Writing for the MIT Technology Review, Patrick Doyle asks the compelling question: Can a midsize Rust Belt city compete with Silicon Valley?
In his feature article, An Innovation Case Study: Pittsburgh, Doyle looks at our city’s evolution from “steel to startups” and introduces the timely topic with the perspectives of one successful local entrepreneur along with some current stats about the tech industry:
“Shortly after Luis von Ahn helped launch Duolingo, his popular language-learning app, he started to receive the same piece of well-meaning advice from investors and fellow entrepreneurs: Why don’t you move from Pittsburgh to Silicon Valley, where you can really grow? Presumptuous? Sure. But not that surprising. The Bay Area is the center of the tech world, a siren for software developers, fat-pocketed investors, and enterprising businesspeople. Companies based in San Francisco and San Jose pulled in $22.6 billion in venture capital funding in 2014, dwarfing the cities’ closest competitors, Boston ($4.4 billion) and New York ($4.2 billion). Pittsburgh firms scored a paltry $338 million.”
The article then examines the current nature of smaller tech cities such as Pittsburgh, reporting that entrepreneurs such as Von Ahn are beginning to push back against this argument that smaller tech cities often “lack big-time venture capitalists and the pool of startup-savvy business and marketing talent that can help a small company grow.”
Doyle reports that “Pittsburgh and other second-tier tech cities—including Raleigh, St. Louis and Minneapolis—are places with strong university pipelines, affordable living costs, great quality of life, and collaborative tech ecosystems.”
The writer then talks to Matt Zieger, vice president of The Forbes Funds, who highlights the unique purpose driven nature of Pittsburgh startups:
“The culture of Silicon Valley is really a bunch of twentysomethings solving twentysomethings’ problems. Pittsburgh has a culture of a broader purpose,” says Zieger. “We have a legacy of building things.”
Some of the hottest companies in the city today are working on complex technologies with real-world applications, including advanced robotics, low-cost batteries to store renewable energy, and self-driving cars. Investors here have also supported local startups that fight human trafficking and provide voice-based apps for the visually impaired.
The article also addresses Pittsburgh’s evolution and transformation from a “hollowed-out, crumbling Rust Belt city whose economic engine had seized with the meltdown of the American steel industry.”
Describing the 21st-century Pittsburgh Doyle writes:
“Neighborhoods are undergoing building booms, industrial wastelands on the riverfronts have become bike trails and parks, and the city’s percentage of educated 25- to 34-year-olds is among the highest in the country. While a strong manufacturing base remains, health care and technology have become the twin economic engines of the region. They’re supported by the neighboring urban campuses of the University of Pittsburgh, which pulls in over $400 million in National Institutes of Health funding annually, and Carnegie Mellon University, which has top graduate programs in computer science, engineering, and robotics and tight connections to industry. Duolingo’s von Ahn remains a CMU faculty member, as does Jay Whitacre, the founder of Aquion Energy, a battery company based on his invention. Andrew Moore—who ran Google’s Pittsburgh office for eight years—recently returned to academia and is now the dean of CMU’s computer science school. Campus talent has been a draw for major companies, including Apple, Disney, Intel, and IBM. Google arrived in 2006 and now has 400 engineers on site.”
The article also discuses the role of key partnerships, such as between Uber and CMU, which will bring a 53,000-square-foot research and development facility focused on designing self-driving cars to town.
“As you’re recruiting executives to move here [for a startup job], Google provides a sense of stability,” says Sean Ammirati, a partner at Birchmere Ventures. “If the startup doesn’t work out, there is a place to transition to. And a lot of people who work at those big companies get bored pretty quick, so they look for something different to do.”
In selling Pittsburgh to out-of-towners, Doyle highlights the city’s world-class sports, arts, cultural and outdoor attractions, proximity to Philadelphia, Washington and Baltimore and affordable housing.
Another piece of evidence that Pittsburgh’s profile is rising in the tech community comes from Silicon Valley: more than 100 national venture funds have invested in Pittsburgh companies in the past five years.
Doyle also talks to ModCloth founder Susan Gregg Koger, who touches upon areas where Pittsburgh can improve:
“Pittsburgh is a great place to have a startup, but it’s not a great place to keep scaling yet.”
Dave Mawhinney, co-director of CMU’s Center for Innovation and Entrepreneurship, adds:
“What we really need is for someone to become an icon. Harvard has Facebook, Stanford has Google and Carnegie Mellon has … fill-in-the blank.”
According to local entrepreneurs, seeing a large IPO in Pittsburgh is only a matter of time. “When that happens,” says von Ahn, whose company is on the short list, “that’s when we’re going to see a big change.”
Read the entire article, An Innovation Case Study: Pittsburgh.