Cities across the United States are in the midst of an entrepreneurial renaissance in which they’re becoming ecosystems for innovation. Craig Buerstatte has followed the trend closely as startup cultures are popping up outside traditional tech hubs such as New York, Boston, and San Francisco.
As Director of the Office of Innovation & Entrepreneurship for the U.S. Department of Commerce, Buerstatte has encouraged city leaders nationwide to invest in their city’s strengths and cultivate a culture of entrepreneurial innovation. Buerstatte explained why cities should establish startup ecosystems of their own with FreightWaves CEO Craig Fuller on the FreightWavesTV show, “Fuller Speed Ahead.”
Buerstatte’s goal at the Department of Commerce is to persuade cities to invest in their long-term growth by formulating entrepreneurial ecosystems. The department has allocated over $200 million in grant-making assets to cities across the country that support entrepreneurship. He sees long-term value-creation opportunities in tech startups for reasons not technological, but economical.
“Unlike some of my colleagues at the National Science Foundation or the U.S. Department of Agriculture or U.S. Department of Energy who are interested in, for instance, the next type of water-powered technology, we look at all technology businesses as a tool for two things – businesses and jobs,” Buerstatte said. “We want to create new businesses that will create jobs, and will help communities like Chattanooga grow.”
In the past decade, Chattanooga, Tennessee has become a hotbed for tech companies and startups. It has earned the reputation of “Gig City” due to the 1 gigabyte per second internet speeds available to its residents from local internet provider Electric Power Board (EPB).
At the forefront of Chattanooga’s tech scene is FreightWaves. Founded in 2017 by Chattanooga native Craig Fuller, the company has quickly become the go-to source in the freight industry for news and data analytics.
“In a city like Chattanooga, FreightWaves sets a precedent,” Fuller said.
Fuller noted Chattanooga’s size and ideal startup culture has allowed FreightWaves to make noise in the industry where it otherwise couldn’t if it were in a more crowded tech hub like San Francisco. The company’s success has attracted thought leadership from these bigger cities to Chattanooga, thus bringing more investment to the city.
Buerstatte agreed with Fuller on the importance that “tentpole companies” like FreightWaves have in leading a citywide renaissance.
“I think the markets and equities that were used in the past to create business and personal wealth are going to look very different in the future, and it’s important for all communities of every size and shape, and every corner of the U.S. to each have their own ‘FreightWaves’ to encourage that type of investment activity,” Buerstatte said.
For the most part, Chattanooga’s success has been organic. Most of its success has come from innovators and entrepreneurs bringing innovation to already established industries. FreightWaves has its roots in Chattanooga because of the region’s deep transportation and logistics history. Known as “Freight Alley,” the Chattanooga area is an intersecting point for many carriers and is home to major trucking and logistics companies such as U.S. Xpress, Covenant Transport and Kenco.
“Companies in Silicon Valley are at a disadvantage in freight because they don’t have tribal knowledge,” Fuller said.
Buerstatte has persuaded city leaders nationwide to focus on bringing innovation to their communities’ assets instead of attempting to emulate a Silicon Valley-style business model.
“You wouldn’t try to force an artist to become a Wall Street banker. You wouldn’t want a transportation professional or truck driver to sit in a cubicle all day,” Buerstatte said. “Think about your respective strengths, how you can bring those together, and leverage them to create the businesses of the next 10, 20, 30 years.”
Buerstatte also addressed the temptation that many political leaders face in chasing a “Moby Dick.” A whale of a deal for a city might be a large industrial firm. Although it brings many jobs to a community, Buerstatte believes economic opportunities that rely on a single employer are risky and could make an economy one-dimensional.
“What could I [as a city leader] gain if I took that same energy, incentives, and strategic planning and put it toward an entrepreneurship strategic plan where I could create 10 to 20 new firms that in five years could be 1,000 to 3,000 collective jobs?,” Buerstatte asked.