DC Ain’t Silicon Valley – 3 Much Needed Tech Growth Initiatives

March 1, 2011

10:46 am

Here we go again.  All the local buzz is moving back to the “how do we make DC the next Silicon Valley” question.  Every time the DC region starts crawling out of the rubble of a tech bubble we start setting our targets on becoming the “Next Silicon Valley” like being Silicon Valley is some sort of panacea.

Get over it – we’re DC. We’re not Silicon Valley and there’s nothing wrong with being us. Why the inferiority complex? Silicon Valley has  stuff that we don’t have and we have stuff that they don’t have and our stuff is just as good as their stuff… it’s just different stuff.

Us Versus Them

So let’s play a little us versus them.  If we compare the lifestyle of a typical Silicon Valley citizen with a typical capital region citizen, we don’t see much difference.  We both have lousy football teams and great hockey teams.  According to the last US Census, the Baltimore/Washington metropolitan area has 8 million people and the San Francisco/San Jose metropolitan region has 6 million. Our median household incomes are nearly the same at just over $96K per year.

Median Home Price

Median Home Price

According to the National Association of Realtors, housing in both regions is above the national average.  DC’s housing is nearly half the cost of Silicon Valley. According to the CNNmoney.com calculator  a person earning $96K in Montgomery County Maryland would have to earn $114K to maintain their lifestyle in San Jose. Another plus for the DC region is that according to the Bureau of Labor Statistics, as of December 2010 unemployment in the San Francisco area was 9.9% while the DC region was the lowest in the country at 6.4%.

Good Stuff

How about cool jobs? Silicon Valley has Google. DC has the Internal Revenue Service.  They have Facebook and we have the General Services Administration (ok, maybe not so cool).  They have Apple, and we have the CIA (getting cooler, if not scarier). But you know what else? We have the White House. They have Steve Jobs and we have Barack Obama.

DC, with the help of locally raised Al Gore, invented the Internet. We have NIH and Bio-Tech. There are more jobs in our town and many of them are smoking hot jobs like Secretary of State or Secretary of Defense or Left Wing for the Capitals.  More people here have high-paying jobs and our dollars go farther. So here’s my disconnect, what part of more people needing work and those that have work have less buying power do we envy? That’s why I can’t understand why we feel like we are the red headed step child.  We’ve got good stuff  right here in DC.

Making Good Better

Now could the region get together and improve the technology ecosystem in DC so it is more conducive to growth? The answer is: absolutely we can. Should we do more to create a vibrant technology infrastructure? Yes, we should and it will take strong political will and fortitude. I beleive to do this we will require the following:

  1. Regional Cooperation – Today, the 3 major regional jurisdictions, DC, Maryland and Virginia (DMV) compete for companies, tax revenue and employment.   We have 8 million people living in 3 different jurisdictions with three different tax codes. Tax laws in Maryland favor investments in Maryland just as Virginia tax laws favor their citizens. The Fairfax county economic development board aggressively courts businesses to Fairfax county away from California, Maryland and DC.  As long as we divide our resources and squander them by competing against our regional-selves, we add friction at the cost of growth. We need to focus on regional growth and realize that companies in DC create income for tax payers who reside across jurisdictions. Cooperation between Maryland, Virginia and DC would be a much more powerful engine for growth.
  2. University Cooperation – The University of Maryland, Johns Hopkins, Georgetown, George Washington, George Mason, and University of Virginia all have some level of entrepreneurship programs, all competing for students, attention and recognition.  University of Maryland can boast graduates like Sergey Brin – c0founder of Google, Carly Fiorina – former chair and CEO of Hewlett-Packard, Robert Briskman – co-founder of Sirius Satellite Radio and Jeong H. Kim who sold his communications equipment company to Lucent Technologies in the late 90’s for over $1 billion (when $1 billion could buy you a pretty nice car). An impressive list and I’m sure that the other local universities have similarly impressive lists. Yet when grouped together, our universities still struggle to compare to the tech luminary graduates from just Stanford alone. Our Universities need to coordinate activities and work together.
  3. Market Focus – Bio-Tech, Networking, Mobile Apps, Cloud Computing. We can’t place our bets on all things.  Our area has many entrepreneurs with impressive resumes and yet the numbers would only be a fraction to the entrepreneurs with successful exit experience in Northern California. We need to focus our resources on the few areas where we have some competitive advantage.  This would grow out our thin bench of experienced entrepreneurs in these focused industries to create a focused critical mass.  Federal regulation and research in bio-tech,  med-tech and energy make businesses that address those industries a natural for a government town.  We need to get our regional authorities and universities to agree on a few focused bets on which to grow our business and develop programs that foster these few focused industries.

If DC is really going to be a force in technology, we will need our governments and universities to work together to focus on being great in a few niches and forget parochial interests. We need to pool our resources and realize that if we rise the tide, we will float all the regional boats. And we need to get over this red headed step child thing.  This is a great town getting better.

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Glen Hellman (@glehel), is an angel investor, serial entrepreneur, and works for venture capitalists as a turn-around specialist. He is the Chief Entrepreneureator at Driven Forward LLC, frequently muses on his blog, Forward Thinking, and works with entrepreneurs to help them figure out what to do and get them to do it.

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