Next week will mark the 10th anniversary of a dark chapter in New Orleans’ long and storied history, when Hurricane Katrina devastated the city and the surrounding area. Now, a growing startup community is hopeful the city will soon be known as a center for new and innovative businesses.
“I think, by 2018, there’s an opportunity for New Orleans to be viewed around the country, around the world, as a hub of entrepreneurship for the South,” says Tim Williamson, the CEO and cofounder of incubator The Idea Village, referring to the year the city will celebrate its 300th anniversary.
That would have been hard to imagine in 2005, when the storm flooded 80% of the New Orleans and cut its population by more than half, while leading to the deaths of more than 1,800 people across the Gulf region.
But after the floodwaters receded, lifelong residents and newcomers from around the country organized to piece the city back together: rebuilding houses, clearing debris, and even restoring street signs, says Andrea Chen, executive director of New Orleans social entrepreneurship incubator Propeller.
“I lived here before the storm, and there was just not a lot of energy around entrepreneurship and problem solving,” she says. “A lot of that changed after the storm, and a lot of that was out of necessity.”
As the city rebuilt, Chen and her cofounders sought to preserve that energy, creating what would become Propeller. Today, the incubator operates a 10,000-square-foot coworking space and offers an accelerator program for startups focusing on problems to do with food, health, education, and water management. It also offers a variety of Crescent City-focused tech programming, like a class on building Arduino-powered Mardi Gras costumes.
One Propeller-backed company, called Clear Health Analytics, uses statistical techniques to help people pick health insurance plans. Another, the VEGGI Farmers Cooperative, has helped fishermen from the city’s Vietnamese community shift to growing local vegetables after the 2010 BP oil spill contaminated the Gulf of Mexico.
“A lot of people already had outdoor gardens—it was something that was part of the culture,” says Chen, explaining that members of the cooperative now sell produce to high-end restaurants around the city.
But while those kinds of turnaround stories are now growing common, the years before Katrina had been marked by pessimism in New Orleans. Problems like crime, political corruption, and a slowly shrinking economy had just seemed intractable, and many talented residents felt they had no choice but to seek their fortunes elsewhere, says The Idea Village’s Williamson, a native of the city.
“In my lifetime, we grew up thinking we could never win,” he says. “We could never succeed.”
But as the city came together to rebuild, long-term residents and natives returned to help with rebuilding efforts began to feel more empowered to change the status quo, he says.
“Because of Katrina, people started to reframe about who we are and how we do things—maybe we can solve our own problems,” he says.
At the same time, the rebuilding efforts brought newcomers to the city, including many with an entrepreneurial bent and a love of the city’s unique culture.
“After Katrina, New Orleans became the leading Teach for America city in the country, so you have a lot of very smart people moving down to become teachers through the Teach for America fellowship,” says Chris Schultz, cofounder of the coworking space and startup community Launch Pad. “A number of them became entrepreneurs.”
That’s led to a number of growing New Orleans startups in educational technology—like Kickboard, which builds analytics tools to track student performance and got its start at Launch Pad. Some Teach for America participants even went on to start companies in other fields, like Brian Bordainick, the founder of Dinner Lab, which puts together chefs, hosts, and diners for one-night pop-up restaurants around the country.
Bordainick says his company has benefitted from one advantage New Orleans has over more established startup hubs like New York and the Bay Area: significantly cheaper costs for housing and office space.
“The startup costs were a lot cheaper,” he says. “We were able to make a pretty small investment last a long way.”
Michael Hecht, the CEO of economic development nonprofit Greater New Orleans Inc., estimates a business can save 30% to 40% in overall costs by starting in New Orleans rather than New York or San Francisco. He’s also seen housing cost savings help companies from startups to giants like General Electric woo new technical hires from out of state.
“it’s been our experience, that we’re pleased to see that if people from New York, from San Francisco, from Chicago are offered the chance to get a good job with a company in New Orleans where their dollar goes 30% further, and they can have a much greater quality of life in general, almost everybody says yes to that opportunity,” he says.
Louisiana also offers tax incentives for angel investors and software businesses in the state, but many acknowledge raising larger levels of capital in New Orleans can still be harder than in Silicon Valley.
“I think that there’s no doubt that being in New Orleans as a CEO or [in] business development, you are going to need to be on a plane,” says Schultz. “If you’re in San Francisco, you can kind of walk down the street, there are VCs everywhere, you can kind of take a lot of meetings very easily.”
Fundraising may become easier if and when New Orleans has a big enough tech company get acquired or go public, suggests Bordainick. That could create a class of millionaires looking for new startups to back, just as Microsoft’s success helped make Seattle a tech hub, and Dell’s IPO helped establish Austin’s tech industry.
It’s unclear, though, if the city currently has the infrastructure to support a new employer on a Microsoft or Dell scale: Housing prices have already risen dramatically since Katrina, leading to widespread debate about gentrification. While rental prices are still significantly lower than in the big coastal cities, so are many paychecks outside tech and other high-salary industries, and public transit advocates continue to argue officials haven’t done enough to restore service cut after the storm.
Still, Hecht argues, a growth-driven housing crunch might be a better alternative to the slow stagnation he says the city saw not long ago.
“The fact that you’re going to have these growing pains is in some ways a good thing, because that means you’re actually growing,” he says.