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Thursday, February 25, 2021

Des Moines has become its own Silicon Valley

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The town of Des Moines, Iowa, has a new slogan: “I want you to fail.”

The slogan doesn’t boast of feats of inventive genius. The town is creating a new, “one-stop shop” for entrepreneurs in the Middle—an agriculture-rich region of Iowa.

There’s a cheesy irony in the slogan. The town should really be much more proud of the engineers, scientists and mathematicians in its innovation ecosystem. No, it is the young entrepreneurs with a vision for wacky companies like Uber or House Party, that Des Moines thinks it is putting on a pedestal. Instead, Des Moines is aspiring to be a more Silicon Valley. In a sense, the town is considering the painful experience of a certain Web-beating startup based in Mountain View, Calif.

Des Moines is its own Silicon Valley, and that’s not such a good thing. It’s time for leaders of the town of about 450,000 to get a sense of humility. Des Moines is supposed to produce great entrepreneurs, not long-term, golden egg-sized businesses.

The last six years have been excruciating for thousands of Des Moines tech entrepreneurs. Hundreds of startups have launched in the past three years. But a major offshoot of these startups has not been raised. The game of industry-mapping online lists of promising tech prospects in Iowa probably includes at least a few well-placed short-timers. But they don’t, overall, represent the sort of big, nationally influential technology companies. So Des Moines has inadvertently started building what many tech companies in other parts of the country hate. It has given Des Moines and Iowa a unique bragging point, perhaps life-sustaining, that nothing else in the region can boast.

Business is booming. Des Moines has seen more than 450 tech startups develop since the start of 2014, according to analysis by the city’s economic development department. These ventures are related to the Des Moines region but are scattered from South Dakota to Utah to New Jersey. Some of the startups, such as RightNow Technologies and BetterCloud, have gone public, and others are doing very well, like Clearspring Technologies and Geeklist. The most widely known and successful startup is Uber, and the bike-sharing service LimeBike is among Des Moines’ tech startups.

Des Moines boosters use others’ failures to talk up the city. They welcome success stories because they underscore Des Moines’ potential to be a kind of “Silicon Valley for agricultural products,” in the words of Torrey Brettert, who led Des Moines’ effort to launch the One Stop Shop.

Chicagoans might turn disapprovingly at the boast. There’s a reason Chicago boosters don’t always focus on the successes of hometown firms. For one thing, many large tech companies are headquartered in Illinois’ largest city. And for another, Chicago doesn’t even have a major metropolitan area, which the San Francisco Bay Area has.

Still, if Des Moines want to deliver on its bold public-sector pitch, which tries to entice entrepreneurs to start businesses in the region, it may want to hold its nose and admit its mistake. Des Moines has plenty of locals making the product itself. But it doesn’t have homegrown technological behemoths to drive to the summit of tech when their hometowns make a misstep. Instead, the local entrepreneurs may end up showing the world how different Des Moines really is from Silicon Valley.

Whether Des Moines ends up with its own Scarcity Premium startup product or only fleeting recognition, the town can learn a lesson from Silicon Valley, where it’s harder for new businesses to leave because of ownership and support from the venture-capital community. That’s one of Silicon Valley’s secret advantages over other regions.

Without the backing of the venture capitalists and executives who now dominate the San Francisco Valley, it’s harder for fledgling companies there to succeed. Texas, for example, has a long list of technology pioneers like Dell, Texas Instruments and Qualcomm. The Texas ecosystem has lots of techers, but few of the new giants and a tough time shaking Silicon Valley’s dominance. Des Moines might be interested in betting its fresh startup investments can match the reputation of its fledgling successes.

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