Creating start-up communities

Today, the word entrepreneurship is on everyone’s lips and the idea of creating a start-up community in every city in the world is going mainstream. It used to be thought that start-up communities could exist only in places such as Silicon Valley and Boston, but I have always rejected that notion. Instead, I believe that start-ups can flourish anywhere and that every city needs a start-up community. Every city was once a start-up. Someone moved to a specific place on this planet and decided to start a city. If every city was once a start-up, surely every city can support a vibrant start-up community.

I have been involved in starting companies, either as an entrepreneur, angel investor or venture capitalist, since I started my first company in Boston in 1987. When I moved to Boulder in 1995, I did not have any expectation of doing business here, rather I was spending all my time travelling from Boston to New York City to San Francisco and to Seattle where I was investing my own money as an angel investor.

Within a year of moving to Boulder, I found myself in the middle of an amazing start-up community that was growing steadily every year. I continued to travel to and invest in Boston, New York City, San Francisco and Seattle, but started paying more attention to other places, such as Austin, Chicago, Dallas and Portland. While the collapse of the Internet bubble between 2001 and 2003 had a dramatic impact on the dynamics of entrepreneurship, by 2003 a lot of new tech companies were being created, and by 2007 the Web 2.0 movement was well under way.

The global financial crisis of 2008 shook businesses and governments around the world to their core, but most entrepreneurs did not notice as they were heads down building new companies. By 2010, those of us who had been doing this for a while noticed something special was happening. The historical hierarchical systems of business were rapidly being replaced by a network model. Instead of having to ask permission to do something, gain access to someone, or work on a specifically assigned task as is the way in most hierarchies, entrepreneurs were functioning almost entirely outside this system in one giant, messy network. Hierarchies have been around since the beginning of mankind and will continue to be prevalent structures, especially in government, academia, military and religious organizations, but businesses are rapidly embracing the network model. Start-ups, entrepreneurs and start-up communities are already living and working within the model.

In the summer of 2012, I wrote Startup Communities: Building an Entrepreneurial Ecosystem in Your City to try to explain what was happening, what I had experienced over the previous 17 years, and how start-up communities could be created in any city. I created a set of four principles that captured what had resulted in an amazing start-up community in Boulder. I call these principles the Boulder Thesis:

1. Entrepreneurs must lead the start-up community. I separate the constituents of a start-up community into two categories, leaders and feeders. They are both critically important, but play very different roles. The leaders have to be entrepreneurs and there needs to be a critical mass of them, at least half a dozen, in the start-up community. The others – government, academia, big business, venture capitalists, angel investors, lawyers, accountants and other service providers – are feeders. The feeders support the activities of the start-up community, but they cannot lead or control the community. If they do, the start-up community will not go anywhere. In the absence of a critical mass of entrepreneurial leaders, nothing sustainable will happen.
2. The leaders must make a long-term commitment. Start-up communities take a long time to develop, just like start-ups. The leaders have to take at least a 20-year view and be willing to work day in and day out on their businesses and on developing the start-up community. If they are not willing to transcend and outlast shorter cycles, such as the two-to-four-year cycles of government, the quarterly and annual rhythm of big companies, or the regular vibrations of the macroeconomy, the start-up community will collapse.
3. The start-up community must be inclusive of anyone who wants to participate in it. The idea of mentorship, or 'giving before you get', and being inclusive is fundamental to the success of a start-up community. If someone – a feeder or leader, an entrepreneur, an aspiring entrepreneur, a student, someone new who has just moved to the city, or someone who has lived there their entire life – wants to engage, it must be easy for them.
4. The start-up community must have continual activities that engage the entire entrepreneurial stack. While annual entrepreneur of the year award ceremonies and fancy networking events are nice, they are not sufficient, or even very important, in the context of creating a start-up community. Instead, the need is for activities and events occurring on a continual basis that engage everyone, from aspiring entrepreneurs, first-time entrepreneurs and experienced multi-time entrepreneurs to all of the feeders around the system.

2012 was an incredible year for start-ups as a large number of new companies were created and many companies created over the past decade blossomed. The understanding of how to create start-up communities spread widely and a commitment by many entrepreneurs to go on a long-term journey, rather than doing things for short-term gain, also emerged. The process is messy, just like entrepreneurship, but I am confident that a new start-up revolution has begun.