Planning October 2016
Start-Up Upstart
Lacking the trappings of a typical tech hub, Kansas City gets decidedly DIY.
By Greg Flisram
It started innocuously back in 2012 among a few blocks of a lowslung, working-class neighborhood straddling the Missouri-Kansas state line. A cluster of hacker houses and home-based start-ups sprung up, looking to be the first to capitalize on a brand new amenity: Google Fiber's first-in-the-nation municipal ultrahigh- speed Internet service. Google's newly opened Kansas City office was just a stone's throw away from what's now known as the Kansas City Startup Village — one of several small entrepreneurial hubs spread out throughout the metro area.
In the years since, the mostly residential neighborhood has taken on a semicommunal flavor, as small tech companies have sprouted up in and among the bungalows, converted garages, and formerly empty storefronts. On any given day, members of this congenial community can be found dropping in on each other for a quick consult, meet-up, or game of foosball. Tour groups from places like Australia and Japan are frequent visitors. The atmosphere is open-door, collaborative, laid back, and definitely DIY.
In fact, DIY is a good way to describe most of Kansas City's tech scene. Like the rest of the city's tech ecosystem, the now celebrated KCSV remains something of an anomaly. In a place without the usual markers of a tech/entrepreneur hub — there are no major research universities, no mountains, no ocean, no major business accelerators, not even a significant venture capital network — Kansas City's start-up community has forged a different path.
It's driven by major investments in tech infrastructure and the various spin-offs and mutations of its existing tech-heavy legacy corporations such as Sprint Corp (mobile technology), Cerner (health care informatics), Garmin (wearable tech), and Hallmark and AMC (digital art/animation).
It has also benefited from the halo of the Kansas City-based Kaufman Foundation — the nation's largest philanthropic organization devoted to entrepreneurship education, as well as a local civic and business culture that is increasingly evangelical on the topic of entrepreneurialism.
According to Drew Solomon, the former director of technology initiatives and a current vice president of business and job development at the Economic Development Corporation of Kansas City, one of the unique attributes of Kansas City's emerging technology scene is its strong civic-corporate collaboration and strong industry-specific focus. "Rather than trying to be someplace like Boston we have aligned a continuum of services and resources around some of our core industry strengths such as mobile and big data," he says.
A prime example started in 2014, with the opening of Sprint Corporation's Sprint Accelerator, dedicated to coaching mobile technology start-ups. A local franchise of the Techstars accelerator — a mentorship-driven immersion program for aspiring tech businesses — the Sprint Accelerator provides an entrepreneurial outlet for would-be mobile tech moguls and gives the company a first look at promising new mobile technologies.
And whereas a lot of other cities have benefited from having large, lead institutional players like research universities, in Kansas City government is playing a fairly major role as both coinvestor and lead champion.
"We're building an ecosystem here that isn't largely dependent on one or two big drivers or benefactors," says Solomon. "It's a 'small ball' approach but one that will hopefully be more collaborative and durable as a result."
The city has provided seed funding for a number of local tech initiatives including Digital Sandbox KC — a technology proof-of-concept center hosted at the University of Missouri–Kansas City and various digital inclusion projects such as LaunchCode, a coding school targeted primarily to nontraditional and minority students.
The Sprint venture, along with the recent expansion of a seven-story co-working hub and a mentor center known as Think Big Partners, both located in a trendy spot just south of downtown called the Crossroads District — which was named a 2015 Great Neighborhood by APA — marked tech's first moves into Kansas City's urban core.
"Over the past 20 years, concerted efforts by Crossroads property owners and the city have helped curate a unique live/work environment supportive of the creative community and reflective of the neighborhood's authentic sense of place," says Jeffery Williams, AICP, the city's director of planning and development. "I think it serves as a great example of a public/private collaboration around a shared vision of what this once desolate neighborhood could become."
Since that time, some notable suburban-based corporations wanting to burnish their own urban bona fides have shown interest in establishing their own urban "in-posts" in order to remain close to the regional center of innovation and talent.
Reza Heidari, left, and Andrew Lee work in a shared house for startup companies near the Google Fiber Space in Kansas City in 2014. The mostly residential neighborhood has taken on a semicommunal flavor; small tech companies flock there to take advantage of Google's ultrahigh-speed Internet. Dan Gill/The New York Times.
A streetcar named 'inspire'
Enter another important addition to KC: a streetcar that debuted this past May. Beyond just a mobility and redevelopment catalyst, it was positioned from the outset as a platform and showcase for urban technology applications of various types. The fully Wi-Fi-equipped streetcar project provides the backbone of a linear, 2.2 mile Wi-Fi district stretching the length of greater downtown.
It has been the vehicle for the city's first major smart infrastructure pilot project — mobile deviceaccessible kiosks and station-stops provide real-time information on nearby events, sights, merchant specials, traffic and weather conditions, and PSAs.
The streetcar line also features camera-equipped LED streetlights and embedded sensors that collect data and facilitate system-level responses to changing traffic and passenger load conditions.
Then Google Fiber and Cisco Systems decided to pilot Smart + Connected Cities, their first North American joint research collaborative in Kansas City, by placing their flagship "Living Lab" dedicated to developing and testing other smart city technologies (especially those utilizing Big Data and Internet embedded infrastructure) in the Think Big building on the streetcar line.
The Crossroads District became the metro region's de facto center of technology and entrepreneurship.
The new KC Streetcar has become a magnet for tech companies along its 2.2 mile route. Above, the streetcar's southern terminus in the River Market district. Photo by Greg Flisram.
Gig city
The Google-Cisco partnership is at the heart of Kansas City's strategy to position itself as a midcontinent hub for big data analytics and civic techtech research and development. Companies like mySidewalk (formerly MindMixer) and Mobilegov have set up shop in the city to exploit the combination of ultrahigh-speed Internet and open civic data networks to develop new applications for urban data management and urban information systems, smart infrastructure, and Internet-assisted municipal service delivery.
Kansas City was also one of seven finalist communities competing for $40 million to apply toward high-tech transportation solutions through the U. S. Department of Transportations' Smart Cities Challenge. The city's application focused on smart, sensor-embedded infrastructure and the accommodation of autonomous vehicles. (The award, an nounced in June, went to Columbus, Ohio, instead.) Meanwhile, Google recently launched a new networked wireless broadband service that will soon be available in several larger development nodes throughout the metro area.
'The major tech corporations are primarily interested in where their future workforce will come from. Unless the conversation expands to include how we train and attract new technology workers, the idea of bringing in new companies will be seen as more of a threat to them than anything else.'
—RYAN WEBER, PRESIDENT OF THE KC TECH COUNCIL
The Sprint Accelerator was a three-month, immersive, mentorship-driven startup accelerator located in the Crossroads Arts District of Kansas City. The focus was to help startups build the future of mobile technology in areas such as wearables, mobile applications, enterprise solutions, education, gaming, entertainment, health, security, and government. Photo courtesy sprintaccel.com.
Launch KC
The sheer opportunism surrounding Google Fiber's entrance into Kansas City has since evolved into something much more intentional and strategic with the 2014 rollout of the city's LaunchKC initiative (launchkc.org). The plan laid out a framework for developing the softer infrastructure needed to support a functioning entrepreneurship ecosystem.
From an early focus on resource network development, educational programming, and various other community-building events, the city has since moved to host major events and to award cash grants for relocating start-up companies as part of Kansas City's annual Techweek celebration in September (modeled after Austin's South by Southwest festival).
In addition to $50,000 cash, the awardees are hosted as entrepreneurs-in-residence at several established companies in proximity to downtown and are provided free access to a host of wrap-around business services from an ever-expanding network of experienced entrepreneur mentors.
As Kansas City's tech-cred continues to rise, economic development planners have been busy working on other ecosystem imperatives, such as engaging Kansas City's notoriously siloed corporate community. According to Ryan Weber, president of the KC Tech Council (formerly Kcnext), the corporations' reticence has a lot to do with ongoing struggles to retain and grow their respective workforces.
"Most of the talk around tech has been purely about start-ups," Weber says. "The major tech corporations are primarily interested in where their future workforce will come from. Unless the conversation expands to include how we train and attract new technology workers, the idea of bringing in new companies will be seen as more of a threat to them than anything else."
Besides workforce development and attraction, the KC Tech Council focuses on local policy changes intended to improve the acceptance of potentially disruptive technologies new to, or originating in, the Kansas City region. They have been active in the city's efforts to improve the area's tech training capacity as well as help advocate for companies such as Uber.
Kansas City's Crossroads neighborhood, sandwiched between downtown and the Crown Center area (background), has emerged as a main hub of the city's tech scene. Photo by Greg Flisram.
Entrepreneurial placemaking
Despite the early fanfare of KCSV and the recent emergence of the Crossroads District, the metro area's start-up scene remains highly fragmented and dispersed. Area economic developers see this dispersion as potential impediment in that it inhibits network formation and the random face-to-face encounters that increasingly drive business opportunity.
The dispersion has to do with the region's relative lack of specially "flagged" or appointed hub incubator buildings — particularly those that are affordable for early-stage companies — that could help anchor the movement in a synergistic, expand-in-place environment.
Establishing that anchor, and determining its location and financial operating model, is an increasing focus of the city's planning efforts, and one that could determine where much of the tech scene plays out in the future.
The key to making it work is to aggregate many of the complementary players in a single area (or even one facility) to improve collaboration and magnify their collective drawing power.
"We'd like to have a place that is completely vertically integrated that combines corporate innovation labs, training and event space, a demonstration center, business incubation/acceleration, and a venture capital 'desk' under a single roof," says Solomon of Economic Development Corporation of Kansas City. "We'd like to have a place where a person can get immersive IT training on one floor and get a job on another."
Meanwhile, early discussions on establishing a full-blown (and lately fashionable) urban innovation district have been somewhat muted because of a shortage of obvious anchor institutions and questions on where such a district should be located. Would it go downtown, in the city's former stockyards district known as the West Bottoms — an emerging area — or even in a suburban tech park near existing corporations' headquarters?
'We'd like to have a place that is completely vertically integrated. ... We'd like to have a place where a person can get immersive IT training on one floor and get a job on another.'
—DREW SOLOMON, VICE PRESIDENT OF BUSINESS AND JOB DEVELOPMENT, ECONOMIC DEVELOPMENT CORPORATION OF KANSAS CITY
According to Williams, the planning director: "A hub will emerge through a balanced examination of the city's available land resources, transit connectivity, and adjacency to neighborhoods offering a variety of housing opportunities. The truth is that there are several possible options and opportunities available to us. If private actors aren't going to vote with their feet and wallets, we may be forced to become more intentional in actively placing it somewhere."
There also a strong countercurrent that favors the continued organic evolution of the city's tech landscape, which would probably mean the accelerated migration of creative businesses from an increasingly hemmed-in Crossroads District to the adjacent and equally eclectic East Crossroads neighborhood.
City planners have long sought to stimulate an eastward path of investment to connect the greater downtown area to the city's famed Jazz District east of downtown, and the prospect of an emergent East Crossroads could finally help spur this along. Already the East Crossroads is home to a growing number of local artisan maker businesses including distillers, the luxury watchmaker Niall, and sportswear designer and manufacturer Charlie Hustle. While not considered tech companies per se, it is believed that they will help provide an ambiance attractive to tech companies.
Show me the money
Despite the ongoing talk about how and where the tech scene plays out physically, the most critical gap in the local start-up ecosystem is the fundamental one of equity capital. In fact, a chronic lack of local venture capital has been the bane of most Midwestern entrepreneurial initiatives and the situation in and around the Show Me State is no exception.
This shortage has too often resulted in the flight of promising start-up companies as they follow the money to the coasts. The Kansas City area suffers, in particular, from a lack of "first stage" venture capital — generally equity investments in the range of $400,000 to $1 million.
To address the issue, the metropolitan chamber of commerce recently kicked off a major capital campaign called KC Rise. The goal is to raise at least $20 million of pooled venture capital funds that can help carry promising business ideas forward into becoming viable commercial enterprises. "The money thing is something that we definitely need to figure out fast," says Solomon.
"Without that, all the talk about innovation districts and being a tech hub is basically moot. It makes no sense being a start-up city if we don't end up being an 'end up' city at the same time."
Greg Flisram is the senior vice president for redevelopment with the Economic Development Corporation of Kansas City.
Web Extra: Up From the Killing Floors
The West Bottoms, Kansas City's former stockyards, is on the rise
By Greg Flisram
"Everything's Up to Date in Kansas City," or so the old show tune goes: A new streetcar line just debuted, a pioneering joint venture between Cisco Systems and Google Fiber is putting KC in the vanguard of smart city technology, and downtown is well on pace to double its 20,000 population in the next several years.
These developments follow other major recent downtown investments including the city's $295 million investment in the Power & Light District — a market-changing transformation of a 10-square-block, borderline skid-row area into a hugely popular urban entertainment center. In the meantime, the city has achieved major national accolades for its fledgling technology and entrepreneurship scenes, and is poised to make major new investments in its famed Jazz District at 18th and Vine. A new $964 million airport is on the drawing board.
All of this momentum has caused many KC watchers to believe that the city is finally ready to break out of its deeply etched, north-south path of investment (a narrow five-mile band bracketed by a resurgent downtown on the north and the famously chic County Club Plaza on the south) and push into areas that have been largely passed over in earlier waves of redevelopment. One of these areas is an ignominious 75-square-block patch known as the West Bottoms, which lies just west of the city's downtown beneath a series of viaducts that traverse rivers, rails, and the Missouri-Kansas state line.
The West Bottoms (or just "The Bottoms") was the historic home of KC's legendary stockyards, which in its day was rivaled only by Chicago in size and reputation. The area also served as a strategic junction point in the nation's early railroad network and continues to do so.
Today the stockyards are gone, but what remains is perhaps the largest collection of unconverted turn-of-the-20th-century industrial warehouses of anywhere in the country. The Bottoms — so named because of its lowland location below the bluffs where the Missouri and Kansas rivers meet — straddles a bistate, urban borderland laced with miles of train tracks, salvage operations, and stranded riverfront. It is also home to some of the city's most iconic landmarks, including the monolithic Stockyards Exchange Building; the onetime modernist marvel, Kemper Arena; and the epic 12th Street viaduct. Despite major challenges, the area appears to be poised for a strong comeback after years of neglect.
Several push-and-pull factors are making that possible. Push factors include a red-hot urban housing market in KC and the filling up of closer-in urban infill sites, as well as expanding tech and arts scenes that are outgrowing their familiar havens in the city's Crossroads District.
There is also a dwindling supply of unconverted tax credit-eligible historic buildings in more established sections of the city. (Missouri's popular 25 percent historic tax credit program has been widely credited with fueling downtown Kansas City's redevelopment.) In a familiar pattern, the art and tech communities that remade a large portion of downtown — including the Crossroads District — using this and other tools are slowly starting to be pushed outward by rent pressure and a lack of readily available expansion opportunities.
Pull factors include an architecturally rich building stock, lots of edgy, postindustrial scenery, and a close-in location alongside a largely untapped urban riverfront. Additional factors include the much-anticipated redevelopment of the city's nearly abandoned 10-acre Kemper Arena complex located on the Bottoms' south end, and the relocation of the city's annual American Royal barbeque event which, although drawing thousands to the Bottoms every October, also tied up a lot of developable land for event parking. The redevelopment of this site presents a major opportunity to completely reposition the Bottoms in a rapidly transforming urban marketplace.
"The place completely reminds me of DUMBO 15 or 20 years ago," says Jeffrey Williams, AICP, Kansas City's planning director and a New York native, in reference to the transformed Brooklyn neighborhood that is now home to multiple tech companies and affluent loft dwellers.
"Like DUMBO in the early 2000s, it's still kind of a sleeper area but could reach critical mass overnight," he says. "The key to keeping it authentic is to maintain the mix of working industrial activities along with housing and commercial uses. Fortunately, the scale of the place, the particular building types, the infrastructure, and the way the main building groups are separated from one another lends itself to maintaining a significant industrial component."
He notes as evidence the Kansas City Port Authority's recent reintroduction of river barge traffic after many years of inactivity. The barges are being staged at a formerly dormant river terminal in the West Bottoms, which is intended to be converted into a small, rail-served intermodal facility. "This place was designed primarily to make stuff and to move stuff," he says. "We really hope to preserve some of that."
Urban planning or organic urbanism?
These events have spurred the tentative signs of a major revival as longtime property owners have haltingly announced reinvestment plans and the volume of real estate transactions has increased. Predictably, most of the newly discussed projects have centered on loft-style housing.
The boldest of these is a $45 million mixed-use project put forth by Indianapolis-based Flaherty & Collins. The project will include 203 units of market-rate housing along with 8,000 square feet of retail directly across the street from the Kemper. Another project by an unannounced developer contemplates the conversion of an entire square block of historic warehouses to a mix of high-finish microunits combined with street-level commercial.
Already complete is an ultraluxury 11-unit infill apartment building directly across the street from the Bottoms' landmark Stockyards Exchange Building. Meanwhile, miscellaneous art galleries, culinary venues, and pop-up event spaces are starting to sprout up on otherwise desolate streets. A formerly shuttered landmark restaurant with historic ties to the cattle industry has recently reopened.
At a more strategic level, a number of ideas to accelerate the pace of redevelopment have been floated: artisan maker spaces, an urban technology campus, an urban-ag zone, and youth sports hub among others. It has been suggested that the city's Planned Industrial Expansion Authority consider expanding or moving its popular Arts District tax abatement program into the Bottoms to redirect the expansion of the local arts community there. (The program offers up to 25 years of tax abatement to individual building owners who lease at least 51 percent of their space to arts-based businesses at below-market rates.) The city is also dealing with a lack of rent-subsidized business incubators to handle a growing cadre of cash-constrained start-ups. It has been actively prospecting for suitable buildings in the Bottoms that can potentially fill that role.
One of the more ambitious ideas out there (but one which has not yet advanced beyond the concept phase) is to position the Bottoms as a bistate urban innovation district to centralize the region's diffuse but growing technology sectors (particularly animal science, big data, and smart-city/civic tech).
Regionalists see the possibility for genuine cross-state cooperation (or at least a symbolic demilitarized zone) along the states' hypercompetitive shared border. Economic developers see it fulfilling a genuine need for a new generation tech park in a metro area currently lacking one. Making this happen will likely require one or more commitments from one of the region's major research institutions and municipalities on both sides of the state line. A lead champion, however, has yet to emerge.
Overcoming history
Whatever its niche, realizing the Bottoms' full potential will involve shaking off a stigma that has been attached to it for many years. In earlier times, the neighborhood was home to flophouses for scores of itinerant railroad workers, dive bars, meatpacking houses, and the occasional political machine clubhouse.
A major flood in 1951 decimated the district and set off a 50-year spiral of disinvestment. The 1973 addition of the city's Kemper Arena — erstwhile home of the former Kansas City (now Sacramento) Kings of the NBA and college basketball's Big 12 Tournament — did little to rejuvenate the area.
The term "bottoms" began to take on a whole new meaning in the 1980s when a minimum security prison-turned work release center was deposited there and junkyards multiplied. So while the regeneration of other classic warehouse districts in other cities is largely complete (or at least well under way), the Bottoms has languished. Until recently, there was no compelling reason to redevelop the area because of a surfeit of better redevelopment opportunities elsewhere in the city.
Today, a handful of local developers have acquired several key buildings and are positioning their properties to lure creative businesses. Outside developers have begun to sniff around, too — attracted by the city's new vibe and the apparent lure of unmined riches in the Bottoms.
Finally, this summer came the announcement that the city's signature event, the American Royal would decamp from the Bottoms, thus freeing up acres of mostly fallow real estate for more intensive, permanent use.
White elephant or golden opportunity?
Much recent speculation has focused on how the reuse or redevelopment of the barely used Kemper Arena could help drive new investment in the Bottoms. The first major U.S. commission of the renowned architect Helmut Jahn when it was built in 1973, the 19,500-seat Kemper has had a fraught history including a major roof collapse in 1978. It never spawned the hoped-for investment in the surrounding area, and its tucked-away location and surface parking buffer haven't helped. The completion of downtown's Sprint Center in 2007 made things even tougher for the fading arena.
In a page out of Houston's recent efforts to repurpose its better-known Astrodome, Kansas City issued a national developer RFP in 2015 to attract new interest. The timing of the RFP coincided, ironically, with the final bond payments on the property. The process elicited to two reuse proposals for the complex grounds, both from local Kansas City developers. One proposal was to repurpose the entire 10-acre arena complex into a major youth sports hub.
One of the sports hub's main supporters is Bill Haw Sr., owner of some 48 acres of property in the Bottoms including the Stockyards Exchange Building and the new 11-unit luxury apartment building. Recently quoted in the Kansas City Real Estate News, the entrepreneur and developer said, "The big objective for me is to create an environment here where young people with children can feel good about moving back to the core of the city. [H]ow cool would it be if those kids could walk to basketball or volleyball practice? Something positive can happen that will complement what we're doing in this neighborhood." Haw has plans to develop acreage he owns along the Kansas River for "family-friendly" residential use and active green space.
Bottoms up?
Despite very definite signs of revival, full-on redevelopment may not happen in the Bottoms until both Missouri and Kansas figure out how to fund major infrastructure improvements needed in the district. These costs are expected to reach into the tens of millions of dollars and likely won't be offset by new tax increments alone.
Aside from all-new streets, sewers, sidewalks and lighting, perhaps the most pivotal of these is major new flood-control measures within the Missouri and Kansas rivers watershed. Although significant levee improvements now fortify most of the Bottoms itself, the lack of adequate upstream flood control facilities renders it at least partially susceptible to catastrophic, 100-year floods. The total estimated costs of flood control improvements systemwide could reach $500 million.
And then there are the trains. The main lines of no fewer than five Class A railroads intersect in or near the West Bottoms causing a ramble — and noisy rumble — of train traffic slicing through the district at all hours and from all directions. These trains will not go away anytime soon and could in fact increase depending on the vagaries of global trade. The need for major soundproofing, new grade crossings, and other safety measures may also drive up redevelopment costs beyond a level that could be supported by the local market.
Somewhat ironically, though, local efforts to secure federal funding for flood control in the area — to prevent disruptions to national rail service — could be key to the district's continued transformation. Then there are the self-styled urbanistas and resident maker-entrepreneurs who see the trains as part of the Bottoms' history and its ambiance. In their minds, the trains offer ballast against full-on gentrification.
Meanwhile the area has attained maximum "in" status as an alternative arts and shopping venue thanks to the rising popularity of First Fridays, a monthly arts open house and block party that draws hundreds. There is growing clamor to see this become a more permanent fixture.
To some, this is proof that the Bottoms has made the transition from being a forgotten place to the center of an emerging scene. With some shoring-up here and there, it could see torrents of a very different kind.
Greg Flisram is the senior vice president of land development with the Economic Development Corporation of Kansas City.
Resources
Crystal Balls: Startups and the Future of the App Economy: The Economist Intelligence Unit's latest documentary explores three rising digital ecosystems around the world, including Kansas City. The film provides new insights and gives guidance on how to further integrate technology in governance, business, and the economy. youtu.be/IHRFpIA3CI8
Kansas City's Living Lab: The premise is simple: Where a "problem or challenge" exists, or one is anticipated in the future, the lab will seek out the best emerging technology solutions that can be fine-tuned, tested, and ultimately validated prior to full-scale commercial deployment. youtu.be/4Y9FL55Tsfs