Hubs happen because people have a vision for their area, invest their time and resources in that area, and they don’t quit.
Northwest Arkansas has the potential to become a capital of retail technology in the US and the world because of the companies, university, talent pool and capital density located here.
The Silicon Valley can trace its roots back to Fairchild Semiconductor, the people and companies that spun out of there, the intentional capital that located there and the fact that people like the Paypal Mafia stay around and put all their capital to work in the next generation of companies. Lather. Rinse. Repeat. You have a hub.
LA does this for entertainment. NY for finance and media. Boston for medicine. Nashville for music. Austin for tech and independent film. Etc. There are plenty of HBR articles about this phenomenon, and NWA (Northwest Arkansas) feels like it is on the cusp but seems to lack two very important pieces in place in order for this to become a reality.
A Culture of Reinvestment
The entrepreneurs who built the big three companies in this area did two great things with their wealth in NWA—bought land and invested in non-profits. These three entrepreneurs are gone, but their impact lives on and we (in NWA) benefit greatly from it, but primarily in cultural infrastructure, not in a re-investment in a local start-up and growth company ecosystem.
What would happen if we could develop a culture of reinvestment in NWA businesses of all shapes and sizes? What if we had multiple yearly exits and IPO’s of companies who launched or moved to NWA because is was the Retail Tech Hub of the US?
It won’t happen overnight.
First, it is going to take companies who know how to evaluate and invest in various stages businesses relocating or opening offices in the area. We’ve already seen how the will of one company—in this case, Walmart—can cause 1,500 vendor teams to relocate and invest in NWA. Why couldn’t we see the collective will of business, university, city, and state government do the same thing for an investment ecosystem?
What if all of the foundations, families and executives from successful Arkansas companies did two things: 1) stayed local after retirement so the wealth they built in NWA could pay a little in state income taxes each year to support tax credits and infrastructure improvements in our state, and 2) invested 10% of their portfolio into funds dedicated to the NWA business ecosystem.
We could start inviting the Sand Hill Road VC community to open offices here in NWA in order to manage the investment. Sounds crazy? Think about how many Fortune 500 companies are building offices and employing thousands of people here. It’s not that far-fetched to think that the Marc Andreesen’s and Fred Wilson’s and Peter Thiel’s of the world wouldn’t want a part of this. We are talking about billions in investable capital at just a 10% commitment level.
Then we’d have not just Angel/Seed money, but real firms doing A, B, C rounds and going public and pouring more resources and wealth into the hands of these company stakeholders who would have a model for reinvestment themselves. We need a culture and a mindset shift. Yes, the arts and community and land and building investments are needed, but we also need a culture of investing in local growth companies to keep the resources here — both people and financial.
But to see that culture take shape, it will take a collective vision and story that we tell ourselves about our area that captures the imaginations of us, our young people and the rest of the US.
A Vision of Who We Are
I think a lack of vision, a cohesive identity and collective story we tell ourselves about our business ecosystem is what holds us back the most. We do not have a collective identity. And depending on which of our four major cities you land it, you’d hear a different conception of what that could be—Retail, Logistics, Agriculture.
But does it have to be this way? What sits in the middle of the Venn diagram of all our know-how, histories and industries?
Walmart is the biggest retailer in the world, and Sam Walton arguably the most successful entrepreneur ever. Tyson has turned itself from a food service to a consumer food company that sells more protein through retail channels than any other company. JB Hunt moving goods and data all over our planet. Move a little south and you have Dillard’s, a leading department store and Acxiom with all the data in the world.
All of this adds up into a CPG/Retail/Supply Chain — or what we might call Retail Tech (very broadly defined) — mecca which should be the envy of Seattle, Silicon Valley, Austin, Atlanta, Minneapolis, Brooklyn and everywhere in between. We should have more know-how, talent and capital deployed towards Retail Tech than anywhere else in the world. We should have e-commerce and technology and supply chain and transportation and product companies relocating here from all over the world.
We could be a Hub and enjoy the benefits of this. Benefits like interesting and challenging jobs for our children right here at home so that our best and brightest—our daughters and sons—are not being educated here and finding challenges in other Hubs. Benefits like seeing outside investment resources pouring into our communities. And benefits like knowing that we pulled together to create something unique and special for ourselves and future generations.
I hope this becomes the story of our future. I truly believe it can be.