Hebron, Ky., Is a special place as the ground zero for the latest tech push into America’s heartland, but Amazon Air, the e-commerce giant’s cargo airline, operates an 800,000 sorting center. square feet here. .
The $ 1.5 billion air hub, occupying 600 acres along the southern border of the Cincinnati / Northern Kentucky International Airport (CVG), will eventually handle enough cargo to fill 75 to 100 flights a day. a few years ago, Brian Cobb, chief innovation officer at CVG, said. Amazon said it was not discussing its future plans, but that the facility would create more than 2,000 jobs and operate 12 daily flights by the end of this year.
“This hub will allow us to get packages to customers faster,” Amazon founder Jeff Bezos said at the groundbreaking ceremony at CVG in May 2019. “It’s a big deal. . “
“The airport is one of the best startup labs in the country,” Pete Blackshaw, managing director of Cintrifuse, an organization of startups and entrepreneurs, told MarketWatch. “It’s redefining [Cincinnati] as a great way to supply.
In addition to a tax deal with local authorities, Amazon was drawn to Hebron because of the land available and an airport undergoing modernization. CVG deploys autonomous vehicles to move luggage; the fleet is managed via a 5G network. Sensors manage the cleanliness of the bathrooms and a tram system that shuttles between the terminals and baggage claim. “We’re trying to build a micro-smart city here,” Cobb said.
One hundred miles northeast, in New Albany, Ohio, data centers have sprouted up in the middle of the state for Amazon, Facebook Inc. FB,
and Google’s parent company, Alphabet Inc. GOOGL,
The region is a hub for the physical Internet infrastructure upon which billions of people depend.
Google, which operates a $ 600 million data center in New Albany, has announced plans to invest an additional $ 1 billion in the region. The company will also purchase more than 600 acres in Columbus and Lancaster as potential future data center sites. Google received $ 54 million in tax breaks from Columbus City Council to build the data center, which will bring 20 jobs.
The growing appeal of a small town in the United States, especially Ohio, to tech giants comes down to one mantra in real estate: location, location, location. About 60% of North America’s population is within 500 miles of Cincinnati; CSX Corp. CSX,
operates one of the largest rail yards in the United States in Queen’s Town; and the EPA’s second-largest research center is in Cincinnati.
“Cincinnati is close to everything. It is a physical distribution center by air, road, river and rail, ”said Mike Venerable, Managing Director of CincyTech, which has a portfolio of more than 30 startups in the digital, healthcare sectors. and food.
Equally important, a favorable business climate attracts Big Techs with unregulated legislation and tax incentives. In early 2017, the Kentucky Economic Development Finance Authority granted $ 40 million in tax incentives for Amazon’s CVG project on condition that Amazon creates at least 600 new jobs in Boone County. A lot of space became available for Amazon after Delta Air Lines Inc. DAL,
abandoned CVG as a hub for Detroit.
“Ohio is working hard to be very business friendly” with bills that minimize regulation, John Navin, professor of economics at Ohio Northern University, told MarketWatch. The Republican-dominated state legislature, for example, has pushed for bills that give businesses great leeway with COVID / vaccination / mask rules to facilitate management and operation.
A small but prosperous tech community
To be sure, Ohio’s tech scene – albeit growing – is about the size of a large Silicon Valley employer. Cincinnati, Cleveland and Columbus have about 125,000 high-tech workers, compared to 373,000 in the San Francisco Bay Area, according to regional employment research. Indeed, in its “Tech Talent Scorecard Ranking” of the top 50 American markets, CBRE places Columbus at n ° 31, Cincinnati at n ° 42 and Cleveland at n ° 44. By comparison, Salt Lake City is # 18 and Milwaukee is # 49.
According to a CBRE analysis in April.
Cincinnati has taken advantage of its location and business-friendly environment to compete with other areas such as Indianapolis, Nashville, and Austin, Texas.
“We’re about a decade behind [Pittsburgh] in technology, but we have a more diverse economy, ”said Venerable, pointing to the head office of Procter & Gamble Co. PG,
and Kroger Co. KR,
in Cincinnati, as well as the prevalence of insurance companies, banks, supply chain companies, manufacturing facilities, healthcare companies, and digital media startups.
“Big business is about to redefine itself” through technology, says Blackshaw. “There is a symbiotic need between their needs and our stable of startups that could change everything. “
Two local examples highlight the marriage of Fortune 500 companies and startups: medical wearable device maker Enable Injections Inc., which developed a yo-yo-sized gadget to make it easier to inject drugs into the body. using a small needle, and 80 Acres Farms, a friendly grower of lettuce that is grown and harvested indoors without soil, with minimal water and under pink-purple lights.
Enable’s enFuse device, which can be affixed to the patient’s body and dispenses medication while the subject performs their duties, could be a breakthrough in a potential $ 1.2 trillion market by 2030 He plans to increase production of the device to millions in a few years. Among its business partners are Genentech, a subsidiary of Roche Holding ROG,
and Eli Lilly & Co. LLY,
Enable has partnered with Flex to mass-produce their product.
High-tech plant plant 80 Acres Farms, whose produce is sold through Amazon’s Whole Foods Market Inc. and Kroger, not only changes the way plants are grown, but also streamlines the complicated system of production, pricing and pricing. food distribution in the United States, according to Mike Zelkind, a former executive of a food company who is the CEO of 80 Acres Farms. More importantly, it eliminated the so-called food miles in transporting produce by truck and train across the country.
What is happening in Cincinnati is happening in other cities in the heart of the country, a result of being near major intersections for transportation hubs and Internet infrastructure; a realization by older and more established Midwest-based companies that they must partner with high-tech startups to innovate; and a consequence of the pandemic and its profound impact on the workplace.
Freed from the need to work from a desk, pandemic-era workers have been freed to work from anywhere, creating a distributed workforce.
“Now you can work for the best job and live for the best life,” says Phil Libin, CEO of All Turtles, an artificial intelligence startup studio. In December, he left San Francisco for Bentonville, Ark.
“I just wanted to leave San Francisco. It got pretty nasty: the forest fires, the crime, the whole vibe, ”says Libin, the founder of app maker Evernote Corp. “Once I could work from anywhere, the risk-reward just wasn’t worth it. “
Libin did not intend to stay in Arkansas for long. The plan was to stay a few months, then go to Boulder, Salt Lake City and Japan. But he stays in town where Walmart Inc. WMT,
is headquartered because of the quality of life and affordability.
“This is the kind of thing possible and accessible now for a few million people, in fully distributed businesses, ”he said. “Our employees are everywhere. Two-thirds of All Turtles employees have left San Francisco in recent years.
There is a special nickname for Ohioans who return to Buckeye State after periods of work elsewhere. “We call them Boomerang Buckeyes,” Chris Berry, president of OhioX, a nonprofit dedicated to helping make Ohio a leading tech hub, told MarketWatch.
Chris Bergman had a front row seat. He grew up in Cincinnati, spent time on the East Coast, and returned to his hometown to launch Gylee Games in 2019. Video game development studio Ra Ra Boom! is due next year. “There is a maturity of funds. We see a generation of entrepreneurs here, and most of them stay, ”says Bergman, who, like others, emphasizes the spirit of collaboration rather than competition in the Midwest.
VC Venerable, raised in Hamilton, Ohio, worked for 15 years in the Washington, DC area before returning to his home state in 2004 to raise a young family.
“A standard of risk is developing in the Midwest,” said Venerable, whose investment portfolio includes “thoughtful companies that address big issues” such as healthcare and climate-friendly food production. “We believe in leading thinkers. “