Is Austin the Next Silicon Valley?


This past week it was hard to tell if the folks braving the heat in downtown Austin were Pokemon Go players or NewCo Austin attendees. While searching for our next session, I started talking with another NewCo attendee, a young woman who recently moved to Austin. She graduated from an elite university, had gotten her first real job at a start up back East, and was lured to Austin because she heard from a friend there was a really good “scene” in Austin. Not a music scene or social scene, but a start-up scene.

Mellie Price, Executive Director of Technology Innovation at the Dell Medical School at The University of Texas at Austin and Brian Monahan, NewCo Co-Founder at the NewCo Austin Kick Off

The pumping Sonos system that hits you entering the lobby of the Capital Factory and the frenetic swirl of earnest young people coming and going in Austin’s signature incubator makes it obvious that something cool is going on. But aside from the energy and the talent, NewCo Austin — produced by Capital Factory — showed that there are some true world-changing companies being built.

Flush with a $14M series A, the rock star team at Data.World is building the GitHub for linked, open data sets. Hungry Planet is leveraging innovation in LED lighting to revolutionize indoor farming. The Dell Medical School is the first tier 1 medical school to be launched in 50 years, and they are leveraging that opportunity to link to the innovation ecosystem in ways that will surely inspire the rest of the world.

Bryan Jacob, CTO and Co-Founder of Data.World, presents at NewCo Austin

Austin is a total NewCo city. It’s got the mix of a world class university, previously successful entrepreneurs to guide and nurture, access to capital, supportive and engaged BigCos, and the network effect that creates “the scene.” It’s drawing talent in a feedback loop that creates positive cycles for everyone. Every single city we look at for a NewCo Festival aspires to reach the enviable position in which Austin now finds itself.

It will be interesting to see what comes out of Austin in the next five years. Despite the steady creep of distributed workforces driven by virtual collaboration, NewCo Festivals are passionately local, and all about a city. Each scene has its own identity and its own ambition.

The Ride Sharing Insight. Given all the entrepreneurial energy going into transportation these days, Austin is also unique because the electorate just booted Uber and Lyft. As a result, the city has become a petri dish for ride sharing innovation. My colleague John Battelle describes Uber as Silicon Valley’s current roshomon (don’t worry, I had to look it up too). While there is clear market demand for transportation solutions, there is no shortage of controversy about the impact of the Uber model. Start ups like RideAustin, Fare, Fasten, Wingz, and Car2Go have all rushed to the fill the vacuum. Locals say the incumbent cab companies have also taken advantage of the vacuum by jacking up fares 30%. The insurgents all have different models and user experiences, but most seem to revolve around returning more profit to the actual drivers — something Tim O’Reilly argues for in his Shift Dialogs interview. In sampling the new offerings, I saw some buggy software, but overall I got around just fine.

But does it matter? Even if there is a better ride-sharing mousetrap in Austin, can it scale and compete with the network effects of the established incumbents? Frankly, this is a challenge that all startups competing with Silicon Valley will face. The Valley has religion about “getting big fast” for a reason. It also has the resources to scale companies quickly. If Austin and other NewCo hotbeds are truly going to break through to the next level, they need to show they can attract talent and ideas and then successfully scale them to change the world. Based on my experience last week at Austin, I’d wager the city is on its way.

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