Amazon and the Future of Baltimore
A few weeks ago Amazon announced the final cities selected as potential sites for the company’s second headquarters or HQ2. Baltimore did not make the cut. Although it was a long shot that Amazon would pick Baltimore from the 238 or so cities that presented proposals, it’s still a tough pill to swallow.
Montgomery County is still in the running and Governor Hogan will supposedly propose a $5BB incentive package to lure the company to Bethesda.
But what if we started to think differently about how that money should be spent if our real goal is to build a more prosperous and resilient city?
Baltimore has many assets that made it an ideal choice for HQ2. And, as many have discussed in the months and weeks leading up to this decision, it’s hard to overstate the potential impact 50,000 new jobs and billions of dollars in financial activity could have had on the social and economic justice issues that plague our city. If a company really wanted to change the world, this is certainly one place where they could get started.
However, as the January 18th editorial in the Baltimore Sun noted: “Amazon never said anything about wanting to use its new headquarters to advance social or economic justice goals…” And so be it.
But the time has come to embrace the idea that business can and should be a force for social change.
Recently in his annual letter to CEOs — this year entitled: A Sense of Purpose, Larry Fink, CEO of BlackRock, squarely brings the notion of business and societal purpose to Wall Street as he implores business to reexamine its relationship with society.
In the letter Fink states:
“… society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. Indeed, the public expectations of your company have never been greater. Society is demanding (emphasis my own) that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Collectively we are demanding different things from the companies we choose to work for, buy from, partner with, allow into our communities and even invest in, than we have in the past. These societal and market forces are requiring companies to consider purpose and stakeholder management as “must-have” corporate capabilities for long-term growth. The economic winners of the future will be those companies who have created operating models that embrace this reality. They will be those companies who understand that operating a business is an opportunity to improve society and not simply a tool for personal economic enrichment.
What we see here is a convergence, where the great cities of the future and great fortunes of tomorrow will be built where business, as a force for good in society come together to address social and economic inequities.
Last year the Abell Foundation commissioned a study on the impact of bringing more B-Corporations — those businesses that are formed at their core to create benefit to society beyond just products or profits — into Baltimore City.
According to the report it was “written with the hope that more companies in Baltimore will embrace the higher standard and that the region’s economic-development leaders will vigorously encourage its wide adoption and use.”
It posited that 500 new B-Corps in Baltimore would amount to $76MM in additional local spending over a 5 year period. This would create roughly 600 new jobs and generate over $2.2MM in additional local and state taxes over the same period.
Julie Lenzer — Associate VP for Innovation and Economic Development at the University of Maryland — wrote a compelling piece in USA Today following the HQ2 announcement that outlines what could be accomplished if the 237 “losers” of the Amazon lottery were to invest the incentive monies they pledged on things like entrepreneurship, job training and better education.
With this as context can you begin to see the silver lining in the cloud of Amazon’s decision? It’s time for Baltimore to decide for itself, and on its own terms, whether we will be “The Greatest City in America” or whether the stories people tell about dysfunction and inequities that plague the city will be our true legacy.
The simple facts are these: the talent needed to revive Baltimore, address uneven distribution of economic opportunity, and the social injustices that come along with that — exist right here in our city. However the hurdle of access to capital for entrepreneurs in general, and minority and women entrepreneurs specifically, still persists.
Local business, philanthropic and government leaders often talk about the desire to resurrect our city, but are they truly willing to invest in order to make this a reality? Investing in, growing or attracting new B-Corps, for example, is a long-term fix and requires the economic development apparatus of the city to operate with a long-term mindset. But is that something they are prepared to do? It seems that even the sponsors of the report have not created a plan to help move this idea forward. Some very well developed ideas that have been presented to them to do so — including one by my firm — astoundingly have been met with less than enthusiastic support.
Following Mr. Fink’s letter, Barron’s financial reporter Vito Racanelli wrote this weekend that true and lasting change never really comes from the top-down. Instead as he states: “the longest-lasting improvements in society come from the hard work of changing attitudes from the bottom up.” And “bottom-up” solutions are long-term in nature.
I made the decision in my own career long ago that lasting change was not going to come from trying to change the biggest companies in the world. It would come from growing thousands of new companies, built by entrepreneurs who want to create cultures of caring and who are then given the knowledge about how to care for stakeholders and use that care as a powerful competitive advantage.
My company the Conscious Venture Lab and our investment firm Conscious Venture Partners is at the forefront of investing in and building these types of companies. We are the first firm of our kind to locate in West Baltimore. We believe talent, drive, intelligence and desire are equally distributed across our society and our city; opportunity on the other hand is not. And that is a clear recipe for enhanced returns and enhanced impact.
We bring entrepreneurs to West Baltimore as a part of building a more inclusive city, and, to find those entrepreneurs who are already there but have been overlooked by the innovation ecosystem.
Last night we celebrated the end of our third cohort with an amazing Demo Day at the MICA Lazarus Center. Over 100 people attended and it seems that entrepreneurship in West Baltimore may be gaining momentum.
To date we have invested in 22 companies, have hundreds of mentors, a tested curriculum and a full-time staff of more than 30 management consultants working everyday to help our companies succeed. Our work has attracted interest from around the globe, including being a part of a groundbreaking program this summer at the Vatican.
Our goal is to launch at least 600 new companies in Baltimore in the next 10-years, creating more than 12,000 jobs and impacting the financial lives of more than 120,000 people in Baltimore.
We are in the process of raising a $50M seed investment fund to make this dream a reality. And yet, with the clear need and not insignificant early success — with the notable exceptions of our partners at Sagamore Ventures, and the Baltimore Development Corporation — we are finding it incredibly difficult to attract the interest and capital from the powers that be here in Baltimore.
Imagine what we could accomplish here if, instead of Governor Hogan allocating that entire $5B in incentives to Amazon, he cut that investment to say…4-Billion, nine hundred and fifty million ($4,950,000,000) and invested $50M into our fund or others like us?
In the wake of the Amazon decision many in Baltimore have asked: “Why not us?” We are attempting to build a new narrative and instead of why not us we’re declaring “From now on!”
From now on, we must all decide to support entrepreneurs of every stripe wherever they can be found if we’re going to create a great city.
From now on, we all must take real action to close the opportunity gap in Baltimore by investing in places where others might not be looking.
From now on, we need to break down the silos that exist in Baltimore that keep great ideas from seeing the light of day.
From now on we’re going to work everyday to make Baltimore the center of the Purpose-to-profit economy.
This is the space we are looking to create here in Baltimore. Amazon may have viewed the city as being too risky a place to be worthy of HQ2. We need to redouble our efforts here to make Baltimore a city of opportunity instead of a risky proposition.
Entrepreneurship is the backbone of a thriving economy. Conscious entrepreneurship — profitable companies built on a foundation of purpose — is the backbone of a more just, joyous and prosperous society.
Baltimore has the knowledge, talent and drive to rebuild this city, attract world-changing ideas and turn it into a shining example of what could be, if a city refuses to let its worst days define it.
If you love Baltimore like we do and this is a reality you want to see, we call on you to join us in making it come true.
Author:
Jeff Cherry
CEO, Founder and Executive Director, Conscious Venture Lab
202–997–0026
