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Photo Illustration: Rebecca Zisser / Axios; Photo: Visions of America / Getty

INDIANAPOLIS — Four years ago, Salesforce bought the email marketing company ExactTarget for $2.5 billion — an enormous payout for the Indianapolis-based firm. Instead of moving it to its own headquarters in San Francisco, Salesforce committed to growing the business in Indianapolis. Since then, it has doubled its employee base, it has its name on the city's tallest tower, and its alums have invested in a new wave of startups.

Why it matters: While startup activity in the Midwest tends to be much lower than the rest of the country, Indianapolis is a star performer, ranking alongside Minneapolis and just below Chicago. The question is how to replicate that success in other struggling, manufacturing-dependent places.

Where it stands: Indianapolis is a thriving business center where the startup rate far outpaces the rest of the state — 7.3% vs. 6.2% statewide. That high rate likely helps explain its resilience and growth during what has been a rough recovery for much of the region, according to an analysis of Census Bureau and Bureau of Labor Statistics data by the Economic Innovation Group.

The formation of new startups is a key ingredient to a diversified local economy that is more likely to benefit from the modern economy. AOL co-founder Steve Case is highlighting the successful ecosystems in areas that are largely overlooked when it comes to investment and attention on his "Rise of the Rest" tour of Midwestern cities this week.

The big break: Indianapolis has had a more diversified business community for several decades, with the headquarters of Eli Lilly, Anthem and Angie's List here. But Salesforce's acquisition of ExactTarget was a turning point for the city — because the wealth generated by the sale stayed in town instead of flowing back to a coastal hub. And Salesforce just kicked off a campaign to get more workers to move to Indianapolis.

  • Scott Dorsey, who was ExactTarget's founder and CEO, launched an incubator called High Alpha across the street. He and his partners create and invest in other fledgling companies.
  • Chris Baggott, another former ExactTarget exec, recently started a company called ClusterTruck to disrupt the third-party food delivery services like GrubHub and UberEats.
  • Companies have clustered around downtown's Monument Circle, creating the density of people that is key to most successful tech hubs.

That re-investing of money and mentorship back into the community has had a big payoff: $7 billion worth of transactions for Indianapolis tech companies in the past 10 years, according to Mike Langellier of TechPoint, an organization that supports the local tech community.

Having an ecosystem of serial entrepreneurs who have found success "creates a wealth of experience and confidence" that the next generation of entrepreneurs can draw from, Langellier said.

Public-private partnerships: Indianapolis is also unique in the collaborative relationship between the local government and business leaders. For example, established companies like Eli Lilly have set aside endowments to help foster business growth. Meanwhile, Indiana Gov. Eric Holcomb's administration is preparing to invest $250 million to support entrepreneurs with its "Next Level Fund," the largest of its kind in the country.

For contrast: Despite the bright spot for startups in Indianapolis, 79% of the state's jobs are in established incumbent companies that are at least 16 years old — the third-highest share in the country.

Coming home: The city has been lucky in attracting a new crop of engineering and business graduates from area universities. It's also benefited from an influx of "boomerang" talent who grew up in Indianapolis, moved away for jobs in San Francisco or Chicago, and are now moving back home. But it's still struggling to attract more senior-level workers, said Bob Stutz, Salesforce Cloud Marketing CEO.

"We've been able to recruit more and more people from places like Oracle and Microsoft," Stutz said. "Once they get here, they love it. But when you first tell them they have to move to Indianapolis for a job, they have a blank stare in their eyes."

Go deeper

White House nominates Rick Spinrad as NOAA leader

In this NOAA GOES-East satellite handout image, Hurricane Dorian, a Cat. 4 storm, moves slowly past Grand Bahama Island on September 2, 2019. (Photo by NOAA via Getty Images)

The White House on Thursday evening nominated Rick Spinrad, an oceanographer at Oregon State University, to head the National Oceanic and Atmospheric Administration (NOAA).

Why it matters: Filling the NOAA slot would complete the Biden administration's leadership on the climate and environment team. The agency, located within the Commerce Department, houses the National Weather Service and conducts much of the nation's climate science research.

2 hours ago - World

Israeli officials will object to restoration of Iran deal in D.C. visit

Photo: Anadolu Agency / Getty Images

Israeli Prime Minister Benjamin Netanyahu has instructed the delegation traveling to Washington, D.C. next week for strategic talks on Iran to stress their objection to a U.S. return to the 2015 nuclear deal and to refuse to discuss its contents, Israeli officials say.

Why it matters: That position is similar to the one Israel took in the year before the 2015 nuclear deal was announced, which led to a rift between the Israeli government and the Obama administration. History could now repeat itself.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Coronavirus cases aren't budging — even after vaccinations doubled— Health care workers feel stress, burnout more than a year into the pandemic — Handful of "breakthrough" COVID cases occurred in nursing homes, CDC says.
  2. Vaccines: Johnson & Johnson's vaccine production problems look even bigger — All U.S. adults now eligible for COVID-19 vaccine.
  3. Political: Watchdog says agency infighting increased health and safety risks at start of pandemic.
  4. World: EU regulator: Benefits of J&J vaccine outweigh risk of rare blood clots.
  5. Variant tracker: Where different strains are spreading.