This post comes to us from Steve Blank.
How to build regional entrepreneurial communities has just gotten it’s first “here’s how to do it” book. Brad Feld’s new book Startup Communities joins the two other “must reads,” (Regional Advantage and Startup Nation) and one “must view” (The Secret History of Silicon Valley) for anyone trying to understand the components of a regional cluster.
There’s probably no one more qualified to write this book then Brad Feld (startup founder, co founder of two VC firms – Mobius and Foundry, and founder of TechStars.)
Leaders and Feeders
Feld’s thesis is that, unlike the common wisdom, it is entrepreneurs that lead a startup community while everyone else feeds the community.
Feld describes the characteristics of those who want to be regional Entrepreneurial Leaders; they need to be committed to their region for the long term (20+ years), the community and its leaders must be inclusive, play a non-zero sum game, be mentorship-driven, and be comfortable experimenting and failing fast.
Feeders include the government, universities, investors, mentors, service providers, and large companies. He points out that some of these, government groups, universities, and investors think of themselves as the leaders and that we’ve gotten that wrong for decades.
This is a huge insight, a big idea, and a fresh way to view and build a regional ecosystem in the 21st century. It may even be right.
Activities and Events
One of the most surprising observations (to me) was that a regional community must have continual activities and events to engage all participants. Using Boulder Colorado as an example, (Feld’s home town) he showed how this small entrepreneurial community runs office hours, Boulder Denver Tech Meetup, Boulder Open Coffee Club, Ignite Boulder, Boulder Beta, Boulder Startup Digest, Startup Weekend events, CU New Venture Challenge, Boulder Startup Week, Young Entrepreneurs Organization, and the Entrepreneurs Foundation of Colorado. For a city of 100,000 (in a metro area of just 300,000 people), the list of activities/events in Boulder takes your breath away. They are not run by the government or any single organization. These are all grassroots efforts by entrepreneurial leaders. These events are a good proxy for the health and depth of a startup community.
Incubators and Accelerators
One of the best definitions in the book is when Feld articulates the difference between an incubator and an accelerator. An incubator provides year-round physical space, infrastructure, and advice in exchange for a fee (often in equity). They are typically non-profit and attached to a university (or in some locations a local government.) For some incubators, entrepreneurs can stay as long as they want. There is no guaranteed funding. In contrast, an accelerator has cohorts going through a program of a set length, with funding typically provided at the end.
Feld describes TechStars (founded in 2006 with David Cohen) as an example of how to build a regional accelerator. In contrast to other accelerators, TechStars is mentor-driven, with a profound belief that entrepreneurs learn best from other entrepreneurs. It’s a 90-day program with a clear beginning and end for each cohort. TechStars’ selection criteria is to first focus on picking the right team, then the market. They invest $118,000 ($18k seed funding + $100K convertible note) in 10 teams per region.
Role of Universities
To the entrepreneurial community Stanford and MIT are held up as models for “outward-facing” research universities. They act as community catalysts, as a magnet for great entrepreneurial talent for the region, and as teachers and then a pipeline for talent back into the region. Their research also offers a continual stream of new technologies to be commercialized.
Feld’s observation is that that these schools are exceptions that are hard to duplicate. In most universities, entrepreneurial engagement is not rewarded, there’s a lack of resources for entrepreneurial programs, and cross-campus collaboration is not in the DNA of most universities.
Rather than thinking of the local university as the leader, Feld posits that a more effective approach is to use the local college or university as a resource and a feeder of entrepreneurial students into the local entrepreneurial community. He uses University of Colorado – Boulder as an example of a regional university being as inclusive as possible with courses, programs, and activities.
Finally, he suggests engaging alumni for something other than fundraising – bringing them back to the campus, having them mentor top students and celebrating their successes.
Role of Government
Feld is not a big fan of top-down government-driven clusters. He contrasts the disconnect between entrepreneurs and government. Entrepreneurs are painfully self-aware, but governments are chronically not self-aware. This makes government leaders out of touch with how the dynamics of startups really work. Governments have a top-down command and control hierarchy, while entrepreneurs work in a bottoms-up networked world. Governments tend to focus on macro metrics of economic development policy, while entrepreneurs talk about lean startups, people, and product. Entrepreneurs talk about immediate action, while government conversations about policy do not have urgency. Startups aim for immediate impact, while governments want to control. Startup communities are networked and don’t lend themselves to a command and control system.
Feld believes that the Community Culture, how individuals interact and behave to each other, is a key part of defining an entrepreneurial community. His list of cultural attributes is an integral part of Silicon Valley. Give before you get, (in the valley we call this the “pay it forward” culture.) Everyone is a mentor, so share your knowledge and give back. Embrace weirdness, describes a community culture that accepts differences. (Starting post World War II, the San Francisco Bay Area became a magnet for those wanting to embrace alternate lifestyles. For personal lifestyles, people headed to San Francisco. For alternate business lifestyles, they went 35 miles south to Silicon Valley.)
I was surprised to note that the biggest cultural meme of Silicon Valley didn’t make his Community Culture chapter - failure equals experience.
Broadening the Startup Community
Feld closes by highlighting some of the issues a startup community in Boulder faces. The one he calls Parallel Universes notes that there may be industry-specific (biotech, clean tech etc.) startup communities sitting side-by-side and not interacting with each other.
He then busts the two big myths clusters tell themselves:“Let’s be like Silicon Valley,” and the “There’s not enough capital here.”
There’s data that seems to indicate a few of Feld’s claims about the limited role of venture, universities, and governments might be overly broad (but doesn’t diminish his observation that they’re feeders not leaders). In addition, while Silicon Valley was a series of happy accidents, other national clusters have extracted its lessons and successfully engineered on top of those heuristics. And I might have misread Feld’s premise about local venture capital, but it seems to be, “If there isn’t robust venture capital in your region, it’s because there isn’t a vibrant entrepreneurial community with great startups. As venture capital exists to service startups, investors will show up when startups are built.” Wow.
Finally, local government top-down initiatives are not the only way governments can incentivize entrepreneurial efforts. Some, like the National Science Foundation Innovation Corps, have had a big bang for little bucks.
Entrepreneurship is rising in almost every major city and region around the world. I host at least one region a week, and each of these regions are looking for a roadmap. Startup Communities is it. It’s a strategic, groundbreaking book and a major addition to what was missing in the discussion of how to build a regional cluster. I’m going to be quoting from it liberally, stealing from it often, and handing it out to my visitors.
This post initially appeared on Steve Blank’s blog. Blank is a retired serial entrepreneur now teaching entrepreneurship at UC Berkeley, Stanford, and Columbia