The 1 Thing that Determines Your City’s Entrepreneurial Success
While studying U.S. cities, we found that the answer to this question told us a lot about the future of a city’s startup ecosystem.
When we visited Wilmington, North Carolina last year, we saw a city in the midst of an economic transformation. In Lansing, Michigan, we caught an even earlier glimpse of a city that’s still in the very early stages of its evolution, with entrepreneurs setting the stage for what they hope will be a fruitful future.
There are many factors that make Lansing unique, even in relation to the other cities we’ve visited this year. In many ways it resembles Buffalo, New York, another formerly formidable city that fell on hard times following the decline of its historically strong manufacturing base.
Lansing is probably best known to people as a car town. It’s a designation that hardly tells the full picture, even if the automobile sector has long had a presence in Lansing.
Apart from automaking, Lansing benefits from its connection to Michigan State University, a world-class research center with tens of thousands of undergraduate and graduate students. It also is a seat of government and is a hub for the insurance industry.
Even though Lansing has traditionally relied on these four major elements to stoke growth, the city is beginning to see a vibrant entrepreneurial ecosystem take hold, says Thomas Stewart, a local entrepreneur who founded The Center for New Enterprise (NEO Center.) Launched in 2007, the NEO Center got off the ground just as the U.S. economy was beginning to tank. Though the timing might have been inopportune, the incubator has seen steady demand since opening its doors.
Yet in the incubator part of the NEO Center, which officially started four years ago, there have been some major changes that Stewart has noticed only within the past year or so. When in the past there were only a handful of entrepreneurs who attended local meet ups, now there are a few dozen people. There’s momentum building, and it’s beginning to have a spillover effect.
“There’s a lot of things I’m seeing that I’ve never seen in the past,” Stewart tells Free Enterprise. “It’s a lot more unique bars and restaurants, and there’s a lot more housing that’s being built. There’s also just more development in general. When we first started [the NEO Center] here, there were just a ton of dive bars that served bad beer.”
While Stewart’s observations are anecdotal, a slew of newly released data shows that the city’s economy is continuing to improve. According to the Bureau of Labor Statistics, Lansing’s unemployment rate stands at 3.8 percent, a figure that is significantly lower than the 5 percent national average. The city also has a relatively high share of jobs in the so-called STEM fields of science, technology, engineering, and math, according to the Brookings Institute.
Stewart and his fellow local entrepreneurs are trying to harness the city’s strengths to further flame Lansing’s forward momentum. “We’re really trying to find and encourage entrepreneurs to target our major industries,” Stewart says.
Stewart says they’re taking a cue from cities that have done just that. “We have major employers here already, so our goal is to try to work with them to find out what their pain points are and have a bunch of entrepreneurs get together to solve them. It’s not an idea that’s unique to us. We’ve seen it play out in other cities in the Midwest, in states like Illinois and Wisconsin, and we know that the model works. It’s just replicating it here that will be challenging.”
This kind of strategic approach to economic growth is still in its infancy, but Stewart is confident that it will pay dividends, especially over the long-term. In the meantime, he is actively working to build better relationships among the various—and previously disconnected—established industry players in Lansing. This effort has resulted in a partnership with Michigan State University that helps mentor and coach university entrepreneurs looking to get their fledgling businesses off the ground.
With so much of the groundwork in place, Lansing is reaching the kind of critical mass that its entrepreneurial community is hoping will translate into the sort of economic growth and vitality that’s characteristic of cities like Ann Arbor and Madison, Wisconsin. “I tell people all the time, especially interns, that Lansing is a great place to find a job. It’s a great place to make jobs and to create your own thing,” Stewart stresses.
“I think that’s what changed for us, particularly compared to what it used to be like. Eight years ago, there weren’t any resources to support the city’s entrepreneurs. Now, we have so many people who are invested and interested in supporting people who want to do new things, and there’s so much to do. There’s so much that can be created in Lansing,” Stewart says. “We have all the assets we need here.”
With the framework laid and entrepreneurs increasingly viewing Lansing as a destination instead of a jumping off point, there’s a lot that could happen over the next decade. If Stewart and his fellow entrepreneurs can successfully connect with Lansing’s entrenched players to tackle major problems and systemic issues affecting their industries, there’s no telling what could happen. Maybe Lansing will be the next Buffalo. Or perhaps another upstart city will one day be called the next Lansing.