A “tentpole” company is a company that elevates everything around them including jobs (both within the company and the service jobs that support those new jobs). Other items that are elevated in the ecosystem include a city’s brand, economic confidence, and a discussion target to highlight a few other dimensions.
In entrepreneurial ecosystems, the tentpole company(s) (or even the *unicorn*) has a very specific role as their success inspires new entrepreneurial activity. This flywheel is critical for continued ecosystem growth.
Tactic #1 in every economic developer’s playbook is to recruit a tentpole business to the area with the idea that this impact business creates a lift for the entire region. This tactic seems to go into hyper-drive when it is a technology-oriented company. (Remember Amazon HQ2 and the gymnastics that cities and their economic development teams did to put themselves in the running? Were they ever really in the running, though?)
The game is to offer a combination of cash grants, rebates, and tax credits based on the number of net new jobs created in their relocation or expansion. More recently, incentives have included workforce development training, infrastructure investment, and access to key land sites.
A few, quick post-pandemic relocation examples I found with a search:
- Tesla from Palo Alto, California to Austin, Texas
- Oracle from Redwood City, California to Austin, Texas
- Blockchain.com and BlockTower Capital (crypto companies) move to Miami, Florida.
- Sendoso from San Francisco, California to Phoenix, Arizona.
- Homelight from San Francisco, California to Scottsdale, Arizona.
- Heliox from Netherlands to Atlanta, Georgia.
- NTT data from Plano, Texas to Nashville, Tennessee.
- The Daily Wire from Los Angeles, California to Nashville, Tennessee.
I feel like this is a race to the bottom for cities and their economic development leaders. At the same time, I know that they have no choice but to run in this race.
The list goes on and on and most of you are probably thinking, why can’t my community recruit in companies like this and use that as an accelerant to grow our ecosystem faster. If you are sitting in Wilmington, NC, Columbia, SC, Orlando, FL, Birmingham, AL, Richmond, Va and tons of other second tier cities, the answer is this – you do not have enough to offer these companies, yet.
It is not just about size (Austin, TX).
It is not just about the maturity of their ecosystem (Nashville, TN).
It is not just about weather (Phoenix, AZ).
It is not just about culture (Miami, FL).
It is a combination of all of these things that serve as the starting point. But most importantly, these cities have been actively building their ecosystems for 15+ years if not longer. What all of these cities can do is leverage various aspects and levels of these elements before they get to the incentives.