With roots in a rugged agrarian work ethic, start-ups are thriving around Omaha--thanks in no small part to big spenders' bankrolls. We sent a lifelong New Yorker to investigate the seedlings of Silicon Prairie.
Omaha, Nebraska, where the start-up scene is bustling. "It's hidden, but like a ninja. You don't know it's there until you actually see it."
Courtesy minorwhite
Bob Grinnell examines the plans for The Mastercraft, an old factory building he purchased in 2005 and has been renovating and filling with start-up companies since.
I'm standing in the conference room of a 140,000 square-foot former furniture factory in North Downtown Omaha, Nebraska. Flecks of paint and upholstery dye dot the cinder-block walls. My tour guide--the owner of the building, Bob Grinnell--explains that this factory, The Mastercraft, takes its name from the furniture brand that had originally inhabited the space. It opened in 1941 and manufactured furniture for the better part of the 20th century. But a decade ago, the furniture business went belly-up. Investors in Iowa bought the company. The building was abandoned.
Grinnell, a successful electronics entrepreneur and Omaha native, bought the building in 2005. His idea was to refurbish the building, carve out offices, and rent it out to start-ups, artists, and creative small businesses. A trained master steamfitter, he'd save money by putting the piping in himself.
When the housing market crashed, commercial office space in Omaha took a nose dive. But Grinnell's timing was improbably lucky. Demand for creative space in Omaha is blowing up. In June 2011, Grinnell had five tenants. Today, there are 27.
There are photographers, interior designers, creative agencies, and start-ups. Over beers, Grinnell explains how the building's classic, factory-style saw-tooth roof, exposed-brick walls, and high ceilings foster a creative work environment. I look into the hallway and see a young woman in a red beret glide by on a scooter. A group from Des Moines has arrived for the tour as well; someone whispers, "Hey, doesn't this kind of remind you of General Assembly in New York?"
The building is 17 feet longer than the Titanic, and is nearly double its width. "There's room to grow," Bob says. "Omaha had a cell, but no nucleus. That's what Mastercraft is."
The "cell" Grinnell is referring to is Omaha's growing, yet somewhat clandestine, start-up community. When Sarah Lacy, the tech and start-up journalist and author, stopped by Omaha for her book tour in 2008, she remarked on her blog that she was "stunned and impressed by the creative vibe of Omaha" and that the creativity of the city "is far more of a central ingredient in Web 2.0 than any other Valley-centric tech wave."
Omaha, the 42nd largest city in the United States with about 410,000 people, is often considered the telecommunications capital of the country, and has a solid foothold in the finance industry, with major Fortune 500 companies such as Berkshire Hathaway, Mutual of Omaha, and TD Ameritrade. Available financial talent in the city'and its proximity to Des Moines'has made Omaha an attractive location for the next generation of financial services firms. Nearly half of PayPal's employees work and live in Omaha. Overall, the city's unemployment rate is half the national average.
It's not hard to find innovative start-ups quietly toiling away in the city, too. MindMixer is working on ways to reinvent how people connect with government online. SkyVu, an interactive game design firm, has built several blockbuster hits. There's also Sojern, which targets travelers for advertisers. More seasoned Web start-ups in the area include Hayneedle, an Internet retailer, and Proxibid, an online auction marketplace. There's even a growing artisan, handmade collective, led by the quirky Chris Hughes of Artifact Bag Co. You can click around this map (thanks to the team at Silicon Prairie News) for plenty more examples:
And yet, impressions like Lacy's of Omaha are common among coastal dwellers. With so much focus on San Francisco, New York, Austin, and Boston--cities with scores of venture-backed companies--who knew there was this start-up scene brewing in the Midwest?
How to Make the Midwest Mainstream
In 2008, Jeff Slobotski and Dusty Davidson conceived of Big Omaha, an inspirational start-up conference that attracts entrepreneurs and start-up enthusiasts from around the Midwest. Davidson had previously founded two start-ups--BrightMix and Tripleseat software--and Slobotski had been a community advocate in Omaha.
This year, the event has branched out. Attendees from 27 states and three countries have descended upon Omaha to hear speakers such as Jim McKelvey, co-founder of mobile payment system Square, and Seth Goldstein, co-founder of Turntable, a start-up that allows people play music together online. The conference attracts some 700 entrepreneurs, marketing executives, software engineers, social media people, and aspiring future founders. Like all conferences, they have come to be inspired, make connections, and enjoy a few days off from their normal routine. But there's something remarkably different about Big Omaha--a lightness or buoyancy--that seems patently Midwestern. Some have compared it to TED or SXSW, but the analogy feels weak. As I'm sitting in the back row of chairs on the first day of the conference, I notice that each speaker gets an uprorious standing ovation--both when they step to, and exit, the stage. Why does every speaker gets two standing ovations, I ask the guy sitting next to me. "That's just what we do here," he says. I have never felt more of a New Yorker.
Earlier in 2008, Slobotski had launched Silicon Prairie News, a TechCrunch-inspired blog meant to "to highlight and support the burgeoning entrepreneurial ecosystem on the Silicon Prairie," the "Prairie" being the geographic area in the Lower 48 bound roughly to the east of the Rocky Mountains, west of Chicago, north of Tulsa and south of Minneapolis. The blog profiles entrepreneurs, announces funding, and helps connect angel investors with local start-ups. Omaha, a four-hour drive from the continguous United States's geographic midpoint in Lebanon, Kansas, is literally smack-dab in the middle of the United States. It's also the farthest you can get in the United States from both Silicon Valley and Wall Street.
The news site started simply enough. Slobotski had been keeping a personal blog about his own interactions with start-ups. One day, Slobotski turned the camera on Dave Nelson, the founder of SecretPenguin, a branding and design agency in Omaha. Nelson, a professional skateboarder, told the story of creating his company, and Slobotski broadcasted it to the Web. It was a hit. But when Slobotksi tried to replicate video, he began to notice a quirky trend: It didn't sound like a TechCrunch story, where of so-and-so raised X amount of venture capital money. Founders in the Midwest were fabulously humble.
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