Startup Communities

Building an Entrepreneurial Ecosystem in Your City

Brad Feld

• Publisher: Wiley
• Year: 2020
• ISBN:
  9781119617792
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

First published in 2012, Startup Communities became a blueprint for what it takes to build a supportive entrepreneurial community. Now regarded as a classic, the "Boulder Thesis" created and popularized by Feld within the book generated enormous media attention nearly a decade ago.

At that time, Boulder was an emerging startup laboratory—a hub of innovation building new tech businesses. It quickly accelerated into a world class ecosystem for entrepreneurs. Boulder's entrepreneurial density, combined with the geographic concentration of entrepreneurial activity around the Boulder downtown core, made it a hotbed of startup activity. Feld was and is still there, as a keen observer and one of its leaders. As he notes simply in the new edition, humans are wired to start things.

In a sense, that short Feld-ism accurately describes the startup revolution still taking hold throughout the world. Boulder is proof that innovation can happen anywhere, in any city. Thanks in part to the book, what happens in Boulder now leaves Boulder. Rapidly growing startup communities in Atlanta, Detroit, Denver, Kansas City, Nashville, and Indianapolis are just a few examples. Over the last decade, Feld has dispelled the myth that startups can only thrive in Silicon Valley.

Startup communities continue to pop up across the U.S. and around the world, prompting fresh new revelations and stories from Feld about what's happened over the last decade. Startup Communities 2e describes what makes a startup community ecosystem first click, then hum, and in time, excel. From Boulder to Beijing and beyond, entrepreneurial ecosystems are driving innovation. Startup Communities 2e discusses and the necessary dynamics and pre-conditions of building communities of entrepreneurs who can feed off each other's talent, creativity, and support.

In Startup Communities 2e, Feld will help you understand:

• The core principles of a vibrant startup community, re-examining his Boulder Thesis and exploring other historical frameworks.
• The attributes of leadership in a startup community that can help it thrive along with the classical problems any community will face during development.
• The importance of a university in a startup community, and how large companies can engage effectively with entrepreneurs.
• The importance of continuous improvement so growth does not stagnate.
• The common myths about startup communities.
• The opportunities to build startup communities in non-urban, or rural, places that are much less populated.

CHAPTER ONE
INTRODUCTION

Startups are at the core of everything we do. An individual's life is a startup that begins at birth. Every city was once a startup, as was every company, every institution, and every project. As humans, we are wired to start things.

Today, we are in the midst of a massive shift from the hierarchical society that has dominated the industrial era to a networked society that has been emergent throughout the information era. The internet is ushering in a post‐information era, one in which the machines have already taken over and are waiting patiently for us to catch up with them. This post‐information era is one in which man and machine are interwoven.

In this era, the network dominates in both the online and the physical world. Throughout the network are nodes, each of which began as a startup. Nodes are continually emerging, and a rigid, top‐down hierarchy is no longer effective. The energy, activity, and innovation in society is diffused across the network and concentrated in unexpected places that often didn't exist until recently.

In the physical world, much of this energy, activity, and innovation occurs in small geographic regions, which I call “startup communities.” Academics call them “clusters” or “ecosystems,” and there are several theories about how they were created, what caused them to grow and evolve, and what happened as they matured.

These startup communities are appearing everywhere. They are no longer limited to historically well‐known entrepreneurial regions and large cities such as Silicon Valley, Boston, New York, and Seattle. Startup communities in cities around the United States, both large and small, such as Boulder, Los Angeles, Chicago, Portland, and Austin are seeing incredible activity and growth. Although many of these cities have a history of entrepreneurial activity, their growth, development, and importance in this economic cycle is unique.

The way startup communities are created and evolve has changed profoundly as a result of our networked society. It is critically important to understand this shift as it relates to economics and innovation because it's not slowing down anytime soon.

In this book, I'll discuss a new approach to building a startup community, which I call the Boulder Thesis. I strongly believe that startup communities can be built in any city, and the future economic progress of cities, regions, countries, and society at large is dependent on creating, building, and sustaining startup communities over a long period of time. This book will show you how, both in theory and in practice.

THE EXAMPLE OF BOULDER

Through this book, I use the Boulder startup community as an example. Since I've only lived here since 1995, this is not intended to be a comprehensive history of the Boulder startup community. I don't mean any disrespect to all of the other people who have helped make the Boulder startup community amazing, or who were involved before I moved to town. However, by not trying to create a history, I can cover enough ground to give you a feeling for how things evolved while I focus on the underlying principles that you can apply to building your startup community.

As I'll discuss in a later chapter, Boulder actually has five startup communities: tech (software/internet), biotech, clean tech, natural foods, and lifestyles of health and sustainability (LOHAS). These five startup communities exist in parallel universes. My time and expertise have been focused on the tech segment. I periodically have intersection points with the other startup communities through friends, events, and an occasional personal investment in a company outside of tech, but my understanding, experience, and engagement with these other segments are limited.

Throughout this book, I've asked others to give their perspective on the key events and activities around the startup community. It will be clear whenever the example is in someone else's voice. I've also brought in several examples from other startup communities when there were activities in Boulder that touched them in a meaningful way, such as Techstars.

My hope is that you do not view the use of Boulder here as “Boulder tooting its own horn.” I use Boulder as an example of a lasting and vibrant startup community because I know it extremely well (at least one segment). This approach is called “synecdoche,” where the part stands for the whole. There are many things the Boulder startup community can do better and many more for it to discover as we continue on our journey. My hope is that, by exploring it in depth, it helps you with your journey in your startup community.

HOW THIS BOOK WORKS

I'll start with a story, then get to the principles of a sustainable startup community. I'll break it down into small pieces, and I'll give you a full set of tools to work with. I'll try to keep it light along the way with plenty of examples. Although this book is not a textbook, nor is it an academic treatise laden with footnotes and references, it is a serious book. My goal is to give you a framework and tools to create and enhance a startup community in your city.

CHAPTER TWO
THE BOULDER STARTUP COMMUNITY

In November 1995, I left Boston and moved to Boulder. I'd gone to college at MIT and had lived in Boston for 12 years. However, Boston wasn't my home; I'd grown up in Dallas, and my wife, Amy Batchelor, had grown up in Alaska. When I sold my first company at age 28, I promised Amy that we'd leave Boston by the time I was 30. Two months before I turned 30, Amy told me she was moving to Boulder, and I was welcome to join her if I wanted to.

We'd both been to Boulder and loved Colorado. Neither of us wanted to live in the Bay Area, which was a logical choice given the work I do, but we wanted either ocean or mountains wherever we lived. Because we were both attracted to the western United States and the Rocky Mountains, we figured we'd give Boulder a try, and if it didn't work out, we'd just keep heading west.

After six months, we loved Boulder and never looked back. When we moved here, we knew only one person, and he and his wife moved away a few months later. However, within a year we had already found a community of friends and entrepreneurs and were quickly learning our way around town. Twenty‐four years later, I can't imagine a better place to live.

BOULDER AS A LABORATORY

Boulder is a small city. In 2012, there were less than 100,000 actual residents, and by 2020, this number had only grown to 107,000. The extended metro area, which includes the neighboring towns of Superior, Broomfield, Lafayette, Longmont, and Lyons, was only 250,000 people in 2012 and is now only slightly over 300,000 people. Boulder is small enough that you can get your mind around the whole place but big enough to be interesting. As a result, I've come to think of Boulder as my laboratory for thinking about startup communities.

Boulder is a smart city. The University of Colorado Boulder is located right in the middle of town, and students, faculty, and staff comprise about 30 percent of the population of Boulder. The presence of several national research labs, including the National Oceanic and Atmospheric Administration (NOAA), the National Center for Atmospheric Research (NCAR), and the National Institute of Standards and Technology (NIST) add nicely to the number of PhDs around. Other alternative educational institutions, such as Naropa, call Boulder home.

Boulder has one of the highest entrepreneurial densities in the world. I define entrepreneurial density as follows:

Boulder's entrepreneurial density, combined with the geographic concentration of entrepreneurial activity around the Boulder downtown core, makes downtown Boulder a hotbed of startup activity.

Finally, Boulder is an incredibly inclusive community. Although there is some competition between companies, especially over talent, the community is defined by a strong sense of collaboration and philosophy of “giving before you get.” If you contribute, you are rewarded, often in unexpected ways. At the same time, especially since it's a small community, it's particularly intolerant of bad actors. If you aren't sincere, constructive, and collaborative, the community behaves accordingly.

Before we dig into the principles of a sustainable startup community, let's spend a little time on the history of Boulder, so we can understand how the community evolved.

BEFORE THE INTERNET (1970–1994)

I moved to Boulder in 1995. This, however, was not the beginning of the rise of the startup community in Boulder; the seeds were planted a long time ago, and there was a significant amount of entrepreneurial success in and around Boulder between 1970 and 1994. I've asked Kyle Lefkoff, a Boulder resident and venture capitalist since the mid‐1970s, to describe what he saw happen during this time frame.

It was not by accident that a university town nestled at the base of the Flatirons would emerge as the densest cluster of technology startups in the world—it was the result of a generation of entrepreneurs drawn to the region first by business necessity, who stayed by choice. Were it not for the foundational success stories in data storage, pharmaceuticals, and natural‐foods brands, Boulder's thriving ecosystem would not exist. But the success of these anchor tenants presaged the growth and success of today's Boulder startup community.

The data‐storage landscape was shaped first by IBM's decision to locate its tape‐drive division in Boulder in the 1960s, and then, by the success of its first spin‐off, StorageTek, in 1975. Led by its visionary founders, Jesse Aweida and Juan Rodriguez, StorageTek was Boulder's first big VC‐backed high‐tech success story, and it spawned a storage and networking industry that grew to dozens of companies by the early 1990s, including billion‐dollar success stories such as McData, Exabyte, and Connor Peripherals.

The pharmaceutical industry had its roots in the science laboratories of the University of Colorado's Boulder campus, where a biotech cluster was born from the labs of Marv Caruthers, who founded Amgen and Applied Biosciences, and Larry Gold, who founded Synergen. Together, these successful companies spawned an industry of home‐grown biotech companies to compete with Syntex, which based its manufacturing in Boulder, and Ciba‐Geigy, which had acquired Geneva Generics, a local generic pill manufacturer. Based on the work of these entrepreneurs, additional pharma successes in this period included Hauser Chemical Research, Somatagen, and Nexstar Pharmaceuticals.

The natural‐foods industry began in Boulder with Celestial Seasonings, an herbal tea brand that sprang to national prominence under the leadership of Mo Siegel and Barney Feinblum, who would each go on to play an important role in nearly every other major brand success in the 1980s and early 1990s with Boulder roots, including Alfalfa's, Wild Oats, Whole Foods, Earth's Best Baby Food, Horizon Organic Dairy, and Silk.

A small but devoted group of venture capitalists stood behind these early entrepreneurs and helped put Boulder on the national map of startups. John Hill, a former StorageTek investor, and Carl Carman, a longtime IBM executive, teamed up in the 1980s to form Hill Carman ventures, which backed many of...