What Just Happened?

The “flyover states,” the “unknown zipcodes,” just elected the president….WOW.  Let that sink in.  Ironically, this is why the electoral college exits, to prevent the urban areas of the country from dominating the political power of the country.  How could our Founding Fathers have been so visionary as to ensure such a check/balance?  They represent a rare combination of pure genius and long term vision with a selfless will to create something great and lasting, the kind of which we may never see again.

This is NOT a political statement. I am not saying I am happy or upset with the election.  But, there are some big ramifications in the recent election that capitalize on trends we have seen coming for at least two years.  There is clearly some anger and frustration between the coasts.  Manufacturing has left the “heartland” and is not coming back.  The auto industry is not coming back to the Rust Belt states.  Those ships sailed a while ago and are not coming back to port regardless of what anyone says.  The economics of those industries simply don’t work any longer.  But, there are bright spots as well.  We are seeing innovation, investment, growth, and new enterprises arising in the same Heartland, a term I strongly prefer over “forgotten zipcodes” and the like.  And, smart communities are getting on the bandwagon.  I can tell you this with confidence because we work in these communities.

The Heartland is seeing a shift of capital and power.  People now work where they want to live, not the other way around.  The Internet made this possible.  And, Richard Florida, popularized the idea in his book, The Rise of the Creative Class.  The bottom-line is the shine has worn off the urban lifestyle.  Who wants the traffic?  Who wants the cost of living? Who wants the air quality issues?  Who wants to have their children grow up with nowhere to bike or play?  We want trees, green space, mountains, lakes, etc.  Therefore, we see shining beacons of light like Nashville, TN, Chattanooga, TN, Greenville, SC, etc. becoming new-age paradises (in the Richard Florida paradigm) for young professionals and especially entrepreneurs!

The comical part of this is the major media channels want to say that this is a function of anger and of racism from a bunch of backwards hillbillies running amok between the enlightened beacons of progress on each coast.  It is simply not true.  Since when did valuing tradition, family, and the pastoral way of life become “racist?”  Again, this is not a political statement.  Major media ignored this tectonic shift and is reeling trying to figure out how it was missed.  However, I fear what they are hearing (inferring) and the true message are still miles apart.  We don’t all want to be metro-sexual urbanites.  The Heartland is rising in power and prominence because of its love of community, family, and tradition, not in spite of it.

If you watched the recent press, you would be left with the impression that everyone in the Heartland is a straw-chewing bumpkin that can’t find his backside with both hands.  It is not true.  I grew up on a farm in rural East Tennessee.  I learned a work ethic.  I learned right from wrong.  And, I went to church every Sunday. But, I got a great education.  I got to travel this great country and many parts of the world outside our borders.  I learned STEM and made a career out of it.  I could have moved to any one of several large urban centers.  But, I did not want to…and the Internet saw to it that I did not have to do so.  I have spent time in every major city in the US.  I enjoy the food, the culture, and the energy, but I more enjoy coming home to my family in my favorite “forgotten zipcode” where I can see the mountains from my back porch, jog in greenspace from my back door, walk out my garage and kayak on the lake, and raise my children with the same tradition and work ethic I was taught.  Granted the jury is still out.  I am still a work in progress.  But, I feel I am doing pretty well and my children are growing up to be open-minded, well-adjusted, productive members of society.

So, what is powering this tectonic shift you ask?  The answer is simple.  It has become too much of a headache to live and work in the “famous zipcodes.”  Talent and technology have become ubiquitous.  Traditional innovations centers have moved from spawning companies that create products with value to companies of pure speculation, marketplaces.  They play the “valuation shell game” as I call it.  Essentially, when a group of investors want a company to be worth more, they put in more capital at a higher valuation without external market validation.  Some of these “unicorns” are trading at 25x revenue or more.  Sound like a bubble to anyone?

That does not happen in the Heartland.  Heartland investors are opting out of coastal opportunities in favor of more tangible value propositions.  And, the true centers of innovation now are universities, government laboratories, etc.  Those are almost all in the “forgotten zipcode” areas.  As evidence, I submit that I grew up on a farm. But, literally just down the road was Oak Ridge National Laboratory (ORNL), one of the original Manhattan Project sites.  It had a dramatic influence on my life by keeping my horizons sufficiently broad and allowing me to evolve from a hard-core scientist, to an entrepreneur developing STEM products, and then to an investor in hard-core science and technology.

From places like ORNL, Vanderbilt University, etc. we see fundamental advances in technology that should become the great companies of tomorrow.  This is the norm in today’s age.  Not every city has a research university or a laboratory, but we are seeing a strong emphasis on entrepreneurship tempered with practicality across the Heartland.  Although I think America IS great, I admit America was greater when the Heartland was strong.  If we want to make America greater again, isolationism and supply side economics are not the answer.  The answer is to invest in the Heartland to take advantage of real innovation occurring in the Heartland and create the ventures that will fuel tomorrow’s economic upswing.  This will create the kind of job growth the Heartland needs…the kind it believes it just voted for.

The luster of the big urban areas has worn off.  Contrary to popular believe, that leaves a large number of well educated, innovation driven folks living in the flyover-states.  These people want their say.  And, they spoke.  I don’t think enough people heard this group, but expect them to continue rising in power and influence.

So, what does this mean?

  1. Richard Florida was right, and this shift of power from traditional urban “elites” to rural “practicalists” will continue and accelerate.
  2. In many ways, the urban rural divide is growing, especially culturally, and that is a problem.  There are conversations that we are NOT having, that need to be had so we can get all oars rowing in the same direction!
  3. In many ways the rural populace is becoming more powerful, which will cause great consternation in Washington and in large cities across the country who feel as if the tail is now wagging-the-dog.
  4. Love of place is reasserting itself. People are seeking a sense of community again and the rebirth of the American Heartland is a GREAT thing.  Embrace it.
  5. Millennials are opting out of the urban lifestyle in favor of natural amenities. That provides great opportunity for a new technical working class across the Heartland.
  6. We see a ubiquity of talent and technology across the Heartland that should fuel the next generation of entrepreneurs and great companies.

This why we say we work on Main Street, not on Wall Street.  This is why we see the power of a syndicate of angel groups and funds as the next logical step in the industry.  Rural areas have talent, technology and wealth, granted not Silicon Valley wealth.  But, by combining them, we can create a powerful force driving innovation and of new venture development.  We are seeing a professionalization of the angel industry driven by the Heartland…not the coasts.  Most importantly, we are seeing truly revolutionary companies erupting across our network!  And, it is only going to accelerate as this shift of power continues.

This is why we believe our model will win.  We get to live where we want and do the right thing for the right reasons.  And, it is a blast.  Why don’t you come join us and be part of the fun?

Copyright Eric L. Dobson, 2016

@edobson865 | @angelcapitalgr | www.linkedin.com/in/ericdobsontnwww.facebook/angelcapitalgroup

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  • Trixie

    It’s always a relief when someone with obvious extispere answers. Thanks!

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