E-commerce disruption is one of the most dangerous exogenous threats to our state’s economy. The fate of Arkansas’ economy is inextricably tied to the success or failure of our two Fortune 500 retailers? —?Wal-Mart Stores and Dillard’s.
A big part of the problem is local companies simply can’t find employees trained in e-commerce. It’s been well publicized Walmart’s e-commerce push has left many Bentonville vendors flat-footed and struggling to find local e-commerce talent. This can be fixed quickly once the problems are identified.
Building an e-commerce center of excellence in Arkansas may sound crazy until you realize e-commerce is just a complex combination of retail, logistics and data. Arkansas has world-class expertise in each of these three pillars because of Walmart, J.B. Hunt Transport and Acxiom.
In addition to their success, a majority of the most promising startups in the state are also directly or indirectly involved in e-commerce: Menguin, Smack, Lauren James, Zenwork, Overdrive Brands, Feather, Scrubshopper, Acorn Influence, Trackwired, Explainify, QuBowl and Gemini Development are just a few. All these e-commerce companies have offices near the downtown square in Fayetteville and two of them (Menguin and Feather) moved from other states.
With a critical mass of similar companies located in close proximity, we’re already starting to reap the benefits of startup density. Creative collisions and sharing of knowledge are happening daily in and around Fayetteville’s historic Old Post Office.
This density was built in a short amount of time with a surprisingly small amount of capital. My e-commerce studio, Hayseed Ventures, provided a total of $2 million to a dozen e-commerce startups over the past 18 months. Those companies have raised $8 million in follow-on funding, and two of them are working to close an additional $12 million in later-stage venture investment.
Without fanfare, the downtown square in Fayetteville has become a national hotbed of e-commerce activity. Interestingly, it’s happened without any help from the state’s large corporations. It’s likewise happened without help with our state or local governments.
With corporate and government support, we could take this heretofore grassroots movement to the next level. Here are a few areas where there is potential for action:
• Invest in the local startup scene. As a start (disclaimer:? self-serving plug), I’d suggest partnering with my Hayseed Ventures team.? We are building an e-commerce entrepreneurship lab in partnership with the Sam M. Walton College of Business at the University of Arkansas. We are seeking funds to turn Fayetteville’s historic Old Post Office on the downtown square into an “e-commerce lab” where students will earn class credit by building and running startups under the tutelage of my team and other successful entrepreneurs.
• Create a $15 million to $20 million e-commerce venture investment fund. Through this fund, we will ensure adequate capital is available for local e-commerce stars and relocate innovative seed-stage companies to Northwest Arkansas from around the globe. The funded companies would have access to mentorship from the above UA e-commerce lab.
• Fund the creation of a world-class e-commerce degree track at the UA. We should endow the professorships with some of the highest salaries in the entire university system and recruit the best e-commerce research minds on the planet to Fayetteville. The best students will quickly follow. In the short term, relocating world-class startup teams to the area will artificially inflate our local talent pool. This will build upon the rapidly growing e-commerce startup density around the Fayetteville square.
More importantly, today’s investment in education will ensure long-term success. Importing talent is a needed short-term Band-Aid, but educating our own workforce will guarantee a replenishable supply of educated workers.
John James is a serial entrepreneur and founder of Hayseed Ventures in Fayetteville. He can be reached at firstname.lastname@example.org. The opinions expressed are those of the author.