THE STUDY LOOKED AT THE STRENGTHS, WEAKNESSES OF 25 U.S. CITIES

Dallas has been working hard to solidify its place as burgeoning tech-driven economic force, but a new report titled Innovation That Matters, said that while Dallas does well in some areas, it must do more to prepare for tomorrow’s digital economy.

Dallas was ranked 19th out of 25 major cities in the report released by a partnership between 1776, Free Enterprise, and the U.S. Chamber of Commerce. It examined cities for their readiness to “capitalize on the inevitable shift to a digital economy.”

DFW entrepreneurship experts such as Trey Bowles, Jennifer Sanders, Bill Sproull, and Jeremy Vickers said, however, there’s more to Dallas’ story than what is in the report.

Trey Bowles says you need to take the results of some studies with a grain of salt.

Bowles, CEO and co-founder of the Dallas Entrepreneur Center, said studies like this aren’t always a reflection of reality.

“You have to take these with a grain of salt,” Bowles said, but added, “It’s great to be in the top 25.”

He said the world’s view of Dallas in the digital economy is a matter of perception, and that Dallas might be at the bottom of one study, but at the top of another.

“It’s interesting that just a year or two ago, the U.S. Chamber ranked Dallas the best place in country to start a business,” Bowles said.

Also, the new report comes on the heels of a recent study by Round Rock-based Dell that placed Dallas at No. 10 among the 50 Future-Ready Economies, globally.

KEY FACTORS IN THE DIGITAL ECONOMY

In the Innovation That Matters report, Boston, at No. 1, and the San Francisco Bay Area at No. 2, led the cities that were evaluated on these criteria:

• Talent: Does the city have the workforce it needs?
• Capital: Has the city mobilized adequate financial resources?
• Industry Specialization: As tech evolves from general IT to specialized sectors, is the city ready to capitalize on this shift?
• Density: Is the community concentrated enough to form a cohesive identity?
• Connectivity: Are the city’s key actors well integrated with the startup community?
• Culture: Does the city have the mindset and lifestyle to attract entrepreneurs?

Boston rose above the Bay area, in part, because Bay Area entrepreneurs said in a survey that the area is becoming “too cutthroat to inspire success.” San Francisco also trailed in how well startups are integrated with local universities, institutions, or local citizens.

Dallas ranked highly in Culture, coming in second, but next to last in Connectivity. That category looked at how local institutions work with each other in “meaningful ways that are helping new businesses to succeed.”

In the remaining four areas, Dallas’ ranking were mid-pack, ranking no higher than 15th in any of them.

Looking at the extremes of Dallas’ scores can offer a window into what the city is doing well, and areas that are opportunities for improvement in the digital economy.

AT THE TOP IN REGULATORY ENVIRONMENT

Dallas’ second place ranking in the Culture metric showed that the city is No. 1 for regulatory environment. In other words, it’s easy to start a new business here.

That’s not surprising, said Vickers, executive director of the Institute for Innovation and Entrepreneurship at the University of Texas at Dallas.

Jeremy Vickers of the University of Texas at Dallas

“It makes a lot of sense that we have moved up on Culture,” he said. “We have invested deeply in the arts, we have amazing sports and entertainment venues, and we have world-class restaurants.”

Vickers said the quantity and role of corporations and higher education institutions were noticeably missing from that metric.

And, he said, “We have numerous small businesses (not startups) that have grown to be $10- and $20-million businesses, but they aren’t high tech or tech sector-specific even if they leverage technology.”

A LEADER IN PROFESSIONAL SERVICES, IT INTEGRATION

Vickers said the area is a leader in professional services and IT integration, “but those don’t get picked up, either.”

Texas as a state usually ranks at or near the top in surveys of business friendliness. And, the city has a adjusted its regulations to compete better in the digital economy.

The city’s efforts to establish fair regulations for ride-sharing operations such as Uber and Lyft, providing incentives for new businesses, and its embracing the Smart Cities initiative are examples of how the city has worked in this area.

Under the culture metric, Dallas ranked highly for openness to new ideas (No. 8) and quality of life (No. 5), which posed the question, “Is the general experience of living in the city an asset or a hindrance for entrepreneurs?”

Cost of living appears to be a critical element of the quality of life section, and Dallas is one of the more-affordable large metropolitan areas in the nation. San Francisco landed at No. 22 in quality of life, largely on cost of living increases.

The Connectivity ranking shows an area in which Dallas needs improvement, according to the report.

This category evaluated how people are working together to help new businesses to thrive by examining eight key actors in this arena: universities; mentors and advisers, professional services firms such as legal, accounting, and office space; investors; corporations; “cheerleaders” such as public schools, hospitals, and government agencies; and local citizen advisory groups.

‘A CORPORATE AND OLD-MONEY CITY’

Vickers said the city’s ranking for Connectivity was interesting.

“We are a corporate and old-money city, and that has been a challenge until more recently,” Vickers said. “Now, corporate executives and their tech talent are deeply ingrained in the ecosystem. Likewise, family offices are investing more than venture capital in North Texas.”

New Orleans’ scores for Connectivity weren’t available in the study’s ranking, which technically placed Dallas as the worst-ranked evaluated city.  Dallas ranked No. 10 for citizen engagement and No. 14 for civic institutions, but it was near the bottom in the categories of universities, mentors and advisers, professional services, investors, corporations, and cheerleaders.

As far as the Talent metric in which Dallas ranked 16th, Vickers said the talent in Dallas is, “outstanding, and we should be a leader, but how does one define talent? We are 16th, yet regularly in the top five or 10 in tech talent in major publications.”

And, Vickers said that Dallas’ location plays a role in the Density category, in which Dallas ranked 18th.

“Density will unfortunately always be a disadvantage for us based on geography, but I think it is an advantage,” he said. “Our city is pocketed and spread out. An entrepreneur should never be forced into one small geographic area because it’s ‘where entrepreneurship happens in our city.’”

Jennifer Sanders says we can learn a lot from studies and what other cities are doing.

LEARNING ABOUT THE DIGITAL ECONOMY FROM OTHER CITIES

Sanders, executive director of the Dallas Innovation Alliance returned Wednesday night to DFW after spending two days at the midyear summit of the MetroLab Network, a consortium of 34 cities and universities in a partnership that focuses of bringing analytics, data and innovation to city government.

Sanders, who is spearheading the Smart Cities Initiative in Dallas, had a chance to look at the report in transit.

Like Bowles, she said you have to look at each study individually, but that there are things in Innovation That Matters, that can help move the city forward.

She said some of the report was a little surprising, though.

“There were measurements that I knew intuitively that Dallas will rank highly on, and we’re not,” she said of some of the metrics in the report. “The benefit of data is that we can look at that, but the picture can be painted in a lot of ways.”

She said the the city’s involvement in the MetroLab is an important element of moving into a more tech-driven digital economy.

“Dallas is an important part of that conversation, an important part of that network,” she said. Such things as connectivity and housing issues are some of the issues the consortium is addressing.

Bill Sproull says Dallas is more of corporate hub for technology, but has what it takes to succeed in the digital economy.

Sanders said that Dallas can learn from other cities, and that reports such as Innovation That Matters can be an important element because city leaders must look at what other high-ranking cities are doing, in addition to what we’re doing and not doing.

“I applaud that this study was done and what cities are doing,” Sanders said.

REPORT DOESN’T PAINT THE COMPLETE PICTURE

Sproull, president and CEO of Tech Titans, said of the report: “The conclusions are what the conclusions are, but that doesn’t paint the picture of what a powerful force we are in tech.”

He said that Dallas has what it takes to succeed.

The report “tells me that we have a lot of raw material to be successful in the digital economy.”

He said the area needs more connectivity between startups and large corporations, and that “We are much more of a corporate hub for major tech companies.”

Overall, among Texas cities, Dallas ranked lower than Austin, which was No. 6, but higher than Houston, which was No. 20.

We distilled the numbers from the report below, to give you a better picture of Dallas’ rankings in the report’s metrics.

DALLAS RANKINGS

DALLAS RANKINGS IN DETAIL

Rankings by dimension

TALENT

Does the city have the workforce it needs?

CAPITAL

Has the city mobilized adequate financial resources?

INDUSTRY SPECIALIZATIONS

As tech evolves from general IT to specialized sectors, is the city ready to capitalize on this shift?

DENSITY

Is the community concentrated enough to form a cohesive identity?

ECOSYSTEM CONNECTIVITY

Are the city’s key actors well integrated with the startup community?

CULTURE

Does the city have the right mindset and lifestyle to attract entrepreneurs?

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