Sunday, March 01, 2009

Startup static, reducing the barriers to entrepreneurship, and creating new platforms for effective startup launches.

The March 2009 Inc. magazine has a good piece by entrepreneur Joel Spolsky. I like Mr. Spolsky's work because he's a working entrepreneur and freely admits to the ups and downs and all the indecision in between.

His column is titled Start-up Static. "A new business is like a shortwave radio. You have to fiddle patiently with all the dials until you get the reception you want."

That advice has never been more true than in this rapidly changing economy. Small startups are not a rigid exercise in business planning. They are a dance of details. You need to continue to tweak, to adjust the dials, always searching for a way to make the signals stronger and your enterprise more sustainable. Anyone who tells you differently has never started up a small enterprise.

What's between the lines of this story is that you can do it too. There is no wisdom handed down from on high to those who start businesses. They are just people who have (hopefully) assessed their chances and continue to put one foot in front of the other in a way that's informed by the details of the path they are on.

In the same article Mr. Spolsky quotes Jessica Graham of Y Combinator, one of my all time favorite startup stories. Y Combinator is an investment firm / training camp / startup mentoring and empowerment platform dedicated to very small tech startups. I won't do it justice here. See the link at the end to learn more.

When asked to do a presentation, it was suggested to Jessica Graham that she might talk about why startups fail, not the usual stuff about why they would succeed.

"That would be boring, " she said. "They all fail for the same reason. People just stop working on their business."

The article continues: "As she pointed out, it's usually a collapse of motivation - everyone wanders back to civilian life. And the startup ends, not with a bang, but a whimper."

The Grahams have seen a lot and do a great deal of good for startups. They focus their energies and help on companies they have skills in (tech startups). As investors, Y Combinator puts in tiny amounts of money (almost always less than $20,000), but they also provide financial support and stability for entrepreneurs training in their highly effective startup programs.

This is a great model that can be reproduced in other fields. New entrepreneurs need small-ball money; but more importantly, they need safe cultural and financial spaces to take cover in while they launch, under the careful eyes of folks who have a stake in their success.

Why not a reproduce the Y Combinator model for firms that focus on green entrepreneurship? What about food entrepreneurs or art entrepreneurs or social entrepreneurs, and on and on? Little bits of money and lots of training, love and attention from people skilled in those arts. That's what the world of startups needs most, and the Grahams have provided a robust, reproducible model that can work in most any area of commerce we would like to develop for our regions and entire societies.

We need new forms of partnerships in the world to support this launch stage among entrepreneurs.

Perhaps we should consider calling these bare-bones startup evangelists 'Launch Directors'. Wouldn't it be cool to have Launch Directors available regionally, so that good folks emerging from the many wonderful business training programs could actually get help taking the subsequent action steps.

This is the stage where Jessica Graham from Y Combinator says, "They all fail for the same reason… everyone wanders back to civilian life."

I think that some form of public-private alliance will emerge, perhaps with the public portion supplying the bare-bones walls and roofs of the traditional incubators plus the connectivity of virtual incubators.

I think the private part of that alliance will emerge to supply the money. Not the old style slash and burn venture style investing but a 'slow money' style of investing promoted by former venture investor Woody Tasch. As Mr. Tasch puts it: "This is a call to action, a call to design new capital markets built not around extraction and consumption, but around preservation and restoration. The vision: billions of dollars a year supporting tens of thousands of independent, local-first enterprises at the base of the restorative economy."

I get to make a presentation to the Wisconsin Assembly Committee on Rural Economic Development this week. Later in the month I am honored to be able to speak at several annual meetings of groups of local focused folks in my area, most of whom have been entrepreneurs and activists of some form or another in their lives.

I'm going to talk to all of these groups about the need for new types of incubators with public-private action steps built in.

Society needs entrepreneurs, and entrepreneurs need society's support. Our job in economic development is to arrange that marriage, teach them to dance, and to empower them to enjoy and learn from their honeymoon journey.

If entrepreneurs can break through that stage, the world that finances emerging companies can take over, and we, as economic developers, can circle back to create more seed stage, local opportunities.

The world needs better startups. You need a sustainable enterprise. Now is the time to create new ways to make this happen.

Inc. Magazine article How Hard Could It Be? Start-up Static by Joel Spolsky

Y Combinator home page

About Y Combinator

Link to the Slow Money Alliance

Announcement, this Tuesday's presentation to the Wisconsin Assembly Committee on Rural Economic Development

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