Hello Everyone:
Welcome to a new week of Blogger on the iPad. This wireless thing is really nice. Blogger's new found genuine appreciation or technology is nice segue way into today's subject on "Where's the Real 'Next Silicon Valley?'" by Richard Florida, for CityLab. Silicon Valley will always be the motherland of the high tech industry. Mr. Florida writes, "High-tech talent is a key driver of the wealth and competitive men's of cities. But it's highly concentrated in places across the United States and the world, following a winner-take-all pattern and reinforcing the geographic inequality that underpins our broader economic and political divides."
Think about that quote for minute. Some cities, like Venice Beach in Los Angeles, attract a large share of high tech workers. These workers are highly skilled and highly educated and when combined with other components, can position a city to the "next Silicon Valley." This is the main takeaway of a new index generated by the real estate firm Cushman Wakefield. The chart can be viewed at http://www.cushmanwakefield.com. The chart identifies the top 25 American high tech metropolitan s in 2016. Mr. Florida observes, "The report covers some familiar ground-but it also contains some surprises.
Leading the list, no surprise here, San Jose, California, the capital of Silicon Valley knows the way to high-tech. San Jose is followed, another no brainer, San Francisco. Unexpectedly, established high tech hubs like New York City (15 on the list), Los Angeles (number 18); Austin, Texas (number 7); Seattle, Washington (6 on the list) are not part of the top five. Interestingly, Baltimore, Maryland (number 12) beat New York City. Portland, Oregon beat L.A.; the Washington D.C. region beat the Boston/Cambridge region by a hair. The top 25 list includes emerging tech centers: Madison, Indianapolis, Columbus, Kansas City, Minneapolis, Philadelphia, and so on. Aspiring tech hubs: Pittsburgh, Detroit, Miami, Provo, and Ann Arbor are missing.
This begs the question: "What's going on here?" There is no correct answer, and "the study and listing are based on a very thorough dive into the data and indicators." However, the results can be reduces to what elements are included in the study. The report leans heavily toward talent, something that Mr. Florida considers valuable-"it is one of my 3Ts of economic development-" however this skewing possibly reveals "most highly educated and knowledge based metro areas, rather than which ones are actual commercial centers high-tech industry."
The first talent indicator is the number of adults with a bachelor's degree. Richard Florida notes, "It's a solid indicator of educational attainment or human capital, but does it really capture leading tech hubs?"
Another chart that can be viewed on the Cushman Wakefield website (http://www.cushmanwakefield.com) graphs the percentage of bachelor's degree holders in each of the study cities. Here, San Francisco leads the list, followed by the nation's capital, Denver/Boulder, Releigh-Durham, San Jose, Boston, Oakland, Austin, Madison, and Seattle. Larger metropolitan with a more multi-cultural cross section of people: New York and Los Angeles, for example, are further down the list.
The next factor the Cushman Wakefield study looked at is the share of knowledge workers (eg. tech workers). Mr. Florida likes to use this measure as well, "as it includes workers in management; computer and math; architecture and engineering; life, physical, and social sciences; health and education." In short, it is Mr. Florida's creative class, minus the fine and performing artists. The usual suspects make the list, albeit in a different order. This time San Jose, lands in the number one position, followed by Boston, San Francisco, D.C., Madison, Seattle, and Raleigh-Durham. Here, the rankings tilt heavily toward knowledge bus and college towns; away from bigger, more socio-economically diverse regions.
The third talent indicator is the number of tech workers. This seems like a given for ranking the high-tech hubs. "Still, it's basically a subset of knowledge workers listed above, focusing on workers in computing, software, telecom, data processing, pharmacy, and medical devices among other tech fields." Once again, the San Jose leads the way followed by San Francisco, Raleigh-Durham, Boston, D.C., and Seattle. New York City and Los Angeles, are further down the list.
The study incorporates a gauge of growth in entrepreneurship, based on a study by the Kauffman Foundation (http://www.kauffman.org), which "includes metrics for the startup growth rate, the scale of startups, and high-growth company density." This time Washington D.C. leads the way followed by Austion, Silicon Valley (San Jose and the surrounding area), Boston, San Diego, and San Francisco. New York is at the bottom of the list.
The last indicator, according to Mr. Florida's opinion, "is the single best one for distinguishing real centers of high-tech industry: venture capital investment in high-tech startups." This means a direct monetary measure of high tech centers: "It reflects the places actual venture capitalist are betting on high-tech businesses." Once again, you can see the chart on Cushman Wakefield's website (http://www.cushmanwakefield.com).
The data for this chart and the attending information was gleaned from Pitchbook data (http://www.pitchbook.com), produced for the National Venture Capital Association, the main organization for VC funds and lead source for following the industry.
San Francisco leads the way with a massive $16.9 billion in VC investment, nearly double the number two leading metropolitan. Richard Florida adds, "But this chart understates the real extent of Greater San Francisco's dominance in high-tech startups. Combined, San Francisco and San Mateo have nearly 40 percent of the national total, with $28.5 billion in venture-capital back startups in 2016."
New York City ranks second on this metric with $9.1 billion in VC investment, outpacing San Jose with $6.7 billion, Boston is number four with $6 billion, followed by Los Angeles with $3.5 billion.
Six other metropolitans were magnets for over a billion dollars in VC investment in 2016. This included "San Diego and Seattle with roughly $1.5 billion each; Chicago with $1.25 billion; and Greater Washington D.C., with $1.1 billion." Austin's VC investment totaled just shy of $977 million. Greater Miami is not included in the chart, but it did attract more than 1.2 billion in VC investment in 2016. Mr. Florida observes, "It's also worth noting that together Salt Lake City and Provo, about an hour's drive from one another, also attracted more than a billion dollars in venture capital investment in 2016."
Doing a deeper dive into the information reveal the dynamics of the chart's longer tail of smaller startup ecosystems:
* Phoenix ($269 million), ...not on the chart...attracted more venture capital investment than Baltimore ($254 million)
* Houston ($245 million), St.Louis ($244 million), and Pittsburgh ($228 million), non of which are on the chart, fit above Raleigh-Durham ($218 million)
* New Haven ($200 million) had more than Madison ($143 million)
* A whole slew of metros-including Detroit ($128 million), Las Vegas ($122 million), Cleveland ($97 million), San Antonio ($78 million) Orlando ($69 million), Louisville ($68 million), and Ann Arbor ($62 million) had more than Columbus, Ohio ($62 million)
What can we conclude from this study? We can tell how smart a metropolitan is based on the number of knowledge workers, the levels of education, and other elements. However, the real money (slight pun intended) is on the actual dollar investment in venture capital-backed startups that point to where America's real high tech places are.
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