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Startups drive new economy

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Tuesday, July 09, 2013


07.10.13 Blog MobileTechTo begin, I will grant you that I am more than enamored of the startup scene in Portland — and in Oregon as a whole. I also grant that it seems incredibly easy to brush aside this newest wave of startups. The numbers feel inconsequential. The relative impact appears too small to calculate, especially when compared to the massive, well-established scale of some of Oregon's traditional industries — and the Silicon Forest's history of technology pursuits.

But to ignore what is beginning to happen is a mistake.

It is naive to assume that this small community of creative technologists and entrepreneurs are simply spending their days building so-called "apps" on an ethereal platform for a relatively fickle market. Just as it is naive to assume that the economic benefits of these startups can be judged by the same metrics as the generations of businesses before them.

Massive numbers of employees, huge expanses of square footage, and tracking increasingly lackluster IPOs no longer capture the true impact of these entrepreneurial pursuits. We have moved beyond a desire to emulate predecessors or recreate ecosystems toward actually building something new. This time around, startups are working to capture the spoils of success within the unique culture that makes Oregon, well, Oregon.

In these crazy entrepreneurs are glimmers of the Henry Weinhards and Howard Vollums and Phil Knights and Dan Wiedens of this generation. And they are creating a measurable and demonstrable impact on our local economy — even if those measurements sometimes take on a different scope than that of their predecessors:

Like their predecessors, Oregon startups create jobs. But the majority of these jobs are high-paying rather than entry level. Over the past four years, startups in PIE — the early stage startup accelerator I cofounded and manage — have generated more than 400 jobs. Those jobs are only a small subset of the activity around the state. The majority of those newly created roles — quite literally “new jobs” — are high-paying, durable, and transferable. In fact, the Kaufmann Foundation, an organization focused on furthering entrepreneurship, has cited startup jobs as being among the best at having "long-lasting economic impact." Furthermore and likely all-too-obvious, those high-paying jobs contribute to strengthening the tax base for the entire state.

Oregon startups upcycle talent. The startup workforce is highly skilled but those skills are transferable to both startups and more traditional industries. And that transference can occur without undertaking the costs of retraining. This enables these creative technologists to move from company to company. This also provides the opportunity to import exceptional talent who are drawn to our quality of life.  Finally, it offers the option of allowing the would-be entrepreneur to take the risk of starting a new startup altogether, which in turn, generates a whole new set of jobs.

Oregon startups are building more companies, more quickly, with less waste. Waning are the days of needing to spend millions of dollars to create a business that might work. This generation of startups have been founded carrying only the overhead of employees and the machines on which they develop their technology. Costs are low; achieving scale is rapid. Money is put to work immediately. Products are launched in a series of weeks instead of years.

And if that initial presumptive foray into the market is not well received, these startups possess the ability to rapidly change direction and attack a new opportunity — without leaving boarded-up windows and former employees by the wayside.

Oregon startups are attracting capital from outside the region.  Startups that have collaborated in PIE have attracted more than $100 million in venture capital in less than four years, the bulk of which has flowed in from beyond Oregon's borders. Furthermore, startups in Oregon raised a whopping $146 million in Q1 of 2013, alone, overtaking Washington for the first time in ages.

Oregon entrepreneurs spend that hard-earned money in ways that strengthen the entire economy. This generation of startups — and the dollars they spend — are at the hub of the broader Portland ecosystem. Anecdotally, these entrepreneurs don't typically end the day with a mass-produced brew or dine at restaurant chains. Instead, they reinvest their capital in the efforts of their local entrepreneurial peers. Food carts, craft goods, artisan restaurateurs: all benefit from this overwhelming desire to buy local.

Oregon business has always been about that pioneering spirit and about taking risks with the hopes of great rewards. Those risks often take time to bear fruit. But in hindsight, they have seemed to be obvious extensions of our culture, built upon the foundations of our predecessors.

The burgeoning Oregon startup scene is just the latest pioneering foray. Pay attention. We’re just getting started.

Rick Turoczy is the cofounder of the Portland Incubator Experiment. He also writes the SiliconForest blog.

Editor's note:  Oregon Business accepts op-ed columns on topics relevant to the state's business community. See op-ed submission guidelines here.



0 #1 General ManagerGuest 2013-07-11 18:36:01
Rick, it should also be noted that many of Oregon's established companies were once startups ... Mentor Graphics, five guys out of Tektronix (with Tek's blessing and some seed money), Columbia Sportswear (the Boyle family), and even Nike (a waffle iron). Some startups can get quite big, as in the case of Urban Airship. So much for the snobs who only acknowledge big and established firms!
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0 #2 Salem WatchdogGuest 2013-07-15 21:08:48
One of the most exciting bills of the last legislative session is HB2323 which invest and start-ups AND give taxpayers the same ownership interest as other venture capital investors. It's exciting to see Oregon expand it's start-up ecosystem.
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