5 Key Traits Of Startup And Innovation-Friendly Cities

By August 7, 2015Bitcoin Business
Click here to view original web page at www.forbes.com

Earlier this year, UK based innovation charity NESTA, together with Accenture and Future Catapults, released CITIE (City Initiatives for Technology, Innovation and Entrepreneurship), an in-depth report aimed to help policy makers create the best possible environment for innovation and entrepreneurship in urban contexts.

There’s plenty of interesting information in the 60-page long guidebook. For the purpose of this article, I extracted some of the key features highlighted in the report, that in my opinion identify cities that are truly smart and able to improve the quality of life of this generation and of the coming ones.

Image credits: Citymart on Flickr
Image credits: Citymart on Flickr

1) They act as customers

Cities can have a huge buying power. New York City, for instance, spent $17.8 billion in 2014 buying goods. But for young, innovative firms, it’s not always easy to access this market, as authorities prefer to make deals with large, established companies and are somehow averse to trying new ideas and suppliers. Real smart cities are those that go the opposite way: opening up procurement mechanisms to make them accessible to smaller businesses and providing local entrepreneurs with a living urban lab with a living urban lab in which to test their services.

Barcelona has been going in this direction for a long time: first with its Urban Lab, and more recently, with the BCN Open Challenge which set out six challenges for businesses and entrepreneurs to propose projects that will transform public space and services. Winning solutions were provided with public service contracts and office space from which to run their operations.

São Paulo is another good customer for innovative businesses: when tendering for public sector contracts, companies only need to display their tax compliance at the time of bidding to pre-qualify for the contract. And SMEs are given preferential treatment as long as their bid price is no more than 10% higher than non-SME bidders.

Image Credits: centrodeinnovacionbbva on Flickr
Image Credits: centrodeinnovacionbbva on Flickr
Image Credits: Michael Shaheen on Flickr
Image Credits: Michael Shaheen on Flickr

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2) They make for great hosts

Cities are increasingly competing which each other to attract talents; but talents – and companies – need places to meet and work together. They look for affordable offices and coworking spaces, as physical proximity to potential collaborators and investors matter. They also look for great incubators and accelerators. Smart cities are those which integrate the needs of young businesses into their development plans.

The NESTA report uses Toronto as a case study. The city government has helped start and support a network of 50 business incubators and accelerators which fuel small businesses and start-ups in the city. Overall, through its Entrepreneurship Services programmes, the city supports 30,000 young businesses a year.

Buenos Aires has been also very active in this space. Old, neglected areas of the city have been transformed into innovation districts with different themes – the first being technology. Tel Aviv’s ILVenture is an open platform for startups, investors, accelerators and others in the city interested in innovation which allows users to post jobs, services and programmes, and search for investors and potential hires.

NYC Smart City
3) They advocate for startups and innovation

Some cities are consciously branding themselves as startup hubs or startup “capitals”. They sponsor international events, to attract investors and influences. This, in turn, helps local businesses to achieve greater visibility. New York City is a leading example of this, with initiatives like World to NYC – launched by the New York City Economic Development Corporation, invites and connects innovative international companies to contribute to the local ecosystem.

The World's Highest-Paid Actors 2015Most Popular
The World's Highest-Paid Actors 2015
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Photos: The World’s Highest-Paid Actors 2015

Another meeting point is Digital.NYC an online platform that facilitates connections and meetings between investors and entrepreneurs. Local companies can also use the ‘Made In NY’ brand, provided they have at least 75% of their business production in NYC.

All of this matters: according to the recent study, “The Power of Entrepreneur Networks: How New York City became the role model for other urban tech hubs” between 2003 and 2013, the Big Apple’s tech scene raised $3.1 billion in funding, with capital availability growing twice as fast as in Silicon Valley.

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Other good examples of how cities could strengthen their brand as innovation hubs include Berlin’s “Business welcome package” which, for €4,500 provides extensive soft landing support for businesses seeking to start out and expand in the city and Dubai’s SME100 ranking.

Image Credits: bobarc on flickr
Image Credits: bobarc on flickr

4) They act as connectors

Meaning that they facilitate both digital and physical connectivity. Entrepreneurs need to be able to work from anywhere, anytime, and this mean that fast and widespread Internet access is a must, for cities that want to attract talent. Innovators also need to move fast across town and they often appreciate sustainable mobility solutions. Bike hire schemes allow busy entrepreneurs to move quickly around the city.

Paris stands out in this respect: its physical cycling infrastructure and public cycle hire scheme is one of the largest in the world. Fast, free Wi-Fi is also available at more than 260 public places across the city.

Another interesting experiment was started this year in Australia: in January, Melbourne introduced the Free Tram Zone in the city centre to get people out of cars and on to trams. Coupled with free Wi-Fi in the city centre, citizens are able to connect physically and digitally across the city for free.

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Photos: The World’s Highest-Paid Actors 2015

Chicago Smart City
Image Credits: Roman_Emin on Flickr

5) They have a long-term strategy

City councils – and mayors – come and go. In order to guarantee consistency, it’s important that cities have a clear and public vision on how to foster innovation and entrepreneurship and a senior leadership to carry it through.

Some people, including gurus like Elon Musk and Stephen Hawking, are scared by the possible applications of artificial intelligence in the military. Others see machines with AI as a threat for workers, stealing away their jobs. But a large number of other experts tend to downplay these worries, treating them a bit like superstitions for easily impressed kids.

Since a number of these supporters are managers, employed by the very same companies that are developing the AIs, one might wonder if they look so carefree and self-assured because they know what they are talking about, or just because they believe the upcoming revolution is not going to affect them personally.

Like in the tale of the guy with the pentagram and the holy water that Musk recently recalled, they believe they can summon the daemon and control it too.

Well, there’s something that maybe they should consider before jumping so cheerfully on the bandwagon: it’s not just low-skilled workers that are going to be affected by the rise of autonomous agents, it’s also the management that is at risk. At Belfast’s EnterConf conference, I recently had a mind-opening conversation with Singularity University’s Nell Watson on how this could happen.

“Thanks to this combination of blockchain technologies and artificial intelligence,” Watson, who is adjunct faculty within the University’s Artificial Intelligence (AI) & Robotics track, told me, ” we’re now potentially able to create distributed autonomous organizations (DAOs), for the first time.”

“ What that means is that is theoretically possible to bootstrap a profitable business in, basically, a day, with a distributed team performing all kinds of different functions all over the world. That’s hiring, procurement, supplies, all of that stuff.”

So, how would that work in practice? The blockchain, remember, is the decentralized, secure database that records and stores every transaction that occurs in a network. It is used by the Bitcoin crypto-currency, but is not restricted to it.

It’s basically an infrastructure that provides a ‘layer of trust’ (or makes possible a ‘trustless environment, as some prefer to say, in which ‘trust’ is not needed, as it’s pre-coded in it) on which is possible to run several applications. One of the most interesting being the so-called ‘smart contracts‘.

Keeping it simple, we could say that smart contracts are contracts that are made valuable, enforced and executed through digital means, without the need for intermediaries that certify the validity of the transaction or check that the task has actually been performed.

In a seminal article written in 1997, Nick Szabo used the humble vending machine as an example to illustrate the concept. Whenever you buy a product, you stipulate a contract whose terms are somehow embedded in the machine. The machine takes in coins, and via a simple mechanism dispenses change and product according to the displayed price.

In today’s data-driven world, thanks to the Internet of Things and widespread connectivity, the possibilities are much greater than this. Smart contracts could allow you to do almost everything, from buying and selling a property to check workers’ performance and pay them using the blockchain.

“That enables a whole new element of disruption. In theory, we don’t even need to register a company anymore. You can have this entity that generates profit running in the cloud and it’s completely anonymous and it’s very difficult to trace who actually owns it,” Watson says.

There are a number of platforms that are already being created to take advantage of that. One of them is called Ethereum, and offers the promise of “unstoppable applications without any possibility of downtime, censorship, fraud or third party interference.”

Most interestingly, these platforms would not necessarily need a management. They could be run by an AI that controls all the processes, assembles automated tasks with human contribution, and provides the final service. Humans would still be involved, to a degree, but they would not run the whole show.

Think this is too far-fetched and your management job is too “creative” or smart to disappear in a snap? Think again. The Harvard Business Review recently run a fascinating article by Devin Fidler, who heads the the Workable Futures Initiative at Palo Alto’s Institute for the Future, in which he discusses something called iCEO.

There’s plenty of interesting information in the 60-page long guidebook. For the purpose of this article, I extracted some of the key features highlighted in the report, that in my opinion identify […]

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