Small Cities Weekly | 12.01.2023
Largest/First/Only Industries, Founder-Market-Geography Fit, & Formic
As part of the work we are doing on the Small City Segment, we send out a brief weekly post of thoughts, links, and research in progress that reflect the week’s work. I’d love to hear from you if you have any thoughts, questions, disagreements, or things to add. Please forward this on to people you think might enjoy reading it.
“Home to the largest/first/only ___________”
As I’ve mentioned, I’m fascinated with the economic makeup and history of small cities and exploring how their weird niches started. After talking to more people from small cities about this and explaining a bit about South Bend’s history, I’ve come to a mad lib that’s fun to throw out to learn about local industries:
We are home to the largest/first/only _____________.”
The two latest I’ve heard are:
“home of world’s largest supplier of radioactive compounds targeting prostate cancer” - Columbia, MO
“home of one of the country’s largest producers of crop dusters” - Albany, GA
These kinds of answers are exciting to me. It seems possible to imagine the opportunities for technology, these industries, and emerging industries to combine into some interesting - albeit weird - new companies.
If you can fill in the mad lib for any other small cities, let me know!
Links
Finding Founder-Market-Geography Fit, Jamie Rodota, Revolution Capital
Tentpole companies often have a connection to the legacy industry or some other unique advantage their HQ location offers. Internally, we’ve begun using the term “founder-market-geography fit” to describe this idea.
Every investor is looking for the right team to build a business, but we go a step further: “Is this the right team in the right place at the right time to build this business?” Said another way, how can location be a strategic and competitive advantage for a company taking on often more amply-funded players headquartered in established tech hubs?
I had a chance to chat with someone from Rise of the Rest this week, which sits within the Revolution Capital family, focused on investing in companies outside of the major tech hubs. I love this idea of geography fit that they just wrote about - it summarizes a lot of what we explored here in trying to determine how the entrepreneurial identity of small cities can find their entrepreneurial niche as a combination of industry history and geography.
CEO: Here’s why Corteva moved its HQ to Indy from Delaware, John Russell, IBJ
Magro said he knew he wanted the headquarters to be close to its customers, and Indiana is ranked in the top five states as a producer of corn and soybeans.
“Being close and being able to get in a pickup truck and talk to your customers—that’s a big deal for us,” he said.
Another big selling point: The company had strong roots in Indianapolis, set up in 1989 as a joint venture by drugmaker Eli Lilly and Co and Dow Chemical to produce agricultural products. In 1997, Dow acquired full ownership and renamed the operation Dow AgroSciences.
This story builds on the above post about geography fit. I love the combination of reasoning here - both to be close to customers and building on an industry legacy dating back to Eli Lilly and Dow in Indy. While Indy is more of a mid-sized city, I think this playbook is something that small cities can pursue as well.
Formic: Automating Abundance, Packy McCormick, Not Boring (2022)
Formic doesn’t make robots. It makes it easy for manufacturers to adopt robots. Given the huge gap between their potential impact and actual deployment, I think it’s the most important part of the stack. If Formic succeeds, we’ll manufacture more, better things, more cheaply, in the US.
…
Beyond the pictures, the facts don’t support the fears. As mentioned earlier, there is a drastic labor shortage in the US, it’s contributing to delays and inflation, and it’s going to get worse as we reshore more manufacturing. Turns out, we don’t need to worry about the robots taking our jobs; we need to worry about not getting robots deployed quickly enough to keep manufacturers in business and the economy humming.
This is a long read from last year, but I promise well worth it. I found it interesting because of Formic’s ties to manufacturing and non-tech parts of the economy, but also because of it’s business model innovation. I think there are a lot of opportunities to learn from how Formic is approaching its market to bring technology into sectors that need it, but might be slower to adopt it. Back to building interesting companies at the intersection of technology and legacy industries - Formic is a model to learn from.
If you…
are interested in building for the small city segment…
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