How a Company Becomes a Pillar of Its Local Community

It wasn't certain that Detroit would become the Motor City. At the turn of the 20th century, any number of American cities with similar access to talent, materials, investment, and transportation could have become the heart of the automobile industry. A few companies within the auto manufacturing community were so powerful and successful that they anchored an entire economicecosystem. It was necessary for you to set up shop near Detroit if you wanted to sell to the range of automotive company that would eventually coalesce into the Big Three. Until the industry was disrupted, that attraction created a cycle. GM, Ford, and Chrysler were aided by the broader network around them as much as members of the network were aided by being close to the automobile giants. The city of Detroit has a large industry cluster.

The country's cities are entering a period similar to Detroit. The Pandemic opened the venture capital community's eyes to the world of opportunity beyond the traditional tech startup hub of California, New York, and Massachusetts. Ten years ago, the venture funds in those hubs invested $4 billion annually in seed- and early-stage start-ups in the rest of America. A new entrepreneurial revolution is poised to fuel that more widely dispersed pipelines. The fundamental question of place is being reconsidered by generations of auto companies.

Where does it make the most sense for a founder to put down roots if they don't have to be in Silicon Valley or New York City? Where will they find the best talent for the job? Even as mega-clusters like Silicon Valley lose some of their edge, aspiring founders will still choose where to locate by looking at the tentpole companies that exist in various communities around the country.

The question is how does a young company evolve to become a tentpole of a local economy. Mayors and other policymakers have a vested interest in this question but so do many entrepreneurs who want to represent and empower the place where their company is located.

The elements that make a tentpole company are:

A company that wants to become a tentpole needs to establish that its success is the area's success first. The growth of Salt Lake City-based Qualtrics as an enterprise software company, raising money, hiring employees, building streams of revenue, expanding its base of customers, drew talent to Utah. There was a mass of talent in Utah. Qualtrics put Salt Lake on the map for founders and VCs and has led to the emergence of a dozen venture-backed unicorns in the last five years. The city saw itself as a seedbed of innovation after the acquisition of Qualtrics. Skeptics believed that innovation can happen here.

The underlying values of the place where the company has put down roots need to be reflected in the company's representation. The co- founder of Duo Security, Dug Song, was so convinced that the company's success had been born from Michigan's business friendly environment, world-class universities, low cost of living, and unique cultural history that he made staying in Michigan a condition. Duo Security's reputation within the state improved due to that.

To become a tentpole, a company needs to create wealth that the entire community can feel. People who aren't tied to the company should feel the benefit when it does well. Highly specialized innovation workers are three times more likely to create local jobs than manufacturing workers. I witnessed the impact of an innovation cluster when my company went public. Wealth creation occurs from jobs, revenue sharing, and returns for local investors, but the collective effect of more financial freedom.

A company needs to invest in its home in order to be a tentpole. The Indianapolis-based company was acquired by the San Francisco-based company. The company decided against moving to San Francisco and instead bought the tallest building in Indiana to house its 2,000 employees. Scott Dorsey started a new venture studio and fund called High Alpha, which has supported dozens of startup in the Indianapolis area. Everyone benefits when entrepreneurialism is in motion.

Being a tentpole is one of the top short term goals of startup founders. They are more focused on the company's products, sales, and growth. The company becomes more important over time. Without the Big Three, Detroit wouldn't have been able to establish itself as the Motor City during the first half of the 20th century. We don't know which places will emerge as the economic engines of tomorrow, but I'm confident that we'll look back on this moment as a tipping point in America's history.