What smaller Texas communities can learn from startups about COVID-19 economic recovery

Pass or Fail

BOERNE, Texas (KXAN) — As the coronavirus pandemic continues to take a toll on lives and healthcare systems across the country, communities are also having to contend with the economic fallout of the COVID-19 pandemic. Now, 58 Texas communities beyond metropolitan areas have a new lifeline in weathering this storm: an accelerator program that uses the lessons of business startups to help them create paths forward.

Orange signs downtown in the city of Boerne alert visitors to open businesses, in hopes of encouraging people to buy local (KXAN Photo/Alyssa Goard)

Smaller cities and communities farther away from urban centers in Texas, who might otherwise have limited recovery resources, have been brought together in a new way during the pandemic that’s leading to solutions from education to business to healthcare.

Their community leaders are getting a university-sponsored crash course in the startup mentality that has worked for so many businesses in Austin, in hopes of steadying more regions in these uncharted economic waters.

Keeping Main Street running

In the city of Boerne in the Texas Hill Country, the makeup of businesses looks different than its much larger neighbor 30 miles northwest, San Antonio.

The Dienger Trading Co. is located at a historic building in downtown Boerne (KXAN Photo/Alyssa Goard)

Amy Story, the president and CEO of the Boerne Kendall County Economic Development Corporation explained that around 90% of Boerne’s businesses are “small businesses,” meaning they have 20 employees or fewer.

The city prides itself on its historic downtown with quaint local storefronts. Many visitors are drawn into the county by breweries, wineries and distilleries, but with the pandemic, revenue from tourism is less dependable.

It’s Story’s job to bring new economic opportunities in to the area and she says her work has changed dramatically since COVID-19 began. Instead of focusing on attracting businesses, she said her focus had to switch to just keeping those businesses in town and afloat.

“We have a big festival, Dickens on Main, that happens around Thanksgiving time, and I think a lot of the retailers, in particular, are looking to ‘How strong can we finish the end of the year to make up for the ground we lost in spring and summer?'” Story surmised.

“I do think that the first of the year, many places will see some places that simply can’t make it,” Story said of the business outlook for many smaller communities. “Our hope is that we don’t.”

Story’s organization is funded by the city, the county and local businesses. Unlike other economic development groups, it is not funded by tax dollars.

Storefronts along Main Street in Boerne welcome in shoppers, instructing them to wear face coverings upon entry (KXAN Photo/Alyssa Goard)

“We are constantly looking for ways to stretch our dollars and still remain effective,” she explained.

It would cost tens of thousands of dollars for her organization to hire a consultant to give economic advice on pandemic recovery. But one day when Story was looking online, she saw a program from her alma mater that could offer her community personalized advice for free.

She was selected to represent Boerne as one of the communities in a new program through the IC² institute at the University of Texas at Austin. As part of the program, she’s been meeting with her peer communities virtually over the past few weeks to come up with a roadmap for economic recovery that is tailored to the needs of her community.

A ‘secret sauce’ for economic resilience

Even prior to the pandemic, IC² institute at the University of Texas at Austin had already found that smaller and more isolated cities, as well as rural areas in the state, were facing a unique set of hurdles. These communities, the institute found, “were dealing with losses in population, rural hospital closures, limited broadband access, less diverse economies, and low budgets to address problems in the community.”

IC² founding director Dr. George Kozmetsky speaks to UT Austin students in the 1990s (Courtesy IC² Institute)

As COVID-19 began impacting the state, the institute created a “Regional XLR8” program, anticipating challenges for Texas communities that are not in metropolitan centers. IC² took the same entrepreneurship principles it has honed since its inception in 1977 — the same principles it has applied in places around the United States and in 43 other countries.

The “secret sauce” for innovation the institute has used for decades involves getting people to work with one another as opposed to working separately, explained Dr. Greg Pogue, Deputy Executive Director for the IC² Institute. It seems intuitive, but Pogue says what really makes the difference is forming groups so there are peer-to-peer interactions.

“This motivates, this helps solve problems and creates this network effect that doesn’t work if all you’re doing is picking up a phone occasionally,” Pogue added.

The installation of the sign marking the IC² Institute at UT Austin, date unknown (Courtesy IC² Institute)

He noted that in the 1970s and ’80s, this strategy was what helped kickstart Austin’s trajectory as a hub for business and innovation.

“What we learned in Austin’s history was Austin was successful tethering it’s future to Silicon Valley and San Francisco,” Pogue said, citing regular interchanges between the two areas such as the “nerd bird” direct airline flights between Austin and San Jose. “Tethering” the well beings of multiple communities together in this way can be mutually beneficial, Pogue argued.

Enter the Regional XLR8 program

A map of community leaders participating in the IC² Regional XLR8 program for pandemic economic recovery (Courtesy IC² Institute)

Local economic development corporations, city and county governments, and regional associations were allowed to apply for the XLR8 program on a first-come, first-served basis. The funds for the program came through both UT Austin, the flagship university of the University of Texas System, and outside donors. The selected communities got to participate for free.

A student in the “Home to Texas” internship program assists with the production of algae for a tech startup (Courtesy IC²)

Over the summer, IC² dispatched 95 students to analyze these areas. Some students, such as those in the “Home to Texas” program, returned to their hometowns for summer internships and could carry out some work in person. Others gathered this data remotely to follow pandemic precautions.

These students completed 11,000 combined hours of research with the selected regions, including 800 interviews and 7,600 community surveys. The findings were then sent back to the institute and to the participating communities.

All 58 areas involved in XLR8 have to participate in a six-week virtual course with the institute, which is going on presently.

A student in the “Home to Texas” internship program helps catalogue and document tourist sites in Del Rio (Courtesy IC²)

Like all the other benefits communities receive in this program, the course is free. But participants have to do homework and answer tough questions such as, “how does your community view itself?” and “how open is your community to growth?”

In normal times, the institute might schedule a conference or in-person meeting, Pogue said. But to abide by the precautions communities are taking to curb the spread of COVID-19, the XLR8 attendees have been meeting entirely online and making it work through Zoom calls.

Even prior to the pandemic, the IC² Institute has focused on the well-being of smaller Texas communities.

“It’s not just about economic success,” Pogue said. “We’ve seen it happen since the Great Recession — the problem is it has been dramatically been concentrated within a few individuals, leaving most people working and most people having less.”

“The pandemic is amplifying the degrees of differences between the haves and have-nots. We must again view in our society, as a social contract, that your good is my good. And this takes a lot of hard, heart-work, and this is what we’re encouraging leaders to embrace while designing strategies that can motivate and unite their communities for growth-minded activity. “

Dr. Greg Pogue, Deputy Executive Director, IC² Institute

Pushing for change with community support

Pogue went on to explain that the XLR8 program works to better understand to what degree these communities have a “fixed mindset” approach, meaning they are less open to changes. While IC² believes that openness to growth will be a key to success for smaller communities in the future, it also believes community members will need to buy-in to any plans for growth in order for them to work. Thus, the economic recovery plan for a community that is ready to bring in lots of new residents and development should look different from the plan for a community that doesn’t want to see significant changes.

A list of major types of economic disruption in Texas during the COVID-19 pandemic, compiled by IC² Institute for its 2020 State of the State of Texas report (Courtesy IC²)

The institute recently published a report on the state of local economies across Texas, which showed that a majority of Texas counties are shrinking in population.

“They struggle with poverty. They are not getting a fair share of economic growth and assets and opportunities,” Pogue said.

It may also take longer for these counties to bounce back from the virus itself. The institute expects that it will take a year to a year and a half for a COVID-19 vaccine to be broadly distributed to rural areas.

With the pandemic, plenty of new practices have quickly become normalized. IC² Institute is wagering that during this time, communities may be more open to the changes they need.

A graphic from a 2020 IC² Institute presentation to TEDC regarding Texas Counties (Courtesy IC²)

“What it comes down to is: new has to be embraced by all counties in Texas, all communities in Texas. And COVID has disrupted things enough that if we think new, we have opportunities where we didn’t have opportunities before,” Pogue said.

So, Pogue is continuing his mission to teach that “growth mindset” to communities from all across the state. When they complete the six-week accelerator, they will exit with a roadmap for community development, a new network of peer cities and regions and a better idea of the type of growth their community will need to face the uncertainties ahead.

Later this fall, a group of 80 UT students will then compete for prize money to brainstorm solutions for specific problems faced by 19 of these communities.

An “open” sign at a business in Boerne is illuminated (KXAN Photo/Alyssa Goard)

Pogue hopes the accelerator forms partnerships and regional groups that continue for years to come.

Amy Story expects her community will want to participate in IC²’s efforts for years into the future as well.

The accelerator has given her ideas for how to encourage high school graduates to consider jobs in their hometowns and how to drive her community towards being intentional about supporting small, local businesses.

“I think the effects of the pandemic will be felt for a long time. There’s no question about that — even once things open, these businesses have ground to make up,” she explained.

Putting knowledge into practice

A photo of a forestry operation (Courtesy Texas Forest Country Partnership)

Hours east of the Texas Hill Country, Nancy Windham is at work trying to help communities in her area get the word out about local businesses. She is the CEO and Executive Director of the Texas Forest Country Partnership, a regional economic development organization for 12 counties and 385,000 people in deep East Texas.

“Our job, simple and plain, is to create jobs,” Windham summarized.

In particular, her region focuses on jobs in forest and wood products, healthcare and advanced manufacturing.

Even prior to the pandemic, her region faced challenges with access to broadband and with keeping local medical facilities open. COVID-19 has exacerbated both of those hurdles, Windham explained.

A photo of supplies being distributed to people impacted by a hurricane in Newton County (Courtesy Texas Forest Country Partnership)
A photo of supplies being distributed to people impacted by a hurricane in Newton County (Courtesy Texas Forest Country Partnership)

“I love the expression, ‘high tides float all boats,’ but what if you don’t have a boat?” Windham wondered aloud. She explained that when school went virtual during the pandemic, many children in the most rural regions in her area were still not able to get online to further their education.

In addition to the pandemic, parts of this region are also recovering from recent hurricanes and tornadoes, Windham explained.

Windham decided to participate in the Regional XLR8 program because she believes it will keep her organization focused on what is most important for recovery and to bring in some outside expertise.

Lately, she has been trying to keep up with her “homework” assignments and compare notes with her colleagues.

“I am learning a lot from those exercises on what the needs are now in this age and time,” she said.

The XLR8 program placed Windham in a small group with other leaders from East Texas and Southern Louisiana. She noticed many of those leaders said they did not have enough space for activity centers for children. Windham doesn’t have young children, so the thought of adding youth activity centers hadn’t crossed her mind, but now its something she’s giving more attention to.

She sees the data and feedback from the XLR8 program as a tool to make changes in the upcoming Texas legislative session that could bring her region better access to broadband and healthcare.

“This exercise that we’re going through now, we’ll have the hard data to substantiate or help write bills,” Windham said. “It will help tell a senator or representative, ‘This will support your initiative. This is what the cold, hard facts are.”

Windham said her community has some unique strengths, and what they may lack in big-city budgets, they make up for in neighbors who are willing to lend a hand, a chainsaw or a truck to help out.

“What COVID has done for us is we are a bigger band of brothers,” she said.

Windham plans to keep leaning on this newfound Texas network she’s become part of to help get her slice of the state the support it needs to ride this wave of unprecedented change.

Partnering with the national non-profit Solutions Journalism Network, Nexstar stations nationwide are telling unique stories about how the pandemic has exposed inequities for students and the solutions some groups have found to bridge that gap.

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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