This article is getting a lot of play and I’m sure they’ll be some pretty vigorous debate about Steve Blank’s observations. I’m not a VC and I don’t have the stellar reputation of Mr. Blank but in my small little circle of working with startups all I can offer is that I see everyday in my communities what he is talking about. I also work with most, but not all the institutions I mention below.
Steve focuses mostly on VCs in the valley but there’s a penultimate movement that we can look to and see if some of Steve’s theories are going to come true—I give you the modern startup accelerator. Accelerators like Techstars, Y Combinator, 500 Startups, built the playbook that valley VCs are trying to emulate now. Right or wrong and for better or worse these entities are the arbiters of taste when it comes to determining what is cool and/or valuable.
Make no doubt about it, these are successful organizations that ARE generating wealth and I’m no more blaming them for this paradigm shift that Steve is blaming VCs. But a reasonable question to ask is where do the folks that want to solve the HARD problems go to get capital and support because the systems that have been in place to support that innovation have shifted—probably permanently. This shift is/will leading to a dilemma that would have been crazy to propose even a few years ago—is the US facing an innovation gap?
Most of the new accelerators that are sprouting up in the US or all over the world are emulating these new accelerator models. You have some holdouts like Houston Technology Center, Austin Technology Incubator and other institutions that are supported by state government and academic institutions. You have regional programs like Pipeline Entrepreneurs and highly organized angel networks like Triangle Angel Partners and Nebraska Angels that have strong regional focuses. Many of these local groups serve as areas of refuge from those that have built their careers around innovation by securing SBR (small business research) grants or transitioning from the public to private sector in areas like aerospace, bio-science and security. Finally you have a few technology companies that have dedicated research units (Google, IBM and Microsoft most quickly come to mind).
But the reality is that these groups are probably not enough and they don’t fully make up for the fact that a big sector of our economy that support innovations and entrepreneurship in bio-science, engineering and aerospace has moved and shifted their focuses to segments of the economy that allow for quicker returns on investment.
The two concepts that fuel this, social and software are often the only areas getting attention from anybody these days. But if you look at what is happening in China and places like Israel and Russia you should be a bit worried, the innovation gap is something that could manifest much more quickly than we all think. The question is how to keep what we have and make sure that we’re poised to grow these capabilities in the US. If it were up to me I’d suggest we need a program similar to the Moon program that serves as a catalyst to spurn innovation, or better yet a Marshall Plan that provides that funding to enable ecosystems to work on wicked problems and the capital, patience and oversight to bring them to life.
It’s easy to be dismissive of government involvement in something like this with the inevitable friction that they bring to the table but big problems need big entities to help solve them and it’s one of the few places where sovereigns have not just an obligation but also an opportunity to lead.
My advice to regions that want to be the next Valley? Don’t, it’s unlikely you’ll ever have a perfect collection of skills that makes the Valley so successful (See Fred Wilson’s excellent post on this subject). Leverage the strengths that you do have and zig where others zag. Communities that are starting to emerge and be successful with entrepreneurship are doing just this and in future posts I’ll highlight some regions that I think are doing this well.
Ben Milne gives a short introduction to his talk at Thinc Iowa 2011 and the realities of raising money and doing business in Des Moines.
Milne is well known to the Thinc Iowa crowd and he wanted to have a conversation that he had not had with this audience before, so he cut right to the chase and talks about what works in Des Moines and what’s a challenge.
Not too many folks can claim they started their first business by taking a line of credit against their house and then driving into downtown Bagdad to start their first business. Craig Paige of BetterWorks established the core principles of his talk at Thinc Iowa 2011 by doing something many entrepreneurs try avoid–talking about what they did versus what they are doing.
But the examples that Craig used painted a vivid picture for the key things that entrepreneurs need to do well..
Think big, execute small. You idea can’t be too big–but it can easily be too small. But that big idea needs to be executed one step at a time, you need to have the practicality and day-to-day focus to support concrete execution.
Have a serious passion for what you want to do–be authentic–because if you aren’t you simply won’t be able to sustain the energy you’ll need for starting something new and disruptive if you don’t care enough to give it everything.
Jerri’s talk focused on social innovation and entrepreneurship and what the implications of some of these social trends mean for big business.
The key takeaways?
Business can ‘do good’ to ‘do well’ and some business MUST ‘do good’ to ‘do well’.
If you’re not having a two-way conversation with your customers, just telling and not listening you risk becoming irrelevant to more savvy and social conscious consumers that believe in open collaboration.
One of the slides that Ben Silbermann showed during his Thinc Iowa 2011 talk was Facebook’s famous motto. I remember when this was widely quoted and there were a few folks that snorted and pointed how arrogant it was to make a statement like this, etc.
What many folks still fail to see is that this is a very valid, perhaps critical concept, in many new business endeavors. There are certainly industries where this type of thinking may not make sense but if your world is building services or products that people don’t know that they need the bottom-line is that feedback and experimentation are going to be critical. The best way to do that? Think big, but execute small as Paige Craig of BetterWorks stated but remember that speed counts, it lets you start a dialog that much sooner with the audience you are trying to serve.
Pinterest, a startup that Thinc Iowa 2011 closing speaker Ben Silbermann co-founded was based on a simple premise. In the real world people often collect and share things. Inspired by his own eclectic passions growing up, in this case insect collection, Pinterest was designed to allow passionate collectors and curators a place to do that digitally.