‘Giganomics’ Looks to Tech Entrepreneurship in Kansas City as New Model for Economic Development

TINLEY PARK, ILLINOIS, November 8, 2013 – There is a new holy grail in economic development, and it isn’t land use, tax policy, or cheap energy costs. In a word, it’s Giganomics.

The term was coined by David Sandel, President of the Gigabit Communities and Smart Cities consultancy, at the Broadband Communities Economic Development Summit here on Thursday. Giganomics refers to the process of using Gigabit Networks, or super-fast fiber-optic broadband connections, as the prime tool for entrepreneur-led economic development.

David Sandel, President of Gigabit Communities and Smart Cities, Sandel and Associates, leads a discussion at the Broadband Communities Economic Development Summit. To the right is Steve Fennel, Director of telecom outreach at the University of Kansas Medical Center, and Rick Usher, Assistant City Manager for Kansas City, Missouri.

The chief exhibit for Giganomics is Kansas City, selected by internet search giant Google for its first Gigabit Network. Judging by the enthusiasm and energy voiced on a panel of Kansas City experts assembled here by Sandel, Giganomics is working.

In addition to the rapid pace in the direct construction of Google’s fiber network, tens of thousands of new jobs in Kansas City can be attributed to the new Gigabit Network, panelists said.

Equally important are hundreds of techies relocating to Kansas City, bringing a vitality and energy to the city that hasn’t been seen in decades. They’re starting business and getting funded to do so.

“Over the last 30 years, Kansas City has been a [jobs] exporter to the coasts, to Chicago, and to Denver,” said Mike Burke, co-chair of the Mayor’s Bi-state Innovation Team, which got Kansas City, Missouri, and Kansas City, Kansas to cooperate on economic development. “We are seeing those young people coming back.

“It is good for the future of Kansas City,” he said. “We are in a worldwide competition for cities to grow, nurture, keep and steal talent in the next decade.”

By the end of the year, Google Fiber’s Gigabit Network in the two Kansas Cities is poised to pass 160,000 homes, said Rick Usher, Assistant City Manager for Kansas City, Missouri. Usher showed slides demonstrating the rapid pace of Google’s structure. All told, 1,000 employees, three contractors, and 50 subcontractors from 17 states are working on the fiber build, he said.

In addition to its announced plans to build a Gigabit Network in Austin, Texas; and its purchase of the iProvo fiber network in Provo, Utah; Google has committed to building its fiber network in 19 cities in the Kansas City metropolitan area. That’s about half of the 2 million homes in the region, said Sandel.

One of the most innovative aspects of Google’s Gigabit Network is the creation of the concept of a “fiberhood” — a distinct geographical area poised to receive the super-fast connectivity. Dividing the 19 cities in the Kansas City region up into “fiberhoods” has enabled a healthy competition among neighborhoods for pre-commitments to purchase Google’s service.

Now, in the neighborhoods to get a Gigabit, there are also “fiberhouses,” or homes for hackers. The vibrant tech community has breathed civic life into the city and has become “a talent attractor and retainer,” said Usher. “Young people that don’t have ties to their communities are jumping on a plane to Kansas City and living in a fiberhouse.”

Burke, an attorney whose career has been focused on real estate development, said that dizzying pace of the last 18 months prompted a light bulb in him to go off. He said that in an era of Giganomics, the old economic development tools don’t work.

“Tax breaks, tax abatements, tax-increment financing: they don’t work for startups,” he said. “We had to invent the tools for startups,” which he said were:

• Finding free and reduced cost office space
• Access to venture capital funding
• Health care, and
• Data storage.

Finding access to creative venture capital and other means of funding startup activities is a crucial new tool, agreed Aaron Deacon, Managing Director of KC Digital Drive, a community-driven effort to leverage the Gigabit Network for economic developments.

Deacon said that the group’s four top priorities were:

• Expanding economic opportunities
• Digital inclusion and digital literacy
• Next-generation application development
• Interacting with the leadership of other Gigabit cities.

Deacon cited the cities’ “Digital Sandbox,” a proof of concept incubator which had played a role in birthing 27 companies — with 15 more on top for the next six months. The sandbox received $1 million in funding from the U.S. Department of Commerce, he said.

Aaron Deacon of KC Digital Drive, and Mike Burke, of the Kansas City Mayors’ Bi-State Innovation Team, at the Broadband Communities Economic Development Summit

He also said that an effort in providing low-cost office space, a separate group called KC Startup Village had provided office space for about 30 startup businesses.

In attempt to quantify what this kind of entrepreneurial activity has on economic development, Deacon speculated, “You have a couple hundred people working in these, some of which have moved to Kansas City [to start their businesses.]

“Some of them will be successful, some will not,” he said. Among those that fail, he said, “some will stay, and go to work for other companies. It is hard to measure the impact of those 200 people” — but Deacon believes that it is substantial.

Additionally, Deacon cited recent investments in new startups: $6 million in mobile search application Leap 2, and $500,000 in Hoopla.io, an event marketing and syndication platform.

Also on the economic development front, Burke cited health care software company’s Cerner Enterprises’ decision to purchase 237 acres to build a new campus that would employ up to 15,000 people in Kansas City.

In fitting with the “Giganomics” theme of the panel, this more conventional jobs announcement was, in this discussion, almost greeted as an afterthought.

Drew Clark, Publisher of BroadbandBreakfast.com, tracks the development of Gigabit Networks, broadband usage, the universal service fund, and wireless spectrum policy, at http://twitter.com/broadbandcensus. Nationally recognized for his knowledge on telecommunications law and policy, Clark brings experts and practitioners together to advance the benefits provided by broadband: job creation, telemedicine, online learning, public safety, the smart grid, eGovernment, and family connectedness. Clark is also available on Google+ and Twitter.