What town wouldn’t want to take a page from a startup’s playbook and turn to an experienced investor to receive an influx of cash and business advice?
Many of today’s billionaires aren’t just interested in slapping their name on a building — they want to make their adopted hometowns a thriving place for entrepreneurs like themselves. But it remains to be seen how much a generous benefactor really can do to transform a city’s economy.
On Saturday, the New York Times profiled Diane Hendricks, who, along with her late husband Ken, launched ABC Supply Company in 1982. Today she’s the second-richest self-made woman in the U.S., according to Forbes, and now wants to transform her home base of Beloit, Wisconsin, into a small hub for tech startups.
Rob Gerbitz, the president and chief executive of Hendricks Commercial Properties, told the Times that Hendricks has spent north of $47 million buying and renovating properties in Beloit. She helped turn the town’s foundry –shuttered in 1999 — into a commercial workspace called Ironworks, which a number of tech startups now work out of. Hendricks has also bought and renovated a country club, and opened new restaurants and apartment complexes to bring people to Beloit.
On Sunday, Oracle cofounder Larry Ellison gave an interview to the Honolulu Star Advertiser about his plans to transform Lanai, Hawaii — the island he bought 98 percent of in 2012 — into a sustainability-focused community. Ellison is helping build a $15 million solar-energy powered greenhouse that’s scheduled to open next year, which he claims will be profitable in its first year. Ellison is also investing $75 million into renovating a resort on Lanai owned by his holding company, Pulama Lanai. Ellison claims that both ventures will bring high-tech, good-paying jobs to the residents of Lanai.
Hendricks and Ellison join the ranks of Kevin Plank, Dan Gilbert, and Tony Hsieh, who have invested their money into ambitious economic renewal projects in Baltimore, Detroit, and Las Vegas respectively. Critics of these projects tend to sing a familiar tune: Rich business men and women don’t know what’s best for all of the city’s residents.
For the residents of Beloit in particular, there’s one question that’s on the back of their minds — what happens when Hendricks, 70, is no longer around to help support the revitalization of the town’s economy. Hendricks’ team personally pitched many of the startups in Ironworks to come to Beloit. Scott Bierman, the president of Beloit College, told the Times that he’s waiting to judge how successful Hendricks’ revitalization project is until he can see how the next recession affects (or doesn’t affect) Beloit.
Bierman has a point that many communities with wealthy benefactors should take note of — success can’t always be judged by how many new startups come to town. Real economic development takes time. As Techstars cofounder Brad Feld, who helped transform Denver’s startup community, says, cities that want to build a robust startup community should expect it to take at least 20 years, no matter what billionaire is behind it.