven. I examined these trends nationally across the United States and its metropolitan areas. For “density” of entrepreneurship—in this case, the share of tech startups per capita—Colorado is a major outlier.
As the two tables below show, for firm formation rates on a per-capita basis for the information technology sector and the high-tech sector more broadly (IT plus biotech, medical tech, aerospace, and engineering services), Colorado cities saturate the top rankings—in fact four of them are in the top 10 for both tables, with Boulder leading the way nationally. These figures are slightly dated, but a subsequent analysis of data from my report showed that density numbers across metros evolve only slowly over time if at all.
Colorado also stands out in terms of “high-growth” firms. In 2012, researchers at the Kauffman Foundation produced a report that analyzed Inc. 500 data of the fastest growing companies in America.
Colorado ranked fifth for highest concentration of high-growth businesses (on a per-capita basis) during the 2000s. Meanwhile, Denver was ninth for large metropolitan areas, and two additional Colorado metros—Boulder and Colorado Springs—ranked in the top 12 for high-growth firm density among medium-sized cities.
Density is important for many sectors of the economy because it lowers transaction costs, and improves matching between firms, labor, suppliers, and customers. These factors are also beneficial for startups and tech companies, but more importantly, for these innovative, complex endeavors, density generates greater opportunities for knowledge-sharing and serendipitous creation.
Brad has written about the phenomenon of startup density on his blog (here and here) and about the importance startup of density to entrepreneurial performance in his Startup Communities book. In particular, he notes that when conducting business in well-known startup hubs—like San Francisco and New York—he tends to stay in a relatively confined area. This is especially true in Boulder, where much of the startup activity is concentrated in a very small space (~10 x 4 blocks).
So, measuring startup density at the level of cities or metropolitan areas may be too coarse. Academic research backs this up. Studies have established a high “decay rate” of knowledge sharing over distances. For example, one found that the benefits of knowledge sharing in the software industry are ten times greater when co-locating within one mile versus within two-to-five miles, while another found that the benefits of co-location among advertising agencies in Manhattan was fully depleted after just 750 meters!
Visionaries like Steve Jobs knew this, which is why he designed the Pixar office in a way that would maximize serendipitous interaction among colleagues in different departments. And, the importance of density is playing out before our very eyes. Cost of living increases in leading knowledge hubs are stratospheric—yet many entrepreneurs continue to start and scale businesses in these places. Why? Apparently because it’s still worth it.
Now, the sustainability of these trends are questionable, and we are starting to see at least some counter-balance taking shape as startups and capital proliferate into more geographic pockets. But the fact remains—whether you are in New York or New Haven, San Francisco or Santa Fe, a critical mass of innovators and entrepreneurs co-mingling in a relatively confined area is beneficial to their success.
Fort Collins is a growing startup community up in northern Colorado. Entrepreneurial leaders recently put on Fort Collins Startup Week as both a celebration of all their progress and a launchpad for more entrepreneurial behavior. The week was a stellar one with involvement from organizations such as Colorado State University, Blue Ocean, Otterbox, and more.
The team who organized the event, led by Chris Snook, put together a mini video series covering the week. Their wrap-up video, which can be found here, provides an overview of why the community came out with such a strong showing for the week.
Brad Feld, a Managing Director at Foundry Group and Co-founder of Techstars, speaks prolifically about Boulder, the Boulder community, and how Boulder has come to be an international renown startup community.
What many do not know is that Boulder has sister startup communities in Denver, Fort Collins, and Colorado Springs – the four innovation hubs of Colorado.
In this interview with ID8, Brad talks about the entrepreneurial growth that Denver has been experiencing in the last few years. Among the topics covered are Boulder’s relationship with Denver as well as what Denver needs to do to take their startup community to the next level.
The Denver-Boulder corridor: At one end is a thriving community of startups, tech companies, and investors, and at the other end is…a thriving community of startups, tech companies, and investors. So why the divide? Each city is doing fine on its own, but together we can turn this region into one of the most dynamic and economically important innovation hubs in the world. Join us for drinks and networking to help us bridge the longest 25 miles in business and look for ways that Denver and Boulder’s finance communities can join forces to expand both their collective strength and their individual investment opportunities. We’ll have a few brief comments from Jim Dieters, Brad Feld and the Startup Phenomenon team.
It’s 4 o’clock in the morning on June 8th, 2012. I’m in my kitchen in a Dallas suburb trying to stay awake while feeding my one-month old. This is only the second time I’ve taken the night-feeding shift, and not that it ever gets easy, but a stoned walrus could kick my ass at tic-tac-toe right now.
I figure I’ll skim Twitter for a bit – if only I can remember how to turn on my iPad. “Ok, let me think. I take the chicken across the river and leave the fox with the corn. Then I tell Sean Connery how to spell the name of God. Wait. I just push this button. Yes. Steve Jobs, you sir, are a genius.”
The screen illuminates. I give my eyes a moment to adjust, and then I think I need to give them a little more time because my email notification pill reads, “174”. This is not typical. Clearly, something, somewhere has gone terribly wrong. But no, nothing is wrong. In fact, things are about to be very, very good because at the beginning of those 174 emails is a note that reads:
From: Brad Feld
Date: Thu, Jun 7, 2012 at 11:38 PM
“Tweeted – I’ll also send out to the CEO list I manage.”
What he means is that he tweeted a URL I’d sent to him. My brain is suddenly wide awake. Some of those emails are new Twitter followers and general words of encouragement, but a very large number of them are interview requests and it’s only been a little over four hours. I realize that there will be hundreds (thousands?) more and it very quickly sets in that This. Is. Happening. One way or another, my family moving is Colorado.
I let Shepard finish his bottle, lay him back down, and take a few hours to start responding to emails as more and more continue to come in. Finally, at about 7 a.m., I go upstairs and wake my wife, Laura.
“Sweetheart. Something has happened.”
This is how it happened, and what has happened since.
Like most people who’ve spent more than, say, six hours in Colorado, Laura and I had the “We should totally move out here” conversation a couple different times with varying degrees of determination. But, when Shep was a few weeks old, we looked at each other and said, “So. Colorado?”
I had been following/web-stalking a number of entrepreneurs, agencies, and developers in Boulder for a couple of years. My admiration for their work had grown to a level approaching “Legendary” so I knew exactly who I wanted to reach out to. Brad at Foundry, David at TechStars, Foraker, Viget, Slice of Lime. The list of talented people doing amazing work here goes on and I was dying to be a part of it.
I decided to build a site that pitched my skills specifically to companies in Colorado and so I got to work building hirebrianrhea.com. Jason Zimdars set the gold standard for the personal resume site when he landed a gig at 37signals ; I figured if I could be half as effective as Jason was at communicating his skills and his personality, then I’d have a shot at turning our dream in to reality.
After a couple weeks of build-test-tweak-rinse-repeat, I was finally ready to ship. I sent Brad an email at around noon expecting to perhaps maybe on the off-chance hear exactly nothing three months later. Instead, that night I was staring at my iPad, bleary-eyed with a newborn in my arms, completely overwhelmed.
The two weeks following Brad’s tweet were a whirlwind. There were offers from Boston, New York, Toronto, and San Francisco, but our sights were set squarely on the Flatirons. I flew out a couple of times and was fortunate to meet with CEOs whom I aspire to be like, brilliant designers and developers, and deeply committed marketers and project managers.
But in the end, there was something special about TechStars alum and Foundry-backed startup Mocavo. They had a grand vision (to bring all the world’s historical content online for free), were attacking interesting problems (to bring disruptive technology to a well-established industry), and had the talent to pull it all off (a year later and these guys still amaze me).
The entire experience and the year following it has been nothing short of a dream come true. There were a few moments before we moved out here that Laura and I had to ask ourselves, “Are we ‘Overly Attached Girlfriend?’ Are we completely obsessed with this place and putting these people up on some illusory pedestal? Is our fantasy about to be shattered? Does this end with us bawling our eyes out listening to Toni Braxton records? And what are doing with all these Toni Braxton records?”
But no – it’s been amazing. We’ve made some wonderful friends, enjoyed beautiful hikes 20 minutes from our front door, and professionally – to be in the midst of so much creativity and palpable energy – it’s been incredibly rewarding.
I could go on and on about what makes this place so special (if you’re reading this from outside the 303 area code and considering relocating, e-mail me and I’ll be happy to convince you that it’s the right thing to do) but instead I’ll just end this by saying “Thanks.” Thanks to Brad Feld for 85 characters that altered the course of my family’s life forever. Thanks to Cliff and everyone at Mocavo for bringing me onboard and giving me an opportunity to be part of what you’re building. Thanks to Stirling at Foraker, Kevin and Chris at Slice, Will and everyone at All Souls. Thanks to all of you for making us feel welcome from day one and for making Colorado feel like home sooner than we could have ever expected.
It’s been an unbelievable year. I’ll do my best to give back for many years to come.
Brian Rhea is a husband, dad and Front-End Engineer at Mocavo.
He’s been building websites since 1994 when his dad told him, “I think this internet thing might get big.
You should learn it.” Thanks, Dad. You were right.
The Computer Science Undergraduate Advisory Committee (CSUAC) is organizing the second round of the 3rd annual Mobile Apps Challenge here in Boulder. The second round of the challenge will take place tomorrow Friday, April 12th at 5PM at Hub Boulder. The competition will include student teams from across Colorado including CU-Boulder, Colorado State University, University of Colorado at Denver, and Colorado School of Mines.
List of Applications:
Musikfly: a platform for musical influencers to manage all their music submissions in one smart, simple feed.
PicPoc: a photo manager/viewer that runs on iOS. Its interface allows you to horizontally scroll through albums of photos, and PicPoc can view photos from your phone’s photo library or you can save photos to PicPoc to keep them secure. PicPoc’s best feature is the ability to lock/unlock your viewing to a single photo, or album of photos.
MGate: an app that allows users to simulate basic logic gate connections and outputs. Users can organize and/nand/nor/not or xor gates together to simulate basic digital logic. This would be a useful tool for teaching and learning about logic gates.
JamWalkr: a social music-listening and sharing app, designed to let users decide not only what kind of music they love, but WHERE it is loved
LightStop: an app that simply does one task really well: Displays current scheduling information for the light rail
Orpheus: is a digital DJ/Jukebox streaming music service for restaurants, bars, coffeeshops, and house parties. It uses social media and machine learning to play music that is revelant to guest and patrons.
What: 3rd Annual Mobile App Challenge: The community event
When: Friday, April 12th at 5PM
Where: The HUB Boulder
Format: Teams will be provided a time slot to present a quick demo of their application to community members and the judges. Following the pitches, community members and judges will vote for the best teams. Scores will be combined to determine the final results.
The total cash prize is $2,000!
Free Food will be served.
Get your ticket for FREE at: http://csuac-mac.eventbrite.
For more information, please visit: http://csuac.com/tagged/app
The event is fully sponsored by SAP!!!
One of the elements of successful startup communities is a vibrant ecosystem of community events. From first time entrepreneurs to professional investors these events must engage the entire entrepreneurial stack. Whether it’s hackathons, open coffee clubs, or accelerators these events help foster community engagement and drive startup communities. We have many such events here in Colorado, but we’re beginning to see an emergence of events within the collegiate level. The CU Boulder Mobile Apps Challenge is one such event.
For the past two years, the Mobile Apps Challenge (MAC) at CU-Boulder has been a great playground for Computer Science students who are interested in developing applications for mobile devices. The competition not only allows students to sharpen their technical skills but also cultivates in them the entrepreneurial spirit. Erudio, an iOS app that helps students better manage their school schedules, won first place out of twelve submitted apps at the last year MAC and is now available on the App Store. Its two young co-founders also started their own mobile/web consultancy firm called Monospace Ltd while finishing their undergraduate years.
Continuing the tradition, the Computer Science Undergraduate Advisory Committee (CSUAC) proudly announces its 3rd annual Mobile Apps Challenge. This two-round event will be happening on March 15th and April 12th with the participation of student teams from across Colorado including CU-Boulder, Colorado State University, University of Colorado at Denver, and Colorado School of Mines.