It’s no secret that a lot of cities out there want to become the next Silicon Valley (or San Francisco, since a lot tech companies seem to be now setting up shop there instead). With the shift towards a knowledge/information/networked economy (pick your favorite name), cities around the world are betting that entrepreneurship is going to be the key to future economic growth.

As an example, I was reading yesterday about a Buffalo-based business plan competition called 43North. It’s allegedly one of the biggest business plan competitions, ever:

With $5 million in cash prizes, including a top award of $1 million, six $500,000 awards and four $250,000 awards, 43North is setting out to turn the best new business ideas from around the globe into reality.

In addition to cash, winners will receive mentoring and free office space for a year. But while the competition is open to anyone in the world, you have to relocate to Buffalo for a minimum of one year if you win. 

It’s a bold move. $5 million is a lot of money. But it strikes me as a step in the right direction to reinvent a city that was once the 8th largest in the US. I’m a big believer in the power of entrepreneurship.

But 2 considerations do come to mind.

The first is that this move can’t, or at least shouldn’t be, purely about business and economics. To create an entrepreneurial hub, I think you need to also ensure that you have a city that young people would love to live in.

I’m not saying that Buffalo isn’t one of those cities (I don’t know it well enough to comment), but I am saying that it should be part of any economic development strategy. Why do you think more and more startups are moving from Silicon Valley to San Francisco?

The second is that I worry we may end up with too many cities trying to become the next Silicon Valley. The industrial economy allowed for the creation of a certain number of thriving metropolitan regions (see: The Rust Belt).

But I’m not so sure the networked economy will require as many. I could be wrong, but the data seems to suggest that we’re heading towards a spikier economic landscape—both within cities and across nations.

In any event, here’s my question for the community: Would you move to Buffalo?

As a follow up to my recent post called “Disrupting everything”, I thought I would share this talk by venture capitalist Chris Dixon at Y Combinator’s Startup School. In it, he talks about why good ideas often seem like bad ideas at first.

Chris frames the discussion by saying that when you have a good idea—that everyone else thinks is a bad idea—you effectively know a secret. But by a secret, it’s really that you believe something that nobody else believes to be true. So much so that when you try and tell everyone else about your secret, they all think you’re crazy, which is frustrating because it seems so obvious to you.

He then provides a number of characteristics that can help you identity good ideas that seem like bad ideas:

• Powerful people dismiss them as toys.

• They unbundle the functions done by others.

• Did it originate as a hobby?

• Do they challenge social norms?

Now, he’s obviously talking about startups, but I think the framework can apply outside of the technology world. I think it can apply to cities. 

To give you one example, let’s consider laneway housing. If you’re a regular reader of this blog, you’ll know that I’m a big supporter of laneway housing in Toronto. But that it’s something the city generally does not support.

However, there are laneway houses being built and they’re being built by architects and progressive urbanists. Some might even call it a hobby, because it remains a pretty tough business model at the moment.

Personally, I think one of the main reasons the city is unwilling to formally allow laneway housing is because it challenges social norms. I’ve read the staff reports and the meeting minutes: people think it’s weird to live off a laneway. In fact, in one case somebody asserted that since laneways are generally undesirable urban spaces, anybody who would want to live off one is almost surely a social degenerate.

But there’s absolutely nothing inherent to human beings that says we can’t live off a 5m wide street or that we can’t have a “house located behind another house.” Those are simply constructs we’ve created for ourselves.

So the next time you hear about an idea that you think seems like a bad idea, ask yourself: Is it really a bad idea or does it just make me feel uncomfortable because it contravenes the norm? Taking yourself out of your comfort zone is a good thing. It’s how we grow.

A friend of mine posted this article on my Facebook wall yesterday: “A Snowier Silicon Valley in BlackBerry’s Backyard.”

It essentially talks about the fact that despite the rapid decline of BlackBerry (it just reported $4.4 billion in losses), the Kitchener-Waterloo region is thriving. Many companies—both local and international, such as Google and Motorola, Square, Desire2Learn, Kik and others—have all hung their shingle in the area. 

Part of this certainly has to do with the University of Waterloo, but much of it also has to do with the legacy of BlackBerry. In fact, you could argue that BlackBerry (formerly Research in Motion) is what started at all.

In reading the New York Times article I was reminded of a post that Fred Wilson wrote last year called, “The Darwinian Evolution of Startup Hubs." It’s a great post. In it he talks about how he looks for the company that gave birth to the hub. In Silicon Valley he argues that it was Fairchild Semiconductor and in New York it was Doubleclick.

Once started, he likens the hub to a growing forest. The big trees (mature companies) start dropping seeds and new trees then start to grow (more startup companies). This is important, because it kick-starts a non-linear cycle of entrepreneurial growth.

Here’s how he maps out Silicon Valley:

"In my mental model of Silicon Valley, the first "tree" was Fairchild Semiconductor (founded in 1957) which begat Intel (founded 1968) which begat Apple (1976) and Oracle (1977), which begat Sun (1982), Silicon Graphics (1981), and Cisco (1984) which begat Siebel (1993) and Netscape (1994), which begat Yahoo! (1995) and eBay (1995), which begat Google (1998) and PayPal (1998), which begat YouTube (2005), Facebook (2004), and LinkedIn (2003) which begat Twitter (2006) and Zynga (2007), which begat Square (2010), Dropbox (2008), and many more."

Using this logic, Fred Wilson argues that Silicon Valley is about 10 cycles in and New York is at about 2. So what about Kitchener-Waterloo? Well if you buy into the argument that BlackBerry is what started it all, we’re really only into our first cycle. BlackBerry created a lot of wealth and talent, and now it’s being deployed into local startups. Our forest has begun.

Part of me worries, though, if Kitchener-Waterloo is the right place for a startup hub over the long term. Sure it has the University of Waterloo, but does young talent want to be there? At about 320,000 people, it’s no San Francisco, New York or Toronto. And we’re already seeing a significant pull towards urban centers.

But let’s look at it from the perspective of Southern Ontario as a whole. We’re at a critical moment in our evolution. The mother tree has caught a disease and it’s starting to take its toll. It may be able to fight it off, but right now it’s not looking promising. Thankfully, there are many young trees sprouting up to replace it. But we’re going to need to take special care of them, because they’re probably our best shot at creating our own thriving forest.