Over the past decade, entrepreneurial ecosystems have flourished across the globe, and not just in Silicon Valley, London, Israel, Seattle and other tech hotspots. Entrepreneurs worldwide have increasingly started companies in their home cities, building opportunities where they live and work rather than moving to well-known innovation hubs. This shift is due, in part, to early-stage investor and entrepreneur Brad Feld, whose 2012 book Startup Communities provides a roadmap for any city with a population over 100,000 to build its own entrepreneurial community. During a virtual CHM Live event on July 9, 2020, Feld shared how his guidance for startup communities has evolved in his newest book, The Startup Community Way, with Lucy Sanders, CEO of the National Center for Women & Information Technology (NCWIT).
Brad Feld’s first two jobs at a tennis club and a fast food restaurant didn’t last long—he was fired for what he calls “opposition to having a boss.” He solved the problem by becoming his own boss, offering math SAT tutoring to fellow high school students. The experience taught him how to run a business at a young age and began a lifetime of engagement with entrepreneurship.
Another key experience from Feld’s youth was the time he pooled the money he received from his bar mitzvah, and took a loan from his father, to buy an Apple II. He fondly recalls spending many hours using and writing programs for the early computer, which gave him an understanding of how to make something out of an intangible idea rather than physical materials. This experience helped guide the work that Feld would choose to do later in life, both as a programmer and a writer.
A few months before Feld’s 30th birthday, his partner, Amy Batchelor, announced that she was moving to Boulder, Colorado, and he could come with her if he wanted to. Feld had sold his company, Feld Technologies, in 1993, and agreed that Boulder might be a good place to live. The couple relocated there in 1995. In the following years, Feld played an active role in Boulder’s entrepreneurial ecosystem as an investor, author, early VC blogger and cofounder of the iconic startup accelerator Techstars in 2006.
During the 2008 financial crisis, an article titled “Start-Up Town” proposed that entrepreneurship would be the path forward for societies and economies globally, citing the success of entrepreneurial centers like the Bay Area, New York, Boston and Boulder. Feld was surprised to see Boulder, his relatively small city of 100,000 people, on that list. How had Boulder developed an entrepreneurial ecosystem comparable to that of much larger metro areas? How could other cities do the same?
To answer those questions, Feld formulated the Boulder Thesis, a set of key principles for creating what he termed a “startup community.” At the core of any entrepreneurial ecosystem, a startup community is a group of people who are fundamentally committed to serve and support entrepreneurs, while members of the larger ecosystem may have other motivations and interests. Feld introduced the “startup community” and the Boulder Thesis in his 2012 book Startup Communities: Building an Entrepreneurial Ecosystem in Your City.
Five years later, the Boulder Thesis had helped entrepreneurs across the world to jumpstart entrepreneurial activity in their communities. But many asked, “What should we do next?” Feld and coauthor Ian Hathaway began working on a sequel to Startup Communities that would update and expand on its lessons. Writing the book, much like building a startup community, was an iterative process involving several experiments and failures. Then Hathaway had a game-changing realization: a startup community is a complex system, and complexity theory can help entrepreneurs evolve, develop and grow their communities over time.
In conversation with Sanders, Feld uses this new framework to expose the weaknesses in conventional wisdom around building thriving startup communities and to suggest strategies for getting around them.
While startup communities depend on successful entrepreneurs who are actively engaged in building and maintaining them, Feld warns against focusing too much on the role of individuals. It is the interactions between these individuals, rather than the individuals themselves or the things they are creating, that are most powerful. Attempting to isolate the impact of any one person or organization will tell only part of the story, and in a startup community, the whole is more than the sum of its parts. The effects of interactions amplify in unexpected ways that are impossible to fully quantify, but they are essential for the growth and sustainability of any startup community.
Networks have always been at the heart of innovative places, but Feld says social media has given us the wrong idea about what makes a network strong. Focusing on the quantity of connections, such as “likes” and followers, can cause us to overlook the importance of quality interactions. Feld posits that a person’s value to a network is a product of the number of connections the person has times the value of information that flows across those connections. Though the quality of information is often subjective and can be difficult to measure, it is key to creating rich and productive networks.
“If you don’t measure it, you won’t manage it.” Feld says this quote, attributed to management guru Peter Drucker, is powerful when correctly applied. But when it is incorrectly applied, it does a disservice, and can even be devastating, to a startup community. When members of the larger ecosystem seek to manage the community’s growth, they might try to measure the data that is easiest to collect—for example, the number of companies created, the number of employees, or the amount of funding in the community. Organizations that support entrepreneurs tend to use this readily available data to demonstrate the success of their support and thereby justify further investment in the community. But this is the wrong focus.
Unfortunately, the data that is easiest to collect is usually the least meaningful to the startup community’s success. Decisions that are made based on this data are likely to be misguided and draw needed focus away from what really matters in a startup community: less tangible factors like relationships and culture. Though measuring these things is difficult, it is crucial to do in order to manage their growth.
In a complex system like a startup community, it is rarely possible to predict the effects that any given action will have. Though this can be daunting, Feld says the key is to embrace the reality that companies are a series of experiments, most of which fail. We must continue to try things, learning from them when they don’t work and celebrating when they do.
One way to encourage positive outcomes from these experiments is to live by the mantra, “Give before you get.” Also called “#GiveFirst,” this principle states that you should offer your time, energy and resources to those in the ecosystem who need help without defining up front what you will get in return. This is not intended to be altruism—you do expect to gain something from your efforts, but the nature of complex systems makes it impossible to know what the return might be. In the worst case, your giving will be a failed experiment that you can learn from. But more likely, the returns from your actions will be beyond what you could have imagined for both yourself and the startup community—this is how Feld feels about his involvement with the National Center for Women & Information Technology (NCWIT).
In 2020, the Boulder Thesis continues to drive the creation of startup communities around the world, contributing to the democratization of innovation. Understanding startup communities as complex systems reinforces the Boulder Thesis while underlining some important new takeaways: interactions between individuals are more powerful than the individuals themselves, networks need many high-quality interactions, measuring the right things is crucial for growth, and giving first can yield unexpected benefits.
Feld and Hathaway never imagined that their new book would come out amidst a series of unprecedented collisions between other complex systems: the COVID-19 crisis and the racial inequity/systemic racism crisis. Feld hopes that by explaining complex systems, The Startup Community Way can help people better understand these crises as bottom-up, emergent phenomena that continually modify and resist top-down, hierarchical control. While this means they’re challenging to understand and impossible to manage, we can embrace a startup mindset and be open to learning and trying and failing as we face these issues and work toward a more equitable and sustainable future.