Social entrepreneurship: how Philadelphia could have a regional distinction for startups

Philadelphia, like any other city that wants to compete in a global marketplace, needs a regional distinction that sets it apart, and in this place, nothing makes more sense than for Philadelphia to define itself as the hub for social entrepreneurship and urban renewal.

Around the world, our hubs of innovation and culture, of education and community are densest and most alive in cities. All of the truly great problems of our time — war and crime and poverty and disease and education and violence and racism and hunger and employment — are either exacerbated by or housed most primarily in our cities.

As a country, if the United States intends to continue to play some form of a major role in the future, the sense seems to be that we will need to do that by continuing to be smarter. Adaptability, industrial might and military strength have served us well, but we need to look for the next train.

Entrepreneurship and the spirit that came out of World War II federal funding (largely in Philadelphia first) helped define the last quarter century of American cultural impact. At a time of high unemployment and a sluggish economy, high technology and scale is meant to be that next train.

So cities do a lot of hand wringing about how to replace widgets with gadgets.

The trouble is that, as a friend put it, if Silicon Valley represents the overwhelming majority of investment in the country, and New York City is in second place, then just about every other city that is even trying is in third place.

How should Philadelphia (like any other big city) try to stand out?

WHY IT IS WHAT IT IS

If you’re a Philadelphia lawyer, you’re supposed to know every detail of the law. If you’re a Philly boxer, you’re supposed to have a great left hook. If you’re a Philly baller, you’re supposed to be able to take it to the rack. If you’re a Philly deli, you’re supposed to have Dietz and Watson meats and Tastykake treats.

Indeed, great cities are supposed to, as legendary architect Louis Kahn once said of Philadelphia, have ‘a character of personality, not impersonality.”

So, tourist pamphlets can be stuffed with the great news that Philadelphia has rich bicycle communities and beer communities and, increasingly, a restaurant community defined by its BYOB distinction. But when we want Philadelphia (or your city) to be part of leading the charge for the next economy, for restarting and rebuilding, for true urban renewal, we need to take it further to build business at its earliest stage. To do that, there is a central question.

What is the regional distinction of Philadelphia’s startup community?

The answer is that we don’t have one. Yet.

(For clarification, we care about startups because they build some jobs, offer some tax revenue and, most importantly, help build a culture of smart people that attracts more to do even more of the first two things and more).

Regional healthcare companies, a life sciences network and a legacy pharmaceutical presence make biomedical an inroad here (and your city probably has something, at some level, like it), something University City Science Center President Steven Tang astutely calls to lead in. Looking at the graph above from ChubbyBrain, you see a chunk of investment here dedicated to healthcare that other regions don’t have.

But here’s what I think.

Startups here should be defined by a social consciousness because Philadelphia is the largest city in the Western World that has every urban problem known to man at a deep level. Yes, I said it. The highest crime and poverty rates. A criticized education system, beleaguered city infrastructure, an outmoded tax structure, ailing institutions and decaying industry.

Social entrepreneurship is solving important problems while building a business that sustains the mission. And in Philadelphia, we have a lot of important problems. (More, I’d say, than Silicon Valley.)

For years, this has been Philadelphia’s curse. It can’t be a place for entrepreneurship because all of the social ills that bring this city down.

If you’re smart, you need to take what are your challenges and make them a strength.

THE EAST COAST SWING

Here’s what’s I predict: The Mid-Atlantic region will shine in the future. The urbanized megalopolis, which strings from D.C. to, one might argue, the New England jewels of Boston and Cambridge, will interest the urban minded of the future: walkable, car-less, dense. That means entrepreneurs and their ilk will continue to once again roost here.

History be damned: New York City’s tech revival will lead that, buoyed by being the financial and media capital of the country today. Washington D.C. will have its own cluster of entrepreneurship that seeks proximity to federal government and its related industries.

But the story doesn’t need to end there.

Philadelphia has another chance to un-make the last half century or so of its decline. To do that, the Philadelphia narrative needs to be changed so its community can have a reason to be here other than proximity to D.C. and New York. Consumer facing products and companies are what changes narratives — not the staid enterprise and biomedical class of this region (though we should not take them for granted).

So we need to continue to build that community.

There’s a chance Philadelphia could develop that perception with a runaway consumer facing success — Chicago has Groupon and Etsy and Tumblr seemed to note the revival of New York’s tech scene before anyone else much did. As a startup reporter, I can say that many people here in Philadelphia are trying to build that next consumer facing social Web 2.0 shining star here in Philly — maybe the videogame movement will break or something else will flourish — but it’s nearly a crapshoot.

Still, to have a rich and varied ecosystem, those are pursuits worth continuing.

But when we’re talking about a regional distinction, I think social entrepreneurship is an area Philadelphia could take hold. This is the argument:

  • Philadelphia is a big market with lots of industrial problems and a vibrant, collaborative tech community that wants to do good.
  • GPIC: The federally funded, sustainably-focused innovation cluster in the Navy Yard is a national model. Better energy efficiency is a poster child of the social entrepreneurship movement.
  • OpenDataPhilly.org: The first open data catalog built by the private market around which we’ve helped develop a civic-minded development community. **In a NewsWorks interview, I first started cobbling together these ideas that a civic hacker scene is the bedrock of social entrepreneurship.
  • Independents Hall: The Old City coworking stalwart has been ‘making it cool to care’ since the beginning, including its entrepreneurship and neighborhood interest.
  • GoodCompany Ventures: the socially-minded startup incubation program needs to get louder.
  • BLabs: the organization that certifies b-corporations has offices in New York City and suburban Berwyn. We need BLabs to bring offices into Center City.
  • Murex Investments: the East Falls investment fund specializes in the socially minded and houses in GoodCompany.
  • Nutter administration: Like their politics or not, the current mayor has been on watch during the launch of a number of interesting public-private initiatives like digital-divide focused FreedomRings, sustainable-minded Greenworks, tech-fueled OpenAccessPhilly and community action-orientated PhillyRising that could prove a new model. This is social entrepreneurship in the spirit of creating community-building models that don’t depend on government.
  • Code for America: The Oakland-based nonprofit that brings developer fellowships to city governments is coming back to Philly for its second year. It should open an East Coast office here, and we hear rumors that something just short of that could happen.
  • Healthcare and life sciences: Spin our existing infrastructure as a focus on improving the fundamental health of the world.
  • University City Science Center: The oldest urban research park in the country incubates life sciences companies that are having that very impact as noted above. It could focus its mission around life sciences that are improving medical treatment.
  • University Impact Fund: Drexel, Temple and Penn should lead an investment fund dedicated to urban renewal in their adjacent neighborhoods.

Philadelphia has a real network of institutions and real, deep problems. That sounds like an opportunity, which is good, because we need something.

WHY THE DISTINCTION MATTERS

A couple months ago, one of my colleagues was on a panel hosted by Select Greater Philadelphia for a gaggle of London entrepreneurs who were interested in either relocating to or opening up offices in North America.

Three questions about why Philly could be a serious option seemed to cut my colleague the most:

  1. What direct incentives in taxes and investment are there to move here? Ultimately, my colleague said, it seemed that if these entrepreneurs were going to challenge the default of New York or San Francisco, it was going to be for a hell of a tax break. If that’s your city’s only way to attract talent, you’re going to lose. Proximity is a strong incentive: so if Philly was a hub for social entrepreneurship, we could help fight our problems and attract new talent.
  2. Where is the top level talent coming from? As much as we trumpet Philadelphia as being with Boston as among the densest clusters of universities in the country, this international crowd didn’t have that attitude. For computer science, the University of Pennsylvania is a top 20 program and Drexel is battling to get there, plus Princeton is in the region and if Pittsburgh wasn’t having its own revival, Carnegie Mellon and Pitt would be within striking distance. However, fair or not, among the jetsetting, global elite with businesses to move, Penn still isn’t seen as an Ivy League power like Harvard or Yale and Drexel is surely not seen as a Stanford. So talent isn’t yet seen as a universal win for Philly (though there’s room for a win there).
  3. Will our clients perceive that we are less savvy because they are expecting us to be in New York? In the 21st century, globally, NYC is inevitably seen as the place for American business and finance. The assessment from many participating in the event was that even if they didn’t want to or didn’t care about being in New York themselves, or thought cost savings could be had by being somewhere else, they still felt the pressure to be seen as not making waves, of being where everyone else is. So, particularly when Philadelphia is so close, the question needs to be answered as to why would a startup of any kind, and certainly one from abroad, choose Philly over New York.

Right now, the sell on Philly all amounts to quality of life: it’s walkable, it’s pretty, it’s historic, it’s close to NYC and D.C., it’s affordable.

That can all be gravy. But it can’t be the meat.

Instead, this is my pitch for this city’s regional distinction.

Philadelphia entrepreneurs: we give a fuck.

That is, this is where people who want to solve real world problems with real impact should come. Combat poverty and crime and the digital divide and education and any other urban issue. Do it in Philadelphia. Your venture can help and find a place for real impact. Sounds like a case for the home of social entrepreneuership.

Then, with proximity and distinction, selling Philadelphia becomes much easier (which is good, because we probably won’t be considered affordable forever).

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