Silicon Valley acts as the entrepreneurial hub and home to major tech companies and start-ups on the west coast. TV series and movies depict this culture of wealth and fame. But this San Fransisco tech hub is not the only city in the United States that fosters this type of creative and financially flourishing environment. Over the past 10 years, start-up culture has spread throughout the United States and is flourishing in cities like Boulder, Colorado and Austin, Texas. Boulder has a population of approximately 100,000 people and in a study done in 2010 by the Kauffman Foundation, Boulder has six times more high-tech start-up’s per capita than the nation’s average and twice as many per capita than San Jose-Sunnyvale in California.

Normalizing this start-up culture has helped Boulders economy flourish, but not all metropolitan cities have the financial backing and culture that could support this shift. Though the majority of millennials in metropolitan areas understand the benefits of integrating small businesses and technology into their city, older generations and individuals with a traditional mindset have difficulty coming to terms with this non-traditional shift in career trajectory. But what makes a city a successful hub for start-up and venture capital culture, is the willingness to explore opportunity and advancement for your environment. Start-up culture is fostered by problem-solving, so is it possible that down the line more cities will become tech hubs and how will this affect entry-level jobs and cities economic development? The cities economic and social structure needs to be supported by the infringement that incorporating entrepreneurial opportunities will bring. Automation, data analysis and other forms of technology will continue to grow and change the systems placed by standard job structures, and the infrastructure of the city around it must be prepared for the change it will bring as well. 

Innovation impacts socio-economic objectives.

Incorporating new practices and innovative efficiencies into a new market will have a positive effect on the socio-economic objectives of a city because incentivising an entrepreneurial culture will ultimately resolve unmet needs. Unmet needs meaning desired services, tangible inventions and reforms to existing systems. Opening small businesses and branches of larger corporations and remote offices also mean that there will be more employment opportunities in a city. Whether the level of entry is higher than a cashier or waiter type position, the market will continue to grow and change with an influx of jobs being introduced either way. This incentivizes people to relocate to these cities, like Boulder or Austin, where the market is rapidly increasing with more complex executive positions, that require a form of expertise. For the past 30 years, the resident population in Boulder County has been steadily increasing, which proves that the growing economy is attracting more people every year.

Unmet needs meaning desired services, tangible inventions and reforms to existing systems. Openings of new businesses and corporations also mean that there are more employment opportunities. Whether the level of entry is high, the industries market will continue to grow and change with an influx of jobs being introduced either way. This is a very positive trend in these metropolitan areas because the demand for jobs, while the price o rent, insurance, tuition, etc. all seem to be increasing as well, therefore unemployment rates have been at a steady decrease since the financial crisis in Colorado.

Brad Feld, the author of “Startup Communities: Building an Entrepreneurial Ecosystem in Your City and Co-founder,” the co-founder of TechStars and managing director of Foundry Group, a VC fund focused on early-stage investments, developed the concept called the “Boulder Theory.” This theory is based on breaking down the four major components essential to how start-up communications start and evolve. Noah Horton, CEO, and Co-Founder of Unsupervised, an AI data analysis tool that is used to automatically detect trends and draw insights from a companies data in a much shorter time span, spoke with me about his take on the “Boulder Theory.” Horton chose to relocate to Boulder, CO from the infamous Silicon Valley for a better quality of life. In a phone interview with Horton, he said that, “It just makes more sense to save money and live some place where I will be surrounded by nature and still be able to find incredible talent to come work with us.” Horton has been in Boulder for the past three years and has seen a continual increase in people moving to the city, and finding talent that is leaving the bay area to come to what National Geographic has deemed The Happiest City in the United States.

 

Commerce and regional economic integration.

What is important to note is that emerging tech and transportation make it possible for small businesses to export and do business on a national and global scale. Therefore working in cities that are not coastal or main financial hubs, make it possible to still be successful. The selling of local goods contributes directly to that particular region’s earnings and productivity which strengthens the economy and supports the ecosystem and local economy. Having increased investment and entrepreneurial activity is extremely beneficial for an interconnected global economy. The trend of starting new businesses and endeavors in a city gives hope, inspiration and motivation to people living in the city to conceptualize the new sense of opportunity in their area. Entrepreneurs finding solutions to market needs and providing new goods and services proves that cities throughout the United States are capable of pursuing similar endeavors that will enrich their local and the nation’s economy. Articles and lists have been published regularly as well highlighting Colorado’s success in businesses thus far. Built in Colorado focused on promoting the “Top 50 start-ups in Colorado” with the first five companies including autonomous vehicle engineers, educational technology, security data analysis, and a virtual reality house realtor, so you can walk through a house without making an appointment to physically go there. These are just some examples in which the city is advancing and growing their infrastructure. 

The proof of growth

What makes projects and change like this so exciting in a city, is that this does not mean that Silicon Valley and New York City are ever going to go away. What this now means is that you do not have to pay to live in one of those cities to have a successful and well-paying job at one of the same companies, there are growing businesses and tech start-ups that are fostering the same environment as they would in any other city. According to BuiltInColorado tech companies in Colorado raised $780 million in funding in 2017 and $35 billion in exits alone in that year. The volume of capital raised is significantly small in comparison to New York raising $4.227 billion in funding during the third quarter of 2017 and the Bay Area raising $4.117 billion as well during that quarter in local start-ups. But, having $35 billion in exits alone means that outside investors are willing to invest and foster the growth of companies out of Colorado because a are aquiring majority of them. In 2017 alone, tech companies, according to CompTIA, made up “9.7% of the workforce in Colorado and contributed $43.4 billion to Colorado’s economy, representing a 14% share in the state’s total economic landscape.” These statistics provide the city with quantitative reason to believe that this direction of Colorado’s investments in start-up culture is benefitting the economy in a positive manner. Honing the ability to create a template or potentially franchisable ideologies and systems to support similar growth in cities across the United States could have a very positive effect on the nation’s economy overall.

Sources:

https://www.cyberstates.org/pdf/CompTIA_Cyberstates_2018.pdf

https://www.nationalgeographic.com/travel/destinations/north-america/united-states/colorado/happiest-city-united-states-boulder-colorado-2017/

https://unsupervised.com/team/

https://www.businessinsider.com/new-york-beat-out-san-francisco-as-a-venture-capital-powerhouse-2017-10

https://www.inc.com/magazine/201312/boulder-colorado-fast-growing-business.html

https://powderkeg.com/the-denver-boulder-startup-scene-a-guide-to-the-front-ranges-givefirst-tech-cultur

https://www.builtincolorado.com/

https://www.builtincolorado.com/2017/10/24/top-100-digital-companies-colorado-2017

As a student graduating with some debt, I empathize with the approximately 44 million borrowers who begin their adult lives feeling financially behind. This is an issue that does not only hinder Americans throughout their lives but especially in the first 10-20 years after they graduate from college. Some of the first steps to becoming financially independent come from getting your own credit card, purchasing high-value items like your first car, groceries, insurance, and then putting money down on your first house. All of these transactions require you to have a certain amount of credit in order to do so, which is difficult when you have upwards of $100,000 of debt to your name before people even apply for their first credit card in their name. Though most importantly, understanding the debt that I will have, along with a lot of my friends, makes me feel nervous about future investments such as purchasing a house. But I am not alone in that concern. The housing market is only decreasing while student debt is skyrocketing, and the long-term effects of this situation are yet to be determined as the debt continues to accumulate. 

 

Millennials between the age of 24-34 are around 8 percentage points lower than baby boomers and Gen Xers when they were that age in homeownership, according to a report by the Urban Institute, a policy research group. Only 37% of millennials born between 1981 and 1997 are homeowners, which does not show a lot of promise moving forward as the housing and entrepreneurial markets have presented solutions to avoid taking out loans and mortgages. A main factor is also the regressing age of marriage. Societal norms are changing and evolving, normalizing the concept of getting married later and women completely joining the workforce, which was not the case, to the same extent, 30 years ago. The more single people in their 20’s the less people will be willing to invest in property because are not assuming that that will be their permanent residence. This is all very important information because as a borderline millennial and Gen Z individual myself, I believe it is important for us to understand the greater effect these changes are having on the economy and how it will affect the market down the line.

 

According to the graphs created by the Federal Reserve Flow of Funds on Market Watch’s Capital Report, home prices since 2010 have only gone up at a steady rate, making it increasingly more difficult for the skyrocketing amount of student loan debt. Economists are worried about what this challenge will present for future homeowners. The New York Fed shows that the there is approximately $1.4 trillion of student debt accumulated in the United States, while the GDP is $19.4 trillion. Which means that the student loan debt makes up approximately 7% of the total GDP. With that being said, the amount of people investing in the housing market is decreasing which is a strong contributing factor of why housing prices are high. It also makes it difficult that the millennial generation is so keen on leases and rentals rather than making long term investments.

 

With new companies such as Airbnb entering the space, and co-ops providing short term housing, they are effectively changing the perception and future of the housing market. Conceptually, it will be very challenging to reverse a generation’s perception of long and short term goals with investing, marriage, and daily spending habits. So it will be interesting to see how the value of the housing market shifts and if reforms will be made to help appease the student debt crisis at the whole.

 

 

Sources:

https://www.marketwatch.com/story/the-surge-in-student-debt-may-be-linked-to-the-wreckage-in-the-housing-market-2018-01-26 

https://www.nar.realtor/sites/default/files/documents/2017-student-loan-debt-and-housing-09-26-2017.pdf

https://www.cnbc.com/2018/03/29/these-are-the-ways-student-loans-stop-people-from-buying-a-house.html

 

There are many reasons why individuals opt to take public transportation. It is financially more affordable, convenience and speed. Though in cities like New York and Los Angeles, citizens have been complaining that the transportation price has risen too high and, especially in New York, commuters are not seeing any change reflecting in repairs and upgrades and are therefore turning to other modes of transportation.

In August, “Annual subway ridership fell in 2017 to about 1.73 billion trips, down about 2 percent from 2015, according to statistics from the Metropolitan Transportation Authority, and subway officials said ridership continues to slip, falling during the first five months of this year by about 2 percent.” (NY Times) In New York, this 1.73 billion trips, with each trip costing $2.75, that would total to over $4.75 billion.

But is that enough to cover the cost of rebuilding the underground systems and ensuring up to date security that was built in 1953? It is a challenge to make that conclusion when the city is home to “The Most Expensive Subway Track on Earth.”

New York is not the only city where natives fear that their form of public transportation is getting too expensive. Angelenos in California must pay $1.75 per ride, not including transfers. So my ride from USC campus to Glendale which includes 3 transfers would cost $5.25 each way and take over an hour. While I could instead take an Uber Pool Express, which is consistently around $7 and gets me home in half the time.

Los Angeles also has had an influx of electric scooters interrupt their mission of encouraging commuters to use their metro rail, bus, and bike systems. Companies like Bird, Lime bike and now Uber Jump in Santa Monica, are seamless and convenient forms of transportation which only cost $1 to unlock and about $0.15 to ride per minute. But how do these startups contribute to the local and national economy, and is it to the same extent that investing in public transit would have?

These companies contribute to finding the solutions for micromobility in urban environments. Creating vehicles built for first and last mile solutions. This is because, “part of the hype surrounding the micromobility space stems from the fact that roughly 60% of trips in the US are five miles or less.” (CB Insights) and that fewer people are already choosing to find other means of transportation besides public transit. Since 2015, according to the American Public Transportation Association, there has been a 4% decrease in public transportation usage.

This could cause a long-term economic problem for cities budgets to have funds to repair, replace, and keep up with the maintenance of pre-existing and future transport plans. Though the micromobility startups show no sign of slowing down their usage and losing their hype, besides legislation restraints, cities will have to find ways to keep their riders riding.

 

It’s not a coincidence that when I Googled, “what date does the new” the sentence was completed with the top option, “iPhone come out?” in my search bar. Since 2007, when Apple released the first iPhone, the pressure to stay up to date within the entrepreneurial cultural push became a reality. Though only less than 3 years ago I purchased my iPhone 6s, I feel out of date when I become the only person at a table without a 10 or an X.

Apple releases their new products typically every September, which means that individuals either save money in preparation to annually invest in Apple or like my family, we wait for the new iPhone to come out to buy the older versions because when new products release, previous product prices decrease. But how are the prices of an iPhone, indicators of our economy and why are these pieces of technology so vital to our lives?

In 2008 and 2009 when the United States was in a recession, Apple released their first iPhone and reported a strong first-quarter profit which shocking in a time of financial turmoil.

Source: https://www.statista.com/chart/14948/apple-iphone-revenue/

“Where many of the other consumer-facing companies are missing their expectations and seeing their revenues decline, Apple continues to see growth,” said David Bailey, an analyst at Goldman Sachs in 2008. “It [Apply] is gaining market share in every category, and given the premium price of their products, that is a significant achievement.” Though Apple had been preparing for their iPhone launch for years and could not have predicted the state of the economy at their iPhone launch date, they still took the risk and had the confidence to release a luxury product to the market. But, the opportunity for people to invest back into the economy by purchasing technology and supporting innovation and entrepreneurship to drive growth, is what may have led Apple to be the biggest corporation and most popularly used technology worldwide.

During the recession holiday season, Apple sold 4.36 million iPhone 3Gs, compared to today where they sold 29 million iPhone units in their fourth quarter in 2018. Which is a substantially higher revenue than all of Apple’s competitors in the smartphone market in the United States.

Source:https://www.businessinsider.com/apple-iphone-sales-history-chart-2017-5?r=UK&IR=T

It is important to take into consideration a companies market size across various countries over a period of time to indicate their unanimous success. Though Apple sales have hit an all-time high this year in the United States, according to Business Insider, Analysts at UBS expect iPhone sales to continue to drop for Chinese consumers. Chinese consumers have flocked to more affordable domestic brands over the past three years, such as devices from local brands like Xiaomi, Huawei, Oppo, and Vivo. Which resulted in Apple investing $500 million this year in research of the Chinese market.

Source:https://www.businessinsider.com/apple-iphone-sales-region-china-chart-2017-3

According to Forbes, Apple continues to dominate the smartphone profit pool by capturing 51% of the segment’s revenue and I will continue to feel societal pressure to upgrade my iPhone 6S to an X. But, because Apple will systematically reduce their prices so anyone who cannot afford to drop $999 on an X, can continue to invest and purchase their products, and I will most likely be purchasing a new phone as well.

 

Sources:

https://appleinsider.com/articles/14/09/30/evercore-raises-apple-price-target-to-125-sees-bigger-iphones-leading-to-bigger-sales

https://www.statista.com/chart/7800/apples-quarterly-iphone-sales/