Eric ran into some fellow Darden grads, Adam Healey and Charles Seilheimer yesterday at a local coffee shop because he was lured into a conversation about Ruby, Twitter, and Web 2.0 goodness. The discussion led me to go check out their blog, and I found an excellent article about the ingredients necessary for creating the right environment to foster startups.

We run into the same issue that Adam brings up–there are not enough nerds in this area. While we certainly are comfortable leading in a location independent enterprise (the subject of our talk at OSCON 2006), having most of your people co-located does reduce managerial burden on cat herding. It’s not quite as easy to have a look over the shoulder to iron out a gnarly coding problem when your team is spread across three continents as it is when you’re sitting next to each other in a bullpen.

There are other items coming up on the horizon which further point out the need for more nerds (besides the need to keep Charlottesville’s coffee shop economy booming):

–The National Ground Intelligence Center is growing. The Global War On Terror is one that focuses on using technology to interdict the bad guys before they can do harmful things to us. The National Ground Intelligence Center is one of the main nexuses of information collection and analysis. Until we beat the bad guys, the NGIC is going to continue to get business, and it needs nerds to help gather that technology.

–The Defense Intelligence Agency is coming to Charlottesville. They’re bringing about 1,000 jobs to the 29 North corridor, and that doesn’t include everything needed to support them (like coffee shops). Just like the National Ground Intelligence Center, the Defense Intelligence Agency relies on nerds to make sense of signal intelligence and human intelligence. There are currently not enough nerds to go around.

–The surplus of nerds from the Value America days has worked itself through the system. Right after Value America closed shop, the programmers from the company had time on their hands. Many of them started up ventures. However, venture capital money dried up, and they were forced to, for the most part, find “real” jobs. The days when labor was plentiful are no longer in the Charlottesville region because the Value America refugees have become absorbed by the greater economy.

–Venture capital deals are on the rise. The number of deals is up, but the average per deal is down. This means that startups have to focus more on delivering the goods and less on the posh offices. In order to make this happen, startups will need good, solid nerds to get to market faster and bring in revenues more quickly. Nice chairs do not bring in revenue. The Virginia Piedmont Technology Council – Charlottesville Venture Group is working with the City of Charlottesville to determine a strategy to bring technology-based businesses into the central Virginia region. Technology companies are not going to want to come to a place where there are not enough workers to fulfill their needs. As it is, existing technology employers who are looking to grow are having significant trouble growing organically with hometown growth. The growth of the contractor community around the National Ground Intelligence Center is being pumped by imported talent with people moving in from the D.C. area rather than with people in Charlottesville. When the Defense Intelligence Agency comes down, it will be the same story.

So, how to get more nerds to Charlottesville? Adam touched on one step in his blog article, which was focusing on improving the quality of the engineering school at the University of Virginia. He makes a fine suggestion about making a game-changing move and shelling out millions to bring in the rock star professors to draw more students and improve the quality of output at UVa. While this will work in the long run, it will take time for the trickle down effects to happen. What else can we do?

–Give the incubators some teeth. While Charlottesville has incubators such as the Batten Institute and Spinner Technologies, they really don’t provide enough of a runway for entrepreneurs to solidify and implement their ideas. Trying to live on a $1,000 a month stipend while slaving away on your laptop for 25 hours a day simply will not cut it in Charlottesville. The cost of living is too high. Not every great nerd has a burning desire to live on ramen and rice cakes for two years while trying to make his great idea a reality. The reality is that great nerds can get jobs which pay them well, and most of those jobs are not in Charlottesville, Virginia. So, in order to draw in the great nerds to the small businesses and the entrepreneurial ventures which will lead to the next big employment opportunities, the incubators have to put significant investment into the worthy incubator seatholders. This is not so that we can pay nerds tidy sums to do nothing. It is so that we can draw in the motivated great nerds who could otherwise go work for Google. Yes, the incubators will have to blur the line between incubator funding, angel funding, and venture capital funding, but otherwise, the good nerds will go elsewhere, and so will the businesses which employ them and many of their friends.

–Get the local governments in on the action. Universities and foundations shouldn’t be the only ones that are in on the incubator game. The city of Charlottesville, Albemarle county, and the surrounding counties have a vested interest in bringing in more nerds. It seems that most people who are interested in the question would rather have Charlottesville turn into Austin than Aspen, and the governments have to take part in solving that equation. Rather than spending money on Art In Place or on a bus station that takes you nowhere, spend it on things which will breed more employment. If I had $11 million to invest in budding entrepreneurial technology-based companies in Charlottesville, I am willing to bet my mortgage that I could grow jobs in the Charlottesville area and grow the city’s base of tax revenue. The local governments in the area need to partner together, because this isn’t a matter of divvying the pie; it’s a matter of growing the pie. A growing company based in Charlottesville will have residents who live in Albemarle, Green, Augusta, and other counties, who will use goods and services in those areas as well.–Look for public-private partnerships. What major corporation wouldn’t want to have its name attached to the partnership which spat out the next Google? Furthermore, it would get the benefits of the goodwill associated with bringing in new jobs and philanthropy to the region. Everybody wins. The corporation gets to hand-pick the best nerds for its own ventures and gets the positive press that goes along with a public project. The local community gets more money to fund more ventures which bring in more jobs.

–Recruit nerds who live elsewhere. Washington, D.C. is a two hour drive from Charlottesville when the traffic is not abysmally jammed. Naturally, traffic is abysmally jammed all of the time. Nerds (and everyone else) hate traffic jams. Charlottesville does not have them. So, go up to D.C. and talk to the nerds there about the joys and low-stress living that Charlottesville offers. Here’s one group and another if you need a start. We’re talking to their groups, but we are a drop in the ocean. The incubators and local governments need to wade into the waters. By the way, these nerds who you import can also act as great mentors for the young batch of nerds that we should be growing in the University who came in because of the rock star professors we brought in with the $150 million in allocated funds.

–Tax breaks? How about tax credits? The City of Charlottesville is going in the right direction with a 50% tax break for technology-based companies, but it’s not enough. Offer tax credits instead. Don’t worry about losing out on tax revenues, because you’ll make it up in spades from the knock-on effects of having larger employers in your region because of the incentives you offered for them to take up shop and hire employees here. It’s accelerated supply-side economics working for you. If you need more help understanding this, offer to take Dr. Alan Beckenstein out to lunch. You’ll get an amazing return on investment for the $10 that you spend feeding him while he enlightens you.

–Prime the pump with the Piedmont Virginia Community College. For every great nerd we bring in, we need a couple of worker nerds to implement the supernerd’s great strategy. Grow those worker nerds in our own back yard as well. These people can continue in their day jobs while they become worker nerds at night. PVCC has repeatedly stated its willingness to increase the number of technology-based classes it offers, so take them up on the offer. PVCC is a great resource for helping get more nerds here, but it’s an underutilized resource.

Growing a nerd population is not going to happen overnight. However, there is still time to start growing that population before the demand spikes, potential employers become frustrated at the lack of supply, and pick up and move elsewhere, leading Charlottesville to become Aspen without the great skiing. Austin did it through both importing the employers and growing them organically, and it had a great educational system at its back pumping out nerds by the bucketload. It offered incentives for companies to take root, and it offered the people to help the companies execute their missions. By combining programs to bring in and grow the nerd population of Charlottesville as well as generating the employment to keep them here instead of watching a mass nerd exodus every May at graduation time, we can build a vibrant technology community. Otherwise, we are always going to be a second-tier player posing as a first-tier location. The saying in Texas is “all hat, no cattle.” Nerds are the cattle that will drive Charlottesville’s 21st century economy and keep it from becoming an exclusive enclave where few can afford to live and jobs are scarce.

Jason Hull posted this entry on Friday, August 31st, 2007 at 10:12 am. It is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.