Tuning Into Austin

Tuning Into Austin

The night before I flew to Austin to research this article, I was in the second row of the Orpheum Theatre’s balcony, rocking out to Garbage. The band’s lead singer Shirley Manson hails from Scotland, but the rest of these bona fide rock stars—Butch Vig, Steve Marker and Duke Erikson—are from Madison and their ’90s smash hits—like “Queer,” “Stupid Girl” and “Only Happy When it Rains”—were recorded at the band’s now-defunct Smart Studios on East Washington Avenue. And, oh, by the way, Vig produced Nirvana’s 1991 Nevermind, forever branding him as a music industry stud and causing Rolling Stone magazine to float Madison as the next music Mecca.

Didn’t happen.

Manson, an outgoing rebel with a cause, loves to schmooze the hometown crowd when they play here. On this visit, she talked about having formed a cultural bond with Madison during the band’s formative years.

“You like to work as a clan,” is how she characterized our liberal Midwestern enclave and its progressive vibe. “I’m very proud to say we grew up here in a city that is tolerant of other beliefs.”

It was a nice compliment that cut through the clutter of the last few years of political tensions and divisions that have shaken Madison’s identity. Manson says her globetrotting Garbage tours helped her appreciate a core Madison value: openness toward one another regardless of race, sex, religion or sexual orientation.

The next day, as my plane lifted toward Texas, I settled in to re-read Richard Florida’s seminal book on the economy of the future, The Rise of the Creative Class. His widely debated (some say debunked) theory boils down to this: Cities that possess the “3Ts” of economic development—technology, talent and tolerance—are magnets for creative-class workers who can drive regional growth and prosperity.

“The rise of the Creative Economy,” writes Florida, “is drawing the spheres of innovation (technological creativity), business (economic creativity) and culture (artistic and cultural creativity) into one another, in more intimate and more powerful combinations than ever.” Heck, he just described Garbage and Smart Studios.

According to Florida’s statistical analysis of the 3Ts, Madison ranked number one in regions with 250,000–500,000 people in “the Creativity Index,” which measures high-tech industrial output, patents per capita and diversity as defined by a greater-than-average share of gay couples (read: tolerance). When he compared the larger, Big Daddy regions of a million or more, San Francisco took the top spot and Austin ran a close second.

So, let’s see … Richard Florida deems us tolerant. Shirley Manson seconds it. And, while we’re no match in size, Madison ten years ago was tracking with the San Frans and Austins of the world. This should feel like a fist-bump moment, but it’s not. Here’s why. Granted, San Francisco is much larger than Madison, but it birthed Craigslist and Twitter. And granted, Austin is warmer, but it birthed South By Southwest, which has become so ubiquitous that satellite festivals are spinning off as we speak. Why didn’t the qualities that sprouted Smart Studios seed Madison’s own garden of innovation and entrepreneurship?

Madison is nothing if not special—we tell ourselves that—but maybe, I thought, what’s special is the way we hold onto some problems when we’d be better off letting go. Do we have a disconnect between public resources and private enterprise? Did we bet the farm on biotech? Is our mindset too much of a town-versus-gown mentality? Are we too dependent on government jobs? Austin, I thought, might have something to say about the answers to these questions, particularly since Atlanta-based consultant Mac Holladay of Market Street Services authored Austin’s wildly successful economic development strategy and has now written a new one, just for Madison.

So off I went, to drink Austin’s brand of Kool-Aid.

Turns out, Kool-Aid tastes pretty weird in Austin. Which is just how they like it.

“Keep Austin Weird” bumper stickers and T-shirts are sold throughout the city and snatched up by tourists (I brought home one of each). They amplify the progressive, geek-is-cool vibe that attracts hippies, techies and intellectuals in droves to the flagship University of Texas campus and a dozen other higher-ed institutions, which then spill new graduates out into the local workforce like shiny VW bugs rolling off the assembly line.

When Richard Florida visited Madison in 2002 to plug The Rise of the Creative Class, he gushed about Austin: a university town and a blue city awkwardly inhabited by a red-state Capitol, with a lovely waterscape—the Colorado River runs through Austin, and its city reservoir is called Lady Bird Lake.

But as Florida’s creative class treatise was climbing the charts, Austin’s economy was tanking.

First came the burst of the dot-com bubble in 2000. A year later, September 11. On the whole, the nation’s economy went from hum to ho-hum. But Austin, home to Dell computers, a burgeoning software and IT hub, and the annual music, film and interactive festival South By Southwest, seriously lost its mojo.

“We lost about 38,000 jobs in central Texas, which were not just any 38,000, they were our best 38,000 out of the tech industry,” recalls Gary Farmer, president of Heritage Title insurance company, a proud Longhorns alum, and an influential Austinite who fought like heck to find the right formula—he calls it the secret sauce—that would mend the broken economy of his beloved Austin, “Tex-izzz,” as he drawls it. Farmer wasn’t worried about keeping Austin weird; he was focused on the tax base, on the housing market, on employee retention, on his bottom line.

“Going from thirteen semiconductor fabrication plants to five; having city tax collections fall by ten or twelve percent. The city was actually laying off employees. Not just through attrition but actually closing libraries, closing the swimming pools,” Farmer recalls.

Few people know this part of Austin’s story, but listening to Farmer tell it, I wondered if it was the crisis that was needed to pull Austinites together?

I met with him in his beautifully appointed boardroom on the fifteenth floor of the swanky Frost Bank Tower in the heart of downtown Austin. The building edges the trendy Warehouse District, where Facebook took up residence in 2010. Looking west beyond the city, the luscious green hill country fades into the horizon. Equal parts git-‘er-done exec and polite Southern gent, the affable Farmer canceled his haircut halfway through our interview after realizing how hungry I was for his secret sauce recipe. He—and the mayor and a chamber of commerce VP and the head of the city’s economic development office—talked with me about Opportunity Austin 1.0. They discussed the project’s symbiotic relationship—a truly combined and coordinated effort—between the public and private sectors in language I had never heard uttered on the isthmus back home.

Under the Austin model, economic development is agnostic about where the jobs come from, as long as they come. And come they have, at least to Austin.

“We were supposed to create 72,000 jobs under Opportunity Austin 1.0,” says Farmer. “We created 124,000.” From 2006 to 2011, that region saw a 13.1 percent increase in business establishments, according to the U.S. Census. In contrast, Madison dropped by 5.4 percent. It’s worth noting that his city is now implementing Opportunity Austin 3.0.

Agnostic economic development? Weird, right?

Far, far away in a land called Austin, government spending is not something that left-wing legislators do unto fiscally conservative opponents. Here, smart spending is tied to taxpayer rebates and corporate return on investment. That’s actually how people talk inside Austin’s city hall, and they’re Democrats!

Case in point: When Facebook was looking to expand its geographic footprint to a place with a deep talent pool, the city of Austin and its chamber rolled up their sleeves and got to work. They already had talent, thanks to UT–Austin. To that, the city council green-lighted a $200,000 incentive agreement, which was in addition to $1.4 million from the Texas Enterprise Fund in exchange for a pledge of two hundred full-time jobs paying at least $54,000 by the end of 2013.

Apparently all parties underestimated Facebook’s economic impact. “They since expanded to another floor in that building and I believe are aiming for three hundred employees,” Austin American-Statesman reporter Kirk Ladendorf tells me. Practical, profitable public-private partnerships in business attraction, retention and expansion? Austin really is weird!

And what’s weirder? Farmer, who helped nail down the red carpet for the Facebooks of the world to waltz in on, by raising millions of dollars from the private sector and flying to places like Silicon Valley—on his own dime—to tell Austin’s story, is a Republican. A Republican who voted for a five-percent tax hike last November to build the new Dell Medical School at UT–Austin—Michael and Susan Dell earned naming rights with their $50 million gift.

“It was the right thing to do,” says Farmer, of his vote. “The right thing to do for the community, my family. I mean, who’s against better health care?”

And if that’s not weird enough, consider that one thing we all know about hard-nosed business types like Farmer is that they hate all that bureaucratic red tape. Hate it. And yet.

“Austin is a process-driven city,” explains Farmer. “There’s a process for everything down here. We get stuck in that, though, sometimes. But sometimes it produces a better product or a better result. I guess you could be against process, but I think in Austin and probably in Madison, you’d be banging your head against a tree because process is important. So you recognize that, you embrace it, you get involved with it and work through it.”

I stand corrected. Sometimes folks like Farmer don’t love process, but they understand its role. And that can make all the difference. And in Austin, even the way they do process is weird.

Enter Kevin Johns, director of the city of Austin’s Economic Growth and Redevelopment Services Office. A whirling dervish of energy and ideas and one sharp dresser, Johns told me about a new UT–Austin supercomputer partnership to develop a business analytic software technology. If approved by the city council in August, Austin will be the first city in the world utilizing the tool to improve city economic growth by creating ROI scenarios for major government investments.

“It gives the city decision-makers and the community stakeholders a common ground for aspirations to be legitimized, evaluated and put into the mix,” says Johns. To me, this sounds a lot like the predictability and cost that Farmer told me was vital to Austin’s economic bounce.

His office is also working with the chamber and Opportunity Austin 3.0 to help tackle the problem of hard-to-employ populations, whose numbers are up over ten thousand. The city estimates five-thousand service-sector jobs in five years, created through commercial revitalization around the inland port system that includes significant small business expansion coupled with distribution company recruitment. The latter task, of course, fits right into Opportunity Austin’s wheelhouse.

“The city has put together the Family Business Loan Program, but with no city money,” says Johns. “We’ve gotten credit unions, local banks and two sources of federal dollars to create a $40 million loan pool.”

The planned-for result is impressive. “The return on investment in a barebones way is just about under half-a-billion dollars a year,” Johns explains, “half of that being social service delivery that we hope is not needed, and then half of it is the wages they get that they pump back into the community.”

What we have here in Kevin Johns, ladies and gentlemen, is a public-sector entrepreneur. How’s that for weird?

“High-speed celebration: Austin lands super-fast Google Fiber network” read the Tuesday, April 9, headline on the Austin American-Statesman‘s website the day after my arrival. Only the second city in the country to be so lucky (Kansas City was first), Austin’s meteoric rise in the last ten years to high-tech hotspot and one of the fastest growing, most affordable and most livable regions in the county was about to go galactic.

In Googleland, “super-fast” means a hundred times faster than your average broadband, or a one-gigabit network that will power Internet access for businesses, schools, government, nonprofits and homes in every neighborhood across the city with the help of its city-owned utility partner, Austin Energy.

“With the installment of Google Fiber, the case can be made that Texas is one step closer to becoming the nation’s next technological hub, inviting some of the boldest and most creative visionaries to call Austin their home,” Governor Rick Perry told the crowd gathered in downtown’s Brazos Hall for the announcement.

Hugh Forrest, Austin native and director of South By Southwest Interactive, the current darling of the city’s signature three-legged festival of music, film and emerging technologies, was one of the three hundred people in the audience when Perry spoke. Naturally, the news was very good for SXSW, which drew 302,700 attendees in March and poured $190.3 million into the local economy in 2012. Forrest views Perry’s motives a bit cynically—”He’s now very good at getting in front of stories like these”—but credits him for creating an environment that lures tech companies to the state. Nevertheless, he cites bandwidth and hotel occupancy rates as two of SXSW’s biggest challenges. Even in this wired city, I had the same challenges with patchwork Wi-Fi hotspots that I do back home, and I did notice new hotels and hotels in the works dotting the cityscape.

I caught up with Forrest at SXSW headquarters a few blocks west of the Capitol in the Market District, where residents and businesses waged a years-long war against a new Wal-Mart. I can see why they fought. “South By,” as the natives refer to it, shares a street corner with “The Tiniest Bar in Texas” (really) and the opposite-of-tiny flagship Whole Foods Market, a destination in its own right. At three o’clock on a Wednesday afternoon the place was buzzing with shoppers, diners and drinkers (the bar was full!) milling about more than a dozen different departments, from beer and cheese to seafood and charcuterie. This giant, eighty-thousand-square-foot chain felt more like an indoor, village-style public market—the kind our mayor wants to build in Madison—than a grocery store. Across from Whole Foods sit BookPeople and Waterloo Records, locally owned treasures, and around the corner is HomeAway, the global online vacation rental company that went public in 2011. A Super Wal-Mart in this neighborhood would feel either a little too weird or not nearly weird enough.

Forrest stands tall at 6’5″ but balances his commanding physical presence with an aw-shucks modesty that might mask his accomplishments if they weren’t so completely outsized. An English major at Kenyon College in Ohio, he’s been with Interactive since its launch in 1994, and he stuck with his little start-up as it hobbled along on the coattails of music and film. When the effects of the dot-com bust and 9/11 subsided, and mobile technology and social media came galloping into our lives, Interactive took off.

There are rumblings that South By has grown so big that it’s lost that trademark organic, alternative feel. Nevertheless, its reputation globally is synonymous with creativity and clout, and Forrest is a favorite son. Part of the reason for this is that he plays well with the traditional business suits—showing up at Opportunity Austin meetings and hobnobbing with chamber executives. Another part of his appeal and success is that he’s a nice guy who struggles with a contradiction: remaining true to the spirit of his ventures while also protecting his own interests, which feels a little corporate. “I’m not completely comfortable being one hundred percent in that world,” he says.

He remembers back in 2003 when South By booked Richard Florida to speak. A bit of a prima donna, Florida asked for a first-class plane ticket and the fledgling Interactive couldn’t swing it. When they went to the chamber for help, they were declined. Now, after “remarkable, crazy, what’s happening here” leaps, Interactive has its own slide in the chamber’s PowerPoint. As Forrest reflects on all this, there’s not a whole lot of spilled milk on his messy little desk, which is piled high with paper, including the latest chamber newsletter.

“As much as the chamber didn’t pay too much attention to us ten or fifteen years ago, that’s kind of a good thing,” says Forrest. “If we worked with them more from day one, it would’ve been a very different event, and it might have been very viable, but it may not look like what it looks like now … We’re this reflection of Austin, we’re this beneficiary of Austin. As it grows, I mean, does it water down what was so special about it in the first place? You can make plenty of arguments that it does, you can also make plenty of arguments that there’s still all these very cool things about the city that haven’t changed. And it simply has become a much more viable city for more people to live in, more people to pay the rent in.”

Like Austin, Madison has a major university and a strong technical college system. We have left-leaning local citizens playing host to a right-leaning state Capitol. We have water. More than Austin, in fact.

But the Madison versus Austin game can be tricky. For starters, Austin is adding about one hundred fifty residents per day. That’s the equivalent of adding almost two Fitchburgs or seven Mononas each year. There’s also Austin’s more favorable climate. And the lack of a personal income tax. And the BBQ. Hmm. I’m comforted knowing that we do beat them in the battle of the beer; try as I did, I never found an Austin craft brew worth its weight in calories.

Can Madison use Austin’s secret sauce recipe to whip up our own version of economic prosperity?

Maybe.

Madison has just deployed its own version of Opportunity Austin. It’s called MadREP (short for Madison Region Economic Partnership) and is designed to pool resources across our eight-county region—just as Austin did across its five-county region—to coordinate business expansion and retention activities, avoid duplication of services and territorial squabbles, and expand and showcase business opportunities by giving companies more choices in where to locate and grow. In other words: amplify our strengths, mitigate our weaknesses, pool and leverage resources.

Had MadREP been around in 2005, when Epic was deciding whether to move its headquarters from Madison to Verona, maybe the software company’s eventual and fateful pick wouldn’t have felt like such a ringing unendorsement to Madisonians.

In May MadREP brought Gary Farmer, the private sector cheerleader of Austin’s economic renaissance who canceled his haircut to help me understand Austin’s success, to the Marrott in Middleton (thinking regionally, people!) to “get everybody all lathered up,” as he describes it, about the Madison region’s own opportunity to be a university town, a capital city and a prolific creator of private-sector jobs.

I asked him whether the economy needs to get worse in Madison before it can get better, like Austin’s did ten years ago when even the chamber went belly up. I asked him, too, whether there’s something so special, so weird, about Austin that its success can’t possibly be emulated, even with an economic development strategy conceived by the same consultant.

“You don’t have to be on the doorstep of despair to say, ‘Oh, we’d better do something,'” says Farmer. “It’s about creating an environment where businesses can prosper, creating an environment where jobs can be created organically and inorganically. It’s about providing those jobs to families. It’s about creating return for taxpayers.”

After every conversation I had in Austin, and from everything I absorbed, I came home wondering why our own deep talent pool isn’t being sufficiently tapped to fuel Madison’s economy—at least not yet.

“Austin has two things that Madison doesn’t,” says Madison-based economist Rebecca Ryan of Next Generation Consulting and author of this magazine’s  Next column. “First, Austin’s business and city government have a shared vision of economic development. They work together and trust each other. We don’t have that here yet.” Ryan adds that Madison’s big bets on biotech and life sciences require long rounds of FDA approvals that high tech companies do not.

While I was in Austin, I asked Forrest, the SXSW wunderkind, what he knew about Madison. “Not much,” he said. “Mad City, the Badgers…” Ouch. That’s it? Struck by wounded pride and nervous compulsion, I rattled off some of the good stuff I thought he should know about.

“For us, I think the food is very interesting,” I began. “We have some of the most fertile agricultural land in the world; Organic Valley Co-op; the largest producer-only farmers’ market in the country, a vibrant farm-to-table movement … And we’re a big biking city, we have Ironman.” I laid it on as thick as I could. But next to Austin’s track record, it seemed so … underwhelming.

Later, when I sat down to write this story, I wondered what had become of Smart Studios, which closed without fanfare in 2010. It had been situated in what’s now called the Capitol East District urban revitalization corridor that stretches the length of East Wash from Blair Street to the Yahara River. shopbop and University Research Park East are among its most notable inhabitants, as well as Old Sugar Distillery, business incubators, the Brink Lounge/Brass Ring/High Noon Saloon complex, and the chamber of commerce/convention & visitors bureau/MadREP. Two new apartment and condominium projects and a Metcalfe’s Market are in the works, and MadREP is working with the hackerspace Sector67 on finding a larger building to serve as an accelerator space prototype for start-ups.

MadREP also plans to cultivate Sector67-style spaces in communities across the region. Of course, this being Madison, the group faces two hurdles: getting Madison stakeholders to work together and convincing the regional economic development community that “Madison-centric” doesn’t mean “Madison-only.” Could it be that we’re more comfortable with contention than consensus?

Farmer told me he thinks our plan can produce positive returns, as long as we execute it, and as long as “the business community is dedicated to the proposition of being better.” I hope we have enough Gary Farmers out there willing to walk the walk. And that government and education will plug in, listen to Austin’s soundtrack and then get to work on recording Madison’s new chorus—as a clan.

A quick web search turns up a story about Smart Studios. Current plans call for it to be a restaurant/lounge that will feature some of the old building and studio history. A foodie future, with a sprinkling of authentic nostalgia, for the bygone music concern. Hey, that might just be weird enough to work. 

Brennan Nardi is editor of Madison Magazine.