Fixing Economic Development in Athens
It’s been a strange and worrying news week in Georgia. It was announced that the Georgia economy is predicted to grow by 2.0% this year, unemployment in Athens is on the rise and venture funding in Georgia fell 31% since last year (and is at its lowest level since 1996) and now totals just 1% of total venture funding in the US.
These are issues that should concern all of us. Stats like the above prove that economic development in Athens (and Georgia, broadly) is tackling the lowest common denominator with no view toward the future. We are growing, but is it the growth that we want? Economic development in Georgia right now seems to be of the mentality of win the battle and don’t think about the war. It is politically expedient to announce an outside company is bringing hundreds of new jobs to a town. It is slower, but ultimately more sustainable, to help small, local companies grow into world-changers. Stagnant wages, stubborn unemployment, poverty and a brain drain are not being fixed by what we are currently doing.
Venture capital backs innovative and world-changing companies. As our economy continues to move away from traditional manufacturing jobs, towns like Athens need to be hyper-focused on innovation and beyond. If we don’t start that conversation today, we’re going to wake up in 15 years and be completely left behind other regions of the country and world.
The week finished by me watching a video series entitled “On Doers”. In the video, Michael Tavani interviews David Cummings. Cummings tells his “overnight” success story – 12 years in the making. It is a great Atlanta success story culminating in his company, Pardot, being acquired for $100M. Along the way, Cummings created 2 companies that broken into the Inc 500 fastest growing companies list. It highlights that economic development by wooing outside companies with tax breaks is not (and can not be) the way to promote innovative, high paying jobs. Instead, we need to focus on our internal resources.
Athens is built on creativity. We are known around the world as the home of famous musical acts, but we are more than that in the creative sector. We are music, art, and technology. Right now, over 20 companies are working daily out of the Four Athens offices in downtown to change their slice of the world in finance, music, marketing, education, healthcare and real estate. Over 60 tech startups work throughout Athens. For the most part, these are not people with PhDs or advanced degrees. They are simply scrappy people that want to change the world. As the economy of the US changes, innovation is going to drive economy growth. As a community, we need to be supporting these drivers of growth.
We have a huge opportunity in Athens to capture the creativity of this town and turn it into an economic driver for decades to come. We can do these with existing resources we already have in town. That opportunity is going to pass us by without better support. Without support, the technology sector in this town will move to a more welcoming environment with easier access to capital, talent and support. It is happening today and will continue to slowly drain unless we do something about it. We are bleeding out our talent as a community as we watch our graduates go to Silicon Valley, Austin, Boulder, Boston and New York.
Every year we have an opportunity to capture the best and brightest graduating from UGA and keep them here. This is a huge advantage we have over most towns and we are wasting it by not providing what they need. It’s not hope and a job waiting tables that is going to entice these students to stay. It is a well-paying job that challenges them that will keep them here. The rest of the ingredients that keep people in a town are already in Athens – nightlife, culture, food & community. The missing piece is challenging jobs – just any jobs aren’t enough for future generations that are going to compete more with their brains than their hands.
Supporting the creative sector to encourage more growth is simple from the technology angle – tech startups are capital light, but brain & time intensive. The most needed component right now in Athens is capital. Most of the tech companies in Athens need capital to explode – they are generating revenue and hiring workers, but the tech sector is not one that changes slowly. If they are not able to exploit changes in the market quickly, 5 other companies from another region are going to outgrow them and leave them (and Athens) behind.
Traditional banking is not where this money is found – these companies don’t have assets to pledge or founders with decades of personal wealth built up to back a loan. This money will come from high net worth individuals in Athens that believe in a future defined by Athens as a leading city of innovation. As Charlie Paparelli put it, “Many of our community leaders bang the drum for more VC money to come to Atlanta. They want these firms to open offices here, live here and become a part of the community. They believe that if this happens, the community will flourish. I don’t disagree, but I believe outside money will not appear until we Atlantans invest in Atlanta startups.” Replace Atlanta with Athens and that is what we as a community need to do – invest in our own success.
It’s not hard. Most of these startups don’t need millions or even hundreds of thousands of dollars. They simply need the ability to work on their startup full time. In Athens we have the advantage of being able to live cheaply, risk big and take chances. Let’s use that to our advantage.
The traditional mode of economic development is dead. It is not the way to build a sustainable Athens. It is not the way to keep our best graduates in Athens (people that are hungry and willing to stay here, by the way). It is a band-aid fix that will harm Athens for decades to come as we watch other communities explode around us. We are on the verge of an exciting time. I don’t want to look back on 2013 and wish that as a community we had done more to support innovative.
Do you want to create the future or merely live in it?