February 19, 2013
Blog All Dog-eared Pages: Startup Communities
A few others had read it and recommended it following that, but I hadn't had chance to look at it until the weekend just gone. It's a fairly compact read, and I got through most of it on the train ride to and from Hebden Bridge for the Bridge Rectifier Howduino.
If you've any interest in encouraging more startups in your community, you should pick up a copy. Check out the Steve Blank review if you want a good primer on it, or read on for the snippets (lots for such a short book!) that resonated with me while I read it.
[...] Boulder is an incredibly inclusive community. Although there is some competition between companies, especially over talent, the community is defined by a strong sense of collaboration and philosophy of "giving before you get." If you contribute, you are rewarded, often in unexpected ways. At the same time, especially since it's a small community, it's particularly intolerant of bad actors. If you aren't sincere, constructive, and collaborative, the community behaves accordingly.
It's my belief that Boulder is unique because the entrepreneurs and other participants in Boulder's startup ecosystem have a greater sense of community than anywhere else in the country. The ethos of mentorship and support by the people who comprise Boulder's startup community were firmly in place when TechStars arrived in 2007. David Cohen's brilliant idea was merely the lightning rod that sparked one of the greatest job-creation engines our country has ever seen.
The biggest observation I can offer from having a front row seat to seeing Boulder becoming one of the hottest startup markets in the United States over the last decade is that there was no strategic plan. Government had little to do with it and there weren't committees wading in bureaucratic quicksand wasting hundreds of hours of people's time strategizing about how to create more startups. Boulder caught fire because a few dozen entrepreneurs believed in their hearts that a rising tide lifts all boats and the derived great pleasure from helping make that happen.
[In her book Regional Advantage: Culture and Competition in Silicon Valley and Route 128, AnnaLee Saxenian] persuasively argues that a culture of openness and information exchange fuelled Silicon Valley's ascent over Route 128. This argument is tied to network effects, which are better leveraged by a community with a culture of information sharing across companies and industries.
"The Boulder Thesis", Feld's framework for how to build a sustainable startup community:
- Entrepreneurs must lead the startup community.
- The leaders must have a long-term commitment.
- The startup community must be inclusive of anyone who wants to participate in it.
- The startup community must have continual activities that engage the entire entrepreneurial stack.
I define an entrepreneur as someone who has co-founded a company. I differentiate between "high-growth entrepreneurial companies" and "small businesses". Both are important, but they are different things. Entrepreneurial companies have the potential to be or are high-growth businesses whereas small businesses tend to be local, profitable, but slow-growth organizations.
Great entrepreneurial companies, such as Apple, Genentech, Microsoft, and Intel, were started during down economic cycles. It takes such a long time to create something powerful that, almost by definition, you'll go through several economic cycles on the path to glory.
Everyone in the startup community should have a perspective that having more people engaged in the startup community is good for the startup community. Building a startup community is not a zero-sum game in which there are winners and losers; if everyone engages, they and the entire community can all be winners.
There is no "leader of the leaders." The best startup communities are loosely organized and consist of broad, evolving networks of people. By having inclusive philosophies, it's very easy for new leaders to emerge organically. Furthermore, there are no votes, no hierarchy, no titles, and no specific roles. Since the leaders are entrepreneurs, they are used to ambiguity as well as a rapid and continuous evolution of the community.
The startup community is always evolving. If the entrepreneurial leaders try to control this evolution, they will fail and undermine their previous efforts. Instead, entrepreneurial leaders should embrace this evolution, encourage and support new things, people, and ideas, and recognize that other entrepreneurs' leadership is additive to the system. Rather than view it as a zero-sum game, in which there's a leader on top, they view it as a game with increasing returns, in which the larger the number of entrepreneurs involved, the more great things happen.
Finally, if you work for the government and are excited about entrepreneurship, don't be afraid to engage deeply as a participant in the startup community. This will be after hours and on weekends, just like everyone else. But you'll be welcomed. And who knows, you might decide to be an entrepreneur.
Universities have five resources relevant to entrepreneurship: students, professors, research labs, entrepreneurship programs, and technology transfer offices. The first two resources, which are people, are much more important than the last three, which are institutions. The idea that people are always more important than institutions is fundamental to creating a healthy startup community.
If someone is visiting from out of town, the leader should quickly introduce the person to about 10 people she thinks are relevant so the visitor can quickly get a bunch of meetings set up to explore the local startup community. Although a leader can occasionally chaperone a person around, it's more powerful to get the community to work by building a culture in which everyone in the community is willing to spend time with someone new in town.
On the idea of giving people who say they want to help a simple task to do, that will aid the community
A quarter of the time the person does the assignment and reports back. This is useful, because I can now filter this person into the category of "a doer." Every startup community needs people to do things; there are an infinite number of specific tasks that are needed on an ongoing basis. Finding people who are good at just getting stuff done is hard.
On experimenting and failing fast
One easy filter [for an idea or project] is whether leaders for the individual initiatives emerge on their own. If the leaders of the overall organization have to assign the initiatives, then these initiatives likely are of lower value. However, if participants in the organization or the broader startup community step up and take on the specific initiatives, their chance of succeeding is much higher.
Interestingly, I did notice the patriarch problem when I engaged with the Denver startup community. It was something that stood out early on; Boulder operated as a network and Denver operated as a hierarchy. In Denver, it mattered who you were, where you went to school, where you had worked, and who you knew. In contrast, the only thing that mattered in Boulder was what you did.
This pretty much sums up the difference in attitude I felt when moving to Liverpool from Cambridge. Liverpool welcomed me regardless, whereas Cambridge seemed full of the old guard who were passing judgement over whose ideas were worthy enough to indulge. Not exclusively, obviously, in either city, but noticeable.
Government is another instigator of feeder control. Although this happens at a federal, state, and local level, it's most obvious at a state level. A new governor is elected. After the typical six-month settling in process, he and the recently appointed head of economic development declare that innovation is a key driver of economic growth for the state and they convene an "innovation council." This innovation council takes another six months to get going while it recruits the appropriate high-profile members. It then creates a set of high-profile public events to spread innovation across the state. Everything is abstract, filled with pomp and circumstance, and usually disconnected from whatever is actually going on in the startup community.
[At the BDNT events] We were also getting regular requests for nametags. Surprisingly, the event still felt intimate, even though it was 40 percent new and averaged 250 people per month. We opted to try something different and went for chaos over formality. At the beginning of BDNT, the seated audience was asked to take one minute to meet someone new. The room erupted into a roar and it often took five minutes to quiet everyone down and start the show. Today each event begins using this icebreaker technique.
BDNT succeeded for the same reasons most startups succeed; a stubborn founder with a vision, an ability to creatively adapt to market demand, and free beer.
A dozen years ago, Phil Weiser, now the dean of the CU Law School, started an initiative that is now called the Silicon Flatirons Center. I tease Phil constantly about the name because I strongly believe "Silicon [Insert Geographic Landform here]" is not a good name for anything. He responds, as every dean should, that a significant financial contribution will cause a name change.
Too right. It was a playful swipe at "Silicon Whatever" that gave us the name for the Cathedral Valley group.
[The Silicon Flatiron Center] expanded the law school's entrepreneurial law clinic to get the law students out into the startup community via free legal support. They reached out to partner with entrepreneurship-minded individuals across campus to start the New Venture Challenge, a campus-wide business-plan competition. They used the Silicon Flatirons platform to regularly bring amazing, interesting people to the CU campus to engage with the Boulder startup community.
Because many of the government leaders, and almost all of the government employees, have never been entrepreneurs, they can't relate to the dynamics of how entrepreneurship really works.
Every quarter I see reports in the local newspaper about things like increased/decreased amount of VC activity in the quarter, the number of patents granted as an indicator of innovation activity, and monthly changes in unemployment. Our governor makes an annual state of the state address in which he focuses on the changes in the state's economic output. The business newspapers report annual earnings, change in stock prices, and total compensation of executives in the same way they report box scores in the sports section. Almost all of this information is irrelevant to a set of entrepreneurial leaders on a long-term journey to create a sustainable startup community.
One of my deeply held beliefs to the secret of success in life is to give before you get. In this approach, I am always willing to try to be helpful to anyone, without having a clear expectation of what is in it for me.
You rarely hear the words "What's in it for me?" around Boulder; rather it's "How can I be helpful?" Introductions flow freely, as do invitations. As I travel around the country, I hear people talking about how easy it is to engage with people in Boulder and how good karma flows freely. This is give before you get hard at work.
In a hierarchy, when someone suggests something, the immediate reaction is to start asking questions and try to figure out why it won't work. In a network, the opposite approach often happens. When someone suggests something, just respond with, "Awesome - go do it." They either will or they won't. You'll recognize this as being similar to the approach of giving people assignments. You get a natural filtering process. If someone doesn't move forward with an idea, no time was wasted. If they do, then the results appear and often more people get involved.
I've adopted this in Boulder. Whenever I want to have a long discussion with a CEO or founder who I'm working with, or need to work through something with someone, we often walk out the door of my office and make a loop around town. More and more, I see other entrepreneurs walking and talking to each other, working through whatever is on their mind, while changing the context from a small conference room to the great outdoors.
Each city [of the four main cities in Colorado, all within 2 hours drive of each other] has a strong individual identity, and civic pride causes many to work hard to highlight their city as the best in the state. This results in another missed opportunity to connect the startup communities in an effort to amplify entrepreneurship across the state.
Almost every person in the room was starting a business [...]. When they asked what they needed to get plugged into the patriarchs I met the night before, I said "Ignore them. If and when you are successful, they will come to you. Go do something great and don't worry about them."
In less than a year, the energy level in Colorado Springs is off the charts. Startups are coming out of the woodwork everywhere and the entrepreneurs are once again the leaders. The patriarchs didn't do it. The ones talking about it didn't do it. The government didn't do it. The entrepreneurs did it!
Less than one in fie of the fastest-growing companies in the United States take any venture capital at any point in their history. Less than 0.5 percent of all new businesses in the United States ever raise venture capital. Where do they get capital if they don't get venture capital and they're too nascent for banks? The usual ways: friends, family, credit cards, and, the best way of financing a business - from their own customers.