Ya know nothing is better than when you are being interviewed and someone asks you a question and you answer it and think back and say….damn I nailed it. Well I had one of those strokes of genius recently when I was being interviewed by a Drexel law student who asked me about what I liked about being in Philly as a business owner.
For some background this debate is hashed over, and over, and over again. Philly has no community for startups, I couldn’t grow by business in philly with the taxes, I couldn’t find innovative companies in philly, stop your whining. Especially if business taxes are really your issue you relocate to Nevada, Texas, Florida – you know the states with NO INCOME tax.
Then in the other camp you have the Philly’s awesome for every one and every company should be here cheerleaders who need to chill too. It’s OK, Philly is NOT for everyone, try convincing Google they should have opened their NYC office in Philly, or Bluefly, or a slew of other companies, including ex-philly company orpheus media research – sometimes it just doesn’t make sense, and that is OK. Other times, people might just want to change scenery, in the same way I don’t take it as a knock on my neighborhood of Northern Liberties when someone decides to move to Queen Village, we all know people change.
The truth is fighting over if a company should be located in NYC over Philly is a bad fight to pick. But first, lets realize who matters and who doesn’t in this conversation (let me start ducking now) – then we can talk how to make things happen here.
Philly isn’t hurting because one person decided to leave, EVER. So when individuals decide to leave, why is that even news? If your argument is that Google, facebook etc were one/two person companies that grew into what they are – point taken, but for every google/facebook there are millions of other small businesses that have no shot of ever becoming that & fizzle out.
Next if your tech company is 1-5 people and you decide to pick up and leave, big whoop. Usually, and I say USUALLY, companies of that size are not what causes a our city pain – as there is churn there.
I think the companies we need to try to retain are the tech companies who are typically 10+ employees or that have a growth trajectory that shows them as a “mover”. Under 10 people / certain revenue growth you’ll always have some shops leaving and some shops emerging here, but its the ones who have the BRIGHT futures and leave, they are the ones that really hurt. I tend to think of the Venmo / Ticketleap types.
I don’t know how many of Marchex Voice’s employees stayed here but they are a philly company got bought for 28 Million by a Seattle parent. Look at invite media, who got bought by Google for 80 Million (I think) – lets talk to them. I think our focus should be on these types of companies…instead of worrying about the 1-2-3 person shops who leave…lets make sure we as a community stay in touch with people who don’t need to be convinced of Philly’s greatness, but already believe in it. That should be focus #1.
Area #2
Focus on those Philadelphia companies who have been bought by or are heavily invested in by companies in other cities. Examine their track record, do the parents let companies typically stay where they are, or do they usually within a year or two fold them into the next regional office. Knowing if this is an issue will help us stay on top of our “big players” locally. Remember 80 Million is a LOT of money, I think you could take almost every tech/internet startup in Philly under 20 people and their combined value would likely not be valued at 80 Million. That is the other big thing here people, SCALE! If 100 startups (who will probably fail, I’m not being pessimistic, its the truth) leave the city that may not equal he impact of 1 BIG player leaving. Our time is not limitless, so lets focus it on the people who are movers.
Area #3
Many tech companies are funded by some angel / VC, as such the city should stay on top of VC activity outside of the area, which companies are attracting funds by organization who can have influence over them. That influence could be also on where they are located. Not that the city can stop someone, but a focus on helping articulate the values of being in Philly would be helpful.
That is what our local government should be doing…take a part of our high tax burden and spend it on analyzing the fastest growing companies actually in Philly. Bring them to the mayors office. Have the Mayor talk about his plan to these people – turn them into local cheerleaders for why we are in Philly…see the idea below.
Area #4
If someone relocates to SF, guess what? They were going to go anyway…its the companies located in wilmington, king of prussia and conshohocken that I think are targets for this strategy.
Tech companies that are located outside the city but within a 20-30 mile radius…this is where my road show concept comes into play. Personally it is good networking to meet other successful growing companies but also to have our small growing tech companies talking to other companies about the values of being in the city is worth while.
Turn these companies into an army! Put on a road show, get them out in the greater Philadelphia area, South Jersey, Wilmington, etc – get them in front of other tech companies that are 5-100 people (I dream small sorry) and have the people who have built companies here talking to the people who should hear their story. I am sick of this “we’re a region” approach I know the mayor has to say it to be PC. I’d go after them first.
The hard part about turning these people into an army is that they are insanely busy growing their companies. But I bet many would be willing to listen if you said anyone who gets selected into this group must commit to 3 road shows a year and if they fulfill that promise they get their wage taxes cut 25-50-75 percent. I might be willing to jump on a few trains, or drive around regionally to get a break – but at least I am getting that break to help bring more companies here – which expands the tax base.
Lastly I’ll say our wage tax sucks, and our business taxes suck. This year our wage taxes alone could have paid for an employee! GRRRRR!
But I will say that there are some intangibles about being in the city that won’t show up on our P&L but have an impact. I never thought about them until that interview when they just kind of “came out”…here they are:
1 – Frustration – traffic getting into a major city is always frustrating, I know a ton more people who hate their commute than those who enjoy having 30-40 minute drives to and from work. I walk/skateboard about 5 minutes to work everyday…this maxes out my productivity, if I had to drive in my productivity would take a hit.
2 – Employee Productivity – texting or answering emails while driving is dangerous. taking a train or bus into work allows your commuting workforce to get some time to do work. Even if it is only 1 hour of work a week. If you have 20 employees who commute into work you end up with 20 hours a week that are productive vs unproductive drive times – multiply that by 52 weeks a year and you have about 1000 wasted hours that are now productive. While you can take public trans to the suburbs, the hard part is once you get off public trans, how do you get to your office?
3 – Travel costs – god forbid you have people who travel a decent amount…the costs of parking cars at the airport or taking a shuttle vs a taxi or train add up.
4 – Creativity – I don’t know about you but it I get some of my best ideas based on the day to day of my life, just passing by store owners, watching people get tattoos, and what not. If you need creative people, you know a lot of them may be in/around cities meaning they typically love working for companies where their commutes are not crazy. I have seen that for most of the creative tech companies, more and more of their employees live in the city.
5 – Its just cooler – lets be honest, our restaurants are better, our cultural options are better, and again with a creative class they see being close to these things as a value add in their personal lives.
Ok, I know this post is all OVER the place, but I can’t spend any more time to clean it up. 🙂
Go philly!