Comeback Town: Can Birmingham become an entrepreneurial city?

by David Sher BackCity to give voice to the people of Birmingham and Alabama.

Click here to subscribe to the newsletter. (Decline at any time)

Today’s guest columnist is John R. Whitman.

I am an entrepreneur and business scholar from the North East who happily married in Birmingham.

Prior to Birmingham, I spent four years helping to build an entrepreneurial ecosystem in Huntsville to cultivate high-tech, high-growth startups.

I even set up a film company and produced a short film about Birmingham innovators make America’s roads safer.

Then I spent another four years building the capacity of non-profit organizations in Birmingham.

So when I read Guest column by Daniel Bolus in ComebackTown, I was super excited.

He’s right: Birmingham box become “the American leader in the manufacture of medical devices”. And, as Bolus points out, we already have key elements in place, such as a logistics hub, manufacturing history, and medical ecosystem. But before we get back to that shared hope, which we both agree can happen, think about this…


We have some historical constraints that make hope harder to achieve. Despite its history of cotton wealth, Alabama, with its low taxes and “right to work” policies, remains one of the poorest and most unequal states in the country. And it shows.

You may think that a low tax rate would attract entrepreneurs. But no. Taxes, even high taxes, well invested in society – such as in high quality education for all, infrastructure including affordable broadband communications, healthcare and regulations to ensure a safe workplace – create attractive conditions for businesses, especially those that want a smart, creative and healthy workforce. California and Massachusetts, two centers of entrepreneurship, are far from being tax havens.

Consider also how the scarcity of state fiscal resources affects those with power and influence. Not to name names or to blame, but some in positions of power and influence jealously guard their fiefdoms.

This is rational behavior because there just aren’t enough resources for everyone, so complacency with the status quo is more likely to result in people staying employed than upsetting people in talking about higher taxes or social benefits that might scare off companies that provide so many low-paying jobs.

Beyond the scarce resources, there is also the great industrial heritage of the city. In 2015, several economists (E. Glaeser, SP Kerr and WR Kerr) published an empirical study on entrepreneurship and urban growth, which found that places with a mining history lagged behind.

Birmingham is a good example.

Mismatch of industry and entrepreneurship

Generally, the mining industry is dominated by large corporations with command and control management systems that are not conducive to innovation and entrepreneurship (with the possible exception of ACIPCO, now AMERICAN , an employee-owned company since 1924).

The very success of these hierarchical societies prevents the emergence of entrepreneurs and entrepreneurial thinking.

Looking further afield, the same was true in the days of cotton plantations, hierarchical organizations controlled from the center and dependent on free labor, conditions that virtually stifled innovation and entrepreneurship (with the dark, ironic exception of the cotton gin), giving the north and west a great advantage in technology and diversification.

A similar effect characterizes banking, insurance, and other contemporary business sectors in which large corporations and their shareholders may thrive, but dampen entrepreneurial impulse and unwittingly anticipate entrepreneurial capacity building.

This mismatch between industry and entrepreneurship is reflected in BLS statistics, showing Birmingham well below the national average in the CEO Location Quotient measure, which indicates the number of CEOs relative to the rest of the nation. (currently 0.30 for Birmingham-Hoover, but 1.26 for Silicon Valley and 1.27 for the Boston-Cambridge innovation region).

These constraints are real, but can be overcome.

Drivers of change

When I did a comparative analysis of the emergence of environmental ecosystems in several metros across the country, several key factors stood out.

One was the role of a single influencer in the power elite, a person of significant prestige with an abundance of commitment and drive to realize a vision of an entrepreneurial ecosystem.

Chattanooga Mayor Andy Berke launched the city’s Entrepreneurship Strategy and formed its Technology and Entrepreneurship Task Force. Look at Chattanooga now, despite a fraction of Birmingham’s population.

The collaboration between Texas Governor Mark White, the Chamber of Commerce and the University of Texas (a so-called triple helix) brought the Microelectronics and Computer Technology Corporation to town, which hired the Stanford Research Institute to prepare a long-term economic plan. The rest is history.

Dean Frederic Terman’s vision and Stanford University’s ties to industry have earned him a reputation as the father of Silicon Valley.

MIT alumni badgered their alma mater to promote entrepreneurship, ultimately led by college entrepreneurship evangelist Ed Roberts. In 2014, 20% of incoming students wanted to create a new business or a non-profit association, while they were still students! And Professor Robert Langer, with his Langer Lab, is a legend in the commercialization of intellectual property.

Another key factor was the role played by only one or two large companies good kind, which could stimulate both the supply and the demand for entrepreneurship. Yet another factor was the role of universities in promoting a culture of entrepreneurship. For example, MIT and Stanford could do it because they had enough resources.

Deliberate success

This all brings me back to Mr. Bolus’ proposition that Birmingham can become a leader in medical manufacturing. Yes, but it will take a champion from Birmingham’s elite with the vision, political courage and commitment to power until success is achieved.

It will also require recruiting a major medical device manufacturer to set up shop in Birmingham, a manufacturer that will both create medical equipment entrepreneurs and create demand for the products and services provided by other local entrepreneurs.

Such a manufacturer should have its own culture of entrepreneurial support, including on-the-job training for staff, mentor-managers who exemplify entrepreneurial behavior, and venture capital contacts willing to expand their portfolio of new projects. of medical technology.

Other factors could be important, such as policy reform to eliminate non-competition clauses in employment contracts and a greater willingness of founders to share equity with employees. Like starting a new business, building an entrepreneurial ecosystem is not easy and pivots may be required.

So yeah, Bolus hope box move from the no-reality zone to the reality zone in Birmingham. I particularly like that it focuses on the specific niche of medical device manufacturing rather than the unlikely aspiration of becoming the next Silicon Valley overnight.

But success will require an energetic champion, a workable strategy to overcome the difficult legacy of Birmingham and Alabama, and a bit of luck. If successful, Bolus’ dream could indeed pave the way for Birmingham to become a true entrepreneurial city.

John R. Whitman teaches and consults in the field of entrepreneurship and nonprofit organizations. A former founder of a Cambridge software startup, he has interests in Birmingham, Huntsville, Chicago and Washington, DC.

David Sher is the founder and publisher of BackCity. He has served as Chairman of the Birmingham Regional Chamber of Commerce (BBA), Operation New Birmingham (REV Birmingham) and the City Action Partnership (CAP).

Click here to subscribe to our newsletter. (Decline at any time)

Comments are closed.