Catching the Uber Economy

Seeing the news that Obama advisor and Delaware native David Plouffe has signed on as a senior executive with the start-up car service Uber, it is hard not to note that this avatar of the new digital economy unfortunately doesn’t offer its services in Plouffe’s hometown.

Unfortunate, because Uber is on a tear, but they are going where the action is. The company has expanded rapidly over the last 18 months, and you can get an Uber car in just about any semi-significant city or region of the country.


The typical Uber market is a hub of economic and social activity. Beyond the big, obvious cities – the Bostons, Denvers and Atlantas – this tends to be places that attract young people and evoke a certain buzz.

Uber is in Lubbock, Texas, a place called Piedmont Triad, North Carolina and even a hot spot like Flint, Michigan. The service is available in New Jersey, Maryland and Pennsylvania.

You can in fact dial up your Uber app for a ride in Wilmington — Wilmington, North Carolina.

So why is Delaware still on Uber’s TBD list?

It is a question everyone in this state should be asking as we continue to struggle to define an economic identity for the 21st century.

The “Uber economy” is an organic one. It does not operate in a top-down fashion. It is fueled by creative people pursuing their passions and often leveraging technology for new commercial opportunity. This economic mindset is characterized by risk and disruption.

In our small state of Delaware, these can be particularly difficult concepts. There are untold benefits that come with our size, but on the tail side of this coin is the reality that intimacy can sometimes impede progress. In any small community, transformations that require sometimes painful change – of ways of thinking and doing things, of institutions – are not abstract, they are deeply personal. Therefore, needed change can be put off or avoided altogether.

Risk is an entrepreneurial impulse that our local business culture doesn’t naturally encourage. We talk often and rightly about our proud heritage as an innovative leader in the sciences, banking, corporate governance, etc. We have a strong history as a manufacturing base. But there is a tendency to cling to a past that relied heavily on major institutions when it came to employment and community life itself, institutions that became intrinsically risk averse over time. Delaware is perhaps too much the corporate state in the age of the entrepreneur.

A recent study suggests that these factors may be contributing to a decline in business dynamism in Delaware that since 2009 has seen fewer new firms entering the market than those leaving it.

chart

Firm entry and exit rates in Delaware, 1980-2011 (Delaware Economic Alert, www.deconfirst.com)

So what can we do to create a more entrepreneurial, start-up “Uber” culture? That’s the question I put to a half dozen of Delaware’s brightest business visionaries. These individuals – who have built and run companies small and large, started venture funds an invested in and mentored start ups – agreed on a few key themes:

The University of Delaware is pivotal. Across the country, universities are increasingly playing the role of catalyst in creating talent and cultivating economic opportunity. Places like Austin, Texas, Ann Arbor, Michigan, and even Pittsburgh, PA have become entrepreneurial meccas, fueled by institutions that incubate risky, sometimes far-out ideas. One of my ad hoc panel members remarked, “UD has to take a much stronger role in driving a start-up culture by providing work space, computer access, student supported projects, professor mentoring and other services.” Another talked about curriculum, saying a shift away from chemical engineering toward “a strong and rigorous computer sciences degree combined with the University’s math program” is essential.

Get behind what we’ve got. When and where start-ups have gained traction, we need to support and accelerate the multiplying effect of their success. As one example, lo and behold, Delaware has a humming local food and drink economy. Companies like Dogfish Head, Mispillion River Brewing and the Painted Stave Distilling are building a critical, boutiquey mass in a growing marketplace with national reach. We need to incentivize and nurture new start-ups in that space while supporting the knock-on business opportunities their success will create.

Tell a more compelling story. Speaking of Dogfish Head, their charismatic founder Sam Calagione is a superb ambassador for our state. We need to take a page from his book and do a better job of highlighting and promoting home-grown entrepreneurial success stories. Being a corporate locus is going to catch the eye of some lawyers and accountants, but it doesn’t carry much relative appeal to the entrepreneurial hipster looking to build a business in a cool place. One of my panel members pointed out that each year the state has a massive captive audience: the millions of people who drive through our state on I-95. Why not capture their attention with the clear message that if you want to start a business, Delaware is the best, easiest place to do it?

Reduce costs and barriers. All the entrepreneurs I spoke with said that the cost of doing business in Delaware is too high. When it comes to energy, for example, there was concern that “Delaware commercial and industrial customers pay much more than competitors in adjacent states.” Another problem is regulations: there are just too many i’s to dot, t’s to cross and fees to pay in starting a new business here. One of my focus group members pointed me to a new law in California – Jerry Brown’s California! – making it easier for people to start businesses out of their homes.

This brings us full circle back to Mr. Plouffe and his new role at Uber doing … what? Reports say his job is to ease the way for Uber’s expansion by helping politicians see the wisdom of reforming an antiquated, highly-regulated taxi industry that hasn’t kept up with what the market demands. (A role that has been rightly recognized for its irony.)

Metaphorically speaking, that’s a cab we need to catch.

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2 Comments

  • Getting rid of Jack Markel would be a great start, shifting government hiring away from regulatory and into research and development would help. Joe Biden’s retirement to the New Jersey Shore would be a plus.Decent public schools couldn’t hurt, especially having an teachers that do more than buy degrees at Wilmington (former motel) University. You could add to this weekly Mr. Fleming.

  • A friend of mine sent me this article and I was delighted to see someone dish out the true facts of this state. The most important fact you mention is related to the University of Delaware. There are many entrepreneurs in our state that commute to PA, NY or CA to run companies and build businesses. If you were to ask they why do not start their business here in Delaware, I would bet that the first response out of their mouth’s would be “And where would I source talent?” And there in lies the problem.

    To grow our economy we need jobs. Jack Markell talks a lot about jobs, but he and his Head of Economic Development do nothing to build jobs here. Is it Jack’s fault or is it the University system and curriculum we have in this state? I would bet that Harker is to blame just as much as Markell is.

    My son, a recent graduate of U. VA studied math and computer sciences (database programming and data analytics). He had the pick of jobs when he graduated. He now works in NYC.

    My daughter, on the other hand, attended University of Delaware. Graduates with high honors, studies math and took some computer classes (note: Delaware’s computer science program is circa 1990’s). She struggled to land a job. There were no companies recruiting on campus that were meaningful. Unless you want to work at Perdue injecting chickens with antibiotics or work at J Morgan Chase as a data entry clerk Level 1 (hourly wages), there is no opportunity for you in this state. My daughter decided to apply to law school and get out of this slow moving state. She is graduating Stanford Law School next year and will be working in CA.

    While neither of my children are the young entrepreneurial types, they are both smart and had no desire to stay in this state. There are no jobs, there is no future of young kids who want to make Delaware a thriving center. It starts at the University and it ends in Wilmington (highest crime rate around).

    The University of Delaware needs to develop a curriculum that is the future of business and commerce. The old days of pumping out DuPont chemical engineers and agricultural farmers is over. Start building a school for the future and stop developing programs to support dying local companies.