The Intersection of Tech, Venture and Cities

Perhaps this is reassuring: you weren’t the only one who hadn’t heard of WhatsApp when Facebook bought it for $19 BILLION dollars. Or hadn’t used Beats when Apple bought it for $3b. Or Tumblr, when Yahoo bought it for $1b. These are household names spending billions to acquire relatively obscure ones, leaving many of us ordinary folks to ask: where did these young companies with multi-billion-dollar valuations come from, and how and where can I find the next one?Over the last four years, I have overseen investments in 600+ early stage tech startups in more than 35 countries. I have seen them emerge from urban and rural settings, men and women, teams and individuals, young and old, the college-educated and the streetwise. Disruptive ideas can emerge from virtually anywhere.

In fact, as technology quickens the trip from idea to product, and helps to connect founders with seed capital and talent, some are pronouncing the old business axiom of “location, location, location” – having been around for generations – all but dead. The question of where entrepreneurs and their dispersed teams and businesses are from, they say, is “tricky.”

This is nonsense.

What I have learned as both venture investor and serial founder is that while startups can be born anywhere, businesses are grown somewhere, and that somewhere is important.

In a recent report by Brookings, the geography of innovation is changing from spread-out and isolated to concentrated and connected. A growing number of people across the globe are living in cities, according to this report, from a majority in 2009 to an expected 70% by 2050. The fact that so much tech growth now is happening in cities reflects the evolution of the Internet. The rise of digital commerce, social networking and online media presents new opportunities for design, expanding tech communities to include writers, artists and other creative professionals who have always gravitated to cities.

We see evidence of this as Twitter and Zynga have migrated away from the sprawling corporate clusters of Silicon Valley and into San Francisco, proudly owning their brand’s roles within SoMa’s more urban environment. And we see burgeoning urban tech movements taking root in Las Vegas, Montreal, and here in Crystal City, Virginia, just across the Potomac River from the nation’s capital and its closest economic hub.

Here in Virginia, this trend is happening organically and not as a product of governmental intervention, public funding or grants. Choosing Crystal City as the headquarters of my company, Disruption Corporation (which produces private market research and manages Crystal Tech Fund for post-seed, high-growth tech companies), was a conscious selection of a combination of infrastructure, resources, and educated talent pool that make it more likely for companies to succeed.

Here in Crystal City, tech and creative workers in crucibles like TechShop (think: Square) are neighbors to defense titans Lockheed-Martin and Boeing. The mixed-use neighborhood itself has an international airport within walking distance and easy bike and metro access to DC, and sweeping views of the monuments. It has restaurants and retail, offices and open-air courtyards with WiFi. And it has a visionary, dominant owner, Vornado, the $30b REIT that is investing in its own back yard and the future of its business. All of these features are attracting the young creatives who seek out collaborative living, and whose quest for innovation and new efficiencies will no doubt shape our collective futures and economic landscape. The latest researchon this urban renaissance shows that areas with a faster growing tech sector tend to have faster growing non-tech employment as well.

Based on what I’ve learned in Silicon Valley and traveling the world in search of the most promising startups, my goal over the next year is to create the most desirable place for high-growth tech companies and their workers to live, work, play and grow. I expect over the next 5-10 years our work in Crystal City will become the model for how other cities integrate technology into their own ecosystems and economic lifeblood.

Yes, it is cheaper than ever for you to start a tech company and you can do it anywhere. Don’t forget, though, that it’s also easier for everyone else, including your future competition. Growing that startup into a real business increasingly requires that the founding team commit visibly, not just virtually, to its customers, shareholders, brand and the broader community. It can seem to reasonable people that the big private market exits come out of nowhere. But the real opportunity for us as investors and as a country, is to help build the ecosystem – the somewhere – that helps these young tech companies compete and win.