(Abridged) Building an Entrepreneurial Ecosystem Lessons from Omaha [Draft 5]

Summary
Tom Chapman is working to build a stronger
entrepreneurial ecosystem in Omaha and across
the Silicon Prairie (an area Chapman roughly
Building an defines as covering Minneapolis to Oklahoma

Entrepreneurial City from north to south and Nebraska to
Chicago east to west, though there is not a
Ecosystem generally agreed upon definition) from his
position as director of entrepreneurship and
Lessons from Omaha innovation at the Greater Omaha Chamber of
© Copyright Tom Chapman, 2011. All rights reserved. Commerce. In this paper Tom lays out the three
[Abridged Draft 5] major steps of his methodology for supporting
entrepreneurs (knowing and being honest about
By Tom Chapman
the area’s strengths; helping players connect;
Director of Entrepreneurship & Innovation
and building stronger teams) and then dissects
Greater Omaha Chamber of Commerce
five core elements of entrepreneurial ecosystems
tchapman@omahachamber.org
(human capital; financial capital; deal flow and
@tchap623
other metrics; a knowledgeable community;
Edited & Abridged by Amanda Styron and infrastructure) and four things
Community Builder communities should not do.
SEED HERE Tom’s people-centric approach to building the
amanda@seedhere.org ecosystem is focused on understanding the
@mandastyron ecosystem’s strengths, taking action to support
its health, building better startup teams and
connecting players appropriately. He sees the
Share your thoughts and additions to this role of economic development organizations as
paper online at: connectors who can help develop a clearer
http://www.slideshare.net/seedhere/building-an-
entrepreneurial-ecosystem-lessons-from-omaha-draft-5 understanding of the current startup landscape,
convene conversations among players, spread
A more in-depth version of this paper is information and success stories, support
available and recommended for economic transparency and lead helpful government
development professionals and others policy initiatives. His approach is infused with
looking for a deeper dive into Omaha’s humility and honesty.
ecosystem and the behind-the-scene stories
of Tom’s approach. Download and discuss it
at:
http://www.slideshare.net/seedhere/building-an-
entrepreneurial-ecosystem-lessons-from-omaha-draft-4

Building an Entrepreneurial Ecosystem: Lessons from Omaha
© Copyright Tom Chapman, 2011. All rights reserved.
1

Preface • I do not work alone. In fact, in many ways, I
In my work for the Greater Omaha Chamber am a smaller part of the ecosystem machine
of Commerce, I get asked a lot of questions than some other key players – funders,
about how to create an innovation and customers, media folks (like Silicon Prairie
entrepreneurial ecosystem. I don’t think we in News), entrepreneurs and local innovators.
Omaha have accomplished this feat…yet. Most of my job is to not get in the way but
help facilitate better interaction – be a
With that proviso, I will lay out the basics of catalyst, not an owner.
our strategy. •

• My perspective is highly biased by what I
First, a couple of things that shape my have worked on in Omaha. Numerous
perspective, approach and this paper that you parties have had unseen impacts and untold
should know up front: success. Finding these stories is often
• illuminating for me, and often this
• Omaha and Lincoln are essentially the same illumination happens well after I thought I
place for my work. I treat everything in
“understood.” It has been important for me
Nebraska and Iowa within 100 miles of to be willing to change my view and adjust
Omaha as my working canvas. Ecosystems
my insight.
do not stop at political or artificial
boundaries. If someone comes to Omaha to
see a collaborator, then they are a part of our Understanding Why Startups
ecosystem. Succeed and Fail
• In general, startups tend to happen in places
• I work for a Chamber of Commerce which where there exists human capital capable of
happens to be a good location for my work
thinking and executing on a strategy to serve a
here, but I do not think that it is the right customer that they understand and for which
place to do this work in many locations
they can iterate solutions. Human capital is
around the country. In all honesty, working
people, so we take a people-centric approach to
for a Chamber can also be a hindrance to my building our entrepreneurial ecosystem.
work. Many do not take me or my efforts
seriously because of who I work for. Most communities think that the failure of the
•

• I have a tremendous amount of freedom to entrepreneur is the failure to write a good
try things and fail in my job – thus, I am not business plan or understand business. We find
required to produce $100 million in venture that most companies fail for a human capital
capital by 2012 or else, so as you read this related reason.
paper, recognize that I am not always telling • Most companies do not fail due to a lack of
you about my failed attempts. I do try to capital – they under-perform to their
include some learnings, but it would be awful potential or they move – but they rarely fail
if I included all of my dumb mistakes. You for that reason.
will have to make some of these on your own. •

•

2

• Most companies do not fail because their We also find not-strengths (i.e. things that
technology was “too early” – they fail because appear to be strengths that are not) in our data.
customers did not want what they were Usually these are strengths in other areas that
selling. are assumed to be strengths across the board
•
(for example: universities). ese are definitely
• Most companies do not fail because they
don’t have an incubator in which to grow – not weaknesses, but don’t be caught in the cul-
de-sac of not-strengths – look at your data to
they fail because they can’t build a team that
determine real strengths. It also helps to
has the capability to build, sell and grow with
identify weaknesses.
just a few people.
To understand the ecosystem strengths in
Efforts to build an ecosystem by focusing on
Omaha we:
these things – writing business plans,
developing business skills, providing more • Try to see the world as it is and not as you
capital, developing ideas, and building would like it to be.
incubators – also fail. What startups need is • Focus on entrepreneurship and innovation
help finding customers, mentors, models, peers, and don’t get lost in economic indicators that
and collaborators that provide the needed are not important or particularly relevant to
information for launching and pivoting their these things.
business. e role of the economic • Are willing to share ecosystem information
development organization is to understand the openly, even if it is negative, to provide
ecosystem’s strengths and weaknesses, take feedback and pressure to improve.
action to support its health, focus on building • Do not punt on weaknesses. We talk about
better startup teams and connecting players them and you can effect change.
appropriately. As you take on this work, keep
your focus squarely on helping the
Step 2: Get as many people on the
entrepreneurs.
bus as you can and leave
Don’t try to get everyone and don’t wait - just
Step 1: Know Your Strengths go with as many people as you can reasonably
As economic development organizations, our get “on board.” Start with finding a couple of
role is to know our strengths better than
buses that already have people in them. Find
anyone, and to that end know our not- them and ask them how you can help. e goal
strengths and weaknesses too. Keep in mind,
is to help entrepreneurs emerge from their labs,
the apparent strengths of an economy for one closets and garages to find others who are
purpose are not always the strengths for an struggling with many of the same issues. One of
entrepreneurial ecosystem. For strengths, look
our organization’s best impacts is a significant
for clusters of companies in certain spaces that improvement in the depth and range of the
are growing and innovating.
networks in Omaha and within the
entrepreneurial ecosystem.

3

Here’s how we did it: needs better entrepreneurial and founding
teams. e most important thing is getting key
• Spent a large amount of time listening to
startups and connecting them with people inserted in the right key roles.
customers, collaborators, funders and peers. Our focus on building better core teams
• Created networking groups where there were involves:
none. Our community needed groups for
high-growth entrepreneurs, corporate • Knowing and supporting our serial
innovation champions, and investors. entrepreneurs. ey are gold. Find them and
love them. is is a select group and we treat
• Separated high-growth entrepreneurs from
small businesses to keep the focus on high- them like our economic development strategy
growth needs such as funding, workforce, is built around them – it is.
finding beta customers, or a technical/ • Looking for companies that produce
business founder or person, etc. interesting, entrepreneurial people that want
to start things.
• Once these peer groups gelled, they ask for
programs with the other groups. is is • Helping companies collaborate across
where the connecting power takes off. industries to create more spin outs.
• Helping companies develop a dynamic idea-
Warning: Don’t make these people/companies generating workplace with ambitious people
become members of your organization or some willing to take some risk to execute on hard
other pay-to-play event. In general, if this is a ideas.
membership effort, then you are already on a
route to failure. If you do a good job, they will Startups – and the people who run them – need
eventually pay-to-play. to be able to listen to their customers effectively
in their sales or marketing efforts and pivot
accordingly. Startups must be able to adjust and
Step 3. Study the elements of your adapt to find a place in the market. We work
ecosystem with Gallup to help startup teams:
e five basic elements of our ecosystem are
• Establish mission, vision and values
(1) human capital, (2) financial capital, (3) deal
• Understand the strengths of the team
flow and other metrics, (4) a knowledgeable
• Orient the team toward goals
community and (5) infrastructure.
If teams do a good job of getting the right
Human Capital people on the boat and find a good advisory
Human capital is the most difficult part of the board, many of the common failure issues
equation and the most important to get right. simply go away because the necessary advice is
e weakness that causes startups to fail is already built into the system. In most instances,
almost always a team weakness. Often it is not a economic development organizations simply
lack of skill within the team, but a lack of cannot offer this type of tangible help – that’s
understanding of how best to deploy talent why we are connectors in most instances.
within the company. To succeed, an ecosystem
4

Mentors & Models • Encourage media outlets to report
A critical aspect of the human capital information on deals
component of an ecosystem is the need to fully • Share disclose-able deal information ourselves
engage mentors and models into the efforts. via networks of all parties involved
Focus on developing a many-on-many
mentoring program and minimize the focus on e role of our organization is to be as aware of
buildings and accommodations. Peer-to-peer deals as we can be. We act to create
and many-to-many mentoring opportunities transparency in the market by letting other
are much more helpful and valuable to the companies know of information that is relevant
ecosystem. to their terms and disclose it whenever
appropriate.
Financial Capital
Liquidity is the ability for an investor to exit a
e core concepts to building financial markets
deal quickly so that they can invest in multiple
are transparency, liquidity and governance –
deals and leverage their cash more effectively
not sheer size of funds.
against debt or other financial vehicles.
A note on size: e size of deals (or the capital
Two key ways that we help liquidity are:
market) of an ecosystem is not as important as
the effort to build a sustainable capacity for • Hosting quarterly meetings of investors
capital up to a certain level that can be • Providing regular connections for
continued indefinitely. Of course, we want to entrepreneurs to investors
have periodic home run investments, but we
Governance - both formal and informal –
focus on creating a pipeline of smaller
creates consistency among deal frameworks and
investable deals each year and plan to for the
fosters transparency for the ecosystem.
next five years. Capacity (people, in our case)
can expand from there to fill opportunities as Government can strongly encourage people to
they are created. be creative and innovative through policy and
programs. When it comes to formal
Transparency is the ability of ecosystem players
governance, we work to:
to generally see the terms of deals that are being
executed in a market so that over time others • Align our policy efforts to the key hurdles and
operating in the market can plug-in reasonable assets of the ecosystem
expectations when the time arises for their own • Take advantage of the data created by
deals. regulations and reporting to both formally
acknowledge and to informally digest and
To build transparency, we look to: discern deals made in the area
• Network service professionals (accountants
Informal governance is making sure that
and lawyers) who work on both sides of
everyone can see bad actors and bad actions.
alternating deals with entrepreneurs and can
Our role in informal governance is to help
share general expectations

5

funders find each other and to build e biggest single impact entity of this effort to
transparency through familiarity and trust. build a knowledgeable community in Omaha is
You can’t force this. Silicon Prairie News* (SPN), a local online
news website focus on entrepreneurs, creatives
Deal Flow & Other Metrics and startups. We try to help them at every turn
We measure lots of little things in our and they, in turn, have been very kind in not
ecosystem and aggregate that data into an portraying us as stiff suits who do not know
“algorithm” to track our progress. We worked anything. Do not try to start an SPN in your
through many different indicators to determine city as economic developers - find and support
what made the most sense for our area and then an SPN waiting to happen in your city.
tested the algorithm with cities we expected to * http://.siliconprairienews.com
be higher or lower on the scale. e process of
constructing our measurement system has Infrastructure
powerfully shaped the way we think about our e core asset of an ecosystem is people, so
ecosystem and the companies, people, assets your core infrastructure needs to be people-
and data we pay attention to. Each ecosystem centric. Infrastructure for entrepreneurship and
will need to see their own data and work innovation is centered around teams and
through identifying the right metrics for the human capital, not sites and pipes. A solid
area to understand your comparative strength/ infrastructure will include events, media
weakness. connections, joint recruitment platforms, idea
collaboration and innovation-supporting
To start building an algorithm, start simply policies.
with:
To start supporting the infrastructure here, we
• Figure out what you think you should count
began by:
• Be creative and conventional - use some
metrics that everyone uses and some metrics • Learning where the entrepreneurs work and
that no one else uses hang out
• Count stuff and then build a basic weighted • Talking up our successful entrepreneurs and
algorithm then talking them up some more. We want
everyone in Omaha to know who the model
A Knowledgeable Community entrepreneurs and startups are here
A knowledgeable community in and around the • Telling entrepreneurs’ stories in traditional
ecosystem makes for a better networked and non-traditional media
ecosystem. We work to help the community • Being consistent and not just highlighting
develop a commonly understood vocabulary them when there is nothing better to talk
regarding entrepreneurship and high-growth about
companies by keeping relevant messages in
front of people and educating a broad audience
a little bit at a time.

6

What Not To Do • Don’t try to replicate success from anywhere
I have four things that you as a community else. Focus on the needs of your community
should not do: and study the reasons for programs in other
places. If your community does not have
• Don’t let negative comments about
those same issues, then you should think
entrepreneurs in the community slide. Ideas
strongly about using other programs. When
about not wanting ‘those people’ here are
you do look at the success stories of Silicon
poison. Try to squelch complaints or
Valley, Israel, Austin, etc. take them in
“accusations” that entrepreneurs are not
context. Look at what happened just before
committed to anything, that they are geeky,
and during their emergence. It is not
greedy, reckless or otherwise bad in some
particularly difficult to find information on
way. ere are virtually no cities that were
those times, but it requires a lens to be placed
built without entrepreneurs and private
on that period of time specifically.
enterprise driving the development.

• Don’t try to pick winners. If you are a service Conclusion
provider (like an economic development If you don’t think this work is hard, please re-
organization but different from a service read pages 1-7. Building an entrepreneurial
professional like an IP lawyer), don’t try to ecosystem is a multi-faceted, long-term effort
judge technologies. We are technology that no one can force, just about everyone
agnostic. Very few startups succeed with their needs, lots of people will work on and few will
initial prototype and strategy – that is one receive credit. Our best advice is to be humble
primary reason that team development is the and be honest about how you and your
critical thing. organization can support this effort.

Good luck! Call us if we can help.
• Don’t be too focused on one story or metric.
Look at the big picture of the ecosystem and
help everyone else do the same.   

About the Author
Tom Chapman is the Director of Entrepreneurship and Innovation for the Greater Omaha Chamber
of Commerce. He is passionate about helping economic ecosystems (particularly in the Silicon Prairie)
flourish. He has worked with hundreds of new ventures, many very large companies seeking
innovation advice, and a host of funders looking for deals. Chapman writes a series called “Innovation
Chamber” for Silicon Prairie News and has a background in energy having worked at both Enron and
American Electric Power in Houston, Texas and Columbus, Ohio. He holds degrees from Creighton
University and the University of Nebraska–Lincoln, owns two businesses, practices law and is working
on a startup of his own.

7

(Abridged) Building an Entrepreneurial Ecosystem Lessons from Omaha [Draft 5]

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