I’m moving all the blogging around Startup Communities to a new place starting – well – now. This will be the last post here and I’ll eventually delete this blog since everything has been moved over the the Startup Communities blog. All of your comments have already been migrated – the only fail on my part is the feed (which I couldn’t port from WordPress to FeedBurner) and anyone who subscribed by email so you’ll have to resubscribe.
The new site is part of Startup Revolution, which is the name of the series for the four books I’m currently writing.
- Startup Communities: Building an Entrepreneurial Ecosystem in Your City
- Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur
- Startup Boards: Reinventing the Board of Directors to Better Support the Entrepreneur
- Startup Metrics: Making Sense of the Numbers in Your Startup
I’ll be launching Startup Revolution and all the corresponding blogs next week so you can get a sneak preview of them in their non-finished state if you want some amusement.
In the meantime, thanks for being part of the community – I hope to engage with you a lot going forward.
Fred Wilson from Union Square Ventures has an extraordinary post up titled The Darwinian Evolution of Startup Hubs. Fred was part of the first cycle of the NYC startup community in the 1990’s and has played a key role in the development of evolution of it, while not limiting himself to only participating in startups in NYC. As a result, he’s got broad perspective about startup communities and the post he writes is right on the money. The conversation in his comments are great – go participate over there if you have comments.
This weekend finds NYC in between Internet Week (which I largely missed because of my London trip) and Disrupt NYC (which I will be at on and off this coming week). So the development of NYC as a startup hub is very much on my mind. And so I thought I’d post about the development of startup hubs.
This theory, which I like the call The Darwinian Evolution of Startup Hubs, is not new and I certainly didn’t come up with it. But I think it is important for everyone to understand and so I’m going to blog about it.
If you study Silicon Valley, what you see is something that looks like a forest where trees grow tall, produce seeds that drop and start new trees, and eventually the older trees mature and stop growing or worse, die of disease and rot, but the new trees grow up even taller and stronger.
In my mental model of Silicon Valley, the first “tree” was Fairchild Semiconductor (founded in 1957) which begat Intel (founded 1968) which begat Apple (1976) and Oracle (1977), which begat Sun (1982), Silicon Graphics (1981), and Cisco (1984) which begat Siebel (1993) and Netscape (1994), which begat Yahoo! (1995) and eBay (1995), which begat Google (1998) and PayPal (1998), which begat YouTube (2005), Facebook (2004), and LinkedIn (2003) which begat Twitter (2006) and Zynga (2007), which begat Square (2010), Dropbox (2008), and many more.
If I left out important foundational companies of this mental model, please forgive me. That was not meant to be a comprehensive history. It was meant to illustrate how this evolutionary scenario plays out over time.
If you drill down a bit deeper, you see that the founders, investors and early employees generate a tremendous amount of wealth from these big successes. The later employees don’t make as much wealth but they do learn a ton and make enough money that they don’t need to work for someone else and so they strike out on their own and are often funded by the folks who made the big money in the prior startup. That’s how the seed drops from the tree and starts a new tree growing. This continues on and on and on.
If you look at that history of silicon valley, you see that in the forty year history (since Intel’s formation), there have been close to ten cycles of maturation and new company formation, and those cycles are getting shorter and the number of important foundational companies that are formed each cycle are increasing.
That makes total sense since this darwinian evolutionary model is non linear. One company begets two and those two companies beget four, and so on and so forth. Of course there are exogenous factors that also play out, like technology changes, financial market cycles, and the availability and cost of talent, and they impact how fast the startup hub economy expands.
This darwinian evolutionary model of startup hub development is not limited to silicon valley. We have seen it play out in other places, most notably Boston, and increasingly in NYC. It is also playing out in markets like Boulder Colorado and Austin Texas and many other parts of the US and many parts of the world.
When I look at a startup hub, I like to figure out what the “Fairchild Semiconductor” of that market was and when it got started. That tells me how far along the development cycle that startup hub is. In NYC, that was Doubleclick which was founded in 1996, the same year as my first venture capital firm, Flatiron Partners, which was founded on two premises, that the Internet would be big and that NYC would be an important locus of Internet innovation. We did not invest in Doubleclick (sadly) but we did invest in a lot of interesting Internet companies in NYC in the late 90s.
So NYC’s startub ecosystem is 16 years old now. And we are two cycles in. The companies that are getting started and funded right now in NYC are akin to the Apple/Oracle stage of silicon valley. If you want to push, you could suggest that we are three cycles in now and the companies that are getting funded right now are akin to the Sun/Silicon Graphics/Cisco era. That might be right.
But in any case, NYC’s tech sector is not anywhere close in terms of fertility to silicon valley. It will be there in another 25 to 30 years. And silicon valley will be even further along.
Unless, of course, something else happens.
The technological revolution that preceded the digital revolution was autos and airplanes. They were invented in the late 19th and early 20th centuries and the first commercial startups emerged in the first decade of the 20th century. The auto/airplane revolution played out until the 1960s/1970s. That suggests that a technology revolution lasts around 75 years.
The transistor was invented in the late 1940s and by 1958 we had commercial startups working on the technology. So if this revolution is anything like the last, the next big thing will be invented any day now and within a decade or two we will be on to the next technology revolution.
And in that case, all bets are off. Silicon Valley could become the next Detroit and who knows what will be the next Silicon Valley.
But of course, all of this is conjecture. History doesn’t repeat itself. But it does rhyme. That comes from Samuel Clemens (aka Mark Twain). One of my favorite people ever.
Muneeb Ali, a CS PhD student at Princeton, and I went back and forth on email recently about personal productivity. We eventually started talking about startup communities and he mentioned he’s a member of the Princeton Entrepreneurship Club. I asked if he’s put together a short overview of what’s going on at Princeton around startups these days – it follows.
If you catch the 09:01am train from Penn Station New York, you can reach Princeton in 68 minutes. More and more people involved in the thriving startup ecosystem of NYC have started making that trip. Once you reach Princeton, amongst the gothic architecture you’ll not only hear a chatter about liberal arts and politics, but will find a strong computer science, mathematics, and engineering culture as well. Most of this engineering talent used to go to Wall St or big tech companies like Google or Microsoft after graduation. However, recently there is an increased interest in starting or joining startups. Princeton doesn’t have a business school and entrepreneurship is viewed more as a way of contributing to economic growth and for taking a leadership role in society rather than a way of making money. In this post, we’re going to talk about what the startup ecosystem currently looks like in the small university town of Princeton, and what direction is it taking.
Small college towns are an interesting data point in startup communities. Young, motivated students bring a lot of energy to the community, experienced faculty members are there to provide mentorship, and potential cofounders can be found in random hallways in college dorms. Princeton is no different, only that it’s easier for students here to believe that they can change the world as they get easy access to people who, well, have changed the world. The startup ecosystem at Princeton can be divided into a) undergrad education and initiatives, b) faculty research and graduate students, and c) the community around Princeton town. Out of the three, the undergrads are the most enthusiastic so we’ll cover them first.
Interest in entrepreneurship and engineering is increasing every year amongst undergrads as indicated by the increasing sizes of computer science classes every year in general (in some courses by 3x!) and by the inreasing interest in entrepreneurship courses in particular. At Princeton, most university initiatives to promote entrepreneurship are managed by the Keller Center. These activities range from offering courses like High-Tech Entrepreneurship by Ed Zschau (the course that Tim Ferriss took and famously talks about in 4-Hour Work Week), to offering internship programs and organizing talks. Apart from university initiatives student-run grass root initiatives are also very popular on campus. Be it a 60 seconds pitch competition like Princeton Pitch or taking students on TigerTreks for visiting startups and entrepreneurs, you can trust the Princeton Eclub for making it happen. The Eclub is almost entirely run by undergrads and graduate students are largely absent from the scene (which is why we’ll cover them with faculty and research). The two most visible events organized by the Eclub are the TigerLaunch competition (similar to MIT 100K, but smaller) and the recent East Coast Startup Summit. It’s interesting to see that some past winners of the TigerLaunch competition, like Artsy and Memrise, took their winning ideas and transformed them into venture-backed startups. Now such companies serve as role models for the next batch of young Princeton entrepreneurs.
Interest in entrepreneurship is not just limited to undergrads, but the faculty and grad students also commercialize their research every now and then. Some recent examples are Data Domain (cloud backups company by Prof. Kai Li and acquired by EMC for $2.1 billion dollars), and CoBlitz (content delivery service by Prof. Vivek Pai and others and acquired by Verivue). Also, sometimes PhD research of grad students also gets commercialized by them as in the case of Ge Wang with Smule. University channels and policies for commercializing research seem to work, but much like any regulatory body there is obviously need for improvement as pointed out by some students.
The community around Princeton town is small, but the beautiful scenery, easy access to university resources, and small commute from NYC is attracting a few startups to be based out of Princeton e.g., Princeton Power Systems. A recent great development is a startup incubator, called TigerLabs, that will be accepting its first batch this summer. Princeton alumni are also fairly active in promoting entrepreneurship and hold an annual conference with the alumni homecoming. There are also local initiatives like the Tigers Meetup in NYC that are beginning to promote entrepreneurship in different cities. At this point these efforts may seem small and it might be hard to see Princeton as the Palo Alto of the Greater New York startup scene, but that might slowly change in the coming years.
Today’s guest post is from Jerry Colonna. Jerry is a long time friend, retired extraordinary VC, and now a CEO coach. Jerry completely groks the notion of mentorship and write a beautiful vignette on it which follows.
I first noticed his eyebrows. Bushy, steel-gray, they danced when he agreed with me.
It was the first of a half a dozen talks I was scheduled to give that week in Ljubljana. This night I was the guest of both the US Embassy in Slovenia and CEED and I was there to speak about the importance of mentoring in the building of startup community. My subtler mission was to convince many in the room to be mentors.
Born in Socialist era, when Slovenia was a part of the Republic of Yugoslavia, most of the 100 or so folks in the room, it seemed from their stony faces and crossed arms, were still a little suspicious of the emphasis on entrepreneurship taking hold in the city.
“They don’t know,” I continued speaking about the young mentees dominating the nascent tech scene. “They don’t know the cost of missed football games, dance recitals, spelling bees, and dinners with the family.”
And I knew I had him. The bushy eyebrows arched so high in vehement agreement that it threw his head back. It then came down in a deep nod. “They don’t know about the dangers of disappearing into the fire.“
Even the stoniest children-of-Socialism-now-captains-of-industry were sitting up.
I moved on. I read to them from an email I’d received in April, after my first visit to the area. In that note, a young entrepreneur spoke not only of the frustration of raising capital–something he understood was a challenge everywhere-but of the alienation and isolation. Growing up in an era of small, flat worlds and in the belief that he could help create the next Google, he was disheartened by the beliefs of the older generation. That group, satisfied with lifetime employment in the Postal Service and a little house in the country, openly criticized the risk tasking, the ambitions, and the desires for something more that is such an intrinsic part of entrepreneurship.
Frustrated by this lack of acceptance, lack of understanding (manifested, for example, in a law only recently passed that forbade anyone who’d lead a business that failed from starting a new business for ten years–the law, thankfully, overturned by the Courts), he was moving to London. After all, he wrote, he wished he’d been Born Somewhere Else.
Finished with the excerpts from the email, the whole room was now sitting up. The young guy could be their son, their grandson. This young man, and the men and women with whom he struggled everyday to create an enterprise out the nothing more than an idea, these people on whom so much of this tiny country’s economic future rests, was leaving.
My thoughts about what makes a startup community grow from a Silicon Valley-wannabe into a vibrant and integral component of local economy aren’t particularly earth shattering or unique. They stem, though, from having had the good fortune of sitting beside people like Fred Wilson and the dozens of others who helped grow this community in NY into something expansive and exciting.
Put simply, the entrepreneurial ecosystem needs seven things:
- Government Support
- Local Capital
It needs the entrepreneurs, staff and opportunities to create interesting companies. It needs the support of government (or, at a minimum, the non-interference of government where crazy laws that criminalize risk-taking are not the norm), universities, and local capital.
But, most of all, it needs Elders. That is, Mentors, coaches, Angel Investors; people who can serve informally and formally as guides. Their roles vary…from providing the seed capital to germinate ideas to providing a steadying, calm demeanor making the roller coaster of the startup experience just slightly easier to bear. “An Elder,” I say in my talks on the subject, “isn’t merely someone with grayer hair. It can be the CEO of the company next door who is two months ahead of you in their fundraising process. It can be the CTO of that failed company whom you bring in not just for their technical capability but for their experience in having lived through a failure and knowing that there’s life after failure.”
Elders come in all forms.
The day after my talk on mentoring, I ran a miniature version of my Disappearing into the Fire Workshop. The room was filled with 150 entrepreneurs, each at varying stages in their journey. And one man stood out. To my right, the bushy eye browed grandfather–a local professor of business as it turned out–sat erect and grinning. In my mind, he’d come to personify the Elder and I was thrilled he was there.
Later, at the break, I made my way to him. Gripping his strong weathered hands, I asked if he was enjoying the talks. Yes, yes, he said, he very much understood the need for mentoring and was happy to help. But then he leaned in close to me, whispering into my ear, “But really I’m here to learn because I have this idea. I know it can be the next Google.”
Kyle York had a great post up on his blog a few weeks ago titled How To Build A Startup Ecosystem In A Small City. In it, he describes what’s going on in Manchester, New Hampshire, how it’s being led by entrepreneurs, what their motivations are, and what they are doing. It’s inspirational and shows what can be done in a city of 110,000 people. I asked if I could repost it verbatim and he said yes – here it is!
When talking about our individual and collective efforts to create a startup ecosystem in Manchester, NH, our leadership consistently hears, “That’s great, but c’mon. What’s in it for Dyn?”
To answer this question, you must first understand our roots. Co-founders Jeremy Hitchcock (CEO) and Tom Daly (CTO) were both brought up in the greater Manchester area and attended Manchester high schools. I actually met Jeremy in the halls of our middle school in the neighboring town of Bedford, way back in the mid 90’s.
Gray Chynoweth (COO) grew up 20 minutes north in Canterbury and breathes the state motto of “Live Free or Die”, while Josh Delisle (VP of Worldwide Sales) touts Amherst as his hometown. Joe Raczka (VP of Finance) is a Bedford alum, just like Jeremy and I. Matt Toy (VP of Client Services) hails from New London.
Cory von Wallenstein (CPO)? Well, he finally bought in and moved here two years ago from Massachusetts to join the movement. Like Cory, nearly every Dyn employee has bought in to the NH way of life and has their own unique story to tell.
For me, I grew up the middle child in a family of five sons. My parents worked their asses off and still own and operate a localsporting goods and screen printing business. They taught me everything I needed to know about business and community from a very early age (like trust and commitment) and have never wavered from that.
I went to college at Bentley in Waltham, MA, moved to California for a few years and was lured back home after being recruited by Jeremy. New Hampshire has a certain pride to it, a connection and pull for people who grew up and/or live(d) here.
It’s hard for outsiders to understand. It can be hard for us to explain.
Many people know of NH because they vacation here, but we have long been recognized as being a great place to live and raise a family and is often designated a small business oriented state. We couldn’t agree more, but with one difference.
I always say that entrepreneurs of yesterday opened up sporting goods stores (like my folks), pizza parlors, jewelry businesses and flower shops, while entrepreneurs of today do the same — just online in a global marketplace with a global audience.
The entire startup mentality is based around this “stick it to the man” attitude, but we simply have the Internet (ex: a domain name thanks to the best managed DNS company on the planet) as our home address, not Main Street in a traditional brick and mortar location that requires foot traffic to stay alive.
We are at the center of the business landscape of the state and we always challenge ourselves to be the next Boulder, CO, or Austin, TX, when it comes to startup hubs. Here’s what a local publication said about our quest.
Our parents set the foundation for us to care about community, to care about the local economy and to realize our ability to leave an impact in creating jobs, creating wealth and creating relevance in the process. We could run our business anywhere, but we choose to do it here. In Manchester, we aren’t just another tech company in the crowd and want to leave a legacy for our kids and grandkids.
Yes, it’s idealistic. Yes, it’s naive. Yes, it’s bold dreaming. But I actually think that’s the great inspiration for it all.
With our involvement in organizations like (see DynCares) the abi Innovation Hub, NH High Technology Council,TechHampshire, StayWorkPlayNH, SNHU, The Community College System of NH, NH Catholic Charities, Big Brothers Big Sisters NH, US First, Families in Transition and the Manchester Young Professionals Network and in startup advising/boards/investment/founding like Trendslide, Mosaic, Incutio, Ruustr, Carrier Pigeon, salesonrails, 1band 1brandand more, we’re just now scratching the surface. Dyn is our launching pad and it’s engrained in our culture and brand.
So back to the question of “What’s in it for Dyn?”. Isn’t it obvious?
We grew up here. We love it here, especially the work/life balance you can create. We believe in the NH advantage when it comes to limited taxes, no traffic, low crime, affordable housing, good schools and access to lakes, beaches, mountains and Boston. Heck, people even tweet about it with the hashtags #MHT #NH. (Okay, maybe we started that, but still.)
It truly is all about the people. We promise long-term opportunity to everyone we recruit and hire at Dyn. By creating an innovation and technology ecosystem in NH, we’re creating a foundation to be able to prove it long-term. At Dyn, we’ve established a wonderful foundation to build upon. So, when people ask us again, “What’s in it for Dyn?,” we’ll simply share this blog post.
If you have interest in starting or moving your company to NH, please contact Jamie Coughlin, CEO at the abi Innovation Hub or drop us a line. I’m also easy to find right here in New Hampshire if I’m not globetrotting the world telling the story of why we love NH so damn much.
It’s Sunday so rather than loading you up with another story from another city, I thought I’d pass on two great pieces of advice that I heard recently from Claire Tischer of TechStars. When I reflected on these, they felt like powerful core beliefs that every entrepreneur should carry around with her, especially when working on the very long term mission of building a sustainable startup community. Following are her words.
“There are only two mantras, yum and yuck, mine is yum.” – Tom Robbins. The glass is half full, optimism will get you everywhere – there are lots of cliches that say the same thing and this is much easier said than done. I have heard countless stories from founders about how they were wronged/abused, what was unfair, something that should have gone differently to gain a better outcome, and so forth. The most successful entrepreneuers I know are the people who took a negative experience, such as a bad interaction with a potential investor, and twisted into an insightful, positive opportunity. For example: “Now I know what kind of investor I don’t want. What a gift. Moving on!”
Don’t show me your feathers. This is a peacock analogy. Male peacocks display their colorful plumage when they’re courting another peacock, an attempt at dazzling with an array of impressive colors. The story of ego / hubris as a fatal flaw is a tired and familiar topic in entrepreneurship, yet many entrepreneurs and community members tend to dwell on past accomplishments and successes more than they quietly, humbly work to build new ones. While not minimizing what you have managed to do so far, show people what you are going to do and how you’ll be better at it than anyone ever has been before. Then prove your case and collaborate with as many people in the community as possible. You can show your collective group feathers when you’re finished the second time. The by-product is strong community so it’s a win even if you don’t end up where you tried to be.
This week is Ohio week on Startup Communities. Yesterday we talked about Cleveland, today we are talking about Cincinnati. David Knox, the co-founder of The Brandery and Chief Marketing Officer of Rockfish Interactive weighs in with his thoughts on Cincinnati’s use of one of its natural resources – the “brand” – in the development of its startup community. In addition to talking about a key natural resource of the community, he also describes how the Cincinnati startup community is leveraging feeders such as the business community and the local university.
Dave starts off with a quote from Dave McClure, which while I don’t agree with, is nicely provocative: “And to be honest, design and marketing aren’t just EQUALLY important as engineering… designers, product managers & [technical, analytical] marketers are usually WAY MORE IMPORTANT than coders.” – Dave McClure of 500 Startups
In the business world, Cincinnati is best known as a “Brand Town”. As the global headquarters for Procter & Gamble, Brand Management was literally invented in Cincinnati, a town that is also home to fellow Fortune 100 companies Kroger and Macy’s. In fact, 9 Fortune 500 companies call Cincinnati home, resulting in the second highest per capita number of Fortune 500 headquarters in the U.S.
This concentration of major companies has created a business ecosystem that revolves design and marketing. Cincinnati is filled with graphic designers, market researchers, advertising agencies and analytical marketers who have helped the region emerge as a global hub for branding and design.
Over the last few years, start-ups in Cincinnati have begun to recognize that this expertise in consumer marketing is one of the region’s most valuable natural resources. Cincinnati’s entrepreneurial community is rallying around this natural resource, applying the region’s strength in design and marketing to bring their startup brands to life.
At the center of this movement is The Brandery (applications for the 2012 program are open), which is showing the power of startup accelerators to catalyze a community around a natural resource. Before The Brandery was launched in 2010, Cincinnati’s startup community was struggling to find common ground. The region had seen success in life sciences with startups such as AssureRX, as well some traction in information technology and advanced materials. But these industries did not create a critical mass of entrepreneurial density in the startup community.
Enter The Brandery, which in fewer than 2 years has started to gain national attention for Cincinnati’s entrepreneurial community by focusing on Consumer Marketing, the natural resource of the region. The result of this focus is that The Brandery has been ranked as one of the Top 10 Startup Accelerators in the US, invited to be a charter member of the Global Accelerator Network, and attracted over a dozen new startups to the region.
The Brandery has achieved this success by placing entrepreneurs as the leaders, yet leveraging feeders to support the growth. The most important of these feeders have been the business community and local universities, both of which have played a significant role in supporting The Brandery:
Business Community as a Feeder: The thematic focus of The Brandery on Consumer Marketing is largely due to the region’s concentration of talent in this area. Cincinnati is not a town that is bursting with engineers, but it does have one of the most remarkable pools of designers and marketers in the country (if not the world). Startups at The Brandery are able to tap into this talent pool for world-class mentorship, as well as potential hires. Additionally, the startups are able to leverage mentors from companies such as Google, Get Satisfaction, and Facebook that regularly visit Cincinnati to call on marketers at P&G and Kroger. Additionally, startups at The Brandery also benefit from unique service providers such as marketing and design agencies like LPK, Landor, Rockfish, Possible Worldwide and Empower that donate their services to startups in the program. And finally, startups are able to leverage the business community of Cincinnati as early customers, gaining access to significant marketing dollars from brands in CPG, Food and Beverage, and Retail.
Local Universities as a Feeder: According to Entrepreneur Magazine, the Cincinnati region is home to three of the top 25 schools for undergraduate education in entrepreneurship (Miami University, Xavier University and University of Dayton). Additionally, the University of Cincinnati College of Design, Architecture, Art and Planning (DAAP) is consistently ranked in the top tier of international design schools. As a result, Cincinnati’s entrepreneurial community has a tremendous feeder for startup talent from the local universities.
Through programs such as The Brandery, Cincinnati is creating an entrepreneurial community that is built around brands and the region’s natural resource of design and marketing.