I spent last week in Washington, DC getting to know their startup scene. We, at Precursor, have yet to invest in a company based in the nation’s capital so we don’t have much exposure to the area. I wanted to get to know the scene to better understand the dynamics to prepare us for future investment.
It was a fun and packed trip! Along the way, I met with founders at the Pre-Seed stage all the way up to the Series D stage. I met with ecosystem builders and investors. I traveled across the entire city from U Street to Capitol Hill to Arlington.
Here are a few of the things I observed:
1. Tech looks different in a city that runs well.
In a city that has a higher population density than San Francisco with only about 200K fewer people, it was remarkable to see how smoothly things operated in Washington, DC. I saw this show up in almost every technology I used.
When I got to my AirBnB in DC, two things were surprising to me. The 1st was that it was so large. I didn’t actually need to use a coworking space at all because I had enough space to do work at home. (And the few times that I ventured out to a coffee shop, I was able to find space to charge my computer and could use the bathroom without a code (*gasp*).) The 2nd was that it was a public housing unit. Compared to public housing units in the bay that can immediately be recognized as tier 2, this public housing unit treated its tenants with respect and dignity. I felt like I was staying in a luxury high rise! Think of how different AirBnB could look and feel if people from all income levels had attractive homes to rent out on the platform.
When I pulled up google maps, it was almost always quicker for me to take public transit to my destination instead of ride hailing. Over the course of my week in DC, I took a Lyft twice and both times were frustrating due to how slow they were. Between the bus and the metro, I was able to get places quickly and conveniently. Consequently, the rides on Lyft seemed to be steeply discounted. It cost me $13 to take a 30min ride in DC, whereas in San Francisco, it costs $13 to take a 10min ride.
When I saw people on Bird & Lime scooters pass me by, I saw young black men riding them near Howard and old white women riding them near Capitol Hill. The equal distribution of access to technology is remarkable compared to what I see in San Francisco where Birds are wiped with poop in the Tenderloin. Howard also is home to one of the few accelerators called in3.
2. Tech is still “weird” here.
I got the sense that the folks who are building tech companies are still seen as outsiders. The “cool kids” were able to secure the illusive Legislative Assistant role for the Congressman of Georgia. I describe these jobs as illusive because they really are. When I was an undergrad at Duke, my dream job was to work as a Legislative Assistant for anyone! I applied to over 100 jobs and didn’t get one.
For the folks who can’t secure these really competitive jobs, they could always work for a startup. They are risky yes, but so is joining a political campaign. In DC, the entrepreneurial spirit is alive and well, it’s just dedicated to the political arena. The successful, DC based later stage startups that I met with told me that many of their recruits came from San Francisco and I assume it is to combat the selection bias that can occur when your industry isn’t the hottest one in town.
I get the sense that people in Washington, DC are still traditionalists who look to change the world through the system that is already in place. They do not yet see tech as a real system and if they do, they don’t see it as a place to impact society in a positive manner.
3. Nobody cares about San Francisco.
This is actually my favorite trait of DC. Nobody there seems to know about or care about what is happening in the valley. I know many folks knew this already as is pertains to our Congresspeople (*insert Facebook Congressional hearing here*). But this seemed to be true of a wider variety of folks. For example, somebody asked me in earnest if I knew what was Upwork.
For companies that are building in very competitive industries, this naivete is terribly destructive. For companies that are building in industries that are either 1) extremely revolutionary or 2) taking advantage of DC’s unique traits, I think this mentality is invaluable.
Take FiscalNote for example. It might have been able to have started in San Francisco, but it couldn’t have grown as fast and as large as it has without its location. It sits 3 blocks away from the White House and <10 from Capitol Hill. It is able to attract the best and brightest who are committed to changing the world because it is building a tech company that works within the legislative system. These are the types of companies that will continue to succeed in DC. And I think the country — especially right now — is ripe for them. With accelerators like Higher Ground Labs, people are starting to build tech companies that can change city, state and federal government and I’m excited to see what comes next! So can unicorns grow in DC? Which gets me to my conclusion. Can the next Unicorn get started in DC. I say yes. It is a city full of entrepreneurs looking to change the world. They are just not sold that tech can fulfill that promise.