The City Council is telling the entrepreneurial community that if you would like to innovate and potentially disrupt an existing industry, you should do it elsewhere.
The City Council dares to impose some regulation on Austin's sharing economy. The disruptors claim that doing so will make the sky fall. At stake isn't innovation, but a regulatory environment that favors the startups over established businesses. The capital rich get richer at the expense of labor. Uber is as old as dirt.
Regulating the sharing economy might be a bad idea. But the supposed crisis of innovation is a red herring. More likely, HomeAway and others are squawking about innovation because they cannot marshal a good argument against the proposed laws. Weak tea.
As for densification, I've spent years mocking the supposed benefits of urban planned knowledge orgies. At best, the density dividend for innovation is a positive correlation without a proven causality mechanism. Google wondering about collaboration and productivity:
The company’s top executives long believed that building the best teams meant combining the best people. They embraced other bits of conventional wisdom as well, like ‘‘It’s better to put introverts together,’’ said Abeer Dubey, a manager in Google’s People Analytics division, or ‘‘Teams are more effective when everyone is friends away from work.’’ But, Dubey went on, ‘‘it turned out no one had really studied which of those were true.’’
The short version of a long article, cramming a bunch of smart and talented people into a room doesn't predictably lend itself to innovation. Turns out, the quality (not the quantity) of the interactions is the magic sauce. Urban or suburban, with or without innovation districts, innovation depends on the social dynamics of the team. Density doesn't matter.