Challenges and optimism on tech's role in Philly

A Free Library panel (from left) Dawn Bonnell, Penn's vice provost for research; Paul Levy, Center City District; Elif Sen of Philadelphia Fed; and Josh Kopelman from First Round Capital.
A Free Library panel (from left) Dawn Bonnell, Penn's vice provost for research; Paul Levy, Center City District; Elif Sen of Philadelphia Fed; and Josh Kopelman from First Round Capital. (MICHAEL BRYANT / Staff Photographer)
Posted: April 09, 2014

It's tough to gauge the impact of Philadelphia's start-up-rich technology community on the city and the region. But there's plenty of reason for hope - and plenty of challenges for an area aspiring to compete in the high-tech big leagues.

That was the half-full-but-rising glass described during a roundtable at the Free Library Monday. Part of Philly Tech Week, it brought a variety of perspectives on tech's role in the region's economy.

Hard data offer only soft hints, such as the unsurprising news that personal ties to the region play a large role in tech companies' presence here - one of the findings in a new survey conducted by Tech Week sponsor Philly and by the Center City District.

District CEO Paul Levy said tech firms fill little of downtown's 35 million square feet of occupied offices. "If you can find 100,000 to 150,000 square feet being occupied by tech firms today, you're being very optimistic," he said.

But Levy and other panelists, including venture investor Josh Kopelman, said such numbers miss the importance of tech's role since the Great Recession - a period of ferment, like those after any major downturn, but one that coincided with key technological changes.

One, he said, was the arrival of cloud-based services, which have dramatically reduced start-up costs. Another was the arrival of Apple's App Store, with its outsider-friendly model for software development.

"As the costs come down, you're seeing the democratization of entrepreneurship," said Kopelman, who noted that he needed $5 million to start his first venture in the 1990s.

"A few years ago, it was $500,000, and now it's $50,000," Kopelman said. "Anyone in a college dorm room can be an Apple authorized developer, pay $150 to Apple, and have an app in the App Store in two weeks."

Kopelman may have been exaggerating, but what once took years now takes months. And Philadelphia is rich in resources such as technology incubators and shared work spaces. Some build on the dynamism of people like Kopelman, who offer expertise and seed capital to those hoping to follow in their footsteps. Others build on the region's world-class wealth of academic institutions and research.

"Some people would say that Penn invented this sector," said Dawn Bonnell, vice provost for research at the University of Pennsylvania, recalling the school's role in developing the ENIAC computer in the 1940s.

Like the region's other institutions, Penn continues to play a key role. In the last four years, its UPstart program has helped turn dozens of faculty members' ideas into enterprises. Its new "Pennovation Center" will offer incubator services and lab spaces on Penn's new South Bank expansion along the Schuylkill.

So what does Philly lack? Kopelman said a key shortcoming arises as companies grow past their start-up phases and need more than the generalists he likens to Swiss Army Knives - able to perform any task.

"Philadelphia stands very well on the ideas. Philadelphia stands very well on the generalists. But where Philadelphia falls is on specialists - the people who have done it before," he said.

In other words, it's one thing to develop a potentially popular app, he said. It's another to smoothly capture a million downloads.

Kopelman said success breeds success - a pattern demonstrated repeatedly in Silicon Valley, where Swiss Army Knife alums from companies like PayPal have helped start new generations of start-ups.

Philadelphia can get there, he and the other panelists said, stressing the importance of basics such as improving infrastructure and education. But it won't happen overnight.

215-854-2776 @jeffgelles

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