Sunday, October 23, 2005

Notes from Austin: Why is Austin entrepreneurial?

The Greater Greenville Chamber of Commerce took an intercommunity visit to Austin, TX on October 16, 17 and 18. These are notes from that trip.

What makes Austin so entrepreneurial? That was the question I asked every chance I got to anyone who would listen.

Maybe the most honest answer we got was, "We don't have any idea," which gets to the heart of how difficult it is to understand a very complex cultural dynamic. Perhaps in some ways it might be hardest for people in Austin to see how different their culture really is. But we dug deeper.

The easy answer that we heard over and over again is that it comes from students. There are 50,000 students at the University of Texas, and tens of thousands more within a 100 miles. There is a brain drain from other places in Texas, and even around the world, to Austin, with 55 percent of the population having a college degree. The most well known example is the young Michael Dell dropping out of school at 19 to start Dell Computer. Several of the largest home grown companies in Austin were started by people 19 to 24 years old.

John Thornton of Austin Ventures pointed out that many of the best entrepreneurs spin out of large companies in the area. They have an idea about how to serve a niche of customers not well served by the status quo. They go to their boss with the idea and get the answer, "That's a great idea, but that is not the business we are in." Austin Ventures likes to talk with those managers.

John Sibley Butler, Director of the Institute of Creativity and Innovation, said that much of the entrepreneurial drive and energy comes from immigrants and other outsiders. He's written a book about it, Immigrant and Minority Entrepreneurship : The Continuous Rebirth of American Communities. His argument is that throughout America's history, the first generation are highly motivated merchants. The second generation are attorneys and accountants. The third generation are philanthropists. And the fourth generation are worthless.

I am struck that all these folks - students dropping out of school, managers leaving companies, and immigrants - are misfits. They don't fit into the power structures that exist in the community. They are driven to create something new where they can be in control. Many don't do what they do because they want to as much as because they have to.

They don't always maintain this entrepreneurial energy throughout their career. Very few companies have spun out of Dell Computer, because, the theory goes, Dell is a very internal looking company that likes to control everything in its sandbox. Other companies in Austin are much more collaborative with outside firms and spin out new companies, which may not be better for their shareholders, but it is clearly better for the community as a whole.

In Austin, the whole notion that most of the creative energy is driven by outsiders ties into the idea that Austin is Weird - a place where differences are celebrated. The notion challenges us to understand how outsiders are incorporated into our community back home.

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