Pittsburgh’s mayor on the city’s startup community and the difficulty of attracting venture capital

Bill Peduto discusses robotics, climate change and the impact of Covid-19

This week, TechCrunch is turning its spotlight on Pittsburgh, Pennsylvania with interviews, profiles, and an event featuring the outgoing mayor, CMU’s President, and local startups.

The Rust Belt city has spent much of the past decade working to shed the image that arrived in the wake of the deindustrialization of the 1970s and 80s. Courtesy of world class universities like Carnegie Melon and the University of Pittsburgh, the Steel City has transformed itself into a vibrant startup ecosystem and a world class environment for robotics, AI, autonomous driving and other high-tech companies.

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Ahead of tomorrow’s event, TechCrunch spoke to Bill Peduto, who has served as Pittsburgh’s Mayor since 2014, a role that has involved overseeing much of that transformation. The Mayor spoke on his efforts over the past half-dozen years, which will culminate in January when he leaves office.

Peduto will also be speaking at our City Spotlight event Tuesday, June 29, 2021. He’ll be joining Karin Tsai, director of engineering at Duolingo, and Carnegie Mellon University President Farnam Jahanian. Register for the free event here.

TechCrunch: What are the biggest initiatives that the city government is doing in order to really help foster the startup community?

Mayor Bill Peduto: We’ve been a partner throughout the past seven years, whether it was with the autonomous vehicle industry, the expansion of robotics or artificial intelligence, predictive analytics, we have engaged directly with the startup community, got them involved in city government and also opened up and provided access to public right of ways in order to see those industries expanding. Working with our universities, we’ve been able to recruit international companies to Pittsburgh: Bosch, Tata, Google, Facebook, Intel, Amazon. They have provided parallel advancements in the tech industry. Pittsburgh has become an innovation hub that people will come to not just for one job but because they know there is opportunity to advance in their careers here in specialized fields.

Many of these companies are coming out of CMU, in industries like robotics, automation and self-driving cars. What is your sense of how varied and diverse the startup community is. What is the breakdown of robotics and automation on one side and all of the other tech categories on the other?

I would say that the robotics and autonomous industries have positioned themselves much more visible on the global stage. But the other industries – especially within the startup industry – are competitive for a share of Pittsburgh’s economy. Obviously the partnership we created with Uber, Aurora and Argo AI – they all garnered attention as Pittsburgh became the first city in the world to have autonomous rideshare. But the fact is that CMU had already been testing their vehicles on our streets for a decade before. We became a city that was one of the first to be able to expand upon that. The competitive advantage that we have here is we don’t have to draw the talent here to build out the industries. We produce the talent.

It seems like there has historically been a problem keeping the talent in Pittsburgh. People often move themselves or their companies to a New York or Silicon Valley. Has that shifted? What initiatives have to made to ensure that people not only come to Pittsburgh, but that they stay in Pittsburgh?

It’s incumbent upon local government to create an environment where people want to live. Quality of life matters and is a key indicator in building out a 21st century urban economy. All the different amenities that we add into city government matter. People want to live in a place that provides them with opportunities that don’t involve being at home or being at work. They want to have a place that has free and plentiful open spaces and areas that they can enjoy. Young people want to be around other young people. For decades, Pittsburgh lacked all three. It was a direct result of deindustrialization and disinvestment. We’ve worked very hard as a city government to build up all three and support locally built companies, whether they’re restaurants, stages or theaters, as a critical part not only of the arts and culture of the city, but also as a critical part of our economic development strategy.

I recently spoke to some startups around Detroit and it was kind of a mixed bag when it comes the legacy of having had the automotive industry based in the city. In 2021, what benefits are there to being a legacy industrial city as it pertains to building a startup ecosystem.

It depends on the company itself, not simply the industry. There are companies that have been around for over 100 years that are some of the most cutting edge within our city. They’ve diversified their portfolios and recognized the direction the world is moving and they have decided to become a competitive part of it. Other companies are more reliant on their success in the past as a model of their future development. As you look at cities like Pittsburgh and Detroit, you understand that their industrial past is something they take great pride in and they build of off.

Is there a sense when speaking to fossil fuel companies that they see the writing on the wall when it comes to pivoting to something more green?

Again, it doesn’t get defined by industry. It’s defined by company and, in most cases, CEO. In many cases in Pittsburgh, absolutely, yes. Everything from the creation to the transfer of energy, long established companies are looking to find a way to put Pittsburgh on the map when it comes to transferring to green hydrogen. The leaders in this are not just the universities, but the companies that have been long established in gas and, in some cases, oil.

What is your sense of how long term an impact Covid-19 will have when it comes to decentralizing some of these tech communities.

You used the exact term. I believe that post-Covid will be a decentralization from the coasts to the cities that have been able to create an environment where they would want to locate. When we’re looking at competition, we’re looking at Charlotte, Austin, Nashville. We’re putting ourselves up against those cities and what they can offer to the startup industry. We’re not as much concerned with the New Yorks and the San Franciscos – or even the Bostons. What we see is that we can be highly competitive against any other area that has research and development that is fueled by the education and medical industries.

What is the biggest hurdle when it comes to being an entrepreneur in Pittsburgh? And what are you doing to help address that?

I think the biggest hurdle remains access to venture capital, especially in this stage. I think we’ve been able to convince investors from the coast that the companies don’t need to leave Pittsburgh in order to be highly successful and see their investment pay off. However, I believe if we had more venture capital arriving here to help to take early stage companies into that critical next stage of expansion, it would build off itself and it would excel growth in all of the industry cluster, significantly.

Specifically what is the city doing to attract the attention [and money] of venture capitalists?

It’s more a partnership with the established intitutions like universities and hospital and our local VC community that have been at the forefront. The city provides the critical backing. I should also mention our corporate and philanthropic communities are also key partners, as well. Working together, we created the Pittsburgh Innovation District. It was a direct results of the Brookings report that came out a few years ago. It is a structural partnership between the city and county government, the philanthropic community, the universities and the UPMC. It is created not only to recruit startup companies, but also to recruit the funding and to be partners in the funding of our startup community.