Paul Graham on Making Pittsburgh the Next Startup Hub
These are my notes from Paul Graham’s talk on Saturday, April 9, 2016 at the University of Pittsburgh. Graham is a graduate of Gateway High School in Pittsburgh, PA and left the region after graduating from high school. These are rough notes taken during the speech, please excuse any grammatical errors.
Graham is the co-founder of Y Combinator, the world’s most successful accelerator.
What does it take to make Pittsburgh into a startup hub?
He didn’t think at first that he could give an optimistic talk when he first started preparing this — he thought, without much research, that he could only do a talk on what Pittsburgh could do, but later found a NYT article about the youth-driven food boom and found himself more optimistic.
This youth-driven food boom is significant.
After leaving Pittsburgh during a time of free-fall after graduating high school, he had nothing to compare it to. But now, things are changing. The youth boom (7% to 7.6% in recent years) is a big and important change. There’s a new energy in Downtown Pittsburgh that didn’t used to be there. Young people are actually excited to be in the city. This energy is what keeps people here.
The net-attraction of young people is a really big deal. Startups are made of people. They are specifically made up of 25–29 years old. These young people have already shifted the center of Silicon Valley. After Pinterest and Stripe moved to San Francisco, that’s a big deal. Now all of the big winners are in SFO and not in the Valley because interesting, talented young people want to live in the city. Founders know they have to live in the city in order to win the talent war.
He’s obsessed with the 25–29 year olds moving to Pittsburgh statistic because you need these people. This is the city equivalent of the beginning of growth for a young startup. Pittsburgh actually has a higher percentage of 25–29 year-olds than the national average by about a percentage point. That means more young people are moving here than the average place — a net gain for the first time in years! The surplus here is about the size of a small town -something is working, just keep it working.
The focus of this talk isn’t entrepreneurship, though, it’s the things attached to that. You don’t foster “entrepreneurship” and “innovation” through focusing on those things. You foster those through making sure interesting, talented young people want to live there.
- Do everything you can to encourage a youth-driven food boom. Food is a big deal. Cafes and restaurants are a big part of what drives a city’s growth and gives it its personality. “There is no there there” in exurbs without local food. “They’re making there be a there here.” Treat the people running restaurants and cafes as the users of a city. A super-fast permit process is a big deal for these people.
- Don’t destroy the buildings that are bringing young people here. Cheap housing matters, but only if you actually want to live there. Pittsburgh is a cheap place where you actually want to live. The best places to live are the places that were once rich and then got poor. Real estate developers are tempted to tear down big, old buildings and build something new. That’s not good! It’s the opposite of the little cafes — it removes the character and personality of the city.
- Make the city the most pedestrian and bike-friendly city in the country. Young people don’t like to own cars. Cities where you can get around without driving are just better — period.
Pittsburgh is actually better than Portland (a comparable city experiencing a youth boom) because Pittsburgh also has a first-class research university in Carnegie Mellon.
So, what can CMU do?
Just be a better university.
There are a lot of people who have to be at the best place out there, that’s just a fact of life. As far as universities can go, they can just get better. That’s about it.
Should universities set up entrepreneurship and innovation programs?
Universities should not be setting up entrepreneurship and innovation programs. You do not get innovation by chasing after innovation! You get innovation through better batteries. This might depress university bureaucrats, but its like telling overweight people to eat less. It’s straight-forward. Universities are great at bringing founders together, but the next thing they should do is just get out of the way! Stop taking equity! Stop making it hard for students to take time off!
Harvard got this right by having the reading period after the holidays — that’s when Facebook and Microsoft were started. This frees up time for young people to innovate.
The empirical evidence strongly suggests that the best thing universities can do is literally nothing.
Startup hubs are also politically liberal.
Startups are strange! Strange people need to be comfortable living in a strange place. You have to tolerate all strangeness. That immediately rules out a huge chunk of the rest of the US.
How has Pittsburgh been culturally liberal? Because it is an immigrant city. People have historically been identified by their immigrant status here. The mayor’s chief of staff mentioned that the mayor is “an Italian,” that’s very Pittsburgh. You need to be both tolerant and pragmatic.
That’s exactly the mindset of Silicon Valley.
Which makes sense because Pittsburgh was the Silicon Valley of its time.
Now for the bad news…
The one more thing that a city needs is investors. Pittsburgh does not have this. Silicon Valley and New York have lots of people with lots of money. If you grow an investor community, it has to grow organically and slowly. It comes from IPOs and successful acquisitions. It takes time to build up.
Three trends make investors less necessary, though.
- Startups are cheaper
- Crowdfunding exists.
- Accelerators exist, like Y Combinator.
Pittsburgh, to become a good startup city, will just need to endure losing companies to other cities. The only way to endure that for the time being is to tell companies they’ll be as good here as elsewhere (that may not be true…the founders’ interests and the cities interests aren’t identical…if you love somebody, let them go).
These are the key takeaways of what Pittsburgh and the community can do to guarantee its growth as a startup city:
- Encourage the restaurant scene.
- Keep your historical buildings and neighborhoods.
- Take advantage of your density.
- Make CMU the best university in the world.
- Encourage your tolerance and openness.
Click here to read Graham’s 2006 essay, How to be Silicon Valley.