Can Startups Save the City?

 

When the Pittsburgh official found out that William Generett Jr. would be taking me on a tour of the city, there was a long pause.

“Well, OK,” he said finally, “but if there is anything more you’d like to see, let me know.”The official wasn’t worried that Generett didn’t know the story of Pittsburgh’s economic revival; he was afraid that he would stray from the official line. Generett is no radical; he’s president and CEO of Urban Innovation21, a public/academic/industry partnership that uses entrepreneurship to boost the poor neighborhoods of Pittsburgh. He and the city share the same goals, but don’t necessarily agree on tactics.

Still, for the first half of the tour Generett might as well be president of the Chamber of Commerce. He stops outside Bakery Square,  a multi-million dollar retail-and-office development, and talks about how it has helped revitalize the city’s East Liberty neighborhood. He points out a hotel and a clutch of high-end retailers (Trader Joe’s, Anthropologie, Williams & Sonoma, Coach, Sephora) and mentions the twin mixed-use development across the street scheduled to open in 2015.

He tags along on the visit to Google’s offices in a restored Nabisco factory that is the centerpiece of the Bakery Square and praises the search giant for its work in the neighborhood.

Click here to watch the Bakery Square video

 But after leaving Bakery Square the tour takes a turn city officials would rather it didn’t.

Generett heads a half mile east into Homewood, a desperately poor African-American community which was featured in a 2011 MSNBC broadcast that can be found on YouTube under the title, “Rachel Maddow Goes to America’s Most Dangerous Neighborhood.”

Neighborhoods left behind

The abandoned houses and boarded-up storefronts here are a sharp contrast to the buzz and energy of Bakery Square and the college campuses farther west. Pittsburgh’s entrepreneurial resurgence is little more than a rumor in Homewood and in other poor city neighborhoods such as the Hill and Uptown.

Standing at an intersection with abandoned buildings and vacant lots on all four corners, Generett drops the feel-good story line.

“It’s a myth that a rising tide lifts all boats,” he tells me. Homewood residents are aware of the entrepreneurial resurgence elsewhere in the city, he says, but have the same question: “How is it benefitting me? As a resident of the city I’m happy, but I don’t know what it means for me.”

Click here for a Homewood video

Generett is no radical. He just wants entrepreneurship to be spread more evenly through the city.

His tour through the “other” Pittsburgh underlies an unsettling reality of the city’s entrepreneurial boom: It’s overwhelmingly the province of highly educated whites or Asians and the wealth and jobs created have done little to help Pittsburgh’s vast underclass.

Standing across the street from the boarded-up Crawford Grill, a once-legendary jazz club in the historic Hill District, Generett chooses his words carefully, mindful of the times that the mayor has chided him for not echoing the Chamber line.

“We haven’t really seen significant investment put into spurring entrepreneurship here,” he says. “One of the reasons that our city has been successful as it relates to tech is that a lot of resources have been poured into making sure that we’ve been able to create a vibrant tech community. That’s not so much the case as it relates to spurring private entrepreneurship in communities like the Hill District. I’m a believer that that needs to be done.”

Click here for Hill District Video
 
Promising tech startups, he says, enjoy a network of support in Pittsburgh that usually begins at a university, but continues to provide money, mentoring and networking after graduation. After all that nurturing, even a successful software firm might employ only a handful of people, none of whom are likely to hail from the Hill. What, he wonders, if that same attention and investment were poured into low-tech startups in poor neighborhoods? There’d be fewer millionaires, but probably more jobs for the people who need them most, he speculates.

The same question is asked by Robert Vagt, president of The Heinz Endowments, the city’s second-largest foundation whose mission is help the region “thrive as a whole.” It’s not clear, he said, that it makes more sense to invest in high-tech entrepreneurship than grassroots startups that could make more of an impact in neighborhoods like Homewood and the Hill.

“It can be a little siloed and that’s the truth of the matter,” says Tom Link, director of the city Urban Redevelopment Authority, adding that the question is: “To the best extent possible how is it that we can leverage the great news that is the economic growth in the city so that it’s felt in as many neighborhoods as possible throughout the city?”

Powering up Pittsburgh

To address that, the city, along with Carnegie Mellon University, University of Pittsburgh, Urban Innovation21 and others in 2011 created PowerUp Pittsburgh to boost startups in poorer neighborhoods, whether they’re robotics firms or restaurants.

Government should not drive entrepreneurship, Link said, but encourage it and create the conditions under which it can thrive. While traditionally focused on real estate, the URA recently has shifted its focus to directly investing in startups, mostly through revolving loans.

The agency has invested $87 million directly in economic development projects which it says has leveraged $600 million in total project costs, creating 3,716 jobs and retaining 691 jobs.

A $25,000 grant from the Pittsburgh Central Keystone Innovation Zone, cheap rent and a program which supplies free interns are why entrepreneur Sanna Gaspard, Ph.D., works in a shared workspace in the poor Uptown neighborhood.

Her company, Rubitection, Inc., which is developing a new tool for early detection of bedsores, is still in its early stages, but she already is giving some thought to where she might locate when she outgrows her current space. She said she agrees with the idea of planting startups in poor neighborhoods, but added that any location must be safe, efficient and surrounded by the amenities a young company needs.

“It’s a great idea to bring (startups) to the distressed areas, but keep in mind that you have to support these companies at the end of the day. What would be the point of having distressed companies in distressed areas?” she said.

Social entrepreneurs

The city is getting help from a growing number of social entrepreneurs who want to succeed and help the community. Jomari Peterson, a doctoral candidate at Carnegie Mellon, said he is firmly planted in Homewood, regardless of whether he receives incentives. Hajj Media, an urban-based marketing and technology startup, will draw ideas and feedback from Pittsburgh’s poorest community while offering inspiration and, eventually, jobs, he said.

“As we grow and are successful that will help other people grow and be successful,” he said.
           
It’s not that the city dreams of turning all the residents of these neighborhoods into software developers and designers. Rather, the hope is that if enough startups – tech or otherwise – locate in an area, other businesses will spring up to support them, either directly through the supply chain or indirectly in the form of a coffee shop, dry cleaner or sandwich shop. These are the businesses that don’t require a degree or venture capital to launch and are more likely to employ local residents.

The last stop on Generett’s tour is the building where Urban Innovation21 has its offices. It’s where I meet one such entrepreneur-in-waiting. Barbara Strothers has been manning the security desk there for years, but last summer started her own firm, Grace Security. The Hill resident launched after taking a seven-week course in entrepreneurship from Urban Innovation21 and Duquesne University.

“Doing it for 13 years and doing it for someone else, I just decided, ‘Hey, I can do this for myself’,” she said.

She is still learning what it takes to run a business, but already has begun hiring and dreams of expanding Grace Security citywide and then out of state.

“It’s exciting,” she said. “It’s a lot of work, but I’m up for the challenge.”

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