New Orleans has always been a most unconventional of American cities. As national prosperity continues to decline under the weight of a constricting economy, the city nearly destroyed by forces of nature nearly four years ago is perpetuating an inverse trend. Even beyond the employment opportunities created by ongoing reconstruction projects, an explosion of entrepreneurialism fostered by big thinkers like Sean Cummings is incubating a re-birth of this historic city.
Sitting in the offices of The Receivables Exchange, the successful start-up I profiled last week, Cummings recounts how President Nicolas Perkin called two years ago to discuss the prospect of basing his new company in New Orleans, he joked in response: "The day you arrive, you will double the number of entrepreneurs" in the city.
With New Orleans still reeling to recover from the devastation wrought by Katrina, Cummings--a successful real estate developer--recognized an opportunity to do something more than simply help re-build his native city. Partnering with Perkin and two other business leaders, Cummings launched Start Up New Orleans, a web-based information service designed to connect entrepreneurs with the resources they need to set-up a new business in the Crescent City.
In March 2008, Cummings established the aptly-named "Entrepreneur's Row" in a property he owns at 220 Camp Street. By November, Entrepreneur's Row housed the offices of nine companies, including The Receivables Exchange. More than simply a landlord to start-ups, Cummings has personally invested in six of those companies.
Cummings's efforts represent just one spoke in a larger wheel of growth that is turning around the post-Katrina New Orleans economy. The Times-Picayune cites his offices on Camp Street as the first of five significant "entrepreneurial hubs" recently established in the city--the leading edge of a trend to cluster innovators close together so they can network and collaborate with each other.
The Idea Village, a non-profit established in 2002 to help draw new investment to the city, is focusing efforts to tie the development of entrepreneurial hubs to neighborhoods in greatest need of economic revitalization. In Fall 2006, Idea Village broke ground in the upper 9th Ward to build the Entergy Innovation Center, partially financed with a $200,000 contribution from the Entergy Corporation. Its state-of-the-art community technology center, conference space, and offices for entrepreneurs and nonprofits are scheduled to open this week. The Idea Village is currently assessing other locations in need of economic development--Gentilly and New Orleans East--while considering where to base their next major entrepreneurial hub.
Thousands of businesses relocated or simply closed after Katrina, skewing the yardstick for any attempt to measure the rate of new growth in New Orleans. I could tell you that the 6% unemployment in the metropolitan area is more than 30% lower than the national rate, and that the US Census Bureau recently identified New Orleans as the fastest growing city in the country, but what does that even mean in an area that lost half of its population and about a third of its industry after the 2005 storm?
A few weeks ago, the Brookings Institution sparked a disgruntled debate by ranking New Orleans as one of the poorest performers of 100 metropolitan areas assessed for how they are weathering the recession. The Brookings analysis inexplicably ignored the game changing destruction of Katrina, comparing the current local economy to a high point from 2004. Business Week, however, recently named New Orleans as one of the best places to ride out the recession.
Cumnings concedes, "There is a national recession going on and New Orleans is not completely immune to that. Perhaps post-Katrina financing is propping things up here more than elsewhere." But beyond the conventional re-building process, he says, "What you are seeing with New Orleans represents a profound shift."
The city hasn't enjoyed any real growth of prosperity in over a century, he explains. New Orleans had its heyday as a bustling port city in the 19th century, when its position near the mouth of the Mississippi made it the gateway for goods flowing to and from middle America. With diminishing maritime transport throughout the 20th century, the city stagnated as it shifted to a tourism and resource-based economy.
"Now, there's a real in-migration of artists and entrepreneurs," he says. Citing the work of Richard Florida, Cummings describes the city's current era as a "creative class-led transformation of New Orleans."
Since the Internet has reduced the importance of geographic positioning, new companies can open offices virtually anywhere. Cummings says, "The perception of New Orleans is of a party town, but it's also great place for business." The costs of rent, overhead, and taxes can be less than in most major American cities, and residents can enjoy the Cajun food, vibrant art scene, and live music that gives the city its distinct cultural identity. "Folks on a start-up wage can live a good life in New Orleans--not just a hand-to-mouth existence."