(Editor’s note: This is the second part of a two-part interview with Ted Smith, director, Department of Economic Growth and Innovation at Louisville Metro Government. The interview was recorded on Friday, Aug. 16.)
Ted Smith, entrepreneur-turned-economic development official for the Fischer Administration, has a reputation as Fischer’s in-house savant.
Smith is also an anti-bureaucrat … a guy in the trenches, bringing together the people behind Louisville’s handful of advanced tech start-ups with investors and policy makers in an effort to redefine the city. He has helped organize the Bluegrass Code-a-thons (see the video) and is a regular at Adam Fish’s Forge events.
Smith’s past lives include stops at TechRepublic and CNET, and he’s worked with a number of the city’s most influential businesspeople, including Matthew Barzun, now President Barack Obama’s main fundraiser, and Tom Cottingham, TechRepublic founder and serial entrepreneur.
In the first installment of our Q&A session, which you can read here, Smith held forth on a variety of topics including the future of the city and the Fischer Administration’s plan to transform IdeaFestival, which runs from Sept. 20 to Sept. 23, into a major Louisville showcase.
In this installment, Smith talks about the increasing competitiveness of second-tier cities such as Louisville, and about why the Fischer Administration sees minority teens as the next great generation of American entrepreneurs.
The interview was edited for length:
Insider Louisville: When I was young, my sister left for Atlanta on the very day she got her MBA from the University of Kentucky and she’s never moved back to Kentucky. Brain drain was an issue in 1978, an issue for so many previous (city) administrations, and it’s still an issue now.
Ted Smith: Well, I think the fundamentals of the American economy are somewhat different, now. This is not a partisan comment in any way, but as a country, what kind of a standard of living are we going to have? To go negative is to say, “Well, in order to afford to support the Baby Boom as it retires … man, that’s a pretty insane burden at some level.” So you either have to say, “Well, we’re going to be living in a much slower kind of economy than when the Baby Boom was in the workforce.” Or, we’re going to innovate our way out of this box. I’m an abundance guy, so I’m going to believe we haven’t even seen what’s going to be the basis of the American economy in two decades. I want to believe that’s true. At some level, I’d like to believe you don’t know the names of the most frequent jobs posted in the next decade. That would be a great situation for Louisville, Kentucky. But what if you took the other side and said, “What if we’re in for a long, slow road, here?”
Places that cost less, relatively speaking, will be more desirable. So really, we’re in this interesting middle ground. People are leaving rural areas … if you read Richard Florida’s work, Kentucky is a net loser. We send more people out of the state than come into the state, one of five states that has this kind of ratio. The majority of that, by the way, is people leaving rural Kentucky to go somewhere else. Not Louisville. Louisville in the last five years has been a migration winner. We’ve gained more people than we’ve lost. So I can only assume we’ve gotten some of those people from rural areas. But then we’ve brought people in from other places. I think the new game may be, are we going to be a high-value of living city as we are today? Because Chicago and Atlanta are pretty expensive. The trade-offs you make to live a more affordable lifestyle, they come out of your hide, not out of your wallet. If you want to commute for an hour, you can.
So those cities, while they’re appealing for living, they’re a negative on cost. You really have to get paid to live in those cities. If you’re not going to get paid, then you have to drive great distances to enjoy that super-urban environment. So I think the super-urbans are going to have a problem. And I think the rurals are having a problem. You just do that math grossly, the winners are all those cities we thought we were competing for urban relocators. I’m less concerned about losing someone to Atlanta today. I am concerned whether we’re the winner of the person from Boston who decides they want to live in a low-cost environment. Will it be Nashville? Will it be St. Louis?
People who were trying to get out of that high-cost environment, their short lists had a whole bunch of cities I don’t know if I would ever put on a list together. Albuquerque. Nashville. It’s like, “How do you come up with this list?!” If you just rip the coasts off the United States, there would be a lot of cities on the list! I think it takes living in the Midwest or the Deep South to understand those are pretty different places. I wouldn’t mix Birmingham readily with Indianapolis. But if you’ve grown up in New Jersey, you might put those two on the same list. These are the issues we’re facing, and these are the opportunities we’re facing. Those people need to come here. They need to come here for Forecastle. For IdeaFestival. They need to come here because we have a 50-foot statue of David.
Give me five surprising things about your new position.
I’ll try to give you five.
Okay, give me one.
When we did something as simple as a summer jobs program. Sure, we did a summer jobs program, but I called up a good friend of mine at the Kaufman Foundation. I knew he was working on a brand new entrepreneurship curriculum called “The Ice House Curriculum.” It’s a fantastic, fantastic program based on all this research the Kaufman Foundation has done about start-up companies. What they’ve figured out is the American narrative is somewhat fragile right now, because somewhere along the way, kids are not being raised to earn money.
The script for the last couple of decades for lots of Americans is, get good grades in school. Go to the best college you can and then go get a job. Right? And if you navigate that maze correctly, you’ll get a high-paying job. So the notion you need to “earn money” in high school or college … that that’s an important skill to acquire is not as popular as, say, in the ’50s. You don’t get your first job delivering newspapers at nine. Not a lot of kids are mowing the lawn anymore. The things I did when I was young like seal-coating driveways. Just not as much of that going on. So (Kaufman) says, “What happens when kids don’t have that relationship with money?”
So, they create this curriculum based on this book “Who owns the Ice House?”, this tremendous true story of a guy who grows up in the Mississippi Delta in the period of legal segregation. He has the good fortune that his uncle owned the local ice house, and his uncle had a completely different life because he owned the ice house, and he taught these lessons about independence.
We bring that into summer jobs program. Worst case scenario, for summer jobs, and I think the mayor agrees with this, is if all you’re doing is just painting fences all summer or ripping out weeds, I don’t know that’s the most you can get out of that.
So, we roll out the Ice House … never been tried on a disadvantaged group. We run it with Kentuckiana Works summer jobs program. On Day One of the Summer Jobs program and we have all these kids … the mayor says, “How many of you thought about working for yourself when you grow up?” No hands up. No hands up. At the end of this, 23 kids submitted pitches for a pitchoff. We gave away a $1,000 grand prize, and three $500 prizes.
You’re saying, “Let’s imbue people from the bottom of society up with an entrepreneurial bug ….”
Yeah, let’s give them another script. Another narrative. When I looked at these kids who did these pitches, I was just pumped because they were actually creating their own networks. They were in groups that worked really hard to put together these business ideas. These are kids from 16 to 18. So, we have Kaufman on the sidelines, and they’re a little bit nervous. Because if it’s going to fail, it’s going to fail because they didn’t design it for kids who are the least advantaged. They designed it for kids at X reading proficiency or who have the resources to say, “I can consider doing this or doing that.” These are kids who have the tenacity you want out of entrepreneurs.
When I make my own personal angel investments, I invest in people, I don’t invest in ideas. Sure the ideas are there, but I invest in the people first. I think that’s true of lots of (investors) trying to remove risk out of early stage investing. You say, ‘Well, is that person going to get up in the morning and fight? And when they get bad news, are they going to fight harder?” If you have that, there’s a pretty good chance you’re going to win not even knowing what the adversary is. Just so you know, this not just lip service. I’m wildly optimistic on people who’ve come from very tough life circumstances given the right basics.
It’s almost the opposite of what you opened with: “We don’t have a Stanford. We don’t have a Georgia Tech, so how are we supposed to do this?” You know what? Maybe we’re going to do better. Differently, but better because we’re going to activate a scrappier, harder working group of people. Sort of like Muhammad Ali. We’re sort of reinventing the idea of who makes great entrepreneurs.
The Muhammad Ali story is exactly that story. He taught himself to fight because he was always getting picked on. His old man wasn’t much of a father. I don’t know anything about the mother. But Ali raised himself and instilled in himself as a kid this incredible work ethic.
So isn’t it a little eerie that’s all here? Do you think it’s an accident, or do you think that is actually the essence of Louisville, Kentucky? That our story is that story. Detroit was the factory worker, the guy with the lunch pail. Pittsburgh was the steel worker … deep religious convictions and culture and whatever. This is a story that in many ways is a lot more fun. There are lots and lots of personal transformation stories. Not than I invoke Ayn Rand, but there is that element of the individual who made the difference. Because that’s inspiring!
If you are the individual wondering if you can do this, you want to be in a place with lots of stories like that!