As sequestration starts to ripple through the Washington region, one sector could see a silver lining: tech start-ups. Experts say if big government contractors cut jobs, talented workers could migrate toward smaller start-ups that don’t depend on Uncle Sam for work. We look at how local leaders’ efforts to help start-ups take root here could begin to pay dividends.

Guests

  • Donna Harris co-founder, 1776
  • Bill Flook Staff Reporter, Washington Business Journal
  • David Zipper Director, Business Development and Outreach, Office of the Deputy Mayor for Planning and Economic Development

Transcript

  • 13:21:39

    MR. KOJO NNAMDIWelcome back. The area's private tech sector has seen remarkable growth in the last decade but it's still a relatively small if coveted part of the local economy, one that local leaders and enterprising entrepreneurs are looking to bolster. Some caution against putting all our proverbial eggs in one basket while other says this is a vital way to diversify the economy and keep up with other regions.

  • 13:22:04

    MR. KOJO NNAMDIHere to bring us up to speed on the latest happenings in D.C.'s tech sector and what it takes for a startup to keep going is Bill Flook. He is a reporter for the Washington Business Journal where he covers technology, biotech and venture capital. Bill Flook, welcome. Thank you for joining us.

  • 13:22:20

    MR. BILL FLOOKThank you. Glad to be here.

  • 13:22:21

    NNAMDIAlso with us is Donna Harris. She is the co-founder of 1776, which you'll hear more about later, and an entrepreneur in residence at Georgetown University. She's the former managing director of the Startup America Partnership where she led the startup region's initiative. Donna Harris, welcome. Thank you for joining us.

  • 13:22:39

    MS. DONNA HARRISThank you.

  • 13:22:40

    NNAMDIAnd David Zipper is back. He was here last July. He's the director of business development and outreach in the Office of the Deputy Mayor for Planning and Economic Development for the District of Columbia. David, good to see you again.

  • 13:22:52

    MR. DAVID ZIPPERThanks, Kojo.

  • 13:22:53

    NNAMDIYou too can join this conversation at 800-433-8850. Do you work in or with the tech sector in D.C.? What do you think it will take to encourage more tech entrepreneurs to set up shop in D.C., 800-433-8850? You can send us email to kojo@wamu.org. Bill, the economic forecast for the region since sequester became a household word has been fairly bleak. But it may actually bring some upsides for the tech community. How so?

  • 13:23:23

    FLOOKWell, this might be somewhat of a crass thing to say because it involves people losing their jobs. I mean, talk about some of the most apocalyptic forecasts to the sequester, means, you know, Virginia, Maryland and D.C. could lose as many as, you know, 450,000 jobs. Now that means that there's going to be -- some of them are going to be technical people, some of them are going to have an opportunity in the smaller business-to-business or business-to-consumer facing startup scene. Sort of the non-federal contracting world might have a place for some of the, you know, say software developers coming out of the federal contracting world.

  • 13:23:58

    NNAMDIYou agree with that, David?

  • 13:23:59

    ZIPPERI think that's potentially true. I think it's important to look at the big picture of the trends we've already seen beyond the sequester. You know, in the last two years in Washington, D.C. we've already seen signs of the economy as shifting toward the private sector away from the public sector. We've actually lost about 3600 jobs in the last two years here in the District, while we gained 27,500 private and nonprofit sector jobs here in Washington. And again, that of course is taking place before the sequestration.

  • 13:24:30

    ZIPPERSo from the perspective of the administration to the mayor we're thinking about which sectors can really continue to grow in the private sector looking ahead. Technology's a part of that. So also are sectors like retail and hospitality over the -- where the District has seen significant growth.

  • 13:24:44

    NNAMDII was about to ask, how large a part of that is technology, because the District is home to a number of different industries, large and small. Where does tech fall in the grand scheme of things for the city, which you call the big picture?

  • 13:24:55

    ZIPPERSure. Well, I mentioned before, we were talking about a baseline of about 737,000 jobs in the city at the moment. But by our best estimates the tech sector consists of around 21 to 22,000 jobs. So think of it has about 3 percent. It's not as big a sector as like health care or hospitality, but it is growing. And it's growing consistently and steadily over the last really 13 years, including the recession. To us that shows real signs of potential for continued growth and perhaps catalyzed growth.

  • 13:25:22

    NNAMDIHow would you explain the city's broad strategy when it comes to working with startups and how does it compare to working with say the retail industry?

  • 13:25:30

    ZIPPEROh, it's very, very different. With the retail industry we actually have worked for a very long time with an organization called the D.C. Economic Partnership on making outreach to large retailers while supporting small retailers. We bring brokers, for example, on bus tours of emerging neighborhoods in the District to show them where they may find retail opportunities that they haven't already considered. Often those are lower income communities that have been outside the main neighborhoods that have been under consideration before.

  • 13:25:57

    ZIPPERNow with the tech sector, it's really only been two years that we've been thinking about it. We hired someone in the mayor's office two years ago specifically to focus on tech. We're going to be expanding that to a group in the weeks ahead. And what we've really tried to do there is find ways of really looking for scale, ways of helping the entire sector overall. We've expanded the D.C. tech incentives program of legislation last year. We supported 1776 and fortify, which we think can have catalytic impacts on the city. And we try to take steps that will really lift the tech sector overall.

  • 13:26:26

    NNAMDIBill, one thing that strikes me about tech businesses is the focus on place. Is there an irony in the fact that these companies that use and develop the kind of technology that enables people to connect over great distances seem to place such a premium on, well, being together.

  • 13:26:46

    FLOOKYou know, that is funny. The -- you know, you talk about the idea of density and that's something -- an idea that comes up when you talk about any startup scene. Is there a critical mass of people, you know, within walking distance of each other, using the same coffee shops, bumping into each other? And that's, you know, one of the ideas of what D.C. needs to have as a startup scene.

  • 13:27:06

    FLOOKYou know, a lot of these guys can work. You know, technology has enabled them to have a distributor workforce across the country if they want to. They can have developers in Eastern Europe or South America if they want to. But, you know, still the idea is that you need to have a real hub, a real centralized location. You know, ten years ago, a dozen years ago, that was the Dulles corridor. And there's a lot of thought right now that that's moving down into the city proper.

  • 13:27:30

    NNAMDIIs the area's strong kind of regional identity in some ways a stumbling block when it comes to creating a central community, compared to trying to create one in an individual city or town?

  • 13:27:41

    FLOOKAbsolutely. You know, you hear over and over again that same Silicon Valley. You'll never hear about Palo Alto, you know, arguing with Mountain View necessarily. You know, it's sort of seen as a broader region, a sort of collective tech community. We have three separate fiefdoms basically. We have Virginia, Maryland and D.C. each with their own...

  • 13:28:01

    NNAMDI...the DMV.

  • 13:28:02

    FLOOK...the DMV -- each with their own unique provincial economic development interests. And there's a lot of thought right now that that is going to sort of stifle the broader sense of the tech community.

  • 13:28:11

    NNAMDIWell, we have one person in the room who's betting that won't happen. She is Donna Harris, co-founder of 1776 and an entrepreneur in resident at Georgetown University. She's the former managing director of the Startup America Partnership where she led the start of region's initiative. Donna, the creation of a central hub is where you come in. I've heard it described as an innovator, an accelerator, a co-working and events space. So how do you describe 1776?

  • 13:28:38

    HARRISWell, we're definitely all of those things. And, you know, Bill's point about density is what has driven the foundational pieces of 1776. The campus really came out of the idea that if we were going to do events, if we were going to do programming, if we were going to help accelerate startups, how would we do that? Where would we do that? There isn't a coffee shop, a convening location.

  • 13:29:01

    HARRISSo the campus itself is 60,000 square feet of possible space for us to expand into. And it will be a place that literally startups can come and hang out, meet each other. And a place where we're going to be bringing together people from the university, community, from the embassy community, from the public sector, from Capitol Hill, from the White House to begin to talk about how can we really leverage the unique advantages that D.C. has that other ecosystems don't have?

  • 13:29:28

    HARRISWe've got -- every major corporation has a presence here. Every country is based here. All the major intellectual thinking about these big industries like health care and education and energy, they're all happening here. But we've never leveraged those things to help start up scale. And yet there are literally hundreds and hundreds and hundreds of startups that are working from home. Nobody knows who they are because they're not raising their hand and coming together.

  • 13:29:54

    HARRISSo the campus is a way to bring people together physically. The events are a way to bring together the programming and the subject matter, experts and the people to help those startups really think about, if I'm a disrupter how do I scale my business? And then we'll be actually forming an accelerator, which will fund and provide programmatic and mentoring support to help the company scale.

  • 13:30:15

    NNAMDIIt's my understanding that the space is set to open the 1st of next month. If I were to walk through the door once it does, what kinds of companies, what kinds of individuals would I come across?

  • 13:30:26

    HARRISWell, we hope you will come down. We invite you to come and do your show from 1776.

  • 13:30:31

    NNAMDIAs long as there's no coverage charge, yes.

  • 13:30:33

    HARRISYou'll be more than welcome. Well, first of all, you'll find a really creative space. So if you think about D.C. office space, it tends to be very stark, very modern, lots of offices. The more successful you are the bigger your little private hovel is. This is the antithesis of that. It'll be very rustic, lots of reclaimed wood, painted, light floors, very open. There'll be everything from old Queen Anne sofas to formal desks that you can sit at. And it will have a feel of this is the place that if you're a high-growth want-to-really-scale-your-company business, this is where you're going to hang out.

  • 13:31:09

    HARRISSo you'll see startups from everything from mobile and tech to education and health care and everything in between.

  • 13:31:17

    NNAMDIWe're talking with Donna Harris. She is the co-founder of 1776, which was just describing. She's also entrepreneur in residence at Georgetown University. She joins us in studio with David Zipper, director of business development and outreach in the Office of the Deputy Mayor for Planning and Economic Development for the District of Columbia, and Bill Flook. He is a reporter for the Washington Business Journal where he covers technology, biotech and venture capital.

  • 13:31:40

    NNAMDIYou can call us at 800-433-8850. What do you think it takes for a startup to get going and keep going in this economy, 800-433-8850? You can send us email to kojo@wamu.org. Send us a Tweet at kojoshow or simply go to our website kojoshow.org and join the conversation there. Let's go now to Matt in Arlington, Va. Matt, in addition to being on the phone you're helping us to settle a bet which we had before this broadcast. Matt, you're on the air. Go ahead, please.

  • 13:32:15

    MATTYeah, hello, Kojo. So my name is Matt. I'm from Taxi Magic. I'm actually in Alexandria, Va.

  • 13:32:22

    NNAMDIOh, go -- Matt, you know, we -- I told our guests that we had a caller on the phone and they placed bets among themselves about who it was. Did anyone get it right? Nobody got it right, but Matt, it is you so...

  • 13:32:35

    MATTOh, that's all right. That's all right.

  • 13:32:36

    NNAMDI...we're thankful that you called in.

  • 13:32:37

    MATTWe need to get the word out better.

  • 13:32:39

    NNAMDIGo ahead please, Matt.

  • 13:32:40

    MATTYeah, so I just want to interject with one thing that we're seeing. I'm in charge of our culture here at Taxi Magic. And as a startup we've had it where it's never been easier to have more access to talented workers, especially software developers here in the D.C. area.

  • 13:32:57

    NNAMDIYou mean, since the sequester was announced?

  • 13:33:00

    MATTReally actually we started to gauge it. Some of our employees and potential employees who were looking to work here were seeing a bit further down the line. So starting about six months ago and really picking up recently as the sequester has hit the mainstream media, the number of people that we've seen coming in from local government, government agencies, NGOs has increased dramatically, and also from government services organizations.

  • 13:33:26

    MATTSo for us, you know, I think that the biggest change that we have is that the risk profile of working in a startup is much lower comparatively than it ever has been before. And previously we could never hope to get someone who might have a mortgage, might have car payments and wasn't really willing to take on that risk of working for a venture that would fail. But as government looks riskier in the eyes of some people now, and we have venture funding that can help us get through the next couple years, maybe even more safely than some government positions, the number of our applicants has jumped up rapidly.

  • 13:34:04

    NNAMDISo, David, Bill, what we're talking about here is not entirely speculative, is it?

  • 13:34:10

    FLOOKThat's fascinating to me that it's started to really come true, even maybe before the sequester hit. That, you know, it brings up the idea of risk and that's one of the big hindrances to the startup community hiring more people. You have to have an appetite in the stomach for, you know, maybe working for an unproven venture whose funding's unproven, doesn't have customers yet. And if you're someone with kids and a mortgage, that's a real -- that's a huge undertaking to be able to do that.

  • 13:34:35

    FLOOKSo obviously every job carries risk but it's the issue of convincing people that, well maybe you should take the leap right now. And I think maybe with some of the cutbacks, you know, you weigh the two, government contracting or being a federal worker, and the startup community and maybe they look a little more balanced at this point.

  • 13:34:51

    NNAMDIOne example, David, does not necessarily describe a trend but what Matt has, in fact, been describing is it seems to be a trend.

  • 13:34:58

    ZIPPERYeah, yeah. It's -- I agree with Bill. It's very interesting and I think it goes to show how potentially a lot of opportunity for the tech sector to grow here. And I think about what's happened in New York City over the last five years as the tech sector has really ramped up in a very significant way. And, you know, to what Bill was saying about the risk appetite of a region's employees, a lot of people talk about how when we -- you know, I've studied what's happened in New York. I actually used to work there too. And there were sectors like finance, fashion, media where there was an expectation of risk, whether you're on the investor side or the employee side.

  • 13:35:36

    ZIPPERSo as -- it wasn't really a culture shift for a lot of those people to pivot to focus on technology, which some people say, oh but Washington is more of a federal city. It's -- you know, no one likes risk. Apparently, you know, for one thing, you know, the federal government may be seen as being a little bit more risky to work in now. And perhaps, you know, that does mean that the tech sector can have experiences like Taxi Magic's experiencing.

  • 13:36:01

    NNAMDIIn addition to which Washington is a changing city. Matt, thank you very much for your call. If you happen to be a federal government employee working in a tech capacity or if you happen to be working for a contractor with the federal government working in a tech capacity, would you think of working for a startup given the economic times and the prospect of sequestration? Give us a call, 800-433-8850. What would you be looking for?

  • 13:36:26

    NNAMDIDonna Harris, other co-working spaces have opened and, well, closed in this city. What's different, in your view, about this one?

  • 13:36:35

    HARRISYeah, sure. So for us the co-working isn't the primary use of the space. So it's a wonderful thing that we can provide to the community a space that people can come and work and be together with others that are building high-growth entities. But it's much more about being a convening space to bring disrupters together.

  • 13:36:55

    HARRISSo it's -- the things that are going to be happening beyond the actual co-working, the events that we'll be having, the caliber of the people that will be coming through and being -- doing office hours and being available to the startups, it's also the fact that we're going to be running a D.C. startup school to address this very issue of we have literally the nation's biggest pool of stem workers in the country. But yet probably with a little bit of rescaling and frankly, visibility if there is a startup ecosystem, many people who are on government contract employees might want to come and work for a startup.

  • 13:37:28

    HARRISIt gives them an easy way to, you know, sort of dip a toe in the water and see if startups are for them. And then the actual, you know, the hands-on help that we're going to be giving the startups that are coming through, through the connections that we have, through the accelerator and through K Street Capital and the other groups that are evolving.

  • 13:37:48

    HARRISBut beyond that I would say the campus itself has become a home to some of the other accelerators in the community. So a relationship with Fortified Ventures and their acceleration program, they early on made a decision to move into 1776 because why have two office spaces? Why be in two separate locations? If we can co-locate together we get the benefit of all of our networks, of all of the mentors that'll be coming through the space. And that benefits everyone. So it's much more than just the co-working.

  • 13:38:18

    NNAMDIIs that important, David?

  • 13:38:19

    ZIPPERYeah, absolutely. It's absolutely important. It's a big part of why this city has been so supportive of 1776 and we're so delighted to have it here in Washington. I think from the city's perspective also, we're interested in making sure that the training that's going to take place at 1776 is available to District residents that are looking for jobs. That's a big priority to Mayor Gray. And in the -- the city provided a $200,000 grant to cover the build-out costs for 1776 a couple months ago and it's part of that agreement. I believe it's 20 percent of the spots in the training classes we reserved for unemployed District residents that agencies will refer over.

  • 13:38:56

    ZIPPERAnd we feel like there's all -- there's a number of other connections I could go into as well where District residents, we feel, are going to directly benefit from all that's happening at 1776.

  • 13:39:05

    NNAMDIBill, you recently flagged a piece in another publication that asked if there's hope for D.C.'s startup scene, but really didn't answer that question. What are some of the criteria for success when it comes to fostering a good startup scene? And where does the District shine or have some catching up to do on these fronts?

  • 13:39:21

    FLOOKYou know, like Donna said, we have this humongous pool of talent in the District. D.C. area regularly rates among the top when it comes to the density of stem jobs, people trained in technical skills. We do very well. But that's only one metric really, you know. In terms of funding in sort of both angel funding, that's sort of more wealthy individuals that put their own money into startups, and institutional venture funding, we're still hurting when compared to some other startup clusters. So that's one thing that is a big weakness for D.C. right now, especially in the fourth quarter of last year, funding dipped to some of its lowest levels since, you know, 2009.

  • 13:40:02

    FLOOKThat's just one quarter, but it's sort of emblematic of sort of how we're kind of bouncing around the bottom right now, or at least not where we could be on venture funding. So -- and that's, you know, whether that's -- we need better start-ups or we need better funders or more funders, you know, that's an ongoing debate.

  • 13:40:17

    HARRISWhich is fascinating because we actually are home to five to the seven wealthiest counties in the nation. So there's a disconnect between the amount of wealth we have and the amount that that wealth is participating in the ecosystem. And part of what we're trying to do is tease out that wealth to get them to understand that there is an ecosystem, because visibility is half the battle. They don't even know there's something to invest in. So making them aware of that, and providing vehicles for them to participate which is the genesis for where K Street Capital has come from, and then really making sure that they understand that rather than putting your money in the restaurants which tends to be, you know, sort of the fun cool thing to do, you can actually put your money into a start-up, make a significant return, and put your network to use which is one of another of the biggest assets that we have as a community, the connections this community has globally.

  • 13:41:07

    NNAMDIDavid Zipper?

  • 13:41:09

    ZIPPERYou know, it's interesting hearing this discussion. The question came up at actually the South by Southwest Technology gathering where Mayor Gray, and I, and the Deputy Mayor Hoskins and about 250 D.C. Tech participants were for the last few days. This exact issue came up in a discussion that the mayor was facilitating about whether we should focus on getting more good entrepreneurs in the city to create businesses or more investors to fund entrepreneurs.

  • 13:41:38

    ZIPPERAnd as you might imagine, one's perspective in that debate seems to be based on whether you happen to be an entrepreneur, in which case you say no, we just need more investors, or if you're an investor, in which case you say, no, the good companies get funded, we just need more and better entrepreneurs. And so to some level, you know, I think it may become a chicken and egg issue. We need more talent. We need better educated investors who understand what it takes to invest successfully proactively in start-ups, and we also need more people who can start businesses, and that's a big part of why we went to South.

  • 13:42:08

    NNAMDIGot to take a short break. Hold your thought, Bill Flook. And if you have called, hold on, we will get to your call. 800-433-8850 is the number to call. You can send us email to kojo@wamu.org. What would you like to see the city do more or less to attract such businesses? 800-433-8850. I'm Kojo Nnamdi.

  • 13:44:09

    NNAMDIWelcome back to our conversation on the D.C. tech sector and the current economy. We're talking with David Zipper. He is the director of business development and strategy in the office of the deputy mayor for planning and economic development for the District of Columbia. Bill Flook is a reporter for the Washington Business Journal where he covers technology, biotech, and venture capital. And Donna Harris is the co-founder of 1776 and an entrepreneur-in-residence at Georgetown University. She's the former managing director of the Start-up America Partnership, where she lead the start-up regions initiative.

  • 13:44:42

    NNAMDII interrupted you when we took that break, Bill Flook. Do you remember what you were going to say?

  • 13:44:46

    FLOOKAbsolutely. And we're talking about what this community needs, whether it's better entrepreneurs or more entrepreneurs or better funders. You know, one thing that's going to encourage both of that is more exits. That is we need more companies that are either getting bought or going public, and that's something that this region has really struggled with. That will create a cycle. If you're an investor, and you can see an end point for your investment in that start-up getting bought by either a larger competitor or someone else, that's going to encourage more people to say, you know what, there is a light at the end the tunnel.

  • 13:45:15

    FLOOKI'm not just throwing my money down a hole here. For entrepreneurs it says, you know, I'm not going to be -- there are people doing this in this region, you know. We have some access here like Eloqua out in northern Virginia just got bought by Oracle, but they are still fewer and far between and not really as much or as substantial as we need here.

  • 13:45:35

    NNAMDIOnto Scott in Hyattsville, Md. Scott, you're on the air, go ahead, please.

  • 13:45:40

    SCOTTGreat. Thanks. Great topic. I've been a small business owner in the district area for two decades, and from what I can see there is an exodus of inner city minorities right now from the district into mainly the mid Atlantic region, particularly the south, going back to their sharecropper heritage, their farming communities. So this kind of a program begs the question, are we going to invest in our people as Americans, or are we going to bring in overseas competition that may or may not really appreciate what it means to be American?

  • 13:46:25

    NNAMDIWell, I don't know about all of that, but David Zipper did indicate that the agreement that the District has with 1776 is that 20 percent of their employees have to be District of Columbia residents, correct?

  • 13:46:38

    ZIPPERThat is correct. That is correct. And it sounds like Scott had some interest in what support can be given to small businesses across all sectors, and that's something that we have a whole agency devoted to the Department of Small and Local Business Development, which provides access to loans, help with business plans and hiring other services that small businesses need.

  • 13:46:58

    NNAMDIDonna, what brought you to D.C. in the first place, and maybe more importantly, what has kept you here?

  • 13:47:04

    HARRISYes. I'm a Michigander, go blue, and brought -- came to D.C...

  • 13:47:09

    NNAMDICut off her mic.

  • 13:47:10

    HARRISHey, hey, stop that. Came to D.C. about I guess six or seven years ago to be on the leadership team of a government relations firm. It was a firm that I had actually worked with while I was in Michigan, and was in a great place in my life to be able to do that, and since have stayed because there's so many amazing assets to the community, and so many wonderful things about living here. Everything from the quality of life, I married and have a three year old, and so having our family based here there's a lot that you can do as a family.

  • 13:47:41

    HARRISBut the business opportunity is fantastic. I've traveled the world and looked at ecosystems as far ranging as New York to Silicon Valley, Hawaii, Puerto Rico, down to Florida, and I've yet to come across an ecosystem that has an many native assets that could be deployed to help build start-ups, and I want to be a part of making that reality, because this can be an ecosystem that is one of the top and rivals the ecosystems that you hear about in the news all the time. But it does require the community to agree to collaborate, to work together to solve the problems like the capital gap, to figure out how we prepare for sequestration and retrain people so that they know there's an ecosystem to participate in, and that they actually have a low-risk way to get comfortable with start-ups and working together, whether you're Virginia, D.C. or Maryland.

  • 13:48:32

    HARRISThis is not about competing. And what's interesting is the entrepreneurs that I work with, they don't care if they're funding comes from Virginia, Maryland, or D.C. They don't care with their mentor lives. They just care that they're getting the help to build their business, and we're trying to take that approach as well, and being part of the D.C. ecosystems and the greater Virginia and Maryland area, I've never seen a community actually that is more collaborative. So, you know, you've people that are recognizing each other, they're giving each other props when they succeed.

  • 13:49:02

    HARRISThere's not a lot of cutthroat, I can't give you recognition because it hurts me, that you do see in other communities. And we've actually had reporters from publications like Entrepreneur magazine comment that when they interview people in the D.C. ecosystem, they don't get the sniping that they get in other communities. And I think that is something...

  • 13:49:21

    NNAMDIMaybe we ought to elect these people to office. But go ahead, please.

  • 13:49:25

    HARRISWell, that is something that I think we could build on as a community, that by, you know, you don't -- you're not going to get that in Silicon Valley, you're just not. I've spent time there, and while it is dense, and you will run into a lot of people, it has its own cultural challenges, and I think we often forget that. So, you know, D.C. and the greater D.C. area is a fantastic place to live, and I think it's a fantastic place to work. I wouldn't want to be anywhere else.

  • 13:49:47

    NNAMDIScott, thank you very much for your call. We'll go to Arnold in Rockville, Md. Arnold, you're on the air. Go ahead, please.

  • 13:49:54

    ARNOLDYes. Hold on one second, please.

  • 13:49:58

    NNAMDIOne, two, three.

  • 13:50:00

    ARNOLDOh, that was five seconds. I only needed one.

  • 13:50:02

    NNAMDIOkay. Go ahead.

  • 13:50:04

    ARNOLDAll right. So I've recently started a small business. It's a hospitality marketing company. I've worked in the city for 30 years in the industry, and I would love to locate -- the name of my company is Capital Hospitality Marketing, a little plug there. But I'd love to be in the Capitol. I grew up around here. So I'm very curious about….

  • 13:50:28

    NNAMDIAbout 1776?

  • 13:50:30

    ARNOLDYeah. Where is that and, you know, what is it?

  • 13:50:34

    NNAMDIWhat would you have for a business such as Arnold's that is in the hospitality marketing business, at 1776, Donna?

  • 13:50:41

    HARRISSure. So the campus is open to any business that is a scalable product or service. So applications, it's an open process. You can go to our website, which is 1776dc.com, and the membership application is available there. And literally it is open. You can join everything from nights and weekends if you just want to pop in occasionally, all the way to getting a dedicated seat that's yours and you can set up a picture of your wife and your dog on your desk.

  • 13:51:08

    NNAMDIThank you very much for your call, Arnold. A similar call, I think is from Erik in Olney, Md. Erik, you're on the air. Go ahead, please.

  • 13:51:17

    ERIKHello, Kojo. Thanks for having me on the show. My brother and I love your show. I went to the University of Maryland, and I was part of the entrepreneurial program called Hinman CEOs. What we did was, we were in groups and we developed ideas essentially. We went through business plans we went through financials, we went through angel investing. We went through all the steps that we would need in order to get proper funding to create a business or get the money to do a start-up.

  • 13:51:45

    ERIKBut the problem is, a lot of my friends, and a lot of the people I was with in Hinman CEOs, they kind of lost hope because a lot of us had great ideas, but we couldn't find good venture funding or good, I guess, capital in the D.C. area. So a lot of my group partners left, like one of my friends, Andy Tipney (sp?) he went to Cisco, and he -- which is in California, because he said that was the only place where he could seem to find people that would listen to (unintelligible) ideas.

  • 13:52:17

    NNAMDII think that creation of 1776 is in part precisely for that purpose. Donna Harris, correct me if I'm wrong.

  • 13:52:24

    HARRISNo. You're definitely right. It's no mistake to say that capital is a challenge. You know, we could give lists of names of individuals and companies that have had to either shutter their business or relocate because they been able to find capital. It's a real issue. It's unfortunately not unique to D.C. I think any ecosystems have struggled with that, but we have to unpack the problem beyond simply capital, and we have to really look at the segments of capital. So trying to tackle early stage, angel stage, series A follow on capital, and there have been some initiatives in each of those categories that I think as they begin to take root will help tackle this issue.

  • 13:53:02

    HARRISSo part of what we're doing at 1776 is funding of the companies that come through our accelerator program. K Street Capital is an angel vehicle to provide some early stage funding to companies as well. You've got organizations on the other end of the spectrum with Revolution that is funding much later-stage companies. I think the gap comes in not the early angel, and not the later stage, but in the middle, and there are an unfortunate number of companies that but for three to $800,000 have had to make decisions they wouldn't want to make, including relocating to other cities.

  • 13:53:36

    HARRISSo, you know, it's something that I think we as a community have to address, but we have to think about it as segmenting the problem and tackling the segments as opposed to the bigger box of how do we increase access to capital.

  • 13:53:48

    NNAMDIThank you very much for your call. David Zipper, you mentioned earlier the South by Southwest festival, which you and Mayor Gray and a cast of hundreds attended. What goals did you have for that trip, and do you feel like you accomplished them?

  • 13:54:02

    ZIPPERSure. So the first and most obvious goal for the Mayor in attending South by Southwest, and this was his first time attending, first time any district officials attended, was to frankly and simply just support the D.C. technology community. There has been a number of people from D.C. going for years from the tech scene here, and there are about 300 in the District that went this past weekend, and on Saturday the Mayor addressed them. Most -- almost all of them came to an event that a group called Tech Cocktail put on, which is going to be partly in 1776, and the Mayor mingled. He did an interview, he just basically expressed and showed support for the tech sector.

  • 13:54:40

    ZIPPERI mean, it's one thing, I think to say that you support the tech sector, and I think he feels it's another to physically show it by traveling to Austin. That was one simple goal. A broader goal is to bring talent, meaning entrepreneurs, meaning investors, tech employees, developers, to Washington, and to that end, the Mayor was able to meet with around a dozen bloggers, journalists, who cover technology in San Francisco, New York, other places where we'd never otherwise have access, and we've started to see some visibility come out of that, and we've also met some good businesses that may want to come here.

  • 13:55:13

    ZIPPERThere was one company that we met with that's in Texas, wants to work with the federal government to see if they can sell the service they're developing to GSA, I believe. And, you know, those are the kinds of companies that have a great reason to be here, and, you know, we're excited to -- we've already reached back out to them, I can tell you that.

  • 13:55:30

    NNAMDIOnto Lauren in Washington, D.C. Lauren, we're running out of time very rapidly. Please make your question or comment brief.

  • 13:55:38

    LAURENThanks for taking my call, Kojo. I'm a new start-up. I connect people who have inherited large amounts of wealth what I felt was initially the financial services community, and it looks like my primary target market is non-profits. Donna, how are you targeting wealthy -- locally wealthy individuals with making an investment in local start-ups?

  • 13:56:04

    HARRISYeah. We definitely are interested in the outreach. I'd love to have you connect with me at 1776dc.com. And, you know, the idea of being able to get the wealth in this community, particularly people who have deep philanthropic interests to understand that they can simultaneously help advance some of these interesting industries like education and health, and tackle some of the big challenges in our country, and make an ROI in their portfolio, is very compelling. So we're doing individual outreach, and would welcome any phone call or email to chat further with you.

  • 13:56:38

    NNAMDIThank you very much for your call. Bill, technology isn't going anywhere other than forward, yet I've seen some people making the argument that cities should be wary when it comes to forging close ties to any one sector or any one company. Should we be bringing a little skepticism to the table here/

  • 13:56:54

    FLOOKOh, absolutely. I mean, you know, you look at sort of the Gray administration and, you know, this was something that David lead, but was carved out about as much as $32.5 million worth of tax breaks for Living Social last year. Now, as we know, since then...

  • 13:57:11

    NNAMDIThink about we only about a minute left.

  • 13:57:12

    FLOOKLiving Social has fallen on some very hard times, and the city built in some protections that made sure they wouldn't get that money unless they keep expanding. But this is just a sign that start-ups are precarious, and you need to be very careful about how you forge forward on this.

  • 13:57:25

    NNAMDIAny comment on that, David Zipper?

  • 13:57:27

    ZIPPERYes. And with regards to Living Social, you know, when we developed the package for them, as Bill is eluding to, we deliberately put in some clauses that required the company to have at least a thousand employees in the city, and to build a new headquarters of 200,000 square feet or more in 2016. Just to be clear, not a dime has been given to Living Social, and it won't be given...

  • 13:57:47

    NNAMDIUntil that happens.

  • 13:57:47

    ZIPPER...unless they clear those thresholds, and I think that those sorts of safeguards are necessary, because Bill is right. Tech companies rise and fall very quickly. The sector overall is continuing to grow in Washington for 15 years. That doesn't mean any one particular company will be leading that.

  • 13:58:00

    NNAMDIOr business model for that matter. David Zipper is the director of business development and strategy in the office of the deputy mayor for planning and economic development for the District of Columbia. Donna Harris is the co-founder of 1776 and an entrepreneur-in-residence at Georgetown University. And Bill Flook is a reporter for the Washington Business Journal where he covers technology, biotech, and venture capital. Thank you all for joining us, and thank you all for listening. I'm Kojo Nnamdi.

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