Tag Archives: silicon valley

The Ancient Startup Communities of Greece and Rome

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Recently, I had the honor of addressing a group of investors from Shenzhen, China, exploring opportunities in Texas and asking the question, why? Why here? Why Texas? Why Austin? Fostered by DB Business Group (a multi-sector global business development group), and a program called Invest Austin, a veteran of Silicon Valley like myself can’t help but ask, “Why not… Silicon Valley?”  Okay, so an ardent advocate of Texas over the Valley certainly isn’t actually asking why they didn’t favor Silicon Valley, I know the answer to that question, but their interest in Austin, over the Valley, is intriguing none-the-less, no?

For all our exploration of the right team, timing, talent, validation, and capital in driving successful ventures and returns for investors, is location more important? In the immortal words of Peter Drucker, it certainly is, “culture trumps strategy.”

those of fail to study history are doomed to repeat itSo I took my talk down that direction, reflecting on the sage insight of philosopher George Satayana that those who cannot remember history are doomed to repeat it, and gave the very talk that most of us dreaded in school; that of ancient history.

How Ancient Greece and Rome Defined Western Entrepreneurship

Consider briefly the two different cultures of ancient Greece and Rome. Both centers of art, economy, and innovation in their time. Both at the very heart of what defines today’s western civilization. And yet, both, very very different philosophically and in their approach to civilization.

To begin with, consider a few of the obvious characteristics of ancient Greece:

  1. The epitome of ancient, western, art and culture
  2. While perhaps not the “inventor” of philosophy, the Greeks are considered the tipping point in the adoption of philosophy
  3. They were governed by independent, yet united, city-states
  4. Their lives were truly destined by the Gods; their fates woven
  5. And innovation, which I’ll explore further, was a result of observation and need

Consider next, what most might conclude are defining characteristics of the Romans:

  1. The dominant force of western civilization
  2. Where the Greeks were defined by philosophy, the Romans are better known for stoicism – strength in the face of adversity (I’m simplifying it in case you’re not familiar with stoicism… I’ll get into this a bit more too)
  3. The civilization of Rome was governed by a single republic representative of the people, unified toward the ideal of the republic
  4. While they paid homage to the Gods (largely borrowed from the Greeks), they believed in Manifest Destiny more than worshiping the Gods to whom they were beholden.  Like the United States reaching for the Pacific in the 1800s, it was their responsibility to bring Rome to everyone.  The Gods play a role, but the Romans are in control; HOWEVER, they didn’t force Roman culture – in fact, those conquered, retained their own. Rome believed it was bettering civilizations, not meant to replace them.
  5. As a result, innovation was largely based on their conquest and the need for improvement to deal with and manage the scope of their reach

Defining characteristics with which one could certainly poke some holes in my writing of history but I think generally define those cultures.  More importantly, help us today, understand how the individuals in those cultures thought and lived.

What of Philosophy vs. Stoicism

I like to think of philosophy, the study of general and fundamental problems such as knowledge and existence, as being at the heart of what defines a culture.  It’s important to study the philosophies of an economy as philosophy, by way of defining culture, in turn, defines communities, which foster industries, which create economies. Therein is our interest.

To simplify our walk down the streets of ancient Greece, I want to share the stories of only 2 Greek philosophers: Thales and Cicero

Thales

As it would happen, Thales was known as the Philosopher Entrepreneur.  In 500 BC, in Miletus, the Greeks longed for Philosophy to have practical application.  Often seen walking the city, looking at the stars and observing the sky, because he was a mathematician with his head in the clouds, Thales would often fall into potholes. What good is this introspection?

Thales wanted to prove that his beloved philosophy can change the way people live; that philosophy is the way we choose to live our everyday life.  A good meteorologist, he was able to forecast the weather. Taking advantage of this skill, he invested in olive presses at a low-cost, when olive presses were out of season, having forecasted excellent weather and an increase in olive production. When the need for olive presses rose… well, I don’t have to get into basic economics to explain how Thales, through observation, filled a product/market fit.  A need.

Cicero

One of the most well known philosophers, I’m going to throw a curve ball at you and introduce to Cicero, a Roman.   What on earth could a Roman do to reinforce my underlying point about the differences in cultures and how it was the Greeks and Philosophy, not the Romans and Stoicism, that apply here?  Cicero was a student of Greek Philosophy and the man who introduced the schools of Greek Philosophy to Rome.

Cicero has left a legacy of dozens of incredible ideas embraced today, of which most don’t realize.  One idea in particular struck me, that personal gain, made upon others’ failures, is an illusion.  Consider the inverse of that: build only on success.

Let’s take a look at the heart of Rome and Stoicism

Fortitude as a means of overcoming destructive emotions

Stoicism is comprised of the main principles that define what it means to live one’s life as a stoic:

  1. Practice misfortune
  2. Train to avoid wrong
  3. Everything is ephemeral

Some time ago, I wrote of the subtle difference between mistakes and failures in entrepreneurship, from the standpoint of architecting growth.  Simply put, that mistakes, the wrong, should be avoided but failure, must be embraced.  Practice misfortune but train to avoid what is wrong.  The greatest mistake most entrepreneurs make is to not learn from history, not research their market, not attract or hire the right team: to avoid mistakes.  After all, everything is short-lived.  Your idea, your advantage, your market, your business – all of it ephemeral, so strive for greatness at the cost of failing, but don’t make mistakes or you’ll never find success.

Stoicism, the defining characteristic of what it means to be Roman but with Philosophy at the heart of what fosters culture, community, industry, and economy, let’s look at our communities today from the standpoint of our philosophies (time to poke holes in what I’m thinking, from your point of view).

The 5 Characteristics and Philosophies of Silicon Valley

  1. Silicon Valley is the dominant force of innovation in the last 30+ years.  While we can make arguments that other cities, other economies, have played their role, when we think of innovation, we think of technology and when we think of technology, we think of Silicon Valley.
  2. Fail, fail fast, fail frequently.  In 2007, Josh Kopelman remarked with First Round Capital that entrepreneurs need to fail cheaper; in 2006, that as soon as one writes a  business plan, it’s wrong.  Fred Durham and Maheesh Jain, build a $100 million company on coffee cups and T-shirts.  They had previously started 9 companies in 6 years before discovering Cafe Press.  In the mid-90’s, Kamran Elahian, a Silicon Valley entrepreneur, famously engraved his Ferrari license plate with Momenta, the name of a company he founded in 1989. Momenta had gone bankrupt in 1992.  Stoicism and the celebration of failure.
  3. Create value for all.  This is a tough one to wrap one’s head around if you haven’t lived in the Valley.  It’s easy to perceive, from the outside, that it’s cut-throat, with everyone scrambling to get rich, to dominate.  Indeed, that’s what’s happening, just not the way most people on the outside see it – they’re scrambling to get everyone rich.  Knowing that 9 out of 10 startups fail, they are less focused on your success in a venture, than in where you’re going from here, and how we can collectively create value.
  4. Constantly “better.”  And I put that in quotes because I want you to think of it in terms of the action of bettering.  Who are the “Gods” of Silicon Valley: Zuckerberg? Brin? Meyer?  Gates (no, he’s not IN Silicon Valley… that’s my point).  We have movies about these Gods so certainly we’re “worshiping” them as Gods aren’t we? But is our startup economy that has those icons or is it Hollywood that makes movies?  In the Valley, no one is a God.  No one is so idolized.  Certainly, people are admired, greatly respected, and deservingly so, just as the Romans respected and honored their Gods, but the philosophy is that our responsibility is to look not at their success but their failures, and improve upon them.  Google exists because of Yahoo’s Directory, the directory that arguably made our use of the internet common-place and trust-worthy, but failed to give us access to everything.  MySpace was little more than the improvement on Friendster; both of which pre-dated Facebook, which now everyone is trying to “fix.” We admire the Gods but we don’t live by their success over us but rather our personal responsibility to exceed them.
  5. Innovation is a result of disruption and constant improvement.  Conquest.

Silicon Valley then, like Rome, is the Republic, it’s not a place, it’s an idea.  Indeed the average person on the street is asked where Microsoft or Groupon is headquartered, “Silicon Valley,” is frequently replied. Silicon Valley isn’t a place, it’s the name we apply to the stories of great heroes who failed and conquered, it’s word used to refer our economy of innovation, not a location.

Just as the Romans embraced every religion, every philosophy, as they conquered, allowing those conquered to retain much of their heritage, the idea of Silicon Valley recognizes that there is no single philosophy, there is no right way, no right answer.  Being Lean, or Agile, or Bootstrap, MVP (whether minimal or maximum viable), or Brazen, aren’t philosophies held in such high regard that startups are lean, as though that’s right; they don’t care how one works, nor what you’re doing, as long as you are stoic, creating value for all, and constantly improving upon… Roman.

By contrast, what are the terms, the ideas, and the philosophies that you most frequently hear where you live?  In my case, can we make a case about Austin?

  1. At the heart of Texas, it’s hard to deny that Austin, the live music capital of the world, the blue city in a red state, the state that defines independence and in which we fought to be Texan first and American second, is the beating heart of American culture. An epitome.  At the very least, a major artery.
  2. Austin is the home of the bootstrapped entrepreneur and a shining example of the lean startup. One can’t go a day without a fresh entrepreneur starting the description of their business by saying, “We’re a lean startup,” as though that makes a difference in your success.  Let me get off the rails here for a second as I’m sure many of my Austin brethren are now starting to wonder where I’m going with this… didn’t I just praise the Valley for it’s belief that the approach to your venture is irrelevant?  Whatever works?  I did, but that doesn’t mean that’s the best approach any more than you’ll hear me say others must be Lean.
  3. Thousands are moving to Austin, TX, more than anywhere else in the country, because of the ideal Austin has for life.  Work / life balance.  Entrepreneurs here generally won’t work 80 hour weeks.  Parents are expected to leave the office to get home.  Some look at that in the startup community as a badge of pride, “we won’t work like they do in Silicon Valley,” as though how much you work determines your success… and yet, it does determine your life. I still remark that the first question people ask you when they meet you in Silicon Valley is what you do for a living; here in Austin, that’s generally the last question they ask.
  4. How well do we know the stories of the failures of the greatest entrepreneurs in Texas?  Do we discuss and celebrate the flame-out of hair-brained ideas or do we generally celebrate successes?  In a sense, do we worship the Gods? Not necessarily because we truly worship them, again, there is a positive spin in my introspective, but does Texas not worship successes because of our need for access to, transparency to, capital?  Is Capital not the manna of the Gods?  Manna that’s prolific in the Valley but relatively inaccessible here?  To some extent, are we not told that we must avoid failure because Angel’s need their return?  I think we are.  Entrepreneurs are told to find customers and revenue, to succeed, before they’ve really even validated that there is a significant opportunity, because the Gods, can’t afford to let us fail; our destiny in woven by their clay.
  5. Innovation then, is based on a product/market fit.  Find something the market will buy, and do that.  Sounds like Thales, no?

Austin sounds an awful lot like Greece and when you explore the idea further, and consider the independence of Dallas from Houston from Austin from San Antonio; or the tremendous rivalry between A&M and UT; or the stark distinctions between industries or markets (never before here in Austin have I been asked so much if I work in B2B or B2C – there is no difference!), is Texas not comprised of city-states?  United yes, in Texas, but distinct.  Not an idea, but a location.  No?  Why is your part of the world called Silicon Alley or Silicon Prairie or Silicon Hills as though it’s distinct and separate from that idea of constantly bettering our world and creating value for everyone.  Because our independence matters.  We’re all a part of Silicon Valley, Silicon Valley is just an idea and our attempts to brand ourselves as distinct is both telling of our worship of what happens in N. California and our desire to be distinct.  We have to be “Silicon” but not…. we want to be like that, but we’re not. Not part of the greater idea, the Republic, but doing things “our way.”

Culture Eats Strategy For Breakfast

The Burning of RomeI’ve never given this talk, to this point, without a lot of agreement, and disagreement.  Assuredly you’re either with me 100% or poking holes all over the place, refuting either my retelling of history or my experience with the present.  And that’s exactly my goal, that’s the point of thinking this way… there is no right answer, there is no right way.  Save for, perhaps, that culture that constantly questions, endeavors, and strives to be better – is that not what creates incredible enterprises?  Culture eats strategy for breakfast.  What matters not is how one gets there, but why.

Here’s the rub and where hopefully I make it clear, that for all my praise of Silicon Valley… well, here’s the point:  Rome burned.  Repeatedly.  For all it’s dominance, influence, and control, at the end of the day, it didn’t work.  And yet Rome learned from its history.  Cicero was a student of Greek philosophy.  The Roman Gods were nothing more than renamed Greek Gods.  So should we detest Rome, should we detest N. California, for conquering and extinguishing Greece?  Certainly not, Greece was a tremendous culture in it’s own right and the very definition of “culture.”  We relish in not being Rome (God forbid we’re like Silicon Valley), we’re distinct!

And yet, Ancient Greece failed too.  Heck, Greece is bankrupt today 🙂

Perhaps we need to learn not from their successes, but their failures?

Rome IS Burning

It starts with a slow burn.  The decadence, the narcissism, the greed… hang on, you were thinking I was talking about Silicon Valley didn’t you? Shame. Rome people, Rome.  People though, are fleeing Silicon Valley.  I’m just one of them, but my departure had little to do with professional gain, I didn’t move for a job, I moved for better… there’s a slow burn.  People are emigrating to TexasThe cost of doing business in California is exorbitant!  The legal hurdles are becoming overwhelming.  N. California is losing it’s monopoly on technology and talent as other parts of the world educate and mature.  That’s not to say one isn’t still better off in N. California, for now, the embers are growing brighter.

Not convinced? Look at that map. Just last week, Businessweek reported the migration of and growth in American cities over the last few years. See that black dot on the far left side of the map? Look at what’s happening in Texas: Dallas up, Houston up, San Antonio up, and the greatest population growth in the entire country? Austin. Silicon Valley is shrinking and the world is migrating to Austin… it doesn’t do that because Austin is nice. People leave their home for places better: for potential and opportunity.

In 2011, Inc asked, “Is this the end of Silicon Valley?”  In 2012, my distant relative, Chris O’Brien (all O’Briens are related), reported Steve Blank’s supposition that social is killing Silicon Valley.

“I think it’s pushing real innovation outside of our country,” Blank said. “And it might be the demise of what we actually do in Silicon Valley.”

And in light of recent activities in New York, and in particular Austin, one could argue that innovation in Social has already left the Valley.

It doesn’t end there… Derek Thompson reported in The Atlantic that, “The Golden Age of Silicon Valley Is Over, and We’re Dancing on its Grave,” while David Sack, after selling Yammer for $1.2B, foretold the end.

But that doesn’t mean Rome was a failure.  It’s influence, it’s culture, it’s stoicism, define western civilization today.  The question is, what can we learn from it.

Greece had no shortage of challenges either

When I think about those characteristics of ancient Greece, and when we translate them to our respective communities of today, I believe we should not embrace our strengths but identify the weaknesses and gaps.

  • Does independence not foster ethnocentrism?  Hell, the United States is known globally for it’s ethnocentrism.  Is Texas a little too introspective?  Is Austin a little too focused on Austin alone?  In looking inward too much, do we overlook lessons already learned elsewhere?  Do we attempt startups that have already been attempted, or are being attempted as we speak?  I won’t hazard to conclude this question but I can say, given my history in Event startups, that never before have I been in an ecosystem where there are so many entrepreneurs doing the same kind of thing… something other parts of the world learned long ago won’t work.
  • Does individualism create businesses, but not cohesive industry?  I’ve written about this before, so I won’t belabor the point, but early stage ventures must work together to compete with one another.  Wait, what? Innovations must foster industries before new ideas are embraced, and like it or not, it takes competitors, cooperation, and collaboration, between like businesses, to create those industries.  How many people think of Austin as the home of the eCommerce industry?  And yet it is.  How many people recognize that where you live is indeed an industry and not just an economy?  We know of S. California, the Rust Belt, Detroit, the Fashion District, and even yes, “Silicon Valley,” because of industry, not the individual businesses therein.
  • Are we supportive but not truly collaborative?  Here’s a tough pill to swallow that took me a long time to grasp because I didn’t see it this way, I had to hear it, time and again: people struggle to find co-founders.  That was a foreign concept to me before arriving in Austin; in the Valley, people are collaborating all the time to start new ventures, one just has to ask.  Here, we have meetups just to help people date in hopes of finding the love of their startup life.  Without question, Austin is FAR, FAR, FAR, more supportive of your success, evident only in the number of entrepreneurs per capita, but that’s not the same as putting everything you have on the line to risk failure in collaborating with a partner.
  • Does a celebration of success overlook the importance of failure?  Notice how these challenges are building on one another yet?  Because of independence we look within, we support but do we really collaborate, we do it ourselves and are Lean rather than investing (spending) to build… is that not because the celebration of success enables people to overlook the greater importance of failure?
  • Does filling needs not stifle disruptive innovation?  The age old debate about the product/market fit and being Lean: filling a need is not innovation, it’s building business.  I’m not on a side of that debate but it’s intriguing, fitting a product into a market isn’t invention.  How then, can that be the heart of the future of innovation?

It can, because Austin is not Greece.

Where in Ancient history Rome replaced Greece, in the history books of tomorrow, people will have fled “Rome” to “Greece.”  And that’s exactly what’s happening today.

Learn from Rome and Greece

As the United States migrates to Texas, it brings with it the philosophies, cultures, and experiences of all that makes our economy great. People bring with them their stoicism, their embrace of failure, their demand of greater, their belief in an idea more than location. And while that alone fails, when blended with the celebration of success, the importance of oneself and our lives, and an embrace of validation and the product/market fit, innovation is both disruptive and lean. That’s the future.  That’s why Texas (Austin) recognizes that independence fosters entrepreneurship, individualism fosters creativity, and you can’t deny that our celebration of successes has built 4 of the largest economies in the United States in Dallas, Houston, San Antonio, and Austin. And at the center of that is Austin. If we continue to be Greece and favor our city-states, that independence and individualism alone… well look at what happened to ancient Greece. But that’s not the direction Texas is headed is it? Texas is in the unique, truly unique position, of learning from the startup communities of Greece and Rome. And that, is why China is in Texas.

Why Do Startups Work in Silicon Valley?

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One of the most frequently asked questions of today’s startup economy, no? Invariably, we discuss capital, talent, and ambition, frustrated with our own communities’ lack thereof, perhaps. And yet, is that really what’s at the heart of making a startup community work? When you think about it, the access to and significance of capital available is merely a result of the opportunity and reward to investors – they aren’t incapable of their own job… they know how and where to make capital available. And arguably, the same is true of talent, if your community is frustrated by a lack of talent, likely two things are happening… either the ecosystem doesn’t effectively reward talent and thus it is indeed going elsewhere, or the talent is there (what I think it most likely the case) but most ventures fail to appreciate that not being able to attract talent and partners may in fact be a significant proof point, validation that your idea or traction thus far isn’t appealing.

If those thoughts are sound, that capital and talent really aren’t what makes startup communities work because capital and talent naturally follow reward, what is at the heart of why startups seem to work so well in Silicon Valley? Are the rewards indeed greater and if so, why?

Culture, philosphy, and industry

90% of startups fail.

Neither access to capital nor talent changes that much, and frankly, it’s easier and cheaper to start some thing almost anywhere else in the world, certainly so here in Texas. Practically the golden rule of entrepreneurship, not only do 90% of startups completely fail, 90% of those that survive, become mere lifestyle businesses capable of employing people, but not really rewarding them. Only 1%, the unicorns as they’re called, truly and significantly reward individuals for the sacrifices and risks involved in working in early stage ventures.

With so much failure inevitable, the answer to the question obviously doesn’t lie in a success rate any more than it does in the amount of capital or talent available; so start by taking a look not at the significance of rewards where you live but at how people treat failure.

How people deal with, react to, and even expect failure is a sign of the culture and philosophy wherein you live, with regard to entrepreneurship.

Culture

The Valley has a unique culture in that embraces that you will fail. In the years that I spent there, the discussion is rarely about your business, your idea, and the company you’re trying to build because it’s going to fail. Instead, Silicon Valley constantly talks about innovation, bettering the best, people, and even “The Valley” at large and growing the entirety of rewards as an economy.

In recognizing and appreciating failure, the culture of the valley looks not to what you’re doing now but what “we’re” doing next – learning from failures and never giving up; simply moving forward until we find success.

While it seems to me that most other economies tend to strive for the success of a business, the Valley strives for the success of people and the economy itself by expecting that every venture is so revolutionary, so disruptive, that it SHOULD fail, otherwise you’re certainly not striving for something as great as a unicorn.

Think of the implications of that culture of the experience you have raising capital. Do investors typically ask “what” and “how” or do they prefer “why” and “who”? In a culture where failure is avoided, returns are never likely as great, simply because entrepreneurs aren’t pushing hard enough – they aren’t trying to better Facebook or Google, they’re simply trying to learn from that success and do something good enough.

In asking first “what” and “how,” they aren’t seeking the unicorns, they aren’t seeking the risk taker and the dreamer, they are avoiding the risk and failures – is this business you are building clear, valid, and monetizable so that my investment is safe? Does your venture community stress revenue and being lean or does it stress market share and disruption? When 90% of startups fail, the investments in those “safe,” lean, revenue focused businesses lose focus on market share, innovation, and disruption and should they succeed, they’re worth far less, they can support employees but not truly reward investors and talent for their sacrifices. Their philosophy is different.

Philosophy

Perhaps you caught on to an underlying message in my exploration of how people deal with failure. More simply put, there, failure isn’t even a word; there is no fail. Investors are seeking the WHY and the WHO and those things can’t be wrong, only WHAT and HOW can be proven wrong and truly fail. Entrepreneurs who do what they love rather than trying to build a business with a product/market fit, can’t fail. Don’t misunderstand, they can be wrong, they can make mistakes, but they never fail; those entrepreneurs will endeavor in their venture until the day they die – it’s who they are. As a result, their businesses don’t really fail, they simply evolve (pivot). Perhaps a brand name shuts down, a company is closed, but the venture moves forward as the team reorganizes, revisits the market, and endures.

Of course, that’s not true of everything there and assuredly you can give examples to refute me. My point isn’t black and white, the point is merely an example to help understand the philosophy there. Investors invest more often, in greater amounts, because they will get a return of some kind, even if that’s just a great team or some partners who carry forward ultimately getting investors their return.

If you live in an ecosystem where WHAT and HOW are the questions asked, where entrepreneurs are encouraged to avoid failure, get revenue as quickly as possible, and stay lean, businesses fail. What and how can be proven wrong and when the entrepreneurs and professionals within the ecosystem don’t instead believe in why and how, a product/market fit proven wrong is the end of the line. Why? There are NO new ideas. Hopefully you don’t live in an startup community where NDAs and IP are still the norm – your idea is not new, your WHAT and HOW is not new. Rewards come from bettering the best, from the teams with the passion to excel.

But what does it take to transform an ecosystem from building businesses to building teams and dreams? It takes industry.

Industry

What is the size and scope of your community? What brought you here, to learn about what makes startups work in Silicon Valley? Do you work within an entrepreneurial community, a city, or a region?

I have to chuckle, far to frequently, when I hear people tell me they are going to San Francisco to raise Silicon Valley capital. Does your community think in terms of it’s city, your city, or does it realize that Silicon Valley is distinct in that it isn’t about San Jose, or Palo Alto, or San Francisco, it’s about Silicon Valley – the cities are irrelevant. Indeed, the cities aren’t themselves sufficient to create an industry and I’d hazard a guess that neither is yours.

I’ve talked quite a bit about industry here, and the role that it plays in economies. In Austin, arguably, are the world’s eCommerce and Social Intelligence industries. We all know Texas is home to the oil and energy industry but those industries aren’t in Austin. What’s in San Francisco, alone, is insufficient to foster the culture and philosophy that we’ve discussed; the rewards that make startups work, but they don’t think in terms of the industries of their city – they think in terms of the industry of Silicon Valley.

Industry, experience, thought leadership, media attention, and public interest, gives entrepreneurs a distinct advantage simply be being where teams are easily made, mistakes avoided, and traction and market share almost a forgone conclusion because of the attention placed on the entrepreneurs and ventures within an industry.

Startups that would fail elsewhere find success in Silicon Valley for no other reason than the media covering things more prolifically, experience helping avoid mistakes, and old coworkers sill at it and partnering with you.

That doesn’t mean you have to be Silicon Valley, let’s be crystal clear, in fact, increasingly so is that you should not be in Silicon Valley because of the cost of doing business there, and their loss of the monopoly on technical talent. Your community exists within an industry, the question to ask is whether or not you realize it, whether or not the entrepreneurs embrace and support that, and whether or not ideas are prolifically shared to build teams, find partners, and even cooperate in competing with one another. Are you focused on your city and the success of businesses therein or are you truly working together, to develop an industry?

To leave you with a parting thought, I love the brilliance of Miguel Arias, a Spanish investor and mentor, in exploring the European community. Give him a read and ask if he’s not referring to the distinct culture, philosphy, and industry that makes unicorns possible, rewards greater, and startups work.

Getting Into Coworking

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Those of us working in the coworking community know, that per capita, Austin, Texas is the hotbed of the movement. According to Google Search Trends and reported by DeskMag, Austin leads the US market in search queries (demand) related to coworking; it’s no surprise Austin is home to the Global Coworking Unconference. For that reason, it came as no surprise to hear that Whoosh Traffic founder, Erica Douglass, was opening a coworking space here in Austin; but knowing that she was involved in the coworking movement from the very beginning and then learning that she was opening an East Austin space in a house, we had to catch up with Erica and share her story.

I first got interested in coworking when I attended the first-ever
“coworking” meetup in 2006, where Hat Factory [now closed] and Citizen Space started,” remarked Douglass. “I started the first coworking space in San Jose, since that’s where I lived and worked at the time, in 2006.”

By 2007, popularity in the Simpli Hosting office space had captured the imagination of early entrepreneurs, hungry for coworking before it really even caught on, and the office couldn’t maintain the coworking feel that makes such work environments so appealing. Erica’s first venture into shared work space wasn’t as much of the “coworking” she had desired anymore and the office was sublet-ted to another company.

Don’t wait for opportunity to knock, prepare for it

As is the case with the best of entrepreneurs, a dream, blended with the search for the right opportunity, prompted Douglass to grab the name she knew she would one day fulfill. Later that year, she picked up opportunityspace.net, knowing that when opportunity struck, Opportunity Space would be born. With the lessons learned from her experience in San Jose, the dream seeking an opportunity was that of a coworking space in a house. It’s a dream many have had and continue to have today; why are we only converting office spaces and commercial or retail property into coworking spaces? Homes are far more comfortable. Working toward that dream, Erika and some friends in the Bay Area crunched and recrunched the numbers but couldn’t make the math work on a house with dedicated desks. Opportunity knocked and as Erika sold Simpli Hosting and shelved her dream of coworking, those friends went on to open Silicon Valley’s Hacker Dojo.

Career and life moved Douglass from N. California to San Diego, and from there, in 2011, to Austin, Texas.

I arrived in Austin and again began scouting for space–this time just for my own business, Whoosh Traffic, as I didn’t know very many people in the tech community here,” shared Douglass. “That turned in to us scavenging some extra office space Joshua Baer and Jason Cohen had with OtherInbox and WP Engine (their companies) on the 8th floor of the Omni building in downtown Austin.”

Baer recognized the demand among startups to have a space to meet each other and work together in downtown Austin, and in March 2012, ironed out a deal for a new vision, Capital Factory, on the 16th floor of the Omni building downtown. Cospace had the pleasure of working with the team to develop and launch the space and, along with OtherInbox and WP Engine, Whoosh Traffic was one of the first companies to move in.

Capital Factory is an amazing space, and I have nothing but respect for Josh and the many others who have brought it to Austin. However, some part of me just wouldn’t let my dream go,” added Douglass. “I had a ‘backorder’ set on opportunityspace.com (in case the original owner decided not to renew the name, I’d be the first in line to get it when it became available again.) In March 2012, the original owner let the domain go, and opportunityspace.com was mine!”

Austin Entrepreneur Opens Opportunity Space

Idly flipping through real estate listings on craigslist, January 23, 2013 marks the date opportunity knocked. The perfect space, the perfect house, in east Austin, was there. With some personal risk, signing up for the space from her savings, and the goal of finally having an entire space where she could lease out dedicated desks to other startup companies, Opportunity Space was born.

In Austin though? Where there are easily more coworking spaces per capita than anywhere else in the United States, and possibly the world; can the market support more? With demand for coworking expected continue to grow at exceptional rates, those of us in the know know that traditional office space will continue to die. We’re experiencing not so much of an increase in coworking properties but a transition of traditional work environments to shared work spaces. As home to many of the most innovative entrepreneurs in the world, where better than Austin to continue to evolve work space in creative ways?

I’ve always had, in my mind’s eye, my space being a house I could work out of with others,” shares Douglass. “And, as a startup owner, I know there are two things on our minds: 1) We don’t want to mess with Internet access or jammed printers or broken coffee machines, and 2) We want our own space where we can shut the door, talk amongst ourselves, set up desktops, bring in family pictures, and really make the space our own–while still being engaged in and working with other startups in the space.”

There is an ever increasing demand and desire in all communities for startups to have their own space and while coworking provides the shared environment that fosters collaboration the likes of which we’ve never seen before, as startups grow, they need something more formal – the 2 year lease on an office isn’t the solution, Opportunity Space is the opportunity. And, for Erika, this represents a personal achievement nearly 7 years in the making.

Opportunity Space is now live and located close to downtown, Opportunity Space benefits from one of the most precious of resources for coworking spaces – dedicated parking; as well as, fast Internet, full kitchens on both floors, and room for you to grow. If you’re a startup owner in Austin who wants your own dedicated space for 3+ people, book a tour now. If you’re a solo-entrepreneur in need of only a single desk, go take a look, this is the start of a great opportunity.

Learn more about the space here.

The Cost of Entrepreneurship in Your Community

Economic Development, Featured, Startup Ecosystems, Startups, , , , , ,

Having spent a couple years now in Austin, and the previous 12 in Silicon Valley, a frequent topic of discussion over drinks or dinner is the question of how entrepreneurship works. Not “Startups” per se, at least not in the context that we think of them when reading about all the innovation on TechCrunch; rather, mere entrepreneurship and the fact that people are wired to work for themselves.

It’s really an intriguing topic when you consider entrepreneurship where you live. As a country, we’re excited by the hype machine that fuels entrepreneurship in California but generally speaking, the economy there is NOT entrepreneurial. It’s simply too expensive. Other than the funded ventures served by the exceptional amount of capital available to the brilliant innovators there, people generally don’t work for themselves, at least not compared to the ambitious entrepreneurs of a place like Austin; who I’d bet, are not unlike the individuals creating opportunity in your city.

There are countless comparisons of one city to another; one economy to another. People love to posit and debate what makes one community thrive while another fails or why a city churns out billion dollar ventures while another rarely crosses that threshold. My thoughts here are along the same lines but I’ve come to a conclusion of late that I think is unique and worth considering.

If we distill down all of the variables driving an economy, we can conclude that there are only two types of entrepreneurial markets in the U.S.

High Cost vs Low Cost Startup Economies

High cost markets are flush with experience, new talent, and ideas BUT require greater investment in business simply to get started. As a result, the “ideas” which receive investment are already fleshed out by experience, ambition, collaboration, and a network of peer professionals BECAUSE no one can afford to start a business without being so capable and taking an idea to market worth investment. This gives such markets (think San Francisco, Los Angeles, and New York) a tremendous advantage and the opportunity to go for big risks; you see this in the billion dollar valuations of Silicon Valley, the dominance of the entertainment industry through LA, and the center of commerce in New York.

Of course, I’m generalizing.

Low cost markets are also flush with experience, talent, and ideas but it takes virtually nothing to get started. Consider the expensive cities on the coast vs. middle America – It costs $185 per hour to get a Ruby on Rails developer in San Francisco. What requires $750k in capital investment there takes only $250k elsewhere. As a result, a few things happen:

  1. Startups from those big cities get a lot of attention; much of it for no reason other than how big they seem. After all, a $750k investment is newsworthy!  Isn’t it? No one bats an eye at the same exact startup in another city raising only $250k.  What a pittance!  The flaw in that happening is that PR = traction; for good ideas and bad. Capital buys time and resources and in our increasingly outsourced economy, even though it costs more to hire talent in those expensive cities, $750k applied to some overseas developers goes a LONG way further than $250k. Time = opportunity.
  2. Entrepreneurs in middle America try to replicate from the coasts… let’s do it like they did… without appreciating everything that goes into making those economies work – A great idea, some money, and we’re set! The problem is that other factors are easily overlooked: experience, ambition, collaboration, and a network of peer professionals, PLUS the PR impact of being in those high costs markets.  Inexpensive markets can’t replicate what happens in those expensive cities so why are we trying?  Rather, learn from their examples as what works there, in those market dynamics, won’t work the same way elsewhere.
  3. Are “ideas” new?  Are ideas worth anything?  How does your city feel about big ideas?  Expensive cities seem to fully embrace the perspective that there is no new idea and that it’s about execution. After all, ideas in high cost markets really aren’t even ideas by the time we hear about them, they’ve been vetted, tested, and in development by experienced individuals.  They work that way because of that first, and the next, considerations but important to evaluate is that in that, no one is testing an idea; everyone, all the investment, development, advisors, investors, and entrepreneurs, are focused on executing, scaling, and growing.  What’s happening where you live?  Are people validating ideas or scaling businesses?
  4. Perhaps most important, in low cost markets, entrepreneurs with ideas can easily, and therefore all to often, try to go it alone. If not alone, with few others, from the sense of independence that smaller towns and middle America seems to encourage. Silicon Valley, for example, isn’t an entrepreneurial environment – it’s a startup environment. There is a BIG difference.  Entrepreneurs have a bit of the lone wolf in them whereas startups are never sole proprietorships.  Entrepreneurs can’t and shouldn’t do it all themselves. There is NO reason to Learn and Discover (my 3rd point) how to scale when the rest of the country already knows so much about your industry, marketing channels, segments, etc. High cost markets put more emphasis on Agile principles for the very reason that they must leverage one another because it’s too expensive to do anything but get the dang thing out and get some proof – and then iterate, iterate, iterate. The high cost of a market forces people to appreciate that time and resources are valuable and though expensive, I don’t have the time to discover something with which I’m unfamiliar – I’m going to focus on what I know well and collaborate with others who can contribute what I need.

So ask yourself and please share with me, how much of this rings true about where you live.  Don’t consider the access to talent, experience, education, or even capital that drives your economy; simply consider the cost of doing business where you live.  How much of that cost determines how your economy works and drives how entrepreneurship might excel with your support.

TL;DR – The mere cost of markets creates different cultures and expectations and rather than learning from one another we try to emulate things.   Expensive markets try to attract and retain the talent from inexpensive markets while inexpensive markets try to replicate how expensive markets work.  It’s a failed approach which in and of itself needs innovation if we’re to foster entrepreneurship in the United States.

What Collaborative Spaces Mean to a Community

Insights / Research, Startups, , , , ,

Whether a community of entrepreneurs, developers, small business owners, or none of the above, collaborative work spaces are changing the landscape of our workforce and driving economic development for cities.  This is no more apparent than in the reaction of the community of Silicon Valley to news that Hacker Dojo was in peril.

New York Times Reports: Silicon Valley Techies Fight to Save a Popular but Illegal Haven

August 22, 2012, New York Times reporter Somini Sengupta shared that the beloved Hacker Dojo was ordered to comply with Mountain View city regulations for offices or move out.

It doesn’t have enough fire exits, sprinklers or wheelchair-accessible bathrooms, as required by city regulations. “If they can’t comply, they can’t use the building as they want to,” said Anthony Ghiossi, the chief building official for the city.

Retrofitting the space will cost the Dojo $250,000. No one wants to see the doors close.

Hacker Dojo

I had the distinct pleasure of attending a few events at the Dojo before I left Silicon Valley for Austin. Like many of the work places that really work, Hacker Dojo just feels right. It isn’t an office and the idea that such a space needs to comply with office regulations, while somewhat logical, is just as illogical. Entrepreneurs, hackers, and developers are flocking to such spaces precisely because they aren’t offices; because the experience in the space, the culture, the style, the atmosphere, and the people there are the reason so many innovative ideas spin out of the collaboration, learning, and building that occurs in these spaces. With such a passionate community, Hacker Dojo considers itself a “do-ocracy” – run by members, including several self organizing teams like events, government, and operations.

Hacker Dojo is a community center in Mountain View – about 1/3rd coworking space, 1/3rd events venue, and 1/3rd a big social living room. It’s an incredible location for events, lectures, parties, BarCamps, DevHouses, LAN parties, hackathons, pie meetups (seriously), tinkering, brainstorming, coworking, and more. Technically a “members only” private club, Hacker Dojo is open for many of the lectures and classes that occur there; it’s a community space first and foremost.

Sengupta adds, “The Dojo is an example of the new work spaces that underlie the start-up culture of Silicon Valley. Coffee shops around here can be packed with coders, huddled over glowing Macs for hours at a time. Technology incubators are sprinkled across the valley, but getting into the hottest ones can be as hard as getting into business school; besides, many of them, like Y-Combinator, just down the road from here, extract equity in the start-up in return.”

Saving Hacker Dojo

With word from the city, Katy Levinson and the community rallied together and with Kickstarter, started to pull together the capital needed to retrofit the space and keep the Dojo kicking (yes, I went there).

We are currently not allowed in more than half of the space we pay rent on,” says the project, “Not permitted to hold large classes, and not permitted to hold many classes at once. This is due to restrictions placed by the city of Mountain View on the Hacker Dojo. We are looking to lift these restrictions by updating the building, and to create some amazing new resources for our community such as a dedicated event space and makerspace/design studio.”

The community responded.

Hacker Dojo, like many such collaborative work spaces around the world, isn’t just a home to entrepreneurship. Indeed, startups are incubated here, classes are held, and events help everyone connect and take a break, but good spaces do so much more for a community. Freelance professionals and service providers are starting to shun working from home or an office in favor of these environments in which they can connect with business builders and innovators. Recruiters are setting up a desk in coworking spaces giving them an edge over their competition by going right to the space where the best and brightest can be found. And the collaboration is accelerating businesses – partnerships that once took days or weeks to negotiate are banged out over a Mountain Dew in the kitchen.

Close now to their $250k goal, it seems assured that this space, a space that has already done so much for the community, will continue. But they aren’t there yet, back the project here and get involved in Hacker Dojo in Mountain View, CA.