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Jan 5 2019 by

Startup Communities Are Not Like Recipes, They are Like Raising Children

I’ve often heard people say “building startup communities (or startup ecosystems) is not about the ingredients, it’s about the recipe.” What they mean is that a focus on the individual people, institutions, and resources will provide only limited insight or success, and that what matters most is how these things all come together. Integration is the right concept, but a recipe is the wrong analogy.

Recipes, like chicken noodle soup or chocolate chip cookies, are simple systems. These recipes require some understanding of techniques and tools, but once learned, they are replicable with a high degree of certainty. The process of creating these “systems” can easily be broken down into constituent parts, such as chopping vegetables or sifting flour, and their integration (mixing) requires little precision.

Recipes become complicated when they involve a twenty-course tasting menu at a restaurant with three Michelin stars. Producing and serving these meals is surely a challenging problem, requiring highly specialized expertise, coordination of many factors, and consistency at scale. But these systems are also ultimately solvable, and when mastered and carried out with care, they can be replicated with relative precision. Restaurants do this repeatedly every night in cities around the world.

Startup communities and startup ecosystems are nothing like this. They are complex systems, meaning they have many “agents” (people and things), interdependencies, and are in a constant state of evolution, which makes fully wrapping your arms around them a challenging task. Most importantly, no one is in control. Such systems cannot be fully understood, predicted, controlled, or replicated; they can at best be guided and influenced. And yet, many strategies used in startup community building today still attempt to impose a complicated systems worldview onto what is an inherently complex system. This is the central problem facing startup community building in practice today and why so many well-intentioned efforts fail.

A better approach for building startup communities is not one steeped in a fixed set of ingredients, a rigid prescription of rules, and where engineered, linear processes are carefully calibrated through tight control. Instead, dealing with complex systems is best done with an informed intuition, trial and error, humility, and a desire to learn. It is more about getting the conditions right than aiming for a specific outcome. This is why you can learn more about startup community building from raising a child than you can by flawlessly executing even a complicated recipe (or system).

To drive this point home, I’m going to pull a passage from Complexity and the Art of Public Policy: Solving Society’s Problems from the Bottom Up, by the economist David Colander and physicist Roland Kupers, which I think captures this idea perfectly. (this quote has been slightly modified to improve readability where text was streamlined):

One approach to parenting is to set out a set of explicit rules for the child—”this is what you are to do; this is what is best for you, and these are the consequences of your not following the rules.” That is the idealized “control approach” to parenting.

There are two problems with this—the first is that most parents are not sure which rules are the correct ones. If they pick the wrong ones, then the child’s welfare won’t be maximized. The second problem is that the child may not follow the rules—do you then give in or not?

The true alternative to top-down control parenting is the parenting equivalent of the complexity approach we are advocating; a laissez-faire activist approach. In a laissez-faire activist approach you have as few direct rigorously specified rules as possible. Instead, you have general guidelines, and you consciously attempt to influence the child’s development so he or she becomes the best human being possible.

Instead of focusing on the rules, the focus of complexity parenting is more on creating voluntary guidelines, and providing a positive role model. (emphasis added).

This is why, in my upcoming book with Brad Feld, The Startup Community Way, we’ll be talking a lot about the behaviors, attitudes, and leadership qualities that promote healthy startup communities, and not about ingredients or recipes. We understand that startup communities require a different set of guidance, tools, and techniques than most of us are used to applying in our professional lives (which occurs because most workplaces are structured in a top-down, hierarchical way).

But the reality is, we all deal with complex systems everyday—from cities to our bodies to any situation that involves interacting with other people. Complexity is all around us. Our hope is that we’ll do our part to help you uncover how to apply what you already know to a different type of problem: that of building a vibrant startup communities in the city where you live. We can’t wait to share our ideas with you.

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Aug 7 2017 by

Startups Rising in the Middle East

Last week my friend Chris Schroeder published a highly engaging article on the state of technology entrepreneurship in the Middle East. If this topic interests you, I encourage you to check him out. Chris is a successful American internet and media entrepreneur turned global startup investor. He’s easily one of the most knowledgable people on the planet about startups and venture capital in the Middle East specifically, and emerging markets more generally.

The article, “A Different Story from the Middle East: Entrepreneurs Building an Arab Tech Economy“, appears in the MIT Technology Review. It highlights some recent successes in the region—including Amazon’s $600 million acquisition of e-commerce platform Souq.com in March, and the $1 billion valuation placed on ridesharing app Careem a few months earlier—and the psychological impact these breakout companies have had on entrepreneurs there.

The importance of visible, high-profile entrepreneurial successes can’t be emphasized enough, though they often receive too little attention as a means of catalyzing a startup community versus other factors, such as stimulating risk capital. Changing mindset is especially challenging in the Middle East, where nepotism and legacy pathways to success are deeply ingrained in the social psyche. There’s even a term for it: “wasta.”

I first learned about wasta when reading Chris’s excellent 2013 book, Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, which he wrote after touring the region extensively. In it, he describes wasta as “a display of partiality toward a favored person or group without regard for their qualifications… [whereby] the net effect, culturally, has been an entropy of acceptance that there only could be one way of doing business.” In other words, only the well-connected can get ahead.

Imagine the impact that has on ambition.

But, the internet has taken a giant hatchet to traditional hierarchies, and unleashed a flurry of entrepreneurship in the region. Startup Rising chronicles the irreversible level of transparency, connectivity and access to capital markets that didn’t exist at the beginning of the decade, the increased appetite of global investors to fund startups in the region, and the explosive growth and changing market dynamics that have been underway as the latest generation of young people comes of age. It also provides a useful lens for the cultural dimension of market access and local innovation.

Four years later, the Tech Review article provides evidence that a virtuous, fly-wheel effect has taken hold and even accelerated. Plenty of challenges remain, some of them substantial—poverty, war, and weak institutions. But the seeds of prosperity are there, and these blockbuster successes are crucial to its development. The article focuses on Dubai as the clear leading tech hub in the Middle East—and the region’s representative on the global stage—and touches on critical regulatory reform, liberalization and importance of immigration, and the vibrancy of female entrepreneurship there.

I’ll stop there so as to not give it all away—though there is plenty more to discover. I encourage you to read both the article and the book—both well-researched, well-written, and intellectually stimulating. The story will surprise you, in the best of ways. Here’s also a video of Chris talking about Startup Rising in 2013 around its publication date. Enjoy.

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May 4 2017 by

#StartupsEverywhere

Engine, the non-profit organization that supports technology startups through economic research, policy analysis, and advocacy, has been producing profiles of startup communities throughout the United States on its blog.

The series, #StartupsEverywhere, launched in January and has produced 14 profiles so far, including Baltimore, Cedar Rapids, Connecticut, Honolulu, Jackson (TN), Kansas City, Madison, Memphis, Phoenix, Raleigh-Durham, Santa Barbara, Tallahassee, Tampa, and Tulsa.

#StartupsEverywhere is designed to celebrate these diverse, vibrant entrepreneurial ecosystems that are growing across the U.S. The project will showcase exciting developments in a variety of rising communities through weekly interviews with startup ecosystem leaders. The profiles will look at issues ranging from the challenges faced by these communities to the unique qualities that set them apart from traditional technology hubs.

The folks at Engine tell me the series will continue indefinitely, and they’re always on the lookout for cities to profile and interesting stories to tell. So, if you’d like to get involved, you can reach out to Emma Peck.

You can follow the series directly with this link. I encourage you to check it out.

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