April 2016(This is a talk I gave at an event called Opt412 in Pittsburgh.Much of it will apply to other towns. But not all, becauseas I say in the talk, Pittsburgh has some important advantages overmost would-be startup hubs.)What would it take to make Pittsburgh into a startup hub, likeSilicon Valley? I understand Pittsburgh pretty well,because I grew up here, in Monroeville. And I understand SiliconValley pretty well because that's where I live now. Could you getthat kind of startup ecosystem going here?When I agreed to speak here, I didn't think I'd be able to give avery optimistic talk. I thought I'd be talking about what Pittsburghcould do to become a startup hub, very much in the subjunctive.Instead I'm going to talk about what Pittsburgh can do.What changed my mind was an article I read in, of all places, the NewYork Times food section. The title was "Pittsburgh's Youth-DrivenFood Boom." To most people that might not even sound interesting,let alone something related to startups. But it was electrifyingto me to read that title. I don't think I could pick a more promisingone if I tried. And when I read the article I got even more excited.It said "people ages 25 to 29 now make up 7.6 percent of allresidents, up from 7 percent about a decade ago." Wow, I thought,Pittsburgh could be the next Portland. It could become the coolplace all the people in their twenties want to go live.When I got here a couple days ago, I could feel the difference. Ilived here from 1968 to 1984. I didn't realize it at the time, butduring that whole period the city was in free fall. On top of theflight to the suburbs that happened everywhere, the steel and nuclearbusinesses were both dying. Boy are things different now. It's notjust that downtown seems a lot more prosperous. There is an energyhere that was not here when I was a kid.When I was a kid, this was a place young people left. Now it's aplace that attracts them.What does that have to do with startups? Startups are madeof people, and the average age of the people in a typical startupis right in that 25 to 29 bracket.I've seen how powerful it is for a city to have those people. Fiveyears ago they shifted the center of gravity of Silicon Valley fromthe peninsula to San Francisco. Google and Facebook are on thepeninsula, but the next generation of big winners are all in SF.The reason the center of gravity shifted was the talent war, forprogrammers especially. Most 25 to 29 year olds want to live inthe city, not down in the boring suburbs. So whether they like itor not, founders know they have to be in the city. I know multiplefounders who would have preferred to live down in the Valley proper,but who made themselves move to SF because they knew otherwisethey'd lose the talent war.So being a magnet for people in their twenties is a very promisingthing to be. It's hard to imagine a place becoming a startup hubwithout also being that. When I read that statistic about theincreasing percentage of 25 to 29 year olds, I had exactly the samefeeling of excitement I get when I see a startup's graphs start tocreep upward off the x axis.Nationally the percentage of 25 to 29 year olds is 6.8%. That meansyou're .8% ahead. The population is 306,000, so we're talking abouta surplus of about 2500 people. That's the population of a smalltown, and that's just the surplus. So you have a toehold. Now youjust have to expand it.And though "youth-driven food boom" may sound frivolous, it isanything but. Restaurants and cafes are a big part of the personalityof a city. Imagine walking down a street in Paris. What are youwalking past? Little restaurants and cafes. Imagine driving throughsome depressing random exurb. What are you driving past? Starbucksand McDonalds and Pizza Hut. As Gertrude Stein said, there is nothere there. You could be anywhere.These independent restaurants and cafes are not just feeding people.They're making there be a there here.So here is my first concrete recommendation for turning Pittsburghinto the next Silicon Valley: do everything you can to encouragethis youth-driven food boom. What could the city do? Treat thepeople starting these little restaurants and cafes as your users,and go ask them what they want. I can guess at least one thingthey might want: a fast permit process. San Francisco has left youa huge amount of room to beat them in that department.I know restaurants aren't the prime mover though. The prime mover,as the Times article said, is cheap housing. That's a big advantage.But that phrase "cheap housing" is a bit misleading. There areplenty of places that are cheaper. What's special about Pittsburghis not that it's cheap, but that it's a cheap place you'd actuallywant to live.Part of that is the buildings themselves. I realized a long timeago, back when I was a poor twenty-something myself, that the bestdeals were places that had once been rich, and then became poor.If a place has always been rich, it's nice but too expensive. Ifa place has always been poor, it's cheap but grim. But if a placewas once rich and then got poor, you can find palaces for cheap.And that's what's bringing people here. When Pittsburgh was rich,a hundred years ago, the people who lived here built big solidbuildings. Not always in the best taste, but definitely solid. Sohere is another piece of advice for becoming a startup hub: don'tdestroy the buildings that are bringing people here. When citiesare on the way back up, like Pittsburgh is now, developers race totear down the old buildings. Don't let that happen. Focus onhistoric preservation. Big real estate development projects arenot what's bringing the twenty-somethings here. They're the oppositeof the new restaurants and cafes; they subtract personality fromthe city.The empirical evidence suggests you cannot be too strict abouthistoric preservation. The tougher cities are about it, the betterthey seem to do.But the appeal of Pittsburgh is not just the buildings themselves.It's the neighborhoods they're in. Like San Francisco and New York,Pittsburgh is fortunate in being a pre-car city. It's not toospread out. Because those 25 to 29 year olds do not like driving.They prefer walking, or bicycling, or taking public transport. Ifyou've been to San Francisco recently you can't help noticing thehuge number of bicyclists. And this is not just a fad that thetwenty-somethings have adopted. In this respect they have discovereda better way to live. The beards will go, but not the bikes. Citieswhere you can get around without driving are just better period.So I would suggest you do everything you can to capitalize on this.As with historic preservation, it seems impossible to go too far.Why not make Pittsburgh the most bicycle and pedestrian friendlycity in the country? See if you can go so far that you make SanFrancisco seem backward by comparison. If you do, it's very unlikelyyou'll regret it. The city will seem like a paradise to the youngpeople you want to attract. If they do leave to get jobs elsewhere,it will be with regret at leaving behind such a place. And what'sthe downside? Can you imagine a headline "City ruined by becomingtoo bicycle-friendly?" It just doesn't happen.So suppose cool old neighborhoods and cool little restaurants makethis the next Portland. Will that be enough? It will put you ina way better position than Portland itself, because Pittsburgh hassomething Portland lacks: a first-rate research university. CMUplus little cafes means you have more than hipsters drinking lattes.It means you have hipsters drinking lattes while talking aboutdistributed systems. Now you're getting really close to SanFrancisco.In fact you're better off than San Francisco in one way, becauseCMU is downtown, but Stanford and Berkeley are out in the suburbs.What can CMU do to help Pittsburgh become a startup hub? Be aneven better research university. CMU is one of the best universitiesin the world, but imagine what things would be like if it were thevery best, and everyone knew it. There are a lot of ambitiouspeople who must go to the best place, wherever it is. If CMU were it, they would all come here. There would bekids in Kazakhstan dreaming of one day living in Pittsburgh.Being that kind of talent magnet is the most important contributionuniversities can make toward making their city a startup hub. Infact it is practically the only contribution they can make.But wait, shouldn't universities be setting up programs with wordslike "innovation" and "entrepreneurship" in their names? No, theyshould not. These kind of things almost always turn out to bedisappointments. They're pursuing the wrong targets. The way toget innovation is not to aim for innovation but to aim for somethingmore specific, like better batteries or better 3D printing. Andthe way to learn about entrepreneurship is to do it, which you can'tin school.I know it may disappoint some administrators to hear that the bestthing a university can do to encourage startups is to be a greatuniversity. It's like telling people who want to lose weight thatthe way to do it is to eat less.But if you want to know where startups come from, look at theempirical evidence. Look at the histories of the most successfulstartups, and you'll find they grow organically out of a couple offounders building something that starts as an interesting sideproject. Universities are great at bringing together founders, butbeyond that the best thing they can do is get out of the way. Forexample, by not claiming ownership of "intellectual property" thatstudents and faculty develop, and by having liberal rules aboutdeferred admission and leaves of absence.In fact, one of the most effective things a university could do toencourage startups is an elaborate form of getting out of the wayinvented by Harvard. Harvard used to have exams for the fallsemester after Christmas. At the beginning of January they hadsomething called "Reading Period" when you were supposed to bestudying for exams. And Microsoft and Facebook have something incommon that few people realize: they were both started during ReadingPeriod. It's the perfect situation for producing the sort of sideprojects that turn into startups. The students are all on campus,but they don't have to do anything because they're supposed to bestudying for exams.Harvard may have closed this window, because a few years ago theymoved exams before Christmas and shortened reading period from 11days to 7. But if a university really wanted to help its studentsstart startups, the empirical evidence, weighted by market cap,suggests the best thing they can do is literally nothing.The culture of Pittsburgh is another of its strengths. It seemslike a city has to be socially liberal to be a startup hub,and it's pretty clear why. A city has to tolerate strangeness tobe a home for startups, because startups are so strange. And youcan't choose to allow just the forms of strangeness that will turninto big startups, because they're all intermingled. You have totolerate all strangeness.That immediately rules out big chunks of the US. I'm optimisticit doesn't rule out Pittsburgh. One of the things I remember fromgrowing up here, though I didn't realize at the time that there wasanything unusual about it, is how well people got along. I'm stillnot sure why. Maybe one reason was that everyone felt like animmigrant. When I was a kid in Monroeville, people didn't callthemselves American. They called themselves Italian or Serbian orUkranian. Just imagine what it must have been like here a hundredyears ago, when people were pouring in from twenty differentcountries. Tolerance was the only option.What I remember about the culture of Pittsburgh is that it wasboth tolerant and pragmatic. That's how I'd describe the cultureof Silicon Valley too. And it's not a coincidence, because Pittsburghwas the Silicon Valley of its time. This was a city where peoplebuilt new things. And while the things people build have changed,the spirit you need to do that kind of work is the same.So although an influx of latte-swilling hipsters may be annoyingin some ways, I would go out of my way to encourage them. And moregenerally to tolerate strangeness, even unto the degree wackoCalifornians do. For Pittsburgh that is a conservative choice:it's a return to the city's roots.Unfortunately I saved the toughest part for last. There is one morething you need to be a startup hub, and Pittsburgh hasn't got it:investors. Silicon Valley has a big investor community becauseit's had 50 years to grow one. New York has a big investor communitybecause it's full of people who like money a lot and are quick tonotice new ways to get it. But Pittsburgh has neither of these.And the cheap housing that draws other people here has no effecton investors.If an investor community grows up here, it will happen the same wayit did in Silicon Valley: slowly and organically. So I would notbet on having a big investor community in the short term. Butfortunately there are three trends that make that less necessarythan it used to be. One is that startups are increasingly cheapto start, so you just don't need as much outside money as you usedto. The second is that thanks to things like Kickstarter, a startupcan get to revenue faster. You can put something on Kickstarterfrom anywhere. The third is programs like Y Combinator. A startupfrom anywhere in the world can go to YC for 3 months, pick upfunding, and then return home if they want.My advice is to make Pittsburgh a great place for startups, andgradually more of them will stick. Some of those will succeed;some of their founders will become investors; and still more startupswill stick.This is not a fast path to becoming a startup hub. But it is atleast a path, which is something few other cities have. And it'snot as if you have to make painful sacrifices in the meantime.Think about what I've suggested you should do. Encourage localrestaurants, save old buildings, take advantage of density, makeCMU the best, promote tolerance. These are the things that makePittsburgh good to live in now. All I'm saying is that you shoulddo even more of them.And that's an encouraging thought. If Pittsburgh's path to becominga startup hub is to be even more itself, then it has a good chanceof succeeding. In fact it probably has the best chance of any cityits size. It will take some effort, and a lot of time, but if anycity can do it, Pittsburgh can.Thanks to Charlie Cheever and Jessica Livingston for readingdrafts of this, and to Meg Cheever for organizing Opt412 and invitingme to speak.
