Irving Wladawsky-Berger: Innovation and Entrepreneurship in Large Metropolitan Areas
For several years now I have been thinking about the differences between various models of innovation and entrepreneurship. In particular, I have been trying to understand the key differences between the innovation and entrepreneurship models that have worked so well in Silicon Valley, the Boston-Cambridge area and similar high-tech, VC-based regions, and the models that might be more applicable to large metropolitan areas like New York and London.
The Silicon Valley model has become the most prominent example of what it means to be a successful innovation hub. Over the last few decades, it has been the leading region in the creation of new high-tech products and companies based on advanced digital technologies. A number of regions around the world have tried to become the next Silicon Valley, hoping to develop the right ecosystem mixture, - including technologists, entrepreneurs, venture capitalists, - that will establish their region as a world class center of innovation. Most such efforts have fallen short of their goals, - a number ending in outright failure.
Why is that? To begin with, most successful high-tech innovation hubs have been built around the great engineering universities in their midst - Stanford and UC Berkeley for Silicon Valley, and MIT for the Boston area. Over the years, these regions have brought together and carefully nurtured a large and fluid community of technologists and, entrepreneurs who share ideas as they move from company to company - as founders, employees, managers, board members or investors. They have achieved a remarkable network effect particularly suitable for high-tech innovation that give them an advantage in scale that is almost impossible to replicate.
Their university-based, high tech innovation model is particularly oriented toward finding The Next Big Thing, - that is, the next big technology, product or service that will take world markets by storm, transform whole industries, and in the process, create considerable wealth for their creators and investors. They have been at the center of several waves of disruptive innovations and creative destruction over the past few decades, and will continue to do so into the future.
But, beyond a few niche areas, this is not a model of innovation and entrepreneurship generally suitable for a large metropolitan region like New York. A model that would work for New York has to leverage the key strengths of the region. Let me briefly discuss three such New York strengths in particular.
First is its large population base - 8.5 million in New York City, and about 20 million in the NY metropolitan area. The NY metro area is also one of the wealthiest in the world, both in terms of aggregate GDP - $1.5 trillion, and GDP per capita, - around $80K.
Next is New York’s position as one of the world’s major global business centers. One sixth of Fortune 500 headquarters are in the area, as well as a very large number of medium and small companies serving its large consumer, business, health care and public sector base.
Last but not least, New York continues to attract talent from all over the world in a wide variety of fields. It is a place where smart, creative, hard working people want to live, work and make it.