The Superstar Gap

The biggest challenge facing many cities in transitioning to the knowledge economy is a shortage of “A” talent, especially true superstars.

All “talent” isn’t created equal. Crude measures such as the percentage of a region with college degrees, or even graduate degrees, don’t fully capture this. It is disproporationately the top performers, the “A” players and superstars that make things happen.

Sections of the knowledge economy have long been geared to superstars. Economist Enrico Moretti cites research on biotech hubs, in which he notes that it is not just having a top university nearby that mattered in establishing biotech clusters, but having the true handful of academic superstars researchers. In The New Geography of Jobs, he writes:

In a fascinating and now classic article and in a series of subsequent studies, they argued that what really explains the location and success of biotech companies is the presence of academic stars – researchers who have published the most articles reporting specific gene sequencing discoveries. Among top universities, some institutions happened to have on their faculties stars in the particular subfield of biology that matters for biotech; others had comparable research but did not have stars in that specific subfield. The former group created a local cluster of biotech firms while the latter did not.

Richard Florida devotes a significant amount of his latest book The New Urban Crisis discussing the rise of the superstar phenomenon, which he also links to specific superstar cities.

Superstars are important in tech because of the 10x principle I mentioned in my recent post on the Silicon Valley mindset. The best coders are 10x as productive as the merely very good coder. The top entrepreneurs are probably 100x or or more. The presence of superstars, along with some amount of good fortune, can transform the economy of a city or region.

Jeff Bezos is a superstar. Mark Zuckerberg is a superstar. Michael Bloomberg is a superstar.

These superstars are disproporationately located in only a handful of regions.

To see this effect, just look at Austin vs. Seattle. Austin is a booming, prosperous city with a major tech industry.  Yet Seattle is generating significantly greater value. Seattle’s real per capita GDP is $75,960 vs. only $55,323 in Austin. Seattle’s per capita income is $61,021 vs. $51,014 in Austin.

Austin had some good entrepreneurs like Michael Dell, but not superstars in industries that would create massive platforms like Microsoft and Amazon. Austin has a lot of quantity, but it looks to me like there’s a big quality gap vs. Seattle.

And it’s not just that superstars create things, they act like a magnet attracting others. As economic development consultant Kevin Hively once told me, “When you’re the best in the world, people beat a path to your door.”

To see this in action, just look at Carnegie Mellon University in Pittsburgh. CMU has the #1 ranked computer science program in the country. And companies like Google (600 employees), Uber (500 employees), Apple (500 employees), Intel, and Amazon been drawn there and set up shops around it.  Ford is investing a billion dollars into autonomous vehicle ventures there. And GM also has a presence.

It’s interesting to contrast with the University of Illinois’ program.  U of I is ranked 5th in computer science. My impression is that from a commercial impact, they used to be bigger time than they are now. The web browser as we know it was invented there, but that was a long time ago. They have a research park designed for companies wanting to take advantage of proxmity of U of I. There are a lot of companies there, but the tech roster isn’t as marquee as Pittsburgh’s and my impression is that the scale is smaller.

There’s a big differnce between being number one and number five, particularly when something like ownership of the driverless car market is at stake. Maybe that’s why former GE CEO Jack Welch said he only wanted to be in a business if he could be number one or number two.

Cities and states in the Midwest and elsewhere in the interior like to boast of their assets, which include many great schools, but very few world dominating number ones in important fields. This is a big challenge for them.

Superstars aren’t the entire world. The presence of superstar businesses also creates problems as well as wealth. But if these places want to not only thrive but perhaps for some of them even just survive in the knowledge economy world, they need to look at their attractiveness to the truly top tier talent (I will address “A” caliber but not superstar talent in a future post). I don’t often see this talked about.

For example, one thing I don’t see in most discussion of Chicago is its lack of superstar talent. Chicago is very good but not the best in a lot of things. Where they do have arguably world beating talent, such as in their culinary industry, they shine. (I know people in New York who happily admit Chicago has better restaurants).

If I were that city, I’d be looking to see how to create a world’s best talent pool in additional particular high impact industries. Maybe the state should consider some radical type action, such as relocating U of I’s entire computer science and select engineering programs to Chicago as part of UI Labs, and putting serious muscle behind getting at least some critical subspecialities with high commerical potential to be clear #1’s in the world.

This is actually a scenario I plan to study in the future. Right now I’m not sure it’s necessary and some of my initial thoughts are impressionistic. So this post is in part a honeypot to try to lure in those who might react to this or even help flesh out the facts (which might augur against it).

Regardless, this lack of superstar/number one type talent in the interior is a big handicap in the world we live in now. For example, just look back at a 2010 analysis Carl Wohlt did of where the people on Fast Company’s “100 Most Creative People in Business” list lived. Only six in the Midwest and seven in the South vs. 35 in the West and 32 in the Northeast (with 20 international). This isn’t a scientific survey but illustrates the scope of the problem.

Cities and states need to take a more finer grained view of talent, and understand the criticality of having at least some of the absolute best talent to kicking a region’s knowledge economy into high gear. Too many places have a superstar gap.

from Aaron M. Renn
http://www.urbanophile.com/2017/06/09/the-superstar-gap/

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