What seems natural, artificial, or supernatural is a function of familiarity. Nature is the background or context for innovation. The challenge is that we live in a world and culture formed by millennia of innovation so that some incredibly advanced technologies seem natural. The difference between technology and magic is not that one works more reliably than the other but that technology is part of the adjacent possible–seemingly impossible but comprehensible. Magic breaks our existing paradigm and is initially incomprehensible. As entrepreneurs we need to present our innovations as technology not magic.
This weekend I attended the Bay Area Maker Faire 2015. New this year was a Startup Pavilion with about 20 companies selling their products and looking for early adopters. Through out the show, I also found many startups looking for support for their kickstarter campaigns.
Excerpts from Paul Grahams’ October 2014 essay “Before the Startup” with commentary interspersed. This essay is in some ways less self-confident than many of his earlier ones. He seems to recognize more explicitly the limits of his ability to offer advice that entrepreneurs in the Y Combinator portfolio–or entrepreneurs applying to Y Combinator–will actually follow. The primary point he hammers home is the need to focus on customers and to realize that a startup a significant multi-year commitment.
A documentary on entrepreneurship as a calling that I found very compelling was “The Call of the Entrepreneur” produced by the Acton Institute. It addresses both practical and spiritual aspects of entrepreneurship from the point of view of three very different entrepreneurs:
- Brad Morgan, a dairy farmer in Evart, Michigan who transforms a failing farm into a successful dairy and compost company.
- Frank Hanna, a merchant banker in New York City who explains how entrepreneurship transforms the economy into a positive sum game.
- Jimmy Lai who grew up in Communist China and then Hong Kong, emigrating to New York to found retail and media companies.
Busyness won’t build your business, it closes off your creativity and your luck. Anticipate, or at least acknowledge, missed deadlines and commitments: triage or re-negotiate.
I recently wrote a friend to ask if he wanted to do something this week, and he answered that he didn’t have a lot of time but if something was going on to let him know and maybe he could ditch work for a few hours. I wanted to clarify that my question had not been a preliminary heads-up to some future invitation; this was the invitation. But his busyness was like some vast churning noise through which he was shouting out at me, and I gave up trying to shout back over it.
Tim Kreider “The Busy Trap“
It’s a terrible feeling when you are behind in your work. What might have been good if delivered early and adequate if on time is now insufficient. So you have to keep raising the bar the later you get. Understanding what is critical to accomplish means making hard choices, and just as when you won’t admit a loss on a stock because you haven’t sold it, you can console yourself that you are still working on that deliverable and it’s just a little late.
“The feeling of being hurried is not usually the result of living a full life and having no time. It is on the contrary born of a vague fear that we are wasting our life. When we do not do the one thing we ought to do, we have no time for anything else–we are the busiest people in the world.”
Hurry creates tunnel vision. It closes off your ability to notice, create, and act upon chance opportunities. It makes you less lucky. It’s always a good idea to maintain focus and finish the critical tasks that are on your list for today or that you have committed to a customer or a partner. But if your list is longer than about six hours of work and you are like most entrepreneurs I know, many won’t get done and you should at least prioritize.
Mark to Market
I have a very long to do list that contains goals for the day, week, month, quarter, year, and next year. Sometimes I have to mark tasks [d] for dropped instead of [x] for done. The sooner I do that so that I can finish the critical ones the less I have hanging over me. I don’t mean to make this sound easy or even straightforward but consider the following to catch up and be creative again:
- Drop tasks that may have been a good idea at one time. Put them on a “good idea” list you can revisit in six months time.
- Explicitly de-commit or re-negotiate a new deadline if you know you are going to miss one or you have already missed it.
- If it’s possible: do a partial job early, send a draft, send an outline, timebox for 20 minutes or 30 minutes or an hour and get a small chunk done and ask for feedback. The worst outcome is to be late and have an incorrect idea of what’s expected or needed.
Related Blog Posts
Don’t waste time painting Tom Sawyer’s fence: proving someone wrong is actually a poor source of motivation. It’s OK to ignore conventional wisdom, but don’t get trapped into doing someone else’s work (or building their platform) just to prove them wrong. Build something instead of trying to win an argument.
Ben stopped nibbling his apple. Tom swept his brush daintily back and forth – stepped back to note the effect – added a touch here and there – criticised the effect again – Ben watching every move and getting more and more interested, more and more absorbed. Presently he said:
“Say, Tom, let me whitewash a little.”
Tom considered, was about to consent; but he altered his mind:
“No – no – I reckon it wouldn’t hardly do, Ben. You see, Aunt Polly’s awful particular about this fence – right here on the street, you know – but if it was the back fence I wouldn’t mind and she wouldn’t. Yes, she’s awful particular about this fence; it’s got to be done very careful; I reckon there ain’t one boy in a thousand, maybe two thousand, that can do it the way it’s got to be done.”
“No – is that so? Oh come, now – lemme, just try. Only just a little – I’d let you, if you was me, Tom.”
Mark Twain “The Adventures of Tom Sawyer” Chapter 2
Rand Fishkin: You Can’t Do It Motivated Me
In “You Can’t Do It is a Powerful Motivation” Rand Fishkin recounts accurate advice he receive and ignored:
- “You can’t build a big company in the SEO space,” said plenty of business people I talked to. “Stick with consulting–it’s what you know and you’ve got a great brand.”
- “You need to hire a head of product and build a product team.”
- “You can’t build a search engine sized web index on $1 million.”
- “Don’t try to raise money now – you won’t get any.”
- “The self-service / web app model is wrong. You need to build an enterprise sales force / charge more for your product / create embedded software so it’s not so easy to quit.”
Build Something Instead of Trying to Win an Argument
Most of this is implementation advice from folks with considerable implementation experience. No one was arguing about customer need, except perhaps the last one is about value proposition. He needs to turn this into a positive narrative. The Germans have an aphorism: “Stubbornness is the energy of fools.” He should reframe this as a persevering focus on his prospect’s needs.
Sam Walton: Ignore Conventional Wisdom
Sam Walton suggested an approach Rand might consider in his ten rules for building a successful business:
Rule 10: Swim upstream. Go the other way. Ignore the conventional wisdom.
If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50,000 population cannot support a discount store for very long.
Related Blog Posts
Here is some advice from a couple of founders that ran successful crowdfunding campaigns:
Matt Oscamou, CEO of Frontier Bites shared at a recent Bootstrappers Breakfast meeting that he ran a successful kickstarter campaign $30K for pay for new packaging artwork and initial order. He found it useful as a way friend and family could help support his effort but he had little donations from strangers.
Mark Palaima, Distinguished Engineer at Avagent, hit their funding goal in the first 5 hours. Most of their donations came in the first two days and spent a great deal of time on a marketing road trip hanging out at tech bars showing off the product. See more about their campaigns at Avegant Glyph Kickstarter Surpasses Stretch Goals Before They’re Made, Try the Glyph in a City Near You
At a recent SV Hardware Startup to Scale meetup, Noah Dentzel, CEO of Nomad Goods emphasized the importance of getting the word out on your campaign. He offered the tip of writing article for press and bloggers. His goal is to make their job easier for them. He also took advance of holes in press schedules – no shows or other delays. His biggest piece of advise is to go for it, ask, knock on the doors. His biggest surprise was learning all the logistics about shipping and delivering products oversea. He knows that shipping to S and Russia cost $0.90-1.10.
Come share ideas, form teams, and launch startups. … Come join us for weekend-long, hands-on experience where you will learn what it takes to launch a startup, meet others with the same shared passion for entrepreneurship, and maybe even create a new business! Sean Murphy is excited to be a mentor at the event.
June 6-8 in San Francisco, CA
Use promo code SFB2B10
During this Startup Weekend, entrepreneurs will be empowered to pitch, build teams and transform their B2B based ideas into Minimum Viable Products (MVPs).
Update Sat-May-17 from Sean Murphy: I am grateful to Scott Sambucci of SalesQualia for recommending me as a mentor and glad that I was able to suggest that Emily Tucker of TaroWorks and Liz Fraley of Single Sourcing Solutions take part as mentors.
Are you a startup founder who wants to make an objective assessment of your new product idea? Schedule a no-cost, no-obligation MVP Readiness Review.
Peter Cohan from Second Derivative offers some of the best sales demo/pitch training and hands-on learning that we have seen. So we are honored to offer these interactive workshops to startups.
Here is the upcoming schedule:
|March 5&6, 2014 “Great Demo!” San Jose, CA|
|May 21&22, 2014 “Great Demo!” San Jose, CA|
|October 15&16, 2014 “Great Demo!” San Jose, CA|
We get a number of questions about logos, here are three tips for designing or choosing a logo when you are bootstrapping or just getting started:
- Text Treatments: text logos are simple, the company name is always right there. Most high tech logos are text treatments, they are clear and simple. With text logos you have instant impact, customers don’t need to decipher anything. Another benefit of text treatments are logo aspect ratio comes naturally with words. They always seem to work whether you are shrinking or stretching them. Examples are Google, IBM, Intel, and eBay.
- Icons: symbol logos can be recognized faster, our brains process images quickly than words alone. But they require more work and $$$ on branding and presence before people have the connection between symbol and company. Examples are Nike‘s swoosh, Apple‘s apple and Linux‘s penguin. Notice these logos have nothing to do with the companies product: they are about being different and being memorable. They are also very simple designs.
- Keep it Simple: like many other types of design, the best logo designs are elegantly simple. They shrink, stretch, or twist without losing their intangible emotional resonance. Color may add to the design, but they still look great in black and white. In fact, most logo designers use grayscales to do the initial design, then move it to color. They have to look good on your business card, on literature, and on your website.
If you missed SKMurphy and SalesQualia at Lean Startup Conference’s workshop, Sean Murphy and Scott Sambucci led an interactive workshop on developing and debugging your repeatable and scalable B2B sales process. In the workshop, we worked a number of sales issues that the attendees from lean startups had:
- Can’t get potential customers to call back
- Won’t make a decision
- Prospects like the beta, but they will not buy
- Deals stall
Engineering Your Sales Process workshop will help you learn from common sales problems by using conscious planning and experimentation. Traditional sales training stresses “every no moves you closer to a yes.” Our approach to engineering your sales process says instead, “What looks like noise is often actually data.” Designing and debugging a repeatable sales process is key to a sustainable business, and we’ll address how to diagnose common problems to determine likely root causes. You will leave with a scientific approach to understanding your customers’ needs and their buying process so that you can scale your business in harmony with it.
You can view the slides at http://www.slideshare.net/SalesQualia/engineering-your-sales-process.
Also here is the link to a readable version of the sales map in mindomo http://www.mindomo.com/view?m=e18b84e308994b1d95a032583f3885bcces
- “@MichalAntkiew: @leanstartup @scottsambucci @skmurphy Great workshop! Now I see how all pieces fit together.” Glad you could join us
- @leanstartup @scottsambucci @skmurphy Great workshop! Now I see how all pieces fit together.
- “This was pretty comprehensive and very useful workshop”
- “Very good”
- “The basics was so helpful. I liked the format”
- “Sales is a conversation. If you’re not getting questions, there’s probably not interest. Let it go.” @scottsambucci @skmurphy @LeanStartup
- More things that drive you crazy? “Lean startup being used by entrepreneurs as an excuse to not take sales/mkg seriously” @a16z #LeanStartup
If you missed our “Working for Equity” panel at Silicon Valley Code Camp 2012, Theresa Shafer and the four CEO’s on the panel had a lively conversation about what’s really involved in leaving your day job and striking out on your own or with partners.
If you are looking to rent a desk or conference room by the hour, day, week or month here are four tools you can use to search. All of them cover Silicon Valley and other metropolitan regions as well
Implications for the future of startups and small service firms:
- It’s interesting that same forces that are making fractional leases on computing capability available in the cloud seem to be at work enabling the ad hoc provisioning of workspaces.
- Coupled with the pervasive availability of wifi in coffee shops and eating establishments and transition to laptops or even smaller form factor tablets and smartphones for computing support, the old assumptions that an incubator provided value offering office space, Internet connectivity, and space in a co-located datacenter are defunct.
- For startups with less than a dozen people, both their computing and physical office configurations are becoming increasingly virtual.
I think this will enable new opportunities for firms to provide professional services, knowledge work, and clerical support in a variety of new forms and delivery modes by interacting either in virtual on-line spaces and/or virtual office space on demand.
Update Thu-Feb-09: A commenter suggests evenues.com also provides information about meeting rooms and event venues. I took a quick look at the site for Meeting Rooms San Jose and learned about a number of new venues to consider. The site also had an interesting blog post on “A Brief History of Coffee Houses as Meeting Places” which reminded me of this RSA video of Steve Johnson on “Where Good Ideas Come From.” In it he explains that coffee houses were one of the first co-working establishments that allowed people to mix and recombine different thoughts to form new ideas.
Update Fri-Feb-10: I came across Cloud Virtual Office (tagline “Virtual Offices & Touchdown Space”) researching “Going Bedouin” a term coined by Greg Olsen that I had written about previously on “Bootstrapping Startups: Bedouin, Global, Incessant, and Transparent” Related blog posts:
- the original blog post by Greg Olsen is no longer available but a copy that admits an image that contained his recipe for a Bedouin startup is still up at “Going Bedouin” on GigaOm
- “The Long Hallway” by Jonathan Follett
Update Mon-Apr-2 a reader suggested DesksNear.Me as another tool for this list.
MyPermissions: Checks for third party application access to your Facebook, Twitter, Google, Yahoo, LinkedIn, Dropbox, Instagram, and Flickr accounts.
SocialMention: Allows you to do keyword and phrase search across more than one hundred social media sites including Twitter, Facebook, FriendFeed, YouTube, Digg, Google, etc…
Here are the slides from today’s “Working for Equity” panel at Silicon Valley Code Camp. It was a standing room only crowd of over 70 that made for a very interactive session with the panel.
Entrepreneurs feel a calling to improve the world by creating an exchange of value. They are motivated by a dissatisfaction with the status quo and blessed with the energy and gumption to change it. People who are content or phlegmatic rarely try to change things.
Update Feb-24-2011: Since I first wrote this in 2010 the Effectuation.Org site has been considerably upgraded and contains a lot more information on Saras Sarasvathy’s research.
Recapping ideas, papers, and books that had changed my life yesterday reminded me of Saras Sarasvathy’s Effectual Reasoning Model from her 2001 paper “What Makes Entrepreneurs Entrepreneurial” (There is an annotated version on the Khosla Ventures site at http://www.khoslaventures.com/presentations/What_makes_entrepreneurs_entrepreneurial.pdf )
What follows are some quotes from “What Makes Entrepreneurs Entrepreneurial.”
Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with.
Effectual thinkers are like explorers setting out on voyages into uncharted waters.
All entrepreneurs begin with three categories of means
- Who they are–their traits, tastes,and abilities;
- What they know–their education, training, expertise, and experience
- Whom they know–their social and professional networks.
In our “Idea to Revenue” Workshop we talk about three kinds of capital that startups begin with: intellectual, social, and financial. We don’t call out what she refers to as “human capital” or “who they are–their traits, tastes, and abilities” as a resource but instead encourage teams to “begin in phase two.” That is, to build on prior accomplishments and long term interests so that early customers view the startup as a continuation of earlier efforts and focus.
But I like this model of bootstrapping entrepreneurs as foragers: living off the land as hunter-gatherers until they can find a market to homestead. Bootstrappers have to start from where they are and search for opportunities. Pasteur advised that “Chance only favors the prepared mind” so you have to open yourself up to possibilities and be prepared to be surprised (which is another way of saying you have learned something new). Some more quotes from her paper:
Using these means, the entrepreneurs being to imagine and implement possible effects that can be created with them. Most often they start very small with the means that are closest at hand and move almost directly into action without elaborate planning.
Plans are made and unmade and revised and recast through action and interaction with others on a daily basis. Yet at any given moment, there is always a meaningful picture that keeps the team together, a compelling story that brings in more stakeholders and a continuing journey that maps uncharted territories.
Eventually certain of the emerging effects coalesce into clearly achievable and desirable goals–landmarks that point to a discernible path beginning to emerge from the wilderness
Seasons entrepreneurs, however, know that surprises are not deviations from the path. Instead they are the norm, the flora and fauna of the landscape, from which one learns to forge a path through the jungle. The unexpected is the stuff of entrepreneurial experience and transforming the unpredictable into the utterly mundane is the special domain of the expert entrepreneur.
One of the reasons that we run the Bootstrapper Breakfasts as 90 minute unconferences–where folks introduce themselves and put issues on the table they would like to discuss–is that it keeps everyone in an entrepreneurial frame of mind:
- When you hear someone describe a challenge that they are facing, it gives you much better insight into their thinking and allows you to evaluate what they might be like to work with.
- Often as not they are describing a common problem, or aspects of a common problem. Hearing their perspective just on the problem can give you new insights into how to solve it.
- It’s good practice to learn how to ask for advice and insight. Entrepreneurs need to do a lot of that in the early market especially.
- Explaining how you managed an issue or situation can deepen your understanding of you solution, it forces you to put it into terms others can use and understand. This is good practice for scaling up (e.g. adding your first employee).
Sarasvathy stresses the cooperative nature of entrepreneurship in the paper, a perspective that I share. Often an entrepreneur is attempting to obsolete an aspect of the status quo, but they have much less competition and much more opportunity for collaboration than is appreciated.
Markets are stable configurations of critical masses of stakeholders, who come together to transform the outputs of human imagination into the forging and fulfillment of human aspirations through economic means.
Effectual reasoning may not necessarily to increase the probability of success of new enterprises, but it reduces the costs of failure by enabling the failure to occur earlier and at lower levels of investment.
Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually; they believe in a yet-to-be-made future that can substantially be shaped by human action; and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it. In fact, to the extent that the future is shaped by human action, it is not much use trying to predict it–it is much more useful to understand and work with the people who are engaged in the decisions and actions that bring it into existence.
She highlights three key differences between effectual reasoning and traditional startup management models:
- Risk taking
- Traditional: expected return, work the plan to deliver results to your investors (“Ready Aim Fire” can become “Aim–not big enough–Aim–not big-enough–Aim…”).
- Effectual: affordable loss, make many small mistakes as early and cheaply as possible to speed learning (“Ready Fire Steer“)
- Traditional: competition
- Effectual: strategic partnership (especially with early customers)
- Value Creation
- Traditional: rely on pre-existing knowledge to aim for a known market you can dominate and exploit
- Effectual: leverage contingencies; create opportunities as you map a new market
She goes into some detail on the “affordable loss principle” and offers extracts from an interview with an expert entrepreneur’s approach to a new market:
While managers are taught to analyze the market and choose target segments with the highest potential return, entrepreneurs tend to find ways to reach the market with minimum expenditure of resources such as time, effort, and money. In the extreme case, the affordable loss principle translates into the zero resources to market principle. Several of the expert entrepreneurs I studied insisted that they would not do any traditional market research, but would take the product to the nearest possible potential customer even before it was built. To quote but one of them, “I think I’d start by just… going… instead of asking all the questions I’d go and say.. try and make some sale. I’d make some… just judgments about where I was going — get me and my buddies — or I would go out and start selling. I’d learn a lot you know..which people.. what were the obstacles.. what were the questions.. which prices work better and just DO it. Just try to take it out and sell it. Even before I have the machine. I’d just go try to sell it. Even before I started production. So my market research would actually be hands on actual selling. Hard work, but I think much better than trying to do market research”.
In finding the first customer within their immediate vicinity, whether within their geographic vicinity, within their social network, or within their area of professional expertise, entrepreneurs do not tie themselves to any theorized or pre-conceived “market” or strategic universe for their idea. Instead, they open themselves to surprises as to which market or markets they will eventually end up building their business in or even which new markets they will end up creating.
This is also an approach that favors older entrepreneurs to the extent that they have larger social networks (based on more shared work experience with more people) and deeper professional expertise. The one caveat is that they have to be open to new possibilities and not be blinded by what they “know” to be true in the face of new information.
This 2001 paper offers another perspective on bootstrapping entrepreneurship that is independently derived and predates “Four Steps to the Epiphany (2003)”, “Blue Ocean Strategy(2005)”, and the “Sales Learning Curve (2004).” But all four are clearly addressing different aspects of the same core paradigm that takes a scientific or hypothesis driven approach to new products and new markets.
I will leave with two final quotes from the paper which highlights the value of establishing enduring relationships.
Expert entrepreneurs […] are actually in the business of creating the future, which entails having to work together with a wide variety of people over long periods of time. [They fill their future] with enduring human relationships that outlive failures and create successes over time
This is largely ignored in our entrepreneurship curricula which tend to focus on market research, business planning, new venture financing and legal issues. As far as I know no entrepreneurship programs offer courses in creating and managing lasting relationships or stable stakeholder networks, nor on failure management.
Recapping on my earlier “Federated Entrepreneurship” post from January 5.
A federation is a union of partially self-governing units with a constitution that does not allow unilateral changes by a central governing body. I think it’s also a good model for what’s required to create an economically dynamic region. One parallel would be to a barn raising or Finnish talkoot, where a community comes together to solve an urgent problem that is beyond the means of a member or family in the community. As one of my old clients once remarked “it takes a village to raise a startup” and I think it takes a federation of entrepreneurs to improve the economy in a region.
What we all hope to learn, the encouragement and advice that we give and/or receive, the lessons learned that we share and the relationships that we build, are as much about building this kind of community here locally as it is about helping us foster our own bootstrapped tech-startups.
Two other well known entrepreneurs have shifted their focus to entrepreneurial education.
Sramana Mitra outlined an ambitious New Year’s Resolution for 2010
Through the Entrepreneur Journeys project, I have come to conclude that the most vulnerable phase in an entrepreneur’s life is the pre $1 million revenue stage. This is where numerous ventures fail. Once the $1 million revenue milestone is crossed, entrepreneurs find it easier to find additional customers, manage working capital, and access funding, whether it is credit or equity.
In my roundtables, the vast majority of entrepreneurs I work with are in this rather vulnerable pre $1 million revenue stage.
Thus, I have come to the conclusion that if I could help a million entrepreneurs globally reach $1 million in revenue (and beyond), that would be the foundation of a robust, distributed, and sustainable economic value creation that would add up to a trillion dollars in global GDP. It would also result in creating at least 10 million jobs around the world.
Through my efforts — blog, books, columns, roundtables — I am trying to develop a scalable entrepreneurship education system that entrepreneurs from every corner of the world can access. I am sure, in 2010, this work will gain further momentum.
But I do need your help in getting the word out that this resource base is available for entrepreneurs who wish to access it. Each of you — if you believe in this vision — can directly or indirectly influence, perhaps, another hundred entrepreneurs, and help them clear the all-important $1 million revenue hurdle. By using bootstrapping, crisp positioning, and laser-sharp focus, entrepreneurs can, each in their individual domains, build small businesses with solid foundations.
Eric Ries also outlined a desire to move Towards a New Entrepreneurship in his first post of 2010:
When I started writing about the lean startup, my aspiration was to do more than just share a handful of tips and tricks that work for consumer internet startups. I believe the only way to improve our chances as entrepreneurs is to develop a working theory of entrepreneurship.
Like other industries – from publishing to automobiles – entrepreneurship is in the process of being disrupted by globalization. On the whole, this is a good thing for America and for our civilization. The cost of creating new companies is falling rapidly, and access to markets, distribution, and information is within the reach of anyone with an internet connection. The result is a profound democratization of the digital means of production.
- “Continuing Education in Entrepreneurship” from October 2006 suggests networking offers “knowledge that isn’t written down” (and not to be found in Mr. Google’s basement):
“I had this epiphany that I had spent the last dozen years or so, since I started attending Software Entrepreneur Forum (now SDForum) and Churchill Club meetings, in this ad hoc program in continuing entrepreneurial education. Books are valuable, and not enough entrepreneurs do enough reading, but there is also a category of knowledge that hasn’t been written down yet. And you can gain wisdom from listening to someone who has played the game–even if it’s just their mistakes–that you would otherwise have to gain from your mistakes experience.”
- “Breakfast with Tom Anyos of Technology Ventures Corporation” Between 2002 and 2008 TVC offered a set of six monthly classes twice a year in Silicon Valley:
- Entering the Entrepreneurial World
- Market Research & the Marketing Plan
- Financial Management
- Preparing & Presenting the Business Plan
- Operations Startup, Monitoring & Human Resources
- The Term Sheet & Lessons Learned
Federated entrepreneurship was a phrase that William Krause used to explain 3Com’s model for management and innovation when he was CEO. Federation comes from a Latin word foedus for covenant or treaty and describes a union of partially self-governing units with a constitution that does not allow unilateral changes by a central governing body. It was a good model for the entrepreneurial business units at 3Com to pursue opportunities both independently and in concerted action.
I think it’s also a good model for what’s required to create an economically dynamic region. One parallel would be to a barn raising or Finnish talkoot, where a community comes together to solve an urgent problem that is beyond the means of a member or family in the community. As one of my old clients once remarked “it takes a village to raise a startup” and I think it takes a federation of entrepreneurs to improve the economy in a region.
What we all hope to learn, the encouragement and advice that we give and/or receive, the lessons learned that we share and the relationships that we build, are as much about building this kind of community here locally as it is about helping us foster our own bootstrapped tech-startups.
I like the concept of simultaneously bootstrapping a startup and building a community. Many regions around the world aspire to improve the level of innovation and dynamism in their local economy. But the Silicon Valley model of technology entrepreneurship combined with risk capital is more than 100 years old: it can be traced to the founding of Federal Telegraph in 1909 (it’s noted by California Historical marker 836). Today’s efforts build on prior practices and institutions. See “Steve Blank on the ‘Secret History of Silicon Valley’“ for more details and the Silicon Valley Historical Society.
I think this means that each region needs to leverage its unique strengths new industries and local entrepreneurial activities. Put another way, Silicon Valley has already been invented, now we need to invent the regional models that will replace it.
It’s interesting that a number of the engineers behind the semiconductor revolution were from Midwestern Congregationalist Church backgrounds that emphasize a lack of hierarchy and a commitment to education and hard work. Some excerpts from Tom Wolfe’s “Robert Noyce and His Congregation” (a re-write of his earlier “The Tinkerings of Robert Noyce.”):
ROBERT NOYCE, INVENTOR OF THE silicon microchip and co-founder of Intel, grew up in Grinnell, Iowa, one of countless small towns in the Midwest that had been founded in the 19th century as religious communities by so-called Dissenting Protestants: Congregationalists, Presbyterians, Baptists, Methodists, and many others. What Dissenting Protestants dissented from was the Church of England and its elaborate ties to British upper-class life. […]
The Congregational Church had no hierarchy. Each congregation was autonomous. A minister was a teacher rather than a holy shepherd with a flock. Each member of the Congregation was supposed to be his own priest, in direct communication with God. […]
This attitude had a fascinating corollary in education. Back East, as in Europe, engineering was an unfashionable field for any truly gifted student to go into. It was looked upon as nothing more than manual labor elevated to a science.[…]
An extremely bright student, the one possessing the quality known as genius, was infinitely more likely to go into engineering in Iowa, Illinois, Michigan, or Wisconsin than anywhere Back East. As a result, the way to today’s Information Superhighway, more recently known as the Digital Revolution, was paved entirely by geniuses from the Midwest and farther west. […]
A decade later at Intel, Noyce decided to eliminate the notion of levels of management altogether. He and Moore ran the show; that much was clear. But below them there were only the strategic business segments, as they called them. They were comparable to the major departments in an orthodox corporation, but they had far more autonomy. Each was run like a separate corporation. Middle managers at Intel had more responsibility than most vice presidents Back East.
“The Rise of the Brain Belt”
Perhaps even more important to the revival of the Heartland may be the growth of high-technology services and communications, energy production, manufacturing and warehouses as the critical levers for new employment and wealth creation. Only 10 percent of rural Americans live on farms and only 14 percent of the rural workforce is employed in farming. The area’s future clearly lies in the continued expansion of other industries.
The key to this growth is not merely cheap energy or labor; it’s the quality of the workforce. Although these areas are often seen as lacking in educated workers, many rural regions of the country—from New England to the Great Plains and even parts of the Sierras—actually have a surplus of skilled labor. The basis of this surplus lies in the high level of education among young people in many Heartland states. In virtually every measurement, students in key rural states—particularly the Dakotas, Iowa, Nebraska and Kansas—tend to perform better than those in more urbanized ones, as measured by graduation rates, college attendance and enrollment in high-level science and education programs.
[…] The Internet is rapidly diminishing the traditional near monopoly of information that throughout history has belonged to the metropolis; today a farmer, a securities dealer, a machine shop proprietor or a software writer in a small town enjoys the same access to the latest market and technical information as someone located in midtown Manhattan or Silicon Valley. “