common knowledge

Jon Taves

Enrico Moretti, a professor of economics at the University of California-Berkeley, wrote a paper in 2011 reporting that cities in the United States were creating jobs at different rates. He argued that after the 2008 stock market crash the US job market rebooted. The cleanse dramatically changed the “geography of jobs” – with the majority of growth shifting to “knowledge hubs”.

Knowledge hubs are parts of the country that are heavily populated with skilled workers. From computer programmers to electricians, their workforces are full of individuals capable of performing in-demand jobs. These regions fared better after the recession because the influx of high-skill jobs also necessitates low-skill, service sector jobs to support them.

For those reading in Minnesota, we’ve been somewhat insulated from the lingering effects of the Great Recession. Minneapolis/St. Paul has been experiencing growth and, you guessed it, is one of Moretti’s ten knowledge hubs. The other nine cities on that list are:

• San Francisco/San Jose, CA
• Seattle, WA
• Boston, MA
• Washington, DC
• New York, NY
• Raleigh/Durham, NC
• Austin, TX
• Ann Arbor, MI
• Chicago, IL

The fastest growing area in the country, at least in terms of venture capital raised, is Silicon Valley. Home to San Francisco and San Jose, that region of California houses the world’s most innovative companies. Old stalwarts like Apple have made room for companies like Google and Twitter, who are now watching the rise of Uber and Airbnb. The economy is back on its feet and no part of the US is more representative of this than Silicon Valley.

Over the Labor Day holiday weekend, many Americans held drafts for their fantasy football leagues. Fantasy sports – actually “fantasy entertainment” if one includes the plethora of Oscars, US Weekly, Bachelor, and other non-sport leagues – has swept the nation. According to NFL.com, approximately 30 million people will play fantasy football this year. In honor of the US’ most fertile economic region, I’m suggesting a new type of fantasy league: Fantasy Entrepreneur League.

Instead of starting seven offensive football players, one defensive unit, and a placekicker, why not select nine of your favorite entrepreneurs? I’m not exactly sure what the scoring metric would be: annual sales, gross margin, employees, venture capital raised. What I am sure of, however, is my starting nine. They are as follows:

QB – Paul Graham (Y Combinator)
QB – Mark Levin, Kevin Starr, & Robert Tepper (Third Rock Ventures)

Quarterback is the most important position in football. He touches the ball on every play and has enormous influence on whether his team wins or loses. He’s the field general; he reads the defense and reacts. No dominant football team is complete without him. Perhaps the same can be said about start-ups who don’t use incubators.

Y Combinator and Third Rock Ventures are the class of venture capital firms. With Y Combinator in the heart of Silicon Valley and Third Rock in Boston’s thriving biotech community, each work in different sectors, but they achieve similar outcomes. Y Combinator helped Dropbox and Airbnb rise to prominence. Third Rock guided Bluebird Bio to an IPO last year. Bluebird’s goal for 2015? Eradicating the spread of ALS. Unfortunately for them, the “Ice” nickname is already being used by an NFL QB.

RB – Elon Musk (Tesla Motors)

Perhaps my favorite entrepreneur of all, Elon Musk is a bastion of innovation. Responsible for Tesla Motors – not to mention PayPal, SpaceX, SolarCity, and the proposed Hyperloop – at 43 years of age, Musk has a remarkable list of achievements. Look for a mass-market version of his electric car marvel, the Model S, to hit the road by 2017. Currently priced at $70,000, Musk is targeting $35,000 for his next vehicle.

RB – Drew Houston & Arash Ferdowski (Dropbox)

It’s all about the cloud, baby. As more and more of the world reduces their offline activity, having somewhere to store their “lives” becomes more important. Not to mention the proliferation of Big Data, everything we do online is tracked. Before data scientists at Target can sift through all of our clicks and decide what toothbrush should be featured in their catalog, that data has to be stored somewhere. Dropbox launched as a personal file storage system, but they’ve done an excellent job in scaling their business quickly. Their size now allows them to offer products for companies, as well – a critical market for their long run success.

WR – Garrett Camp & Travis Kalanick (Uber)
WR – Brian Chesky, Joe Gebbia, & Nathan Blecharczyk (Airbnb)

The darlings of the “sharing economy”, Uber and Airbnb allow users to earn income off the assets they have already have. Perhaps someone doesn’t have the skills to be an engineer, but assuming they are honest and reliable human beings, these companies give them the opportunity to make extra money with their car and house.

They get additional kudos for disrupting the traditional taxi and hotel marketplaces. Airbnb cites studies that argue they aren’t in a zero sum game with hotels, but instead, are attracting new customers from the pool of individuals that usually stay with relatives when they travel. Uber makes no such claims – their brash approach is perhaps why they’ve been met with such regulatory backlash. (I’m looking at you, Germany.)

TE – Alex Hawkinson (SmartThings)

Remember that Disney Channel movie from the late 90s? Smart House? SmartThings is starting to make that dream seem possible. (Well, most of it.) It’s an app that connects to the “smart” devices in your home so that you can control them remotely. Cool, huh? Maybe there isn’t much mainstream appeal right away because of its economics, but it’s the TE spot. You shouldn’t expect much production here anyway.

D/ST – Jack Dorsey & Jim McKelvey (Square)

If “defense wins championships”, businesses need payment processing services just as badly. What’s the point of creating a great product if no one can pay you for it? Square has the newest seat at the transaction table and is eager to prove they aren’t PayPal-lite. A partnership with Starbucks to handle all payments on their platform, if successfully launched, would go a long way to disprove that expectation. They’re off to a good start on their own, however, with $20 billion in payments already processed.

K – Yancey Strickler, Perry Chen, & Charles Adler (Kickstarter)

Obvious pun aside, Kickstarter deserves as much credit as Uber and Airbnb for the reach of the sharing economy. Its services allows entrepreneurs, big and small, to market and sell their ideas to the world – all without having to give up equity in their company. It allows everyone the chance to innovate; including copycat sites like IndieGoGo and FundAnything. Despite its mimics, Kickstarter is definitely worth more than a late round draft pick.

Jon Taves is a contributor to Common Knowledge Media and the editor of the economics and finance-based website, EFEssays.com.