Comments on DC tech execs ask for better spaces for startups - Greater Greater Washington

Comment by kob

Wed, 11 Jul 2012 08:42:57 EDT

It's great that some tech firms want to work with DC to see if something can be done to encourage development. Nothing wrong with that. Not really clear, however, from the letter just what the tech companies want. And that's ok too.

If it's tech incubators they're after, then the models for tech incubators are clearly established, and there are plenty of them around.

But on the opposite end, something on the scale of innovation island .. we're a long way from that in DC. But a dialog with local businesses and universities about skills needs is probably needed.

Comment by Jos� Mar�a

Tue, 10 Jul 2012 13:40:28 EDT

Thanks Ken from a spanish reader (Zaragoza) but as interested in blog your article I do wonder if you could add a "Tumblr" (to share in an easy manner).

All my best,

Comment by AntiANC

Sun, 08 Jul 2012 16:42:33 EDT

" (a) we have made tremendous investments in amenities to make DC an attractive place for talented young people to live"

As @Jasper have said, these "investments" are outweighed by the fact that the octogenarian-dominated ANCs go out of their way to harass and intimidate all young people into leaving DC.

Note, for instance, that the recent Georgetown University-ANC agreement pressures not only undergrad but grad students. Sergey Brin and Larry Page, Ph.D. students when they founded Google, would have been classified just the same as the hypothetical drunken undergrad.

[Deleted for violating the comment policy.]

Comment by Richard Layman

Sat, 07 Jul 2012 09:43:42 EDT

mruger -- Blackboard.

You could argue MCI, but they only moved here because of their legal contestation of the ATT monopoly, access to the FCC (and Congress). Their operations were not based in DC.

There are plenty of small outfits.

Comment by Richard Layman

Sat, 07 Jul 2012 09:40:27 EDT

The problem with the discussion in this entry of the Bloomberg effort wrt the Cornell-Technion university is that it's a university. It's not designed, directly, to be space for startups. The idea is that a new university engineering based, at a level higher than that of NYU's and Columbia's and Cooper Union's engineering programs will seed the next generation of technology innovation and industry in NYC.

They aren't subsidizing startup space other than incubators and technical assistance and such, not unlike initiatives relating to the Brooklyn Navy Yard reuse and maintaining the garment industry.

Given that business of all types is increasingly technology and computing technology based, the Bloomberg initiative is probably a good one.

That being said, it's a quantum scale level different project from the type of initiative as suggested by this post.

First, the thing about space and cost and innovation is Jane Jacobs 101. It's the whole point of "the large stock of old buildings" being one of the 4 essential elements to great cities.

Second, the nature of DC's real estate market militates against the existence of such buildings in the current market, and for the foreseeable future, unless the height restriction is broken, and even then it will take decades to see a measurable impact on rents in terms of JJ 101.

Third, the thing about the Bloomberg initiative is to figure out how to do something like that, in terms of enhancing the city's engineering, IT, computer engineering, bioengineering, health telematics education.

The point people made about NoVA... yep, that cluster developed as a response to DARPA, DOD, telecommunications needs, plus MCI.

A few years ago when some local said, DC wants to get in on the health software end of the healthcare debate, I wrote something to the effect that there is a difference between letting contracts and writing code and creating software applications. Anyway...

Third, you could work with CUA and AFRH to leverage the engineering resources at CUA and HU along with space adjacent to the AFRH and CUA that CUA acquired to use as a potential research park, along with space at AFRH.

Or you could do the St. E's idea as expressed above. I like the St. E's idea. Frankly, I'd just let people use it now, if they want, without worrying too much about the master plan. It's not like the city is making money off it now.

Although it is locationally deficient and will be for some time. That's the whole attraction of cheap space though, people will take it and the area will improve in the process.

Fourth, or you can work to do both.

Fifth, it's reasonable to do because the city needs a better balanced economy.

Sixth, even though people criticized it, actually Mayor Williams' idea to move UDC to St. E's was a good one. You could do that, add an initiative somewhat comparable to the Bloomberg one, and when the St. E's west campus redevelopment tanks because Congress won't give them more money for DHS consolidation, take that over too. Make it the tech area.

These kinds of initiatives work out over a multidecade timeframe.

And still won't solve the unemployment issue because regardless, DC isn't going to participate much on the manufacturing end of things, where reasonably high paying jobs for the "less" educated but still "highly technically skilled" will be available.

Comment by Jasper

Fri, 06 Jul 2012 23:56:50 EDT

@ Fall Church:If this Mayor is serious about promoting the tech industry

It doesn't even have to be tech industry. Education would be nice enough. Especially, since better education benefits everyone, while more tech industry only benefits a few nerds.

Comment by Falls Church

Fri, 06 Jul 2012 18:55:19 EDT

Jasper,

I totally agree that the ANCs are getting in the way of something that's best for the city but getting rid of them is not politically feasible. If this Mayor is serious about promoting the tech industry, he'll spend less money on silly giveaways like the Living Social deal, and more political capital getting the nuts-and-bolts right. Like, telling the ANCs there will be serious repercussions for their districts if they don't get with the program and allow DC's universities to expand tech education.

In addition to whipping the ANC's in line with his vision, the Mayor needs to get a plan together to implement the tech education facility slated for St. E's and improve UDC's tech offerings. There's a lot of work to be done with DC's educations system at all levels and the Living Social money would surely have been better spent elsewhere, like in tech education...a service that would actually benefit DC residents and not just big business.

Comment by David Alpert

Fri, 06 Jul 2012 17:30:17 EDT

HogWash: Here is a diagram from the plan that shows the transportation more clearly.

The blue shows MLK. West Campus (the DHS part) is west of that; East Campus (DC's part) is what's east of MLK and west of the Green Line. The rectangular quad off MLK near the middle is the proposed academic area. As you can see, it's a bit less than a 10 minute walk to Congress Heights Metro, definitely within the range of what people will readily walk.

The streetcar will go along MLK under the current plan. The diagram here says MetroExtra bus, but since then the streetcar plan came out and upgraded it to streetcar. The streetcar would get you very close to the academic campus (and to other stuff, including West campus).

The area in the southeast, near CH Metro and marked Transit Village in the image from the post, is one place I think they want retail; also along MLK. But I am not sure how fleshed out that is.

I heard something also about a shuttle for DHS employees which would pick up at the retail near CH Metro. I am not clear on the details though.

Comment by mruger55

Fri, 06 Jul 2012 17:09:31 EDT

If the catastrophically unprofitable pseudo-tech company Living Social can convince the DC government to give it a gigantic tax abatement, I'm sure they'll fall for this plan, too.

Can anyone name one actual tech startup that has come out of DC...ever? A hodgepodge of silly social networking and analytics companies milking VC cash before they burn out is not exactly reassuring.

DC proper has never been a hospitable home for young tech minds, and there's no reason a dedicated space is going to change that.

Comment by HogWash

Fri, 06 Jul 2012 15:43:01 EDT

@David, thanks...I walk to and from Cong Heights metro daily.

My question was about the sort of transit improvements slated to link St. E with the rest of the city. The area designated for streetcars (MLK) is not near Cong Heights Metro (Alabama Ave).

The Maple Quad shown on the map doesn't give an idea of "where" the metro is in relation to the campus nor the Hebrew cemetary (which is nice sized plot).

DC is hoping to attract retail especially near Metro and off MLK,

I'm assuming you mean retail near [Anacostia] metro and not Cong Heights?

Comment by kk

Fri, 06 Jul 2012 15:38:22 EDT

If they want to operate in DC accept the rent prices or leave plain and simple there is plenty of cheap land that can be leased or purchased all they have to do is cross the Potomac River, Eastern, Western or Southern Avenues.

We should not be giving anyone benefits to stay here if you cant afford it than its your damn problem. Considering DC as a whole there are many areas where you can get cheaper land than downtown.

Comment by Jasper

Fri, 06 Jul 2012 15:03:11 EDT

@Falls Church: I don't know how to implement this concept.

Get rid of the ANCs that fight everything universities do.

GW is building a new Science and Engineering building and some are quite peeved that they need to put retail at the ground level. Now, retail is all great for urbanism, but it costs them 1/8 of their floor space. They had visions of having a grand S&E building right at the exit of the metro to show people that DC is more than politics.

Meanwhile, GU now has a student cap, which means no growth anywhere.

Comment by Falls Church

Fri, 06 Jul 2012 14:42:31 EDT

If DC wants to easily expand it's high-tech sector, it should encourage its universities to expand its science and engineering departments.

I think this is the right idea because

a) probably the most important factor in forming a tech cluster is having a solid pipeline of recent tech graduates coupled with having professors with lots of expertise, contacts, and credibility

b) DC's path into tech needs to leverage its natural strengths. Education/non-profits is one of its greatest natural strengths.

I don't know how to implement this concept. One pie-in-the-sky idea would be to build a legit tech/engineering program at UDC but that would take a boatload of money. That said, a consensus is forming on the Council that UDC needs to be improved.

The other point is that it's better to provide tech companies with indirect assistance that helps citizens just as much as companies (like educating more DC residents in tech) rather than direct handouts.

Comment by David Alpert

Fri, 06 Jul 2012 14:36:14 EDT

HogWash: St. E's is very big, and Congress Heights Metro is at the extreme southestern corner. There are 2 halves, separated by MLK Blvd: the west side, which will be DHS buildings, controlled by the feds, and with heavy security. The east side is DC controlled and will be open to the public. DC is hoping to attract retail especially near Metro and off MLK, defense contractors who want to be near DHS, some residential, and an educational institution.

Comment by HogWash

Fri, 06 Jul 2012 13:33:42 EDT

The map reads SUITLAND not SHITLAND. You can see the "u" is not an "H."

I'm all for the interest in St. Elizabeth. What sort of transit improvements are slated to link St. E's to the rest of the city? Streetcars?

I've rarely, if ever, heard people consider Cong Heights as an option when discussing access to the new DHS facility.

Comment by Jasper

Fri, 06 Jul 2012 13:26:19 EDT

@ Ken Archer:I completely agree with you Jasper.

Wohoo. I said: "If DC wants to". That was not my opinion. Also, you're dodging many of my questions.

The cheapest way for DC to support STEM is to get rid of ANCs. It will save money, and the result will be larger universities. If DC at the same time makes itself a better place for all businesses, tech companies will flourish as well.

I think allocating a portion of a DC Innovation Island for a technology campus of a local university, like Bloomberg did, is a great idea

It would be stupid force universities to relocate when the only reason they can not grow at their current location is local opposition. This is partially also the case in NYC, but the issues are very different there than here. [I will self-censure the rest of my comment here.]

DCPS now has their first ever STEM director

Yeay. But please let that person focus on educating kids in DC, and fix that problem before expanding the mission.

Comment by davidj

Fri, 06 Jul 2012 13:18:17 EDT

Calling a collection of 5 -10 buildings a neighborhood is absurd.

Comment by worthing

Fri, 06 Jul 2012 13:13:16 EDT

@Ken - But the TIFs for Gallery Place and downtown retailers, like an Innovation Island for the tech sector, are governmental interventions in real estate development in return for uses that are strategically important for the city.

Ok, I understand a bit better now. I'm still not totally on board--I think the GP/retailers TIFs are more useful on-face because I really don't see much distinction between tech/legal/consulting/any sort of white-collar service/product sector--but I get it.

What would this mean long-term for DC? When does a startup's incubation end, and are they forced to move out of the city because it's still cheaper for them to locate in Tysons once they've exceeded the parameters of the startup cluster? That's a question that the linked article re: Cornell's applied sciences campus doesn't answer for New York. Would we just be seeding companies who enjoy our hospitality for 3 years, and then go thrive out by Dulles?

That's another reason I can more quickly buy a TIF for something like a major hotel or mixed-use retail extravaganza; those are industries/service providers anchored to their "storefronts" and physical locations. Once established, they're set to benefit DC for a long time. I'm not sure I see a space for startups to put down similar roots.

Comment by Rob

Fri, 06 Jul 2012 13:11:16 EDT

Ken Archer wrote: "OK, then help me understand what was wrong with the TIF for Gallery Place and nearby downtown retailers. Without those TIFs, downtown would be endless office buildings."

Where do I start? Here's a list:

1) You've assumed that it's good to have retailers there. I think that's probably right, but it's not obvious: many people would argue that if those retailers wouldn't be profitable without the subsidy, then they shouldn't be there.

2) You've assumed that without the TIFs, there wouldn't be retail there. That's probably wrong. Areas further west within downtown (e.g., the Farragut area) have plenty of retail without any subsidies. When you get offices (that aren't just federal buildings), you tend to get retail.

3) The analysis of revenue from the TIF credits revenue from all new development in the area to the TIF. That's ridiculously wrong. Even without the TIF, something would have been built in that spot, and DC would have gotten revenue from it.

4) There's a lot of evidence that TIFs just redirect development, rather than creating new development. So new stuff in that area probably lowered the tax revenue that DC got from other areas.

5) Once you take 3 and 4 into account, the TIFs had a pretty substantial cost. And that money could have been spent in other, more productive ways.

6) Even if you conclude that despite those earlier points, the Gallery Place TIFs were a good idea, that doesn't mean that a high-tech subsidy (or any industry subsidy) would be. Subsidizing (or otherwise encouraging) residences is very different from subsidizing businesses. That's not true in most places, but because DC can't tax non-residents, getting high income people to live in DC is much more valuable than just getting them to work here.

I could go on at much greater length, but I have other work I need to get done today.

Comment by cminus

Fri, 06 Jul 2012 13:10:56 EDT

@Cider, I did the same double-take, but it's supposed to be "Suitland".

Comment by Ken Archer

Fri, 06 Jul 2012 12:29:04 EDT

Here's a different spin on this: If DC wants to easily expand it's high-tech sector, it should encourage its universities to expand its science and engineering departments. Perhaps DC could do what all states are doing: Have a STEM budget and dole out some grants. Meanwhile, GW and GU are building new science and engineering buildings without a single dollar of DC money and bucking enormous pressure from the ANCs.

I completely agree with you Jasper. In fact, isn't this exactly what Innovation Island in NYC is? While it wasn't in the letter, I think allocating a portion of a DC Innovation Island for a technology campus of a local university, like Bloomberg did, is a great idea. DCPS now has their first ever STEM director, and obviously leveraging this investment to improve DCPS STEM programs would be a major knock-on benefit.

Comment by Jasper

Fri, 06 Jul 2012 12:19:08 EDT

@ Fall Church:DC also has a cluster in the not-for-profit sector. That would also be worth doubling down on.

Oh, wouldn't it be nice. But noooo, DC's ANCs oppose any expansion of DC's largest not-for-profits: The universities.

@ Ken Archer:Our strength ... My company has been in Tysons for 12 years

You can't be part of something that you're not in.

OK, then help me understand what was wrong with the TIF for Gallery Place and nearby downtown retailers.

Help me understand how that TIF relates to this letter from tech companies?

Check out the 250 tech companies in http://proudlymadeindc.com/

Yeah, where are they? Checking under IT, there are 17 companies, that are also mostly listed under Clouds/optimization and web services. Or is every company with a website a tech company?

Comment by Ken Archer

Fri, 06 Jul 2012 12:18:27 EDT

the one big difference I see is that those are all retail/hospitality/residential offerings. A bunch of tech startups would just be different occupants of an office building.

But the TIFs for Gallery Place and downtown retailers, like an Innovation Island for the tech sector, are governmental interventions in real estate development in return for uses that are strategically important for the city.

The questions that should be asked is (a) do the uses generate sufficient knock-on benefits (e.g. are the uses strategically important) and (b) is the city avoiding overpaying?

Comment by Cider

Fri, 06 Jul 2012 12:11:53 EDT

Why is a road on that map labeled "SHITLAND" at the top right corner?

Comment by worthing

Fri, 06 Jul 2012 12:07:00 EDT

@Ken - OK, then help me understand what was wrong with the TIF for Gallery Place and nearby downtown retailers. Without those TIFs, downtown would be endless office buildings.

I'm not Rob, but the one big difference I see is that those are all retail/hospitality/residential offerings. A bunch of tech startups would just be different occupants of an office building.

Comment by Ken Archer

Fri, 06 Jul 2012 11:55:55 EDT

All other things being equal, why would a company locate way out at St. E's as opposed to a place like Rosslyn?

Because after making the type of transportation investments to link St. E's to the rest of the city that Mayor Bloomberg is making to link Roosevelt Island to Manhattan, St. E's won't be "way out", and will offer affordable office space with clusters of related tech firms.

Comment by beatbox@gmail.com

Fri, 06 Jul 2012 11:52:07 EDT

Stupid idea. All other things being equal, why would a company locate way out at St. E's as opposed to a place like Rosslyn?

Comment by Ken Archer

Fri, 06 Jul 2012 11:44:48 EDT

@AWalkerInTheCity I agree completely.

Comment by Ken Archer

Fri, 06 Jul 2012 11:42:36 EDT

Unbiased economists (i.e., those who are not being paid by an industry asking for a subsidy) who have studied subsidies for "strategic" industries have consistently found that once you take into account the cost of the subsidies, they're bad for economic growth (and that's consistently true, whether the economist doing the study is generally liberal or conservative). That's not ideology, it's solid peer-reviewed research.

OK, then help me understand what was wrong with the TIF for Gallery Place and nearby downtown retailers. Without those TIFs, downtown would be endless office buildings.

The increase in property and sales taxes from downtown that resulted from steering developers towards a multi-use downtown have more than repaid those TIFs. So, what's the problem?

Comment by AWalkerInTheCity

Fri, 06 Jul 2012 11:42:23 EDT

ISTM that NYC built a tech concentration, leveraging their existing media/publishing strengths, and did not worry about the dominance of Silicon Valley, or about whether the companies are "truely" tech or not.

I'm not sure DC can't attempt to leverage both its strenghts in law, nonprofits, and journalism/media, and its proximity to the NoVa tech hub, to create a tech hub focused on the interaction of tech and its existing strengths. NYC should be the model, not Silicon Valley or Boston.

And the focus should not be on subsidies, but on addressing specific obstacles.

Comment by Ken Archer

Fri, 06 Jul 2012 11:38:00 EDT

it's a fool's errand to try and build a tech cluster in DC because a) DC doesn't have much of a tech industry...b) There is already a tech cluster of sorts out in Tysons/Dulles corridor

Check out the 250 tech companies in http://proudlymadeindc.com/. Our strength, in my opinion, is that (a) we have made tremendous investments in amenities to make DC an attractive place for talented young people to live and (b) the NoVa tech cluster is stifling for young innovation-driven start-ups. My company has been in Tysons for 12 years, and it's a deal-maker driven culture whose epicenter is the Tower Club, not a tech meetup. Read Saxenian's book comparing Boston and Silicon Valley to see the same distinction that exists between NoVa and DC.

What DC should really concentrate on is doubling down on the already existing legal industry cluster.

The letter actually addresses the issue, recommending that DC target its focus more on tech sectors where the customers, law and hospitality, are already here (just like federal contractors have a natural cluster in DC). Defining what is a technology cluster is itself a dilemma.

Comment by Rob

Fri, 06 Jul 2012 11:34:07 EDT

Ken: Nice implicit ad hominem attack there: "Everyone who disagrees with me is an ideologue."

Comment by Cassidy

Fri, 06 Jul 2012 11:30:18 EDT

I hope that if anything comes out of this it is something tangible like the Innovation Island and not just more free money for the JOB CREATORS of the world.

Comment by Falls Church

Fri, 06 Jul 2012 11:29:58 EDT

DC also has a cluster in the not-for-profit sector. That would also be worth doubling down on.

Comment by Falls Church

Fri, 06 Jul 2012 11:24:26 EDT

Clustering is all about massive networking effects by having a huge concentration of a certain industry. It's a "winner take all" environment where the big clusters (like silicon valley) get bigger and it gets harder and harder for anyone to break through. In that environment, it's a fool's errand to try and build a tech cluster in DC because

a) DC doesn't have much of a tech industry and your only hope of forming a self-perpetuating cluster is to already have a substantial quantities of the key components -- existing tech companies, a steady pipeline of tech graduates, venture capitalists, etc.

b) There is already a tech cluster of sorts out in Tysons/Dulles corridor which will be nearly impossible to compete with since as I mentioned, the big get bigger and everyone else gets squeezed out.

What DC should really concentrate on is doubling down on the already existing legal industry cluster. DC has a ton of natural advantages in the legal industry just like silicon valley has advantages in tech. The way clustering works is that it's much easier to grow an existing cluster than to start a new one. Clustering is all about doubling and tripling down on a region's advantages compared to other places, and DC's "comparative advantage" is all in the legal industry.

That's not to say there can never be a tech industry in DC. NYC isn't just finance and the Bay Area isn't just tech, but if you want a high returning, low risk investment of government dollars, you're best off doubling down on your existing industry and advantages. Anything else is just a vanity project.

Comment by Tyro

Fri, 06 Jul 2012 11:21:41 EDT

Will start-up founders and employees be willing to commute to a location like St. Elizabeths?

What a terrible idea. There is no benefit to the tech sector to put them up in an isolated office park. The point of having more tech companies in the city is that it makes it easier for tech people to gather an access other people and events in the dc metro area. Are there even any local amenities nearby? Or is this functionally the same as renting office park space in Fairfax Count or along 270?

Comment by Jasper

Fri, 06 Jul 2012 11:21:35 EDT

@ Ken Archer:Do you disagree with the strategic importance of the tech sector to DC?

What tech sector in DC? AOL, CSC and the Amazon servers are in NoVa. Your own company is in NoVa.

Does DC perhaps have an overflow of high-tech unemployed? No, because DCs academic students flee the city as fast as they can after being harrassed for years by their neighboring ANCs.

What DC does have is an overflow of very poorly educated and hence difficult to employ people. They are not gonna get a job in the tech sector.

Also:the DC tech sector is well situated to replace lost jobs and demand for office space

Fantastic! If they're doing well, then why the request for corporate welfare? Also, 7 small companies are not going to replace the tens of thousands of jobs that are being lost by government contractors that are mostly based in NoVa and MD.

And why to the tech sector, and not the [random other] sector?

And why should DC favor any sector over other sectors?

If you want to ask DC to become more business friendly, then you've got a point, but I disagree with any favoritism for any specific business sector.

America is a free market place. Let's keep the market free from government favoritism and corporate welfare.

Comment by Alex B.

Fri, 06 Jul 2012 11:20:13 EDT

If the problem is high office rents, then why not focus on simply increasing the supply of building stock that would lower rents over time.

Comment by Ken Archer

Fri, 06 Jul 2012 11:14:16 EDT

More corporate welfare. Why should DC be handing money to businesses at all?

Debates about economic development are too often dominated by those who oppose all government efforts to support businesses and those who never see a subsidy they don't like.

I think most people are less interested in either ideological position, and just support what works.

If a city-supported project is structured to yield knock-on benefits that greatly exceed the cost of the project, why shouldn't we support it? The first several TIFs in DC were like that.

We need to have guidelines for discerning what projects are likely to work, and what projects are not likely to work. Check out my earlier article, What can DC learn from its successful subsidies?

Comment by Tech

Fri, 06 Jul 2012 11:04:25 EDT

First thing we have to do is establish what a "tech" company is. Letting anyone with a godaddy domain name to be considered a "tech" company is ridiculous. Of the above, I would only consider megapixel, gryphon and fortify actual "tech" companies.

I would consider GGW to be more of a "tech" entity than the rest.

This is an old problem in a new time. Startups have long complained about the cost to get going, lease etc, and I don't ever remember a time when SF or any of the commercial office space between SF and Menlo Park CA was what any of us considered "affordable"

Instead of throwing tons of taxpayer resources into unproven, untaxable tiny companies with but a few employees, many of which aren't even DC residents, we should be saving our powder for the decades proven, high earning, whitecollar job factories that DC has historically given up to the burbs.

Comment by Rob

Fri, 06 Jul 2012 10:59:35 EDT

More corporate welfare. Why should DC be handing money to businesses at all? Every industry can come up with some BS argument about being "strategic" but none of those arguments hold water.

Comment by Ken Archer

Fri, 06 Jul 2012 10:46:47 EDT

In summary: Dear mayor, gimme gimme gimme. No motivation why, and what DC might gain.

That's not really true. The letter explains a point that DC leaders are all aware of: "As the contraction of federal agencies and contractors begins to affect the DC economy, we believe the DC tech sector is well situated to replace lost jobs and demand for office space".

Do you disagree with the strategic importance of the tech sector to DC? If so, what do you think are the constraints to building that sector? Do you have different ideas for how to support the tech sector?

Comment by Jasper

Fri, 06 Jul 2012 10:42:02 EDT

In summary: Dear mayor, gimme gimme gimme.

No motivation why, and what DC might gain.