The bus ride to spread the start-up culture

‘Dessert for thought / You can feel it in every bite / And proceeds will go to the cause and to the fight….’/ Martina Lynch, a Baltimore MC, is performing a rap to promote Taharka Brothers, a local ice cream company that is on a mission. It promises to work for racial harmony through slogans on the side of its tubs and the names of its flavours — which now include ‘Chocolate lives matter’.

“We can make a change and spread it in every scoop,” she concludes, to enthusiastic applause at the Impact Hub Baltimore, a start-up incubator-cum-community centre that political and non-profit leaders hope might provide balm for some of the economic and social wounds. (In April, the death in police custody of Freddie Gray, a young black man, sparked the worst protests in the city since 1968.)

Lynch’s performance is one of the highlights of a tour through Baltimore entrepreneurialism organised by Steve Case, the billionaire co-founder of AOL. It is a daylong whirligig of co-working spaces, accelerators and start-up pitches reached on a huge battle bus emblazoned with Case’s call to arms: ‘Rise of the Rest’.

Since merging AOL with Time Warner at the top of the dotcom bubble and retiring as chairman in 2003, 57-year-old Case has directed his personal fortune to venture capital investments and his fame to promoting government policies that foster entrepreneurialism.

The “rest” emblazoned on the bus refers to the swaths of the US that do not enjoy the same attention from VCs as the country’s booming start-up hubs in Silicon Valley, New York and Boston. “At the moment we have all our eggs in three baskets,” says Case, “and it would be safer if America’s innovation economy was dispersed across the country.”

Celebrating entrepreneurship in the rest of the US is the aim of the tour, the fourth Case has done, this time taking in the north-east, including Philadelphia, Buffalo, Manchester and Portland as well as Baltimore. A rotating cast of local politicians, journalists, investors and staffers from Case’s own VC firm, Revolution, join him on the bus.

Of the $18.7 billion invested by venture capital firms in the US in the second quarter of this year, $11.4 billion went to California, with New York and Boston accounting for $3.6 billion of the remainder.

CB In-sights, the research firm that compiled those numbers, found that activity has begun to stir in some other cities, notably Austin, Texas, but that raising funds is an uphill battle elsewhere.

“The data overwhelmingly show capital flowing to a few places and to white guys,” says Case. “There’s tremendous innovation happening in Silicon Valley, though I’m not a fan or a cheerleader of Silicon Valley. Things like Instagram — it’s awesome, good for them — but that’s not figuring out ways to deal with some difficult problems that we have in various communities.

“So how do you create that same sense of possibility, same tolerance of risks and a willingness to invest and willingness to mentor? How do you take some of that DNA, that secret sauce, and make it available to the rest of the country?”

Baltimore is not alone among US cities in seeing a thriving start-up scene as a route out of economic malaise. The playbook it uses, including a business development corporation channelling tax breaks and sponsoring start-up incubators, is common to many urban renaissance plans, many of them built around local universities. Baltimore has the renowned medical research university Johns Hopkins to give its start-up scene a locus and a specialism in health care. But the challenge remains to counter the brain drain to Silicon Valley and to encourage VC and angel investors to take a look at the city.

Michelle Geiss, a non-profit executive who cofounded Impact Hub Baltimore, says: “There are no Fortune 500 companies here, a lot of the old industries are gone, so a lot sits on the shoulders of entrepreneurs.”

In Baltimore, Case bounds from event to event in rolled-up shirtsleeves, showering praise on the city. Each day is as planned and always on message as a political campaign stop: part publicity stunt, part attempt to stir together different players in the local ecosystem.

Each choice of location for a stop is designed to flatter the city, from the offices of Ord-er-Up, a Revolution-funded food delivery app acquired by Groupon, to the headquarters of Under Armour, the sports clothing maker founded by Maryland-born Kevin Plank and now a $22 billion public company.

The day ends with a “pitch competition”, where eight start-ups compete in front of judges for a $100,000 cheque from Case’s own account. Six of the eight have connections to Johns Hopkins, and all exude ambition.

Kwame Kuadey, founder of GiftCard-Rescue, which turns unused gift cards into charitable donations, says he wants his company to be “the PayPal of the gift card industry”. Seal-Bin Han, founder of ShapeU, which organises workout groups under the guidance of personal trainers, bounds onstage to proclaim Baltimore “could be the fitness hub of the world”.

The swing through the Impact Hub notwithstanding, the evidence of the Baltimore stop is that its start-up scene is as overwhelmingly male and white in character as in Silicon Valley or New York. To the extent that networks are being knitted, they are not necessarily inclusive.

Case is hesitant to claim too much for the start-up scene when it comes to dealing with the city’s entrenched problems, from educational inequalities to chronic unemployment to policing.

“It is not the be-all and end-all, not the magic solution, but I think it’s part of the solution,” says Case. “We have very good data that suggest, for every job created by tech start-ups, there are five to seven jobs created in the community.”

He adds that the definition of entrepreneurship is wider than “tech start-up”, especially so outside the “big three” — Silicon Valley, New York and Boston. “There is a food truck somewhere that could be the next Chipotle,” he says. “It could be anywhere.”

There is certainly no reason to dismiss Baltimore, and as Taharka hawks its socially-conscious icecreams from trucks around the city, there is plenty of ambition on show.

Lynch’s lyrics echo even as the billionaire’s bus rolls on: ‘We can make a statement ... we’ll put it in every state/We’ll write it across the walls, we’ll write it on every pint.’

— Financial Times