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Atlanta City canít keep tech startupsViews: 466
Oct 08, 2009 12:46 amAtlanta City canít keep tech startups#

John Stephen Veitch
City canít keep tech startups
Atlanta Business Chronicle - by Urvaksh Karkaria Staff Writer

Byron E. Small
Dan Breznitz: Atlanta is in danger of becoming a Ďhuge incubation center and the success will be reaped by California and New York.í

In a gulp-inducing finding, a study by a Georgia Tech professor shows 40 percent of high-tech startup companies quit Atlanta within three years of raising their first institutional money.

The irony is Atlanta leads the nation in having infrastructure ó think research universities and educated labor ó to birth high-tech startups, the study found.

The primary reason entrepreneurs leave is not because they canít get funded, but because they lack deep-rooted local connections or networks, said Dan Breznitz, the studyís co-author and an assistant professor at Georgia Tech.

Instead of building great high-tech companies, Atlanta has become a feeder system for great high-tech companies in other states, Breznitz said. Atlanta is in danger of becoming a ďhuge incubation center and the success will be reaped by California and New York,Ē he said.

I can't read the rest - Subscribers only.
http://atlanta.bizjournals.com/atlanta/stories/2009/10/05/story2.html?b=1254715200

On LinkedIn Bill Wicksteed Senior Adviser/Research Associate at SQW Ltd and Univ of Cambridge, said:

"That's analogous to a concern we have in Cambridge UK - where we start many companies but don't see many grow big. The thought here is that we may have great resources for start up but lack the scale and/or culture for major expansion."

And here in New Zealand that's been the standard complaint for the last 20 years. Whenever we have a success, we attract international investors, and we're pleased about that. The business grows and we are pleased with our success. Then the International investor says "We're opening a factory in Malaysia, or China, and we're shifting the Head Office to Sydney, or San Francisco, or Boston."

Then they add, "But we'll keep research and development going in NZ." Of course in the long run they don't.

Big fish eat little fish.

(Small aside to Thomas who I snapped at a couple of days ago. The same thing happens to our medical research of which we are proud. Even though NZ is very tiny, and our funding is heavily restricted, our medical people have developed techniques, tools and theories that are part of a worldwide collaborative effort. Key things that come to mind are heart surgery on infants, prevention of brain injury for infants, the longest running study of human development in the world (1972 and continuing), many advances in cancer research, protection from common colds, research into dental care. But they suffer the same fate as our small businesses, they eventually get gobbled up by the guy with the most money. )

John Stephen Veitch; The Network Ambassador
Open Future Limited - http://www.openfuture.co.nz/
Innovation Network - http://veech-network.ryze.com/
Building an Open Future - http://openfuture-network.ryze.com/

Private Reply to John Stephen Veitch

Oct 08, 2009 1:36 amre: Atlanta City canít keep tech startups#

Thomas Holford
John Stephen Veitch sayeth:

"City canít keep tech startups
Atlanta Business Chronicle - by Urvaksh Karkaria Staff Writer"

. . .

"Instead of building great high-tech companies, Atlanta has become a feeder system for great high-tech companies in other states, Breznitz said. Atlanta is in danger of becoming a ďhuge incubation center and the success will be reaped by California and New York,Ē he said."

--------------------------------

Well, this may have been the way things USED to be, but now California has the same complaint as Atlanta and New Zealand: other venues more attractive to or supportive of technology businesses are kidnapping our emerging companies.

I can't say what Atlanta or New Zealand's problems are. But I think the problem in California was a certain cultural hubris that basically said "We're smarter, richer, and more sophisticed entrepreneurs because we invented and built the silicon chip industry. Therefore, we can just plug in a different technology module, turn the crank, and dominate any other emerging technology business."

The flaw in that logic is that technology, business, and finance are ultimately highly mobile, and the California's success in silicon chips was a lucky accident as much as it was clever technological entrepreneurship.

A great deal of the hubris also infected the political class like a bad chest cold, and the politicians visualized the technology industry as a golden goose on steroids that would fund every pipe dream that any politician ever had.

Politicians could not resist the temptation to help entrepreneurs "manage" their bonanza and imposed "helpful" solutions like Sarbanes Oxley to make the industry less risky and more accountable for investors. They also poured tons of money into initiatives to keep the technology "advancing" when the key technological advances had long since been achieved, and the real technological innovation was shifting to other areas.

I worked with startup companies in Silicon Valley and saw first hand the unrealistic expectations of venture capitalists, the naivete of technology entrepreneurs, and the shallow grandstanding of politicians. Silicon Valley was created by a handful of hardworking, motivated, talented, visionaries. It's a delicate, fragile formula, and too much help of the wrong kind or with the wrong motivations can spoil the recipe.

One entrepreneur I worked with was engaged in the eternal struggle to raise funding to keep his promising technology company on track. Venture capitalists would offer him investment capital for an obscene price if he could show a history of three years of profitability. The Chinese offered him free rent and free facilities in a technology park in China if he would move his small operation there, even though he had never made a dime.

Atlanta and New Zealand do not need to worry about California poaching their promising technology startups.


T. Holford







Private Reply to Thomas Holford

Oct 08, 2009 8:44 amre: re: Atlanta City canít keep tech startups#

John Stephen Veitch
That's a wonderful contribution Thomas. Lots of meat to chew on. I'll try to come back with an equally constructive viewpoint.

There is so much in what you write that rings exactly true.

Thank you so much.

John Stephen Veitch; The Network Ambassador
Open Future Limited - http://www.openfuture.co.nz/
Innovation Network - http://veech-network.ryze.com/
Building an Open Future - http://openfuture-network.ryze.com/

Private Reply to John Stephen Veitch

Oct 08, 2009 11:41 amre: re: re: Atlanta City canít keep tech startups#

Scott Wolpow
BTW it is the City of Atlanta. At first glance I thought it was about Atlantic City in New Jersey. Perhaps Atlantic City was going beyound gambling and Red Hotels and Green Houses.

Private Reply to Scott Wolpow

Oct 09, 2009 12:19 pmre: Atlanta City canít keep tech startups#

James Booth
.
Seems to me, if I am understanding this story correctly ...

Atlanta has the *solution* and is now looking for a "problem" to fit it ?

Why not capitalize on BEING the "incubator" - specialize in it !

Everyone already knows Georgia is running out of water anyway.

Last thing they need is something that will increase the local population.

Be best at what you are good at, Atlanta !


JB

Private Reply to James Booth

Oct 12, 2009 6:45 pmre: re: Atlanta City canít keep tech startups#

Lamar Morgan 954-603-7901

Jason,

Where did you hear Atlanta is running out of water? I lived in that city for more than 20 yeears, I never heard such talk. Now, California? That's quite a different story. We've already run out of money. Ever since I arrived here in 2001, I learned there are water problems.

Lamar Morgan
CDMM - Synergistic Business Marketing
(707)709-8605
Need PR?...Call Lamar!

Private Reply to Lamar Morgan 954-603-7901

Oct 12, 2009 9:34 pmre: re: Atlanta City can't keep tech startups#

James Booth
.
I have no idea who Jason is, but since I brought it up ...

I should have said " *Atlanta* is running out of water - not "Georgia"

Has been "in the news" for years.

For example:


Metro Atlanta / State News 7:12 p.m. Wednesday, October 7, 2009

Water talks, water talks everywhere

By Dan Chapman

The Atlanta Journal-Constitution


" Each time Georgia proposes damming the Chattahoochee, Etowah or Tallapoosa rivers,
or any of their tributaries, Florida and Alabama unleash a torrent of lawsuits and bureau-
cratic protests to kill the proposed reservoir.

And metro Atlanta, in desperate need of more water, loses virtually every time.

Story continues below ‚Üď ... "
- http://www.ajc.com/news/water-talks-water-talks-157348.html


JB

Private Reply to James Booth

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