Ecommerce in Arkansas
When I founded Acumen Brands eight years ago, the Arkansas startup scene was non-existent. After raising over $100 million in venture capital, our company definitively proved that a world-class ecommerce venture can be built in the state.
Today there’s quite a bit more activity and investment in the startup ecosystem, especially around ecommerce.
While Arkansas will never become Silicon Valley — we simply don’t have the talent pool to invent self-driving cars nor build rockets to colonize Mars — we can and should create a national hub for ecommerce.
Ecommerce disruption is one of the most dangerous exogenous threats to our state’s economy. The fate of Arkansas’ economy is inextricably tied to the success or failure of our two Fortune 500 retailers — Wal-Mart and Dillard’s. Additionally, with Amazon’s secret Consume the City delivery project, and Uber’s self-driving 18-wheelers, J.B. Hunt is also at risk from ecommerce disruption.
Retail sales data is not trending the right direction: Amazon is exploiting their (rapidly expanding) online advantage over Wal-Mart and is on a clear path to dethrone Wal-Mart as the world’s largest retailer. While Wal-Mart should be on notice, Dillard’s and other department stores should be even more concerned — Amazon will overtake Macy’s as biggest seller of clothing in U.S. in 2017, just four years after moving into fashion.
A big part of the problem is that local companies simply can’t find employees trained in the field. It’s been well publicized that Wal-Mart’s ecommerce push has left many Bentonville vendors flat footed, and struggling to find local ecommerce talent. This can be fixed quickly.
Building an ecommerce center of excellence in Arkansas may sound crazy until you realize that ecommerce is just a complex combination of retail, logistics, and data. Arkansas has has world-class expertise in each of these three pillars — the state is already well-known for its success in retail (Wal-Mart, Dillard’s), logistics (WMT, J.B. Hunt), and data (WMT, Acxiom.)
In addition to the success of the state’s Fortune 500 in these pillars, a majority of the most promising startups in the state are also directly or indirectly involved in ecommerce: Menguin, Lauren James, Riff Raff, Zenwork, Overdrive, Feather, Smack, Scrubshopper, Trackwired, Explainify, QuBowl, Piltdown, Gemini Development, etc.
All these ecommerce companies have offices near the Fayetteville Square, and two of them (Menguin and Feather) moved from other states to join our movement.
With a critical mass of similar companies located in close proximity, we’re already starting to reap the benefits of startup density — creative collisions and sharing of knowledge are happening daily in and around the Fayetteville’s historic Old Post Office.
This density was built in a short amount of time with a surprisingly small amount of capital: my ecommerce studio Hayseed Ventures provided a total of $2 million of seed capital to a dozen ecommerce startups over the past 18 months. Hayseed’s portfolio companies currently employ over 130 Arkansans in high paying new economy jobs. They’ve raised $8 million in follow-on funding, and two companies are working to close an additional $12 million in later stage venture investment.
Without fanfare, the downtown Fayetteville Square has become a national hotbed of ecommerce activity. Interestingly, it’s happened without ANY help from the state’s large corporations. It’s likewise happened without help with our state or local governments…
With corporate and government support, we could take this heretofore grassroots movement to the next level. Here’s a few areas where help is needed:
- Invest in the local startup scene. As a start, I’d suggest partnering with my Hayseed Ventures team — we are building a Ecommerce Entrepreneurship Lab in partnership with the Walton College of Business. We are seeking funds to turn Fayetteville’s Historic Old Post Office on the downtown square into an “Ecommerce Lab” where students will earn class credit by building and running startups under the tutelage of my team and other successful entrepreneurs. (disclaimer — self-serving plug)
- Create a $20 million ecommerce venture development and investment fund. Through this fund, we will ensure adequate capital is available for local ecommerce stars and relocate innovative seed-stage companies to Northwest Arkansas from around the globe. The funded companies would have access to mentorship from the above U of A Ecommerce Lab. The concept has been proven — by deploying a mere $2 million, my Hayseed Ventures team funded and mentored a dozen ecommerce ventures and moved several out-of-state companies to the area. This work has already created 130 jobs and attracted millions of dollars of follow-on capital in just 18 months. Arkansas ecommerce investment can be profitable as well: Dillard’s $4 million investment in my Acumen Brands returned $16 million in a single year.
- Fund the creation of a world-class ecommerce degree track at the University of Arkansas. We should endow the professorships with some the highest salaries in the entire university system, and recruit the best ecommerce research minds on the planet to Fayetteville… the best students will quickly follow. Interestingly, all the companies in the Fayetteville Innovation District were built with local, young talent. Most are recent graduates from the University of Arkansas. Since field of ecommmerce is only two-decades old, ecommerce veterans don’t exist. Talent must be trained from scratch.
In the short term, relocating world-class startup teams to the area will artificially inflate our local talent pool. This will build upon the rapidly growing ecommerce startup density around the Fayetteville Square.
More importantly, today’s investment in education will ensure long term success. Importing talent is a needed short term band-aid, but educating our own workforce will guarantee a replenishable supply of educated workers.
Reach out if you will help make this a reality — firstname.lastname@example.org
(An edited version of this article was originally published in the Northwest Arkansas Business Journal)