Packaging a city’s value is a little different these days. It goes beyond regional battles and attempts to poach HQ’s from other metros. Cities compete globally, so in addition to quality of life, it’s important for local leaders to understand everything from national policy to industry trends and growth opportunities. And while Austin’s entrepreneurial diversity is one of its strengths, it can be tough getting to a sales deck everyone can agree on.
One of the organizations that’s helping refine that pitch is the Austin Technology Council, part nonprofit trade group and part think tank. With close to 300 member companies, ATC has a good pulse on what’s driving much of Austin’s tech sector. In a recent Forbes interview, ATC President Julie Huls highlighted some key points.
“Our 30-year software and semiconductor industry has proven to be a strong foundation for some of the newer-generation companies. E-commerce companies and software-as-a-service (SaaS) companies are growing rapidly in Austin. We’re starting to seek some growth within the life sciences area as well..”
The Life Sciences piece is something Huls’ team and a host of partners are pushing in the Central region. In June, data collected by ATC from more than 240 biotech companies showed a surprisingly mature industry cluster, with more than 60% of companies already generating revenue. Another key finding won’t surprise many of you. Funding was cited as the biggest challenge by 65% of the companies surveyed. The other one was finding the right people, with almost 40% identifying personnel and recruiting as a top priority.
Tom Kowalski, president of Texas Healthcare and Bioscience Institute (THBI), summarized the Life Sciences initiative at a recent ATC event in Austin.
“What we’re trying to do in Texas is create an environment for research/development and manufacturing in life sciences. This is a critical juncture to ensure the availability of the funds, talent and facilities needed to invigorate the industry.”
Huls also mentions the Texas Emerging Technology Fund (TETF) in the Forbes piece, reminding us there’s $400 million or so that’s been allocated for investments in innovative technology projects and research. The interesting part is how much of those funds have been set aside for biotechnology. According to a recent Economist piece, as of January 2012, almost half the awarded projects went to Life Sciences companies, tallying more than $370 million.
Besides industry diversity, the innovation sparked by high-tech clusters like Life Sciences is increasingly tied to local job creation. That recent Samsung announcement could have an even bigger effect on the local economy if you buy the arguments in Enrico Moretti’s book, The New Geography of Jobs. Brookings’ Mark Muro points to an excerpt.
“With only a fraction of the jobs, the innovation sector generates a disproportionate number of additional local jobs and therefore profoundly shapes the local economy. A healthy traded sector benefits the local economy directly, as it generates well-paid jobs, and indirectly as it creates additional jobs in the non-traded sector. My research, based on an analysis of 11 million American workers in 320 metropolitan areas, shows that for each new high-tech job in a metropolitan area, five additional local jobs are created outside of high tech in the long run.”
[And] it gets even more interesting. These five jobs benefit a diverse set of workers. Two of the jobs created by the multiplier effect are professional jobs—doctors and lawyers—while the other three benefit workers in nonprofessional occupations—waiters and store clerks. Take Apple, for example. It employs 12,000 workers in Cupertino. Through the multiplier effect, however, the company generates more than 60,000 additional service jobs in the entire metropolitan area, of which 36,000 are unskilled and 24,000 are skilled. Incredibly, this means that the main effect of Apple on the region’s employment is on jobs outside of high tech.”
That last sentence is what’s grabbing headlines. Whether Moretti’s data holds up or not, it’s clear there’s plenty of ancillary benefits for cities that have a strong tech legacy. The differentiator gets down to which cities can market themselves and out-execute the others. Time to sharpen the sales deck.