The Young Entrepreneurs_lowres

Idea Village CEO Tim Williamson says the entrepreneurs and businesses his group has worked with since 2005 have created more than 1,250 jobs - and are poised to hire even more people.

Three years ago, Leslie Jacobs initiated 504ward, an organization "dedicated to retaining young talent in New Orleans." For Jacobs, the issue is personal. "What prompted me to start 504ward was watching what was happening with my daughters," Jacobs says. "They felt they'd never come back, but they did, and some of their friends moved here as well. I hired a consultant group, we did six to nine months of planning, and that's how it started."

  In the wake of Hurricane Katrina and the federal floods, New Orleans became a magnet for educated young adults looking to make a difference. Many came as volunteers, but those who stayed created a network that has attracted an influx of young adult professionals. This brain gain, according to U.S. Census figures, is substantial. In 2000, 26 percent of adults 25 and older in New Orleans had a college degree. In 2010, that number jumped to 33 percent. Forbes also has taken notice; the magazine recently ranked the New Orleans-Metairie-Kenner metro area as America's biggest "brain magnet" (its term for "the smartest cities of the future").

  Though academics and city officials have yet to measure how many young adult newcomers there are (and how many have actually stayed in New Orleans), there is clearly a critical mass. Teach for America, for example, has 400 core members in the New Orleans area this year, in addition to the 650 alumni who never left. Sixty percent of the Young Leadership Council's (YLC) 1,500 members are not from New Orleans. 504ward has 7,200 members, 70 percent of which are newcomers to the city.

  So far, the general outlook is one of optimism, evidenced by the hundreds of tech startups and social entrepreneurial ventures created by newcomers and natives alike. There are signs, however, that a vision for mass retention of the educated young adult population, particularly the newcomers, may not align with New Orleans' economic reality.

One significant issue is the local job market. As the Associated Press reported in August, New Orleans gained 13,700 non farm jobs over the past 12 months — 13,300 of which are in the service-providing sector. YLC executive director Amy Collins says the nature of the marketplace is an important factor.

  "Our mid-sized economy is mostly composed of small businesses and social enterprise, not giant corporations," she explained. "It's a good thing right now because you don't have one big employer who's suffering, but that also makes things more unstable because you're going to live and die by small companies, which are in a constant state of adaptation."

  The Idea Village is a nonprofit startup incubator whose stated mission is to "identify, support and retain entrepreneurial talent in New Orleans by providing business resources to high-impact ventures." Its cofounder and CEO Tim Williamsondoes not see this as a challenge.

  "Since 2005, we've worked with 1,006 entrepreneurs, and they have created about 1,000 jobs as a group," Williamson says. "Fifteen of the companies we work with are in hyper-growth, meaning they're seeing upwards of $5 milion dollars in sales. Also, 13 companies that we have worked with have hired over 250 new people [total] in the last 12 months and have plans to hire another 167."

  Williamson also cites the increase in applications to its educational and developmental acceleration programs.

  "The new entrepreneurial season started in July, and applications are up 83 percent from last year so far," he says. "This time last year, we had 195 applications, and as of October 2011 we have 407."

  These entrepreneurs, however, are not necessarily hiring newcomers. In fact, it seems the more well-established startups are composed mostly of people who were living in New Orleans before Katrina. Dukky, a social media marketing company founded in 2008, employs six "natives" and one newcomer. Out of the 48 employees at TurboSquid, a marketplace for 3-D models founded in 2000, only 13 are newcomers. Carrollton Technology Partners, which moved from New York City to New Orleans in 2000, has 27 employees and only three newcomers. The Receivables Exchange, an online marketplace for accounts receivables founded in 2007, has 58 employees in its New Orleans office. Many, according to spokesperson Bob Leahy, were born here.

  Tech startups are not necessarily looking to hire in large numbers either. Software developer Susco Solutions plans to add four positions, and founder and president Neel Sus says he expects three out of those four will not be from New Orleans. Audiosocket, a music licensing and technology company, will hire three to five employees in the next few months, and CEO Brent McCrossen says he is "looking locally where I can." The New York Stock Exchange recently acquired a small stake of ownership in the Receivables Exchange, which also plans to increase employment. Whether those jobs are in New Orleans, New York, or at a potential office in California remains to be seen.

  Even though the Idea Village has been successful, startups are extremely high-risk ventures. "Out of those entrepreneurs that we've worked with, I would say around 30 to 40 have gone out of business," Williamson says.

  KODA, for example, was an Internet recruiting company founded in 2008. In April, CEO Jeff Berger shut down the business, which had offices in New Orleans and San Francisco, and moved to New York City to pursue other entrepreneurial opportunities.

  Still, entrepreneurs are clustering to build and sustain the local momentum. Social Entrepreneurs of New Orleans is a professional association that supports established and emerging ventures by connecting them with a network of mentors and experts. Headed by Andrea Chen, the organization currently has 10 fellows in the first round of its new accelerator program, which provides pro bono professional services and paid consultations.

  Chen says the educated young adult demographic is particularly drawn to social enterprise. "Nationally, there is something about this generation that is really pushing the envelope and looking for ways to solve really critical problems we face, and I think that's because the problems we face are so scary," she says.

  Collaborative workspaces like the Icehouse, Entrepreneur's Row, the IP, and Launchpad also have become a large part of the local entrepreneurial community. The low-risk setup at Launchpad, which houses 75 businesses, reaches out to young adult talent. Tenants pay rent monthly, and they can choose to rent a co-working desk, a permanent desk or a private office. Amenities include access to Wi-Fi, printers, phones, conference rooms and a gym.

  "The idea is that getting a business off the ground is hard, and doing it in an environment with other entrepreneurs accelerates the process for some people and increases chances for success," says co-founder Chris Schultz, who runs several software companies from New Orleans. "The basic premise is that there's a huge gap between working in a coffee shop or in your back bedroom and what it takes to get a traditional commercial leap, and it can be very difficult because there's nothing in between."

While Launchpad has found success providing an instant social network and support system for young entrepreneurs, similar efforts geared toward young adults who hope to find jobs in other sectors have not been as successful.

  The challenge of keeping up with demand, says 504ward executive director Jessica Shahien, has caused a shift in programming. "At 504ward, we initially focused on the one-on-one connection, on matching up young adults with mentors, but we can't get to people fast enough," she says. "You want to find the right match, so scaling that has been a challenge. We never thought we'd plan many events, but we hosted a business competition, and next thing you know we're doing an annual dine-around where community leaders open up their homes to 500 people in one night."

  Connecting talent to industries and jobs is a problem that Greater New Orleans Inc. (GNO, Inc.), an economic development agency, inherited. According to executive vice president Robin Barnes, GNO, Inc. recently acquired WorkNOLA, a jobsite for educated young professionals looking for work in New Orleans, from 504ward. "504ward is enormously strong in outreach to job seekers and young professionals nationwide, but it was a challenge for them to get jobs posted on the site," she says.

  WorkNOLA was the brainchild of Nathan Rothstein, who co-founded Young Urban Rebuildng Professionals (YURP), one of the city's first post-Katrina groups geared toward young entrepreneurs. In 2009, Rothstein closed YURP and left New Orleans to attend graduate school at Brandeis University. Last year, he left Brandeis and founded Swellr, an education startup in Boston. Rothstein has no immediate plans to return to New Orleans.

  Though there are more than 1,300 jobs currently listed on WorkNOLA, Collins says she has noticed a disturbing trend. "You're starting to see service-oriented jobs trickle into WorkNOLA, so I see that it could become just like The Times-Picayune [website] where highly talented workers are really having to weed through to find high-talent jobs," she said.

Even if educated young professionals are able to make connections and find jobs, money and career mobility remain significant issues in New Orleans.

  "People who have jobs here reach this cap in their salary and say to themselves, 'If I did the same thing in Atlanta or Houston, I could be making a lot more money,'" says Lauren McCabe, who works for Zydeco Media, a new startup that aims to be a social media agency for restaurants. "That's the point where people decide either to leave or to stay."

  University of New Orleans professors Marla Nelson and Renia Ehrenfeucht of the Department of Planning and Urban Studies discovered that the "lack of possibility for advancement" also determines who stays and who leaves.

  In 2009, Nelson and Ehrenfeucht surveyed 80 locals between the ages of 25 and 40. In a paper presented at the 2010 New Orleans Political Economy Symposium, they reported, "Many felt they would have to leave New Orleans to progress professionally, and high quality of daily life would not supersede career options."

  Nelson says this applies especially to those in the nonprofit sector.

  "New Orleans has a level of attraction, but knowing a lot of people in the nonprofit realm, if you don't have that really dense job network, it's hard to move up," she says.

  The YLC's Collins agrees and adds that the window of opportunity is closing for retaining young professionals.

  "You can only enjoy New Orleans so many years in a row without having the job you aspire to," she said. "We're past the five-year mark, and the window of opportunity is very narrow. If we can't integrate these people en masse into the New Orleans workforce, they're going to start leaving."