Start Up Communities[ an entrepreneurial ecosystem] A book by Brad Feld By Mercy Setiawan. Merah Putih Inc. 2013
Start Up CommunityBrad Feld is using Boulder startup community as an example. New approach to build a community = Boulder Thesis.
Principles of a Vibrant Startup CommunityEconomic Sociology Geography
Economic External Economies Factors Accounting Services Specialized Suppliers Direct Legal economic benefit to companies Startup s in located within commonInfrastructures geographic Labor pools a startup area community. Share fixed costs of these resources Average cost per startup drops
Sociology Community with a culture of information sharing across companies & industries (Example: Silicon Valley) Horizontal exchange of information across and between companies Respond to Share Adopt new Leverage newinformation trends Innovations condition Densely Networked Culture Successful Industrial Adaption
Geography Creative class Creative Creative individual class class individual individual A location with many Creative Creative Creative class class individual Class individual Creative ClassComponents Characteristics• Entrepreneurs • Want to live in nice places,• Engineers • Enjoy culture with a tolerance for new ideas & weirdness• Professors • Want to be around other creative-class individuals• Artists
The Boulder Thesis1. ENTREPRENEURS must lead the startup communities.2. The leaders must have a LONG-TERM COMMITMENT.3. The startup community must be INCLUSIVE of anyone who wants to participate in it.4. The startup community must have continual ACTIVITIES / EVENTS that engage the entire entrepreneurial stack.
Participants in Startup Community Startup Community Leaders Feeders
LeaderThe leaders of a startup community must be theentrepreneurs.Characteristics: Long-term commitment Inclusive of anyone who wants to engage with the startup community Actively involved Play non-zero sum game Mentorship driven Experiment & Fail fast
Feeders• Government They existed to support rather than to lead• Universities Great conveyer of entrepreneurship• Investors VC & Angel Investors• Mentors Those who help but hope no economic rewards• Service Providers Lawyers, accountant, etc. who invest their time and energy for no charge in early stage.• Large Companies
Classical Problem• Patriarch Problem• Complaining about capital• Being too reliant on government• Making short-term commitments• Having bias against new-comers• Attempt by a feeder to control the community• Having a cultural risk aversion• Avoiding people because of their past failure
Patriarch Problem Situation SolutionsOperated as HierarchyIt mattered :- who you were, Operated as a Network- where you went to school, The only thing that mattered is :- where you had worked, and what you did.- who you knew
Complaining about capital Situation Solutions Raise the capital they need. There is always an imbalancebetween supply of capital and demand for capital. Focus on creating business itself.
Being too reliant on government Situation Solutions• Government = leader.• Government has less money than people think it does.• No background as entrepreneurs.• Moves at slower pace In contrast, the best startup communities operate as networks:Government operates a hierarchy. There is rarely a leader of a network, just nodes that are interconnected.
Making short-term commitments Situation Solutions Need to be committed and keep Building a startup community building their companies. takes a long time.It takes a generation of effort toget a startup community up and running in a sustainable way. Additional effort to lead the startup community
Having bias against new-comers Situation SolutionsMany cities ran as hierarchies. Welcome newcomer.Newcomers had to wait to earn their way into the hierarchy. Invite them to join every activities they want to be involved in.
Feeder want to control the community Situation Solutions Network should drives an entity, notFeeders try to control: hierarchy- VC‟s- Government- University Use warning sign when you see top- down control over all activities.
Having a cultural risk aversion Situation Solutions Take more chances and give their A concern about investing time in effort time boundaries.something that doesn‟t have impact. If it fails, change it or kill it Just ignore the existing hierarchy. IfFear of rejection by other leaders in your initiative doesn‟t work, try the startup community. another one.
Avoiding people because of past failure Situation Solutions Let go and embrace the failed entrepreneurFailed entrepreneurs was being avoided because of his failure Shift the culture around failure in a positive way.
Holding Activities & Events• Organization• Tech Meet-up• Open Coffee Club• Start Up Weekend• Ignite• Startup Week
Roles of UniversityUniversity Smart Young People
The Power of AlumniUniversity could leverage the power ofentrepreneurial alumni : ▫ Bring alumni back to campus ▫ Create a mentor relationship with the alumni and a top student in his area ▫ Highlight the alumni publicly
Accelerators Vs. Incubators Accelerators Incubators Rigorous Application Process Rigorous Application Process Provides business resources Provides business resources Access to investors Access to investors Shorter period of time Longer period of time Rapid Growth Nurturing Development Hands-on mentorship External mentorship teamsSmall – seed investment for equity Fee for service / space (sometime s equity) „Fail-fast‟ mentality Long-term relationship Improved chance of success Improved chance of success in long term
Community Culture• Give before you get• Everyone is a mentor• Embrace weirdness• Be open to any ideas• Be honest• Go for a walk• The importance of after-party
To Remember 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 will go through several economic cycles on the path to glory.”