Entrepreneurs Fuel Post-Katrina Business Boom Oil and gas fuel the engines of employment and industry in New Orleans, but one legacy of Katrina may change that -- a surprising surge in entrepreneurs. The latest numbers show that 450 out of every 100,000 New Orleans adults have started a business since the storm. That's 40 percent higher than the national rate. But there's still a significant wealth gap between rich and poor.

Entrepreneurs Fuel Post-Katrina Business Boom

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This is ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish, in for Guy Raz.

Katrina, one of the deadliest hurricanes in American history, hit the Gulf Coast five years ago today. The systematic breakdown of levees and the flooding that followed contributed to the deaths of some 1,800 people.

Today, President Barack Obama came to New Orleans to mark the anniversary.

President BARACK OBAMA: Even as you've been buffeted by Katrina and Rita, even as you've been impacted by the broader recession that has devastated communities across the country, in recent months, the Gulf Coast has seen new hardship as a result of the BP Deepwater Horizon oil spill.

CORNISH: Oil and gas fuel the engines of employment and industry in New Orleans, but one legacy of Katrina could shift that focus: A surge in the number of entrepreneurs.

(Soundbite of telephone)

Unidentified Woman #1: Naked Pizza.

CORNISH: Not long after the storm, New Orleans native Robbie Vitrano started a pizza place in the neighborhood of Broadmoor.

Mr. ROBBIE VITRANO (Owner, Naked Pizza): This location that we're standing in, it's about 496 square feet. It took about six feet of water in Katrina.

CORNISH: Not just any pizza place; it's a health-conscious, probiotic, 10-grain crust, healthy pizza place.

And the real question is, how does it taste the next morning for breakfast?

(Soundbite of laughter)

Mr. VITRANO: That is the ultimate taste test. It's a great cold pizza.

CORNISH: Naked Pizza, as it's called, is a hit, and it's expanding rapidly. The first franchise outside New Orleans is opening this weekend, in South Beach, Florida, and 300 more are in development, in places as far away as Dubai.

So how did such a success spring from a flood-ridden neighborhood? Vitrano says Katrina forced those who remained to step up.

Mr. VITRANO: It was that sense of re-evaluation. It's a personal re-evaluation. It was an economic re-evaluation. It's a cultural re-evaluation. People here were inflamed with that sense that, okay, we're not sure what the way forward is, but we need to do something. We need to put ourselves in motion. We need to get at it.

Mr. CHRIS SCHULTZ (Co-Founder, Launch Pad): I don't think the recognition was there prior to Katrina of how important developing an economic base that wasn't simply oil and gas and the port and tourism and kind of what we've always done.

CORNISH: Chris Schultz is another local businessman. He's involved in bringing high-tech companies to the city.

Mr. SCHULTZ: I'd say there was more of a complacency when it comes to economic development. You know, we didn't have that sense of urgency that we've had now.

CORNISH: Schultz is co-founder of Launch Pad, a company that offers low-rent office space for high-tech startups, complete with a phone, fax and yoga classes.

Launch Pad is warehoused in a space called the Intellectual Property Building. It's one of several startup hubs born after the storm. This growing business network, combined with pumped-up state tax breaks, has drawn young entrepreneurs from all over the country and the world.

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Ms. MEGAN HARGRODER(ph): My name is Megan Hargroder.

Mr. SHUTI KARANA(ph): I'm Shuti Karana. I go by SK.

Mr. PATRICK COMER (Flatsourcing.com): My name is Patrick Comer.

Mr. PETER BODENHEIMER (Flatsourcing.com): Hi, I'm Peter Bodenheimer.

Mr. DON FONZERTO(ph): I'm Don Fonzerto.

Ms. RACHEL LAROCHE(ph): My name is Rachel Laroche.

Mr. KARANA: One business I'm going to start is Web and mobile apps for engineering and scientific productivity.

Ms. HAGRODER: We're going to be hosting clothing swaps across New Orleans.

Mr. COMER: I have a company called Flatsourcing that does software development.

Mr. BODENHEIMER: We recruit people to take online surveys for our clients.

Mr. FONZERTO: I'm a visual fax(ph) artist.

Ms. LAROCHE: My husband and I just moved here from Chicago.

Mr. FONZERTO: From Los Angeles.

Ms. HARGRODER: I'm originally from Lafayette, Louisiana and was really attracted to the creative tech community.

Mr. KARANA: I had read a lot in the Wall Street Journal, entrepreneur magazines, that New Orleans has a very good entrepreneurial culture.

Mr. FONZERTO: I like it much nicer than L.A. because I'm from a smaller town in Germany, and L.A. is such a juggernaut of a city.

Mr. BODENHEIMER: Access to capital has been good. Access to politics and power and the movers and shakers, you're so much more connected to that in New Orleans than you are in, say, Los Angeles or New York.

Mr. COMER: You know, it's never going to be Silicon Valley or anything like that, but it's a city that's going to have a thriving entrepreneurial community.

Ms. HARGRODER: I like to say we're kind of accidental entrepreneurs. It really came out of necessity for us, because when we first moved here, the job market was just really limited, and we didn't find a lot of opportunities. So we started them ourselves.

CORNISH: Launch Pad co-founder Chris Schultz says there was always a baseline of this kind of talent here, but that they weren't always connected to the business community.

Mr. SCHULTZ: I think any of the barriers to building a career for yourself that have traditionally existed in New Orleans - you know, colloquialism and were you born here, where did you go to high school - all that type of stuff is gone. That was washed away. The community has become so much more open and welcoming and embracing of new talent, new ideas. It has become a much more cosmopolitan city, like you would expect in a New York or L.A. or San Francisco, that type of environment.

CORNISH: Where are you from?

Mr. SCHULTZ: I moved here from L.A.

CORNISH: So did you start your business after the storm?

Mr. SCHULTZ: I started this business after the storm. I had a previous business...


Mr. SCHULTZ: ...that I sold, and then I started this business after the storm.

CORNISH: It seems like you could've left. You could've gone back to where you're from, where there is a big, robust industry of people doing the kind of work you're interested in. I mean, why would you start here in this environment?

Mr. SCHULTZ: Yeah, that's absolutely right. I mean, I'm in New Orleans because I'm passionate about the city. I like to say that people who are in New Orleans now are here by choice, not because they have to. I choose to live in New Orleans because it's a city I love.

CORNISH: That's Chris Schultz, co-founder of Launch Pad, an entrepreneurial workspace in New Orleans.

Next, we turn to Allison Plyer. She's co-director of the Greater New Orleans Community Data Center, which just released a report on the last five years of recovery.

Ms. ALLISON PLYER (Co-Director, Greater New Orleans Community Data Center): About 450 out of every 100,000 adults here has started a business. And that compares to about 320 out of every 10,000 U.S. adults. So we have a trend that's much stronger than the U.S.

CORNISH: So the folks who returned or remained, more of them are more likely to start a business?

Ms. PLYER: Exactly. Exactly. Yeah. And I think that there's been, you know, a lot of small-scale entrepreneurial opportunities just in construction and even debris hauling at first. But there's also been some really innovative entrepreneurship that's happened here.

CORNISH: But is that because there aren't other jobs to get? I mean, are people basically creating their own work?

Ms. PLYER: Well, I think that, you know, there's evidence that in any recession, which of course we're experiencing, as is the whole country, that starting up businesses does increase. But our rate is much higher than the rest of the U.S. So we're seeing a spike that's quite notable.

CORNISH: It seemed like so much money was pouring into the New Orleans area after the storm. So what did that mean for this region going into the great recession?

Ms. PLYER: Well, it was incredibly useful for us that we had so much federal money coming to help in the rebuilding post-Katrina when the recession hit.

CORNISH: Was it a total buffer or...

Ms. PLYER: It was a very strong buffer. But to give a sense, you know, we were increasing our jobs, essentially recovering our jobs, post-Katrina, and then the recession hit. And whereas the country lost 4.5 percent of all jobs, we lost just 1 percent of jobs.


Ms. PLYER: So that indicated the federal stimulus that we got post-Katrina, which actually was much, much larger than what the state got for the regular economic stimulus package, really, you know, continued to create jobs in construction and infrastructure building and design, et cetera, that buoyed our economy while the rest of the country was really floundering.

CORNISH: I want to juxtapose this with poverty rates here in New Orleans and the fact that one thing your report seemed to indicate is that the income gap is larger. So how do we reconcile this sort of growth in other areas and then faltering in some other aspects?

Ms. PLYER: Right. New Orleans has, you know, a very high poverty rate, about 23 percent now, which actually is lower than before the storm, when it was 28 percent. And we assume that largely, that's attributable to the fact that people with fewer resources had a much harder time returning because a lot of the public housing hasn't been rebuilt yet and because it took resources to return. So we saw some real significant demographic shifts.

And then, historically, we, as the whole country, have always had really large disparities in income by race and ethnicity, and, you know, that continues to be the case.

CORNISH: And paint a picture for me. What does that mean?

Ms. PLYER: African-American households in the New Orleans area make $32,000, which is about 45 percent less than what white households make, and it's actually lower than what African-American households make across the U.S.

CORNISH: That wealth gap persists in the business community as well, according to Todd Higgins.

Mr. TODD HIGGINS (Center for Community and Workforce Development, Urban League of Greater New Orleans): It's a false positive on many magazine articles that they're written about the entrepreneur explosion here because I guarantee the people that they talked to are people who came from somewhere else.

CORNISH: Higgins works as a counselor for small businesses out of the Office of Community and Workforce Development at the Urban League of Greater New Orleans.

Mr. HIGGINS: When you ask a local from the area, how do you feel about it? They'll tell you they don't get the support. They don't get the help. So it's almost like I'll bring somebody in from elsewhere and give them all the resources they need, but my own people, I'll let them suffer a little longer.

CORNISH: Women and minority-owned businesses are still struggling in New Orleans, especially the ones based in neighborhoods where the storm hit hardest.

Mr. HIGGINS: You can't force a bank to do anything. If it don't want to loan money to an African-American, it's not going to do it. It's always about those who know how to get funding, how to grow your business, and giving it to a group of people that come from Connecticut, New York.

You know, the mom-and-pop stores that really keep it going have been family members who have started a business and just passed it on generation to generation. But after the storm, it was difficult for anybody to get funding from any one of the local banks.

When it gets down to making a banker go out of his four walls to go into a small, established mom-and-pop business, it's almost near impossible.

Angele VonDerPool agrees. She is director of the Women's Business Resource center at the Urban League. VonDerPool says that for all of New Orleans to capitalize on the bright points in its economy, growth and inclusion should be the goal.

Ms. ANGELE VONDERPOOL (Program Director, Women's Business Resource Center, Urban League of Greater New Orleans): It is five years post-Katrina, but it still has not changed. It's still, you know, a fight in the trenches for development, redevelopment, revitalization. So continue to look at New Orleans, I'd say, just as if Katrina happened last year because it's still a battle.

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