Big Fish, Small Pond
Smaller markets are emerging as powerful incubators for innovation, offering unique advantages that challenge the dominance of major city hubs
By Michael Schmanske
When I worked in finance, the phrase “big fish in a small pond” was often used dismissively. The idea was that to truly succeed, one needed to swim in the open ocean of large markets. However, my experience with healthcare startups has shown me the value of small ponds—places where early ideas and companies can gain a strong foundation.
Allow me to introduce you to Pittsburgh, PA. The city I’ve returned to in 2024 is vastly different from the steel town I left in the 1990s. It has transformed into a hub for biotech research and AI development, thanks to local institutions like Carnegie Mellon University and University of Pittsburgh Medical Center (UPMC). The cost of living is low, the air is clear and quality of life improvements have made Pittsburgh an attractive location for young families.
While large markets like New York and San Francisco offer undeniable benefits—including concentrated talent pools, economic opportunities and investor attention—smaller markets like Pittsburgh provide unique advantages: Lower living costs, a supportive community and engagement from local policymakers make these cities ideal for startups. Additionally, the evolution of remote collaboration tools has further leveled the playing field, allowing companies in smaller markets to tap into global resources without leaving their home base.
Many other regional innovation hubs across the United States and globally are gaining recognition for their roles in fostering new ideas and businesses (and Prognosis:Innovation will delve into many of them just like we are highlighting Pittsburgh as the first of our IncubatorCities®). Regions like Austin, Denver and Raleigh-Durham in the U.S., along with international counterparts like Tel Aviv and Stockholm, are proving that innovation is not limited to traditional major market centers. These cities are attracting talent, investment and resources, creating vibrant ecosystems that rival those of their larger counterparts.
It’s time we gave IncubatorCities® like Pittsburgh the attention they deserve. These “small ponds” are becoming increasingly essential to the global economy, offering the perfect balance of resources, quality of life and growth potential. Whether you’re an entrepreneur, investor or policymaker, the rise of these innovation hubs presents an opportunity to engage with and support the next wave of groundbreaking companies. The future of innovation may very well depend on the success of these emerging Incubator Cities.
Michael Schmanske is a 24-year Wall Street veteran with experience on trading desks and asset managers. He is the co-founder of Prognosis:Innovation as well as founder of MD.Capital.
