Technology Works for Startups and Our Economy

We are proud to announce the launch of Technology Works today, a study demonstrating the pervasive and important growth of the tech workforce across the United States. Engine is committed to tracking the close connection between innovation and entrepreneurship. This new research, which we commissioned from the Bay Area Council Economic Institute, demonstrates the connection between high tech employment and overall economic prosperity.

Today’s study is an expansion on the data visualization we launched during the party nominating conventions that illustrates the geographically diverse nature of technology hubs in the U.S.

More than ever, startups harness technology to achieve their goals. This means hiring more people with skills in the science, technology, engineering, and mathematics (STEM) fields, the definitive factor in the Bureau of Labor Statistics’ defintion of high tech industries. Tech-focused startups tend to start small and grow rapidly, becoming the drivers of overall employment.

It’s easy to highlight startup success stories: Google, Facebook, Pandora, Twitter, and Yelp are just a few of the relatively young, tech-based companies that employ thousands of workers. As we better understand the multiplicative effects of hiring at these companies -- and the startups that will follow in their footsteps -- the case for supporting innovative entrepreneurs becomes apparent.

Communities experience significant benefits from high tech employment. We are able to estimate that the creation of one high tech job accounts for the creation of 4.3 other jobs in a local economy. How does that work? Technology workers tend to earn more than their peers in other industries, which they put back into the local economy by consuming goods and services. Tech companies companies also rely on local services and vendors, further driving local benefits.

So while many Americans may never work for a company like Google or a technology-focused startup, they still benefit from the impact these jobs have in communities around the country. About two-thirds of the U.S. labor force works in local services, ranging from healthcare to legal services to restaurants. As Enrico Moretti, Professor of Economics at the University of California, Berkeley, said about the study, “the dynamism of the US high tech companies matters not just to scientists, software engineers, and stockholders, but to the community at large.”

Our research with BACEI makes it clear that the economy increasingly depends on innovation. Explosive job growth isn’t likely to come from the established internet giants. It will bloom from driven entrepreneurs making the most of the technologies at their fingertips. Engine is committed to continuing analyses of startups’ impact on the economy and we’re planning further compelling research in the near future.

Put Your Mark on Our Innovation Map

A few weeks back, we posted the first version of a simple tool to connect startups to incubators and accelerators in their communities. Created in association with our friends Luke Pelican and Marvin Ammori, we’re aiming to build out the map further. We’re looking to you -- investors, mentors, and entrepreneurs -- to tell us where these innovation hubs are to better connect with entrepreneurs.

Startups are critical to economic growth and job creation. Connecting entrepreneurs to resources that will help grow their businesses will be critical to keep this trend going. By submitting information about your group, startups can more easily find the spaces that will help them thrive.

How does it work? Go fill out this survey and we’ll populate your information on our map (we’re a bit obsessed with maps lately). Before we do so, we’ll send a confirmation email to make sure you’re cool with being included. Then sit back and watch as your incubator or accelerator pops up on our map.

Simple, right? As adoption grows, we hope to build out and design this map into a more robust tool, but first we need the data from you to make it possible. So drop us a line and we’ll get back to you straight away. The country can’t wait for more startups to take off and you may be the group that mentors the next big startup success story.

Mapping Innovation and Entrepreneurship

Startups are flourishing across the country as we can see from the interactive map Engine released last month. What you may not know is that a network of incubators, accelerators, and other resources are available to entrepreneurs in these communities. Along with my colleague Marvin Ammori, we undertook a research project to catalog some of the important innovation hubs. With the help of our friends at Engine, we now have a tool to map these hubs for the benefit of entrepreneurs, job seekers, and policy makers. We welcome your help in continuing to build out this map for startups around the country.     

Startups are important: they drive economic growth and technological innovation, representing the best of entrepreneurialism and perseverance. However, finding assistance when launching a startup and building a business can be very difficult. Fortunately, there are organizations that help entrepreneurs turn a kernel of an idea into a thriving business: incubators and accelerators. These innovation spaces are a crucial ingredient for entrepreneurial success.

Generally speaking, incubators provide entrepreneurs with a place to set up shop, business resources, seed funding, networking opportunities, and other tools to get their companies started. Accelerators are similar in that they provide resources to young companies, but they also work with startups that are more established and help them to take their business to the next level. Together, these organizations play a critical role in the innovation ecosystem.

With Engine, we’ve created a map of incubators and accelerators that are helping startups throughout the country. Click on a pin to learn more about an individual innovation space. We show organizations that work with internet-focused companies -- app developers, software designers, and other related organizations -- but they may also host many other types of businesses.

The maps shows the innovation spaces that exist from coast-to-coast, in all 50 states. If you’re a startup looking for help launching or growing your technology company, check out the incubators and accelerators in your region. If you’re an incubator or accelerator but don’t see yourself on the map, fill in your information so we can add you.

Innovation Spaces Map

Survey  

Luke Pelican is an associate at The Ammori Group

Innovative U.S. Jobs, Startups Not Only a “Tech Center” Phenomenon

The tech sector may be driving the economy where you least expect. Today, in collaboration with the Bay Area Council Economic Institute, or BACEI, Engine launches its first major research project, demonstrating the importance of technology and entrepreneurship across the American economy. We invite you to explore the data and see where innovation is happening. 

Engine is San Francisco-based and we hear from people in business and government alike that startups and technology are centered in Silicon Valley, where a small network of innovators, investors, and entrepreneurs build the “new economy.” But in Engine’s effort to connect policymakers to entrepreneurs, we have worked with startups located across the country ranging from Kansas to Georgia to Michigan.

Our work with BACEI aims to tell the whole story. Using data from the Bureau of Labor Statistics and the National Establishment Time Series Database, BACEI calculations show that tech jobs and startups aren’t isolated. In fact, as BACEI economist Ian Hathaway told us last week, growth “is not only a ‘tech center’ phenomenon.” Communities including Dayton, Ohio and Troy, Michigan, and Columbia, South Carolina have experienced growth in technology employment exceeding 10 percent in 2011.

What BACEI observed:

• Since the dot-com bust, jobs in the high-tech sector have performed better than for the private sector as a whole. 

• A minimum of 61% of counties had at least some high-tech jobs in 2011 -- data limitations prevent a truer and larger estimate because data are suppressed in sparsely populated counties to protect the identity of individual companies. Estimates for many counties are not available.

• Metro areas with the fastest growing high-tech jobs are geographically and economically diverse.

• In 2009, more than 72% of counties had at least one new business establishment in the high-tech sector.

• High-tech startups have held relatively steady during the economic downturn, even while new business establishments across the entire private sector have declined.

Let’s unpack this a little bit. Based on Department of Labor definitions, technology industries are those that include a very high share of technical disciplines -- those in science, technology, engineering, and mathematics fields (STEM). If you’ve been following Engine, you’ll know STEM employees play a critical role in startups and technology and that the need for STEM professionals has led to calls for new legislation to bolster startups.

Second, our data visualization tracks jobs in the private sector. This means we’re looking at all the jobs at companies in technology industries, not just workers with these professional skills. These industries include computer hardware, software, systems design, and information; high-technology communications and electronics equipment; internet publishing and web search portals; data hosting and processing services; pharmaceutical and medical manufacturing; aerospace manufacturing; architecture and engineering services; and research and development services. We aim to show that technology doesn’t just create jobs for engineers and computer scientists, but managers, designers, salespeople, and executives as well.

Finally, the startup data we track reflects new business establishments -- first-year startups -- in the same technology industries. This includes businesses across the board, including sole proprietorships that are not captured by Labor Department or Census Bureau data. It’s a broad net and captures a comprehensive picture of tech startup growth.

Our research aims to think critically about how technology, the internet, and entrepreneurship shape our economy. The first step is to dispel a few misconceptions about the location of tech jobs. Going forward, the analysis will provide insight into labor trends and their impact on public policy.

We want consumers, entrepreneurs, and policymakers to dive into the data -- looking at their own backyard or at the national level -- to gain a better understanding of how technology influences jobs. We think you might be surprised.