Let the Right Ones In

"Is this your first time in New Orleans?" a cocktail waitress asks me with a smile, cocking her red-feather headdress to the side.

"My second," I reply. No virgins at this party. This response deflates her slightly, but her enthusiasm rebounds.

“We can do a shot anyway.” She mixes hibiscus juice—a product she’s promoting called Bissap Breeze—with a swig of rum from a hidden stash. The sweet red liquid distracts from the sultry 84-degree March afternoon. The atmosphere is intensified by the heat of 1,000 bodies squished onto the patio of a sports bar, their voices competing with an overamplified emcee. “This is just like Bourbon Street,” remarks a man to my left.

“People keep saying that!” says a woman passing out protein shake samples.

We’re celebrating the end of New Orleans Entrepreneur Week, a Google-sponsored showcase of the city’s flourishing start-up scene, where 19 big ideas are vying for $50,000 in seed money. It’s the coda to “entrepreneurship season,” a nine-month series of competitions, workshops, and networking opportunities designed to nurture the city’s next wave of businesses.

The whole thing is meant to feel more like a festive free-for-all than a geeky crowd-funding affair. It’s about channeling the spirit of Mardi Gras—“when everyone comes together,” says Tim Williamson, cofounder and CEO of The Idea Village, the business incubator that’s hosted Entrepreneur Week since 2009. “So, if you could do that for business or economic development, it’s a big idea."

Williamson is one of the masterminds behind New Orleans’s transformation from a stagnant backwater struggling with white flight, brain drain, and urban blight—not to mention two hurricanes, an oil spill, and a recession—into a city where the number of people starting businesses is 28 percent higher than the national average. Tax credits have brought in video game, bioscience, and tech companies, diversifying an economy long dependent on tourism, shipping, and oil. The city’s $600 million film scene ranks right behind Los Angeles and New York City. Business leaders and economic developers are hustling to rebrand New Orleans as a destination for the young and creative, talking up its reputation for small business, great food, and unique music.

The roots of the local start-up scene go back 12 years, but if Katrina hadn’t hit, “I don’t know if we would be the ‘coolest startup city in America,’ I don’t know if we would be ‘the number-one brain magnet,’” Williamson says, touting recent titles bestowed on the city by Inc. and Forbes, respectively. “Movements can scale for two reasons: a disaster or an opportunity. In our case it happened to be a disaster.”

Hurricane Katrina caused $135 billion in damage and knocked out one in five jobs in the region. “Many people who probably would not have been entrepreneurial beforehand were forced into a spirit of entre- preneurialism just for survival,” says Arnold Baker, CEO of a concrete supplier and chairman of the National Black Chamber of Commerce. Learning how to cope with flood, waste, and energy problems created a whole new industrial niche. Dealing with the catastrophe of the failing public school system—now 80 percent charter-operated— spurred education start-ups. Baker says citizens realized “it was going to take everything that everyone had to successfully redevelop the city. Every relationship. Every ounce of energy. Every spare dollar.”

Waves of outsiders bolstered native enthusiasm. Volunteers descended to help rebuild. So did MBA students on spring break and businesspeople eager to use capitalism for good, connecting the city’s entrepreneurs with outside networks. The floodwaters damaged 70 percent of the housing stock, but they also washed away some of the corruption and failed institutions that had contributed to decades of decline. Katrina created an opportunity most cities never get: a chance to push the reset button.

But disaster capitalism has its down side. At 350,000 people, the city’s population is nowhere close to its 1960 peak of 627,525. Allen Eskew, a local architect and urban strategist, estimates a “stable” recovery requires a population of 400,000. If the city could grow to 500,000 residents, it would enter a new population bracket and qualify for more federal funding. Plenty of cities find themselves in a similar position—Detroit is the poster child—but most have been crippled by the slow exit of manufacturing jobs. The sudden exodus gives New Orleans a unique pitch. “Where else can you make a mark like this in history? Nowhere,” Williamson says. “Everything you see was restarted.”

The real test for entrepreneurship season is whether any visitors stick around for more than a blurry weekend of partying—long enough to put down roots. Signs around town declare, “Welcome to your blank canvas.” And the architects of the city’s economic renaissance know exactly whom they’d like to fill it.

Plenty of entrepreneurs have taken the bait. The founders of The Receivables Exchange, an online marketplace for unpaid invoices, abandoned New York City for New Orleans in 2007. “The whole city is in start-up mode,” founder Nicolas Perkin told USA Today at the time. “You walk to work, and you hear hammers and drills all the way. And you’re thinking, ‘They’re building the city, I’m building the business.’” The company has generated 70 new jobs and millions of investment dollars. The Receivables Exchange logo will crown a 21-story office building in downtown New Orleans formerly known as Chevron Place.

The startup scene also includes Naked Pizza, a rapidly expanding health-food chain with franchises in 11 U.S. states and Dubai, started by Big Easy native and social innovation guru Robbie Vitrano. There’s Kickboard, whose founder, Jennifer Medbery, arrived in New Orleans after a Teach for America tour of service and put her computer science degree to work by writing software that helps teachers track their students’ progress. And there’s Cordina, a company that has made millions selling pouch-packaged booze, sort of like Four Loko meets Capri Sun. They thank The Idea Village for helping them secure venture capital. The nonprofit has connected nearly 1,800 entrepreneurs with free consulting and $3.1 million in funding. Its prodigious alumni exceed $100 million in revenue annually. But so far most haven’t proven to be job generators: Every entrepreneur incubated leads to little more than one new local job.

Many entrepreneurs say they have a hard time finding qualified workers. “We graduate 400 computer science majors a year from our state schools. That’s it,” says Kenneth Purcell, founder and CEO of iSeatz, a firm that makes software for travel companies. “And if I’m hiring 20 to 30 people a year, that’s [nearly] 10 percent of the total population of computer science grads. That’s ridiculous.”

While businesses around the country can relate to Purcell’s tech recruiting frustrations, the challenges run deeper in New Orleans. The economy is still dominated by flagging or unstable industries like hospitality, dirty energy, and shipping. The housing rental market is inflated. The violent crime rate is 80 percent higher than the national average. And then there is the matter of inequality, an entrenched problem exacerbated by Katrina. While white New Orleanians saw their median household income rise between 1999 and 2009 to $57,807—a figure that puts them above the typical white American household—black families watched their income dwindle to a little more than half that.

Everyone agrees that economic development in New Orleans needs to address inequality, education, and crime. But “there is a perception that some of the entrepreneurship is not a very diverse community, it’s principally white and affluent, and maybe not inclusive in the context of thinking about how it might interface with New Orleans as a place,” says Morgan Williams, a fair housing lawyer and cofounder of Social Entrepreneurs of New Orleans.

Other experts argue that an influx of educated creative types actually exacerbates some civic problems. “Without question, they increase the price of real estate, they gentrify neighborhoods, and other groups get marginalized,” says Elizabeth Currid-Halkett, associate professor of urban planning at the University of Southern California. “That debate about whether the creative class is good for everyone is pretty long-standing.”

The idea that attracting a “creative class”—educated, entrepreneurial professionals who often freelance or create their own jobs—could revive a modern city was articulated in a 2004 best seller by urban planning professor Richard Florida. I emailed him to ask if he thought this strategy would benefit all New Orleans residents.

“The creative class is the core force of our future economic growth,” he replied. But “we also have to upgrade jobs in our service sector. This is the key to lifting a large number of individuals out of poverty.”

New Orleans has projects in the works that will create service jobs down the road, including plans for a billion-dollar hospital, but it’s hard to say whether these will be enough to replace the high-paying blue-collar jobs eliminated by a postindustrial economy. A less optimistic vision of the future is that of an affluent class of professionals fed, nursed, and entertained by an echelon of servers, divided largely along racial lines.

There’s a logic to spending redevelopment dollars to attract entrepreneurs: They’re mobile, they’re affluent, and they’re often hiring—resulting in a multiplier effect as they naturally become New Orleans evangelists. Contrast that with the cost of bringing back far-flung former residents: After Katrina, billions of dollars were set aside to bring evacuees back to the city. Now the coffers are nearly empty, and tens of thousands of survivors still haven’t returned.

“Many of them are in better places now,” says Eskew. It’s the flip side of disaster capitalism—for many, the city is no blank canvas.

Hours before Katrina hit, Yvahn Martin was at a late-night street party, watching brass bands play. It didn’t occur to her to evacuate—she had weathered other hurricanes. Plus, she was planning a housewarming party for that weekend. The refrigerator in her new apartment was stocked with food and booze. At 5 a.m., her mom called and threatened to come get her if she didn’t leave. Two hours later, Martin, four friends, a dog, and the housewarming refreshments were packed into a Mississippi-bound SUV. “Everyone was just sort of terrified,” she says. Martin had graduated from Tulane in 2003 and decamped to Los Angeles to pursue a film career and make a reality TV pilot about dance. It took a year to realize Hollywood wasn’t her thing, and she returned to her mom’s house in New Orleans.

“I started working in production. I started selling real estate. I was in a theater company. And then I was doing nightlife promotion for Camel cigarettes,” she says. “I had to have four jobs.”

Six weeks before Katrina hit, she had finally made enough to move from the second floor of her mother’s house to an apartment of her own—on the first floor. When it was consumed by 8-foot floodwaters, the original footage of her TV project was destroyed, along with most of her possessions. The levies had broken. No one was going back. “We were all really emotionally wrecked and kind of, like, shell shocked, not knowing what to do.”

So Martin and her friend Maya dropped off the others in Baton Rouge and continued west to Texas, Arizona, California. “People were just sort of showing their love to us in a lot of different ways,” Martin says. Everything was free if you were from New Orleans. Free places to stay. Free fleur-de-lis tattoos. Free handfuls of Xanax looted from Gulf Coast pharmacies. In Los Angeles they ditched the car and flew to New York City. Martin enrolled in an MBA program. By the time she caught her breath, she was already waist-deep in a new career with an e-commerce site that sells high-end street wear. She hasn’t looked back.

“I definitely know what it means, quote unquote, to miss New Orleans,” says Martin. “But I also know what it means to want to get the fuck out, too.” Her family members all resettled elsewhere, so she just comes down to visit friends. She wants to be a part of the city’s rebuilding without uprooting her new life.

An opportunity this March let her have it both ways. NOLAbound, a federally funded program organized by The Idea Village and two local economic-development groups, brought in 27 “well connected” creative professionals for an all-expenses-paid tour designed to show them the city’s progress, get them tweeting about it, and convince them to relocate. “Usually people focus on recruiting companies,” says Nish Acharya of the Economic Development Administration, the federal agency paying for the program. “The idea of bringing in the entrepreneur at the early stage, from what I’ve seen, is relatively new.”

For Martin and a few other former residents, the trip was eye opening. “I never thought that I would have an opportunity to move back to New Orleans and work in tech,” she says.

It’s an opportunity she’s turning down— for now. Same goes for Allyson Ward Neal, another former New Orleanian who’s hanging out with Martin at a NOLAbound-hosted crawfish boil on St. Patrick’s Day. Ward Neal, who manages a team of developers for Chevron, accepted a relocation to Houston after Katrina and stayed put.

“We on burn out. Right now, we just need to chill for a minute,” Ward Neal explains, plucking a crustacean’s head from its exoskeleton. “After the storm when you watched the news, you would just see all the stories about people who died, people who lost their house. It was like the storm, every day, every day, every day. And so, that’s why I just took the relocation. ’Cause I was like, ‘I just got to get myself together and recover.’”

She continues, “I think it’s a good strategy to try to get the outsiders to come in, because they’re not suffering from post-traumatic stress.” What about the next bad storm? Katrina survivors, she says, “gonna be freak-ing like, ‘Oh lord! Here we go again.’”

Ward Neal and Martin’s decisions reflect a larger trend. “We’ve lost about 100,000 in population—mostly black,” says Eskew. Many of the poor were given one-way bus tickets to other cities or lived in areas hit harder by Katrina and didn’t get enough insurance reimbursement to rebuild. And many in the middle class, like Martin and Ward Neal, just wanted a less difficult place to pursue a dream. The city has gone from more than 66 percent black to 60 percent.

“There are some parts of town that were majority African-American [where] you go and it’s almost empty,” says Westley Bayas, a New Orleans native and director of a local education nonprofit. Cousins and friends “went to Houston, Atlanta, and Dallas. They saw how great things could be with functional school systems,” high-paying jobs, and more diversified economies. And they aren’t coming back. At least, says Bayas, not until the city can get to a place “where there’s no reason for them to turn down an opportunity to come back home.”

On my last day in town, Martin brings me to Congo Square, the spiritual heart of the “old New Orleans,” where slaves were allowed to congregate freely. It’s the day when the Mardi Gras Indians—black families with historic ties to the city’s indigenous population—put on ornate costumes and march through the streets. In the square, about 10 dancers, singers, and drummers are performing. The female leader—“the queen”—is breathtaking, plastered head to toe in feathers. Tourists snap pictures.

The music fades out and one of the female dancers launches into a diatribe. “We came here on a spiritual mission,” she thunders. She warns the tourists that they cannot use photos of the performance without compensating the group—a nonprofit legal team will make sure of it.

With the message delivered, she introduces Kenyatta, who’s a drummer but isn’t in costume. He’s been stuck in Chattanooga since Katrina, and he can’t afford to move back to New Orleans. “We’re passing the basket,” the spokeswoman says. “We gonna do it the African way.” She licks a dollar bill and slaps it on Kenyatta’s forehead.

“I taught most of the drummers who are here,” he tells me when I approach with a dollar. “I’ll be back. A couple of months.” One dollar at a time.

The “culture of New Orleans comes from its people,” Bayas tells me, a common refrain. So how does a city hold on to its culture when so many of its people have left and when so many of the newcomers look nothing like them?

Some believe the city’s unique rhythm is enough to turn anyone into a true local. “It’s not a choice of either or. We can have our historical fabric and we can put in our new stuff,” says Eskew. Other prodevelopment types warn that cities are like people. If they don’t change, they atrophy and die. The key, of course, is balance—a balance that could tilt depending on who ends up moving here and how invested they become.

At least one NOLAbound participant was planning to relocate. To Arabella Proffer, a painter living in Cleveland, New Orleans “kind of seems like one big art school.” Proffer has lived in Los Angeles, Boston, Ann Arbor, and other cities. Now she’s looking for an apartment in New Orleans.

But she’s not committing just yet. “When people are like, ‘Buy property in NOLA,’ I’m like, ‘Noooo,’” Proffer tells me. “Even if we moved down there, I know we wouldn’t stay. Because we never stay anywhere.”