There are basically two kinds of economic development strategies: import new businesses and jobs from elsewhere, or grow your own. Kentucky’s leaders have long focused on the first strategy, with a lot more misses than hits.
Awesome Inc. — a startup-business accelerator in downtown Lexington run by a bunch of smart, young techies — works with local investors and entrepreneurs to create home-grown businesses and jobs.
Last Wednesday, I joined about 100 other people at Awesome Inc.’s offices for Demo Day to watch five groups of young, local entrepreneurs make presentations about the companies they are working to create.
Before the presentations, Nick Seguin, a former manager of entrepreneurship for the Kauffman Foundation, discussed why this work is important for both communities and individuals.
“If we want more jobs, startups are what matter,” Seguin said, noting that most net new jobs in America are created by businesses less than six years old. But, he cautioned, “Success is built on a lot of failures.”
Entrepreneurship requires more than individual effort, he said. It needs a supportive community with the right kind of mind-set, funding, business services and employees.
The five companies that presented last week are all trying to harness online or mobile technology to create profitable new ways of solving problems or adding value.
Three of the teams were chosen earlier this year for an intense 14-week development program. In return for office space, a little seed money and a lot of advice, Awesome Inc. (Awesomeinc.org) and its investors get a small stake in each company, a common model for such accelerator organizations.
TagaPet is developing a pet tag system that uses electronics, including GPS and mobile phone technology, to reunite lost pets with their owners. Michael Ward said he and his two business partners love animals, and their idea grew out of that passion — an important motivator for many entrepreneurs.
Tags would be sold through pet stores and veterinarians, and customers then pay a monthly subscription fee for online tracking services. While a competitor already offers a similar product, Ward said he thinks there is room for more players in a nation with millions of pets.
Rate My Rental is a Web site that its developers hope to launch in Lexington at the end of the year to let college students rate properties where they have lived as a guide to future renters. So far, they have gathered listings for 800 properties and 400 reviews of them from former tenants, partner Sam Blake said.
The company’s business model allows landlords to list a property on the site for free, then pay 10 percent of the first month’s rent if it is rented through the site. Blake and his two business partners, all University of Kentucky students, developed the idea to help others avoid the rental nightmares they experienced.
Fanbouts is a Web site being developed to aggregate fan-generated sports content — videos, photos, tweets, etc. Partner Jim Wombles said the site would make money through premium subscriptions and advertising.
Presentations also were made by an “alumni” team, which had been through Awesome Inc.’s program earlier, and an “associate” team that has ties to Awesome Inc. investors.
Crowded is a mobile app developed by an alumni team that allows fans at professional baseball games to use their smart phones to play trivia games and participate in predict-the-play contests at the stadium. The app is now in beta testing. The company would make money from advertising.
Crambu, the associate team, seemed to be furthest along. It provides an electronic platform for hotels to collect feedback and requests from guests, who use their own smart phones or iPads furnished by the hotel.
Partner David Booth said an initial version of the software has been in testing in three hotels in Kentucky and California, and the latest version will soon roll out to 11 hotels in several states. Hotels pay $1 per room per month for the service.
Will all of these companies succeed? Probably not. Will some of them? Maybe.
With the right culture and support, Seguin said Lexington entrepreneurs can develop the companies of the future, just as Kentuckians developed such success stories as Kentucky Fried Chicken and Alltech.
“It doesn’t need to just happen in Boston, Austin, Boulder or the Bay,” he said.
Awesome Inc. founder Brian Raney put it more bluntly: “Step 1 is do something. Step 2 is keep going. Most people get lost at Step 1.”