Friday, September 6, 2013

You Can’t Just Start Up Your Startups

By Alex Pearlstein, Director of Projects. 

I’ve been reading Brad Feld’s book Startup Communities: Building an Entrepreneurial Ecosystems in Your Community in which he reveals the fun and easy steps to transform any community in the world into an entrepreneurial hotbed. Feld is one of the co-founders of TechStars, fast becoming a brand name and guidepost for a new wave of startup “accelerators.” Accelerators are different from incubators in that entrepreneurial mentors guide the process, the residency term is finite and packed with programming, and the “demo day” for incubated companies is a make or break deadline for developing a viable company.

My description of his book is admittedly a bit cheeky, but Feld expressly states that just about any city/region can develop an entrepreneurial ecosystem if it just puts the right pieces in place. Apparently, many of these pieces involve having a bunch of young, talented, nerdy, Type-A white guys who really like each other, love to “network,” and aren’t afraid to sow their entrepreneurial oats over and over again until they succeed. Once that happens, they owe a debt to the “community” – Feld also calls it the entrepreneurial “stack” – to give back through mentorship and participation in numerous local events for – and by – the “community.” I’m not kidding about the white guy part; references to female entrepreneurs or entrepreneurs-of-color are few and far between in Feld’s manifesto. Brad also has many harsh words for just about anyone other than entrepreneurs trying to develop and sustain a technology ecosystem. If it’s not driven by entrepreneurs, it won’t work. Held up for criticism as unfit to be entrepreneurial standard-bearers are economic developers, anyone in government, and just about everyone in academia. We just don’t get what it means to be an entrepreneur and how to help other entrepreneurs succeed.

The core tenets of Feld’s model are basically that communities must be open, inclusive, non-risk-averse, egalitarian, and fertile ground for entrepreneurs to come together as a networked community to do stuff, plan stuff, meet a lot, eat pizza, drink coffee, talk a lot about potential business ideas, vet those business ideas, try to fund those business ideas, help each other make those business ideas work, and then repeat ad infinitum until you’re Silicon Valley. Yes, it takes time – but you’ll get there, young Skywalker! Sorry – being cheeky again. But it’s easy to be as Feld is often so smug and self-assured about his model. Of course, he’s speaking from his position as a leader of Boulder, Colorado’s startup community, renowned as one of the country’s most dynamic. His perspective might be a bit different if he were toiling out of any number of aging, dying, disinvested, dysfunctional cities peppering our national landscape. I’d like to see a follow up to Startup Communities called “Wind-Down Communities” in which Brad throws in the towel after failing to ignite an entrepreneurial firestorm in Deadsville, USA. Cheeky again – sorry about that.

What has really made me cynical about Feld’s thesis is a new report by Dane Stangler of the Kauffman Foundation called, “Path-Dependent Startup Hubs.” According to Stangler, “Regional entrepreneurship ecosystems, aka startup communities, are being studied and touted as the next new thing in economic development for cities and metropolitan areas across the country…And for good reason.” As recent data have shown, companies with fewer than 50 employees have brought our country out of recession. But Stangler’s research also identified this little tidbit: “The adoption in recent years of new entrepreneurship programs in many cities is perhaps more an indication of the underlying strength of the region and its base of talent on which those programs can build than it is a cause of startup activity.” In other words, the rich get richer. While Brad Feld seems to think that all a community needs to do is be open, network its entrepreneurs, have them create cool programs, and just watch the successful companies sprout from the ground like weeds, he fails to ever acknowledge that you need the entrepreneurs there in the first place to even have a chance of being a startup hub. Yes, he credits the University of Colorado, Boulder as being a great source of young tech talent, but he fails to lay out a Plan B if you don’t have this infinite fount of Baby Bezoses or Gerber Gateses. Or, if you have a major university, but you’re not a place where anyone wants to stay past college.

In other words, what Feld doesn’t acknowledge or understand is that there are some communities where smart young people just don’t want to be. In fact, there are a lot of communities like this. And applying his Startup 101 principles in these places just ain’t gonna work. What they have to do first is become “stickier” communities for talent and THEN try to be startup hubs. “Sticky” places feature the types of amenities and lifestyles that appeal to talented folks who can basically choose to live wherever they want. Austin, Texas is a famously sticky place; so too Atlanta; so too the San Francisco Bay Area, Seattle, Portland, D.C., Research Triangle, Dallas, New York, Houston, etc. – basically, all the places that show up on the “ten best” lists and have the country’s strongest economies. If your community is more slippery than sticky at this point, about all you can do is apply the glue one layer at a time by strategizing how to make your economy, built environment, arts and cultural capacity, recreation amenities, downtown districts, neighborhoods, public schools, live music scene, and a hundred other criteria as competitive as possible for top companies and talent.

Anyway. Read Feld’s book for yourself and decide if it makes sense for your community. There’s some good stuff in there; I don’t want to imply that there isn’t. But also take his advice with a grain of salt. It’s easier to get to the top of the mountain when you’re already most of the way up.