Yesterday I read this interesting blog post by Ken Archer, editor of Greater Greater Washington, about the challenges of attracting tech companies to a city or region through incentives like tax breaks or subsidies.
Ken focuses on the difficulties of defining what really is a tech company in this day and age when most companies appears to have digital strategies. He comes to the conclusion that companies that innovate are the ones that cities, like Washington, DC should focus on attracting.
I think it can be helpful to look at a recent presentation about startups by Steve Blank where he talked about how different startups work.
Steve talks about the "scalable startup" and I think this is the type of startup every city or region want to attract. A scalable startup is meant to grow big from the beginning and most of the time need risk capital.
When cities are trying to attract tech companies and startups, it is probably scalable startups they are thinking about because of the potential for rapid growth and job opportunities.
The question is then, what can a city do to attract companies like that? Is there any precedent that for example tax breaks would work? At a recent panel discussion at DCTech Meetup Ken Archer mentioned the case of Twitter being lured into San Francisco from Silicon Valley by tax incentives from the city. I really wonder how representative that example is because of the proximity of San Francisco to the Valley.
There are also others who argue that non-monetary factors play a large role in attracting startups and the people who create them (the crazy ones, the ones who think different), to a specific region. Richard Florida talks about the geography of tolerance in a recent piece in The Atlantic Cities and how tolerance is an important variable that correlates with the growth opportunities for startups and their founders.
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