November 26, 2012
Let's start with the idea of a startup economy. Why is that a viable option for Binghamton? And how could that possibly replace the large industries that have left?
So if you're an entrepreneur, you create a job for yourself, but you can create a job for a bunch of your friends as well and that's how we grow the economy. It's particularly important in areas such as Upstate New York where we had a huge number of extremely successful companies, I mean it's like the Who's Who of the Fortune 500. You have the GEs, the Westinghouse, the Cornings, the Kodak, the Bausch and Lomb's, the Xerox, the Link Simulator, it just goes on and on and on.
And they're all basically gone now, they're a shell of themselves now, they're very small. They start out as a startup, they ramp up, they kind of peak and then they ramp back down. We have a huge number of companies in Upstate New York that are at the end of their life cycle, rather than the beginning, but we had so many of those large companies that the pipeline for some reason stopped. There wasn't this pipeline of hundreds of small companies, ramping up, which would become mid-sized companies, which would become large companies.
So for every 100 companies you start, maybe one of them will become a large company, or maybe it will take a thousand to create one large company. But you have to have that pipeline. That pipeline stopped. We have to restart it.
And what exactly do you mean by a startup company?
We're not necessarily talking about a 7-11 on the corner, a fast food franchise. Small businesses are important to a region, but they don't grow a region economically. You start a restaurant, a franchise, say a McDonalds here in town, people go there, they buy breakfast, they buy lunch, they buy dinner, and some of that goes to people who work in this region as salary. But a chunk of it disappears and goes off to McDonalds headquarters.
Ok, so you're siphoning money out of the region, you're not growing the region. If we start a Wal-Mart here in Binghamton, ok, there's Wal-Marts all over the country, all over the world, people go to Wal-Mart and then a fraction of those dollars comes back to Binghamton and so that investment is leveraged.
It seems like every small city talks about becoming the next Silicon Valley. Do you think Binghamton needs to create a unique identity that would work here?
It's a fascinating question that gets a lot of debate and there's been a fair amount of research. The essence seems to be "you can't do that. You can't create a cluster." So entrepreneurs create clusters, clusters don't create entrepreneurs. So the thing to do is create as many entrepreneurs as you can and they will probably self-organize and certain clusters will develop.
But if you say, here's where we're going to be strong and you're trying to push that area, what you're doing is you're taking money away from the area that was most likely going to develop and become strong. And we're not smart enough to guess the answer and so it's usually not a wise investment to try and pick the winners.
Do you see any advantages in the Binghamton area?
We do certainly have infrastructure left over from when we did things like electronic packaging. We have remnants of the simulator industry which was started here and was quite large here. So there are useful bits and pieces.
I would say that the huge advantage that Binghamton has, a couple of them. One is our geographic location - you can draw a 300-mile circle around Binghamton and that's 25 percent of the population of the US and more than half the population of Canada within 300 miles of Binghamton.
And we have five... whatever... interstates you know pouring into here. So we're kind of this little, very small, rural area, that is really very well positioned. We're 100 miles or so from the center of finance, the world's center of finance.
Up here a hundred square feet, you'll probably get for free. So young people are going to be making no money on this startup. The salaries are close to zero. So you have to be in a place where you can space for free, you have a lot of young people who have essentially no living costs, who have no commitments because it's hard to commit to something that is probably going to fail if you have, if you're married, you have a house, you have mortgage, you have kids, if you have any of those things, it's pretty hard to commit to something that's probably going to fail.
A student right out of college, why not? Especially right now, where most college students are unemployed or underemployed, why not take a fly around something like this? So you've got this wonderful population, you've got 4000 students a year pouring out into the community here locally, so it's a wonderful resource from the point of view of potential partners, inexpensive housing, inexpensive cost of living, pretty darn close to money. I think we have a lot going for us.
That was Binghamton University professor Ken McLeod, on Binghamton's potential future as a startup breeding ground.