[Book Review] Startup Communities: Building an Entrepreneurial Ecosystem in Your CityMadanmohan Rao
by Brad Feld2012 John Wiley (Amazon)
14 chapters; 202 pages
"Startup communities" are popping up around the world, not just in Silicon Valley but other parts of the US such as the city of Boulder and elsewhere abroad as well. Startup Communities documents the buzz, strategy, long-term perspective, and dynamics of building communities of entrepreneurs who can feed off of each other's talent, creativity, and support and thereby energise entire cities and industries.
The book offers valuable insights into increasing the breadth and depth of the entrepreneurial ecosystem by multiplying connections among entrepreneurs and mentors, improving access to entrepreneurial education, creating events and activities that activate all the participants in the startup community, and much more.
As the global economy continues to struggle, entrepreneurs and startup companies are leading the way in creating new innovations, new products and services, and new jobs. They are rejuvenating the economies of many cities around the world as they create the basis for the next wave of economic growth, according to author Brad Feld, himself an entrepreneur, investor and mentor.
“Startups are transforming our society. Over the past 100 years, we've gone from an industrial era, where a hierarchical structure dominated business and society, to a post information era where the network is rapidly disrupting the hierarchy and transforming the way we work and live,” according to Feld.
Feld categorises the literature on startup communities into various clusters: external/agglomeration economies (eg. Paul Krugman, Michael Porter: scale impacts), network effects (increase in qualitative value of networks), horizontal networks (eg. AnnaLee Saxenian: porous organisational boundaries), and creative class (eg. Richard Florida: geographical clusters of creative communities).
The small town of Boulder has become a hotbed of startup activity, and Feld provides a useful deep-dive into the rise of this activity (eg. in domains like storage technology, pharmaceuticals, natural food). He has defined the ‘Boulder Thesis’ for startup communities in a series of books.
There are four key components of a framework for entrepreneur ecosystems in a city or region, according to Feld:
1. Entrepreneurs must lead the startup community.
2. The leaders must have a long-term commitment to the startup community.
3. The startup community must be inclusive of anyone who wants to participate in it.
4. The startup community must have continual activities that engage the entire entrepreneurial stack.
The Startup Revolution Website has lots of useful content and link for readers interested in further details. The book material is clearly presented and makes for a brisk read, though some of the chapters have sweeping generalisations which could have been backed up by more data and interviews.
Other reviewers have disagreed with some of the assertions that only entrepreneurs should ‘lead’ local startup communities. Strangely, Feld also does not focus as much on the media as a key player in this ecosystem, especially media focussed exclusively on startups through news coverage, interaction platforms and dedicated events.
A good startup community has healthy synergy and coordination between ‘leaders and feeders.’ Leaders are startup founders, feeders are the rest of the startup ecosystem: investors, incubators, accelerators, mentors, universities, government agencies, large companies, and services firms. One chapter is devoted to each of these categories of players.
Good startup communities have porous boundaries and roles, with a revolving door for emerging and established leaders and feeders. They should experiment and fail fast, and move on with new models and formats for community events.
Based on his extensive experience, Feld describes typical problems in startup communities: rigidity of patriarchical leaders, complaints about lack of venture funds, over-reliance on government, short-term thinking, bias against newcomers, a culture of risk aversion, power politics, and lack of treating failures as sources of learning.
The most practical part of the book is a description of periodic events that can be held to attract and galvanise local startup communities, which I have summarised in Table 1 below.
Table 1: Startup Events and Activities
On the content front, the Boulder Startup Digest gathers information about all local startups events and circulates this online to interested readers. There are also organisations and networks such as the Young Entrepreneurs Association (of successful CEOs), Entrepreneurs Foundation (for social responsibility initiatives), and angel networks that energise local startup communities. The TechStars initiative is an accelerator program for select startups, bringing together interested investors and committed mentors.
Feld offers useful principles for mentors: be direct; be responsive; guide rather than control; challenge but do not be destructive; have empathy; hold information in confidence; separate opinion from fact. The best mentor relationships eventually become two-way peer relationships, according to Feld.
The book makes important distinctions between entrepreneurs and small business founders (entrepreneurs are extraordinarily focused on their communities; small business founders are more involved in the broader business community), and incubators and accelerators (incubators are typically attached to a university).
Universities can play an important role not just through student talent but cross-disciplinary courses and centres, incubators, accelerators, summer camps and regular meeting space for local and international startup forums. More academic engagement with local startups and successful entrepreneur alumni is an important success factor. Colorado University has a successful Startups2Students meetup forum; MIT has a Founders’ Skills Accelerator with mentoring and financial support for aspiring entrepreneurs.
Governments have been less successful in entrepreneur ecosystems, partly due to their lack of understanding of startups, hierarchical rather than network thinking, too much of dependence on election cycles and politicians’ agendas, and different culture and mode of operation as compared to startups.
Feld ends with some useful general principles for startup community success: give before you get; everyone is a mentor; embrace weirdness, eccentricity and difference; be open to any new idea; and be honest.
As for the road ahead, Feld identifies the open-source format of such startup events as important for global spread and knowledge exchange, and highlights trends such as national movements for entrepreneurship, eg. Startup America Partnership.
Brad Feld has been an early stage investor and entrepreneur since 1987. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures, a company that helped launch and operate software companies. Brad is also a co-founder of TechStars. Brad currently serves on the board of directors of BigDoor, Cheezburger, Fitbit, FullContact, Gnip, MakerBot, MobileDay, Modular Robotics, Oblong, Orbotix, SEOMoz, Standing Cloud, and Yesware for Foundry Group.
He is chair of the National Center for Women & Information Technology, co-chair of Startup Colorado, and on the boards of Startup Weekend and the Application Developers Alliance. Notable companies that Brad has invested in and/or sat on the boards of include Abuzz (acq. NYT), Anyday.com (acq. PALM), Critical Path (CPTH), Cyanea (acq. IBM), Dante Group (acq. WEBM), DataPower (acq. IBM), FeedBurner (acq. by GOOG), Feld Group (acq. by EDS), Gist (acq. RIM), Harmonix (acq. VIA), NetGenesis (IPO), ServiceMagic (acq. IACI), ServiceMetrics (acq. EXDS), and Zynga (ZNGA).
Brad holds Bachelor of Science and Master of Science degrees in Management Science from the Massachusetts Institute of Technology. Brad is also an avid art collector and long-distance runner. He has completed 22 marathons as part of his mission to run a marathon in each of the 50 states.
[Follow YourStory's research director Madanmohan Rao on Twitter at http://twitter.com/MadanRao]