BUSINESS

The location of startup companies is a key indicator of innovation, entrepreneurship, and economic growth. A new map identifies the clustered locations of software companies founded in the past decade that have reached billion-dollar valuations. (The Atlantic CityLab)

Match up the “Startup Cities” map with our own map of Internet use. See any similarities?

Discussion Ideas
Familiarize yourself with this fascinating interactive map, the one the CityLab article talks about. It provides data on software companies founded in the past decade that are worth more than a billion dollars. Use these questions to start navigating. Use the short menu on the left-hand side, and the list of the 140 startup companies on the right.

• What is the leading sector among the new billion-dollar startups?
  • Enterprise apps. Enterprise apps are computer software used to serve the needs of organizations rather than individuals. Your school’s email system or accounting program are enterprise apps. Leading producers of enterprise apps include HP, Microsoft, and Oracle.

• What region has created the most gaming startups?
  • Asia produced half (7) of the 14 most recent billion-dollar gaming startups in the world.
    • Singapore
      • Garena, a “platform provider for online and mobile entertainment and communication.”
    • Japan
      • Gree, a “mobile social company with businesses that include social gaming, social media, advertising, licensing and merchandising.”
      • Colpol, a pure gaming company.
    • China
      • Yozu Interactive, a “developer of online and mobile games.”
      • Perfect World, “an online game developer and operator.”
      • Ourpalm, a developer, operator, and publisher of mobile games.
      • Changyu, a “developer and operator of online games.”

• Only one education-based startup is on the list! What is it and where is it located?
  • Chegg is a Silicon Valley (California, United States) startup that “specializes in online textbook rentals, homework help, scholarships, course reviews and internship matching.”

• What is the newest startup on the map to join the billion-dollar club?
  • Oculus VR, which develops “interface software for the cloud-based gaming industry.”

Now dig deeper in the CityLab article with these questions about “startup cities.”

• What is a startup?
  • A startup is just what it sounds like—a business that is just “starting up” and looking for funding (capital) to build its infrastructure, and customers to sell its goods or services to (markets). The term “startup” is often used with new tech industries, although it could apply to any business.

• The data in the map focuses on tech startups that have “gone public.” What does it mean for a startup to “go public”? Click here to read about one recent tech startup going public.
  • It means that the company will start selling shares of itself to the general public. These shares can be bought and sold on stock markets. Shares of Facebook, for example, appear on the NASDAQ stock market under the symbol FB.
  • Prior to “going public”, a startup is private. That means that it is owned by investors—individual people or companies. Before to going public, for example, Facebook was owned by individuals such as co-creator Mark Zuckerberg, and company investors such as Microsoft.

• The CityLab article says many startups depend on venture capitalists to grow. What are venture capitalists?
  • Venture capitalists are businesspeople who invest in startups. VCs provide funding and business guidance to startups in return for financial equity (some amount of ownership) in the company. Venture capitalists are taking a chance on startups, hoping the company will become profitable enough to repay their initial investment and make them more money.

• The CityLab article says China is “no longer the world’s factory.” What does this mean?
  • In 2010, China surpassed the U.S. in terms of value-added manufacturing—factories that produce actual physical goods. China is still the world’s leading manufacturer (see page 3), followed by the United States, Japan, Germany, and South Korea.
  • China’s growing software startup sector may mean that it is moving from manufacturing goods to creating services (such as e-commerce sites, social media platforms, or games) for consumers.

• The CityLab article says successful startups are key indicators of a region’s “innovation, entrepreneurship, and economic growth.” Are there any negative impacts of “startup cities” or suburbs?
  • A concentrated area of financial success creates a huge “income gap.” Venture capitalists and successful entrepreneurs can make millions and even billions of dollars. This may drive up the prices of homes and consumer goods in the area, making it difficult for teachers, police officers, or retail employees to live in the region. Click here to read about how this issue is impacting Silicon Valley.
  • In the United States, the tech industry is not demographically diverse. Click here to read about “What It’s Like to Be Black or Female in Silicon Valley.”

TEACHERS TOOLKIT

The Atlantic CityLab: The New Geography of Super-Charged Startup Cities

Nat Geo MapMaker Interactive: Internet Users

Atomico: Billion dollar+ software companies founded since 2003

Nat Geo blog post: Alibaba, IPO