Can Cleveland Become the Next Tech Hub?

Less than five years ago, Bernie Moreno was happily running a national network of high-end
car dealerships.

Fast-forward to now. Moreno has traded the auto retail business for an unlikely new act—as the head of Ownum, a blockchain venture that’s redefining the way public records, such as birth and death certificates, are digitized.

And the unlikeliest part of all? He’s doing it in Cleveland.

Bernie Moreno at the Blockland conference, held in Cleveland.
Bernie Moreno at the Blockland conference, held in Cleveland.

Some of Ohio’s smartest people laughed at the idea of ditching auto sales for a technology startup, Moreno recalls. “Cleveland is the worst place to start a tech company,” they’d tell him. There was the perception that Silicon Valley and New York would remain the epicenters of American tech and investment. And many felt there was no money in Cleveland—and that it lacked an educated workforce for high-skilled tech jobs.

But Moreno forged ahead, expanding Ownum beyond its initial focus on digital car titles and establishing the Blockland conference to attract some of the world’s top blockchain minds to Cleveland.

Now comes another bold move: a bid to convert one of downtown Cleveland’s most prominent buildings—The Avenue Shoppes at Tower City, owned by Bedrock, part of Cleveland Cavaliers and Quicken Loans owner Dan Gilbert’s family of companies—into a “virtual mall of tech entrepreneurship.” The multimillion dollar proposal would turn the 350,000-square-foot, mostly empty shopping mall into an entrepreneurial ecosystem unlike anything else in the country, focused primarily on minority entrepreneurs. Moreno faces skepticism from the coasts and locally. “We have to get people here to think bolder, and differently… and to take more risks,” he says.

FirstEnergy Stadium in Cleveland
FirstEnergy Stadium

Crucially, the city government is 100 percent in support.

Every city wants to position itself as a home for the young, hip and business-minded, and many have tried. But true success requires setting realistic expectations of what it means to become an entrepreneurial tech hub. It means shedding the pessimism that has understandably dimmed some of the city’s ambitions for decades. Trust, inclusion, equity and shared prosperity must be top-of-mind for all stakeholders. Cleveland has a remarkable opportunity to set a new narrative on this front.

Progressive Field in Cleveland
Progressive Field

The city boomed after World War II, with manufacturing jobs that attracted a stew of white workers from Europe and Appalachia and black people from the South. But like other midwestern cities—such as Detroit—Cleveland withered during the 20th century’s second half, in part because of a middle-class exodus to the suburbs. It made headlines for all the wrong reasons: high crime, excessive taxes and balkanized politics.

Cleveland’s current renaissance began in the mid-1990s. The city focused energy on its downtown core, realizing that as the city’s living room, it was critical to attract new energy, residents and financial activity. It needed a marquee tourist attraction, and with the help of visionary civic leadership, the Rock & Roll Hall of Fame and Museum opened in 1996. Three new sports stadiums were built, plus major hotels. By 2006, Frank G. Jackson was elected mayor, and he set ambitious strategies to accelerate his city’s revival. For example, he set a goal to attract 25,000 new downtown residents and 25,000 workers within a decade. Soon vacant factories and warehouses were converted into sleek lofts and high-rise condos. Now, officials happily boast there’s a downtown housing shortage. Given the Cleveland Clinic’s role as one of the world’s top healthcare institutions, another plan repositioned the region as a health-innovation hub. A sparkling convention center was built downtown, just blocks from the stately city hall.

Cleveland's new convention center
The new convention center, downtown

The mayor also knows that tech innovation is more likely when the government serves its citizens. That’s why he hired a chief technology officer to drive innovation, from the city’s municipally-owned power plant to its airports and its police force. Things were so bad before that police reports were handwritten and literally walked desk to desk. Some city workers even lacked email.

Early on a recent Tuesday night, the Marble Room, one of Cleveland’s most expensive restaurants, buzzed. Young couples sipped martinis and ate sushi at the bar. In one corner, a lawyer boasted about his high-rise condo’s Lake Erie views, noting it was only a five-minute walk from his office and local grocery, at a fraction of what the space would cost in Manhattan or Washington. The restaurant occupies two floors of a nearly century-old Beaux Arts bank building, in Cleveland’s first steel skyscraper, lined with art from the around the world. No expense was spared in the building’s renovation—in fact, the massive basement vault has been turned into a private dining room. But in many ways, the scene in the Marble Room represents the new, younger money the majority-black city aims to attract.

If Cleveland’s revival and bid to become a tech hub is to succeed, some of the new energy must spread to current residents of historically working-class neighborhoods like Glenville, far from downtown.

Tower City

Michael Jeans is working to make that happen. Jeans grew up in Cleveland, then spent two decades in financial services. In 2014, he created Growth Opps, a firm aiming to expand access to financial opportunity. One result is a $50 million equity fund explicitly focused on black and women entrepreneurs, especially those growing a business in Cleveland. “In too many places, in Cleveland and across the country,” Jeans says, “we haven’t seen the appetite for investing in minority- or women-owned businesses, and there’s a lower tolerance for risk.”

Jeans is strict about the types of firms he’ll invest in: no gun retailers or alcohol distributors, although alcohol makers may be considered. Yes to manufacturing, but only companies using technology to operate efficiently. He offers one example of why it’s so tricky for black entrepreneurs to gain traction in Cleveland: “If a young white man—or a non–African American or Hispanic male—fails at his first business venture, he’s considered a serial entrepreneur the next time he gets up and asks for funding. But if a young black entrepreneur fails, he unfortunately wears a scarlet letter. We need a different narrative for what success looks like.”

Mel McGee is a beneficiary of Jeans’ strategy. She grew up dreaming of a computer science career but felt lonely—often excluded—as the only woman in her college classes. She started a women’s-only coding bootcamp and turned that into a business. Now her company We Can Code IT has campuses in Cleveland and Columbus, with the audacious goal to train 10,000 coders locally within a decade.

“Our goal is to invite people to the tech party who historically haven’t been invited. We’re creating a living, breathing success story in a community that hasn’t seen enough of it.” Mel McGee

Nearly 70 percent of We Can Code IT’s participants are from historically underrepresented groups like women, blacks and Latinos. Some come to the full-time, 14-week program thanks to scholarships and grants, including from the city of Cleveland. And many graduates have now transitioned from minimum-wage retail or food-service jobs into tech roles at major firms with local outposts, such as Progressive Insurance and Microsoft. Their new jobs pay an average of $56,000 a year. “Our goal is to invite people to the tech party who historically haven’t been invited,” McGee says. “We’re creating a living, breathing success story in a community that hasn’t seen enough of it.”

It shows how Cleveland is deliberately building a workforce that’s ready for the tech-driven economy. While many of We Can Code IT’s graduates lack a high school diploma, new data suggests that a growing share of the region’s residents have at least a bachelor’s degree—higher than the national average.

“New and emerging technologies have a significant impact on the way Cleveland functions and serves residents, businesses and visitors,” says Mayor Jackson. “As city government, we play an important role in investing in and supporting those companies and entrepreneurs at the forefront of this technological evolution. We have positioned ourselves in a way that is uniquely Cleveland. Assets such as our low cost of living, major business districts, world-class health care, arts and entertainment districts and our proximity to major universities and colleges are attractive qualities. Cleveland is nimble and adaptable in a changing landscape. As we position ourselves for the future, we are using technology as a tool to eliminate disparity and create greater equity and prosperity for all.”

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