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Startup Ecosystems and Such

In my travels, the local evangelists are quick to share how great their startup ecosystem compares to all the other ones. This comparative analysis is always an effort to engage in funding conversations and how VCs should...

February 21, 2016

In my travels, the local evangelists are quick to share how great their startup ecosystem compares to all the other ones. This comparative analysis is always an effort to engage in funding conversations and how VCs should spend more time in their ecosystem. Everyone is the "best-kept secret." This is especially true in ecosystems where the University is at the center of the startup community.

Comparative analysis is not that useful. While presented as "data" the truth is that the data is weak. The data is not tracked well and is really no more than broad patterns where data is then developed to support a few successes. We are a "FinTech" hub or an "Artificial Intelligence" center of excellence is generally followed with a handful of examples and some conjecture about how this expertise came about. In some cases, the definition of the sector is broadened to include more data and a few highlighted case studies that now fit in the broadened definition of the sector.

There are a bunch of quotes around judging a society by how they treat animals, their weakest, their poorest. What if we judged startup ecosystems by their biggest failures? The companies that raise a lot of money, get a lot of buzz and then go away. One could argue, the biggest failures could actually be a metric for the best startup ecosystems. Ecosystems are really just a geographic-bound collection of personal experiences. These personal experiences are shaped by the culture, institutional knowledge, and leadership of these ecosystems. Additionally, there are environmental conditions that shape the frequency and adversity of those personal experiences. It's hard to train as a professional skier in Atlanta.

Incubators, co-working, etc. are environments that shape personal experiences. If you go to a yoga studio, your experiences will be very different than taking a yoga class at a large gym. These ecosystems only survive if they meet the needs of the customer. Hence, some incubators are successful because of the culture they create -- not necessarily due to the high frequency of success. Hence the flurry of incubators. Incubators are just fulfilling market demand.

Startup ecosystems become very insular. The aggregation of talent, ideas, and experience bound by tight geography also creates cohesive opinions that appear as facts. Visiting other communities provides great perspective on your ecosystem.

Looking at the ecosystem leadership is also a great subjective way to analyze a startup ecosystem. VCs, angels, and serial entrepreneurs. How engaged are they in supporting these new startups? What has been their track record? How are they helping the ecosystem? Are serial entrepreneurs starting new companies? Where are the "Ex-" coming from? Ex-Google, Ex-Microsoft, etc…

When I was running ATDC here in Atlanta, the above are the things that occupied part of my brain space early on. It quickly shifted to a focus of "go help build companies." I left ATDC, and for the first year after leaving I continued to have a lot of coffee meetings with startups needing help. I continued to spend a lot of my evenings and weekends in the ecosystem. In the last year, I have really just focused on helping a few startups where I can make a difference. This has included startups outside of Atlanta. I should still seek a better use of my extra time. For now, I still enjoy helping.

Everyone is always looking for advice, so here is some free advice for startups.

  • Only attend startup events with an agenda. This is usually recruitment of customers or employees. The rest are for your own entertainment and not necessarily productive.
  • Choose incubators that align with your business. Finish this sentence, " I chose XYZ incubator because they are great at ______."
  • Participate in the ecosystem where you not only receive value but can contribute value. It is a virtuous cycle of giving and receiving.
  • The ecosystems that you spend time have an associated culture. This culture will rub off on you and in turn on your company.
  • Ignore all of the above. Focus on your startup. Heads down..product -customers- employees… You are not required to be part of the ecosystem, it is a choice.

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