Moneyball for Cities

Trailing indicators are a terrible way to measure the future potential of a city’s tech scene. Aggregating the numbers make these trailing indicators even worse (e.g., aggregate capital raised, aggregate revenue, aggregate number of employees).

If you want to make your city better, start something. If you want to help make your city better, invest in programs and events that help more people start something. This is why, at the local level, we ought to be talking more about entrepreneurship than innovation.

With¬†roughly¬†470 first-time venture firms trying to raise a fund,¬†the overall micro-VC trend doesn’t appear to be slowing. Simultaneously, the global¬†interest in startups continues¬†to grow.¬†Bringing it all together is the growing sentiment that Silicon Valley isn’t the only place to start and grow tech companies anymore.

The point is that all the signs are pointing towards the economic growth of smaller cities and, given what I’ve seen on the tech tour this year, the best way to predict which cities are poised to become local tech hubs is to track the number of new businesses (read: startups) created over time.

The best way to gauge the potential of¬†a city’s future tech scene¬†is to track the number of business license filings. This is probably the best leading indicator of¬†a city’s “openness” to entrepreneurship over the long term.

Moneyball for cities is all about creating more startups and then doubling-down on those companies by creating more resources for the companies that show actual traction. Ultimately, creating ten new $1M/year companies or one new $10M would drastically transform local economies and the only predictable way to ensure that happens is to get more entrepreneurs to step up to the plate.