8:44am

Mon November 5, 2012
Startups

How upstate New York could build strong startup communities

It's not hard to think of the Silicon Valley, or maybe Boston and more recently New York City, when pondering the best place to be as a young entrepreneur.

But cities all over the country are trying to become just as popular. Some are doing better than others.

So what will it take for cities in upstate New York to get on the startup map? Entrepreneur-turned-venture capitalist Brad Feld has some ideas.

Feld has made a living in Boulder, Colo., another city with a thriving startup scene. He also just wrote the book Startup Communities: Building an Entrepreneurial Ecosystem in Your City.

He has a four-point theory on what it takes to build a strong startup community that he calls his Boulder Thesis:

  1. Entrepreneurs must lead the startup community.
  2. The leaders must have a long-term commitment.
  3. The startup community must be inclusive of anyone who wants to participate in it.
  4. The startup community must have continual activities that engage the entire entrepreneurial stack.

Feld made this fun video for the Kauffman Foundation about his theory:

The Innovation Trail spoke with Feld more in depth about building startup communities.

This interview has been edited for length and clarity.

Q: What is it that makes a good startup community?

A: I believe you can start a startup community anywhere so  I don't think there's something that's specific about one geography over another. My premise, what I call the Boulder Thesis, is built on the notion that you can build a startup community anywhere. There are attributes of different cities that have an impact on the type of and kind of startup community you create. I like to talk about the idea of natural resources. I don’t necessarily mean physical natural resources, but they’re not that un-similar.  Pretty much every city has some natural resources around technology, around businesses, around institutions that do create a kind of base for them to grow on.

Q: You say it takes 20 years to grow a startup community. Why does it take so long?

A: There’s nothing magical about 20 years. My view is it’s a very long-term experience. I use 20 years because I use this notion of a generation. The reason it takes so long is because you have to work on that same kind of an arc that the creation of most businesses works on. And if you think about most businesses, a majority of companies have a very long arc and get built over 15-20 years. Most other institutions, like government or universities, operate on a much a different time scale. You have to outlive all that stuff as a startup community. The goal is to say to people, very clearly, ‘have a long-term view and commit to doing this over a long period of time because it’s just going to take a while.’

Q: Your theory says a startup community should be led by the entrepreneurs. Can it still work if a university or government is pushing too hard to create the community?

A: I believe that all the participants, whether people in universities or people in city government, or investors and venture capital firms, I think all of those participate in - and provide real value to - the startup community.  But in the absence of a critical mass of entrepreneurs who are leaders, you won’t make any progress. The way I describe it is you separate the world into two categories: leaders and feeders. The entrepreneurs are in the leader category and everyone else is in the feeder category. Members of organizations that are feeders can also play leadership roles. A university creates and incubator and fund it and staff it, that can be a leadership activity.

Q: Can a startup community take off if entrepreneurs don't stay put, if there's too much of a draw to move to bigger communities? Can one company that decides to stay and becomes successful be enough to put a city on the map?

A: I don’t it’s that you have a magic one company that plants its flag, but you do have to have people who are committed to that geography for a long period of time. It’s totally fine for entrepreneurs to migrate from place to place. So I think the dynamic [of entrepreneurs moving in and out of a city] is very powerful, but if everybody wants to move out of the community, then nothing is going to sustain over a period of time. Again, it’s back to this notion of having a critical mass of leaders who commit for 20 years to be working on the startup community - wherever that is.

Q: So it is important to have new companies coming in as well?

A: I think it’s important to have new entrepreneurs coming in. The new entrepreneurs generate new companies. So it’s not the idea that new companies are moving into the community, it’s that you have new people - new entrepreneurs - starting new companies in the community. Most startup communities have a resource that constantly attracts new people into it, which is called a university. And if you think about the value of a university in a startup community: the biggest value of a university is actually regularly bringing in new, young smart people into a city. If some percentage of those new, young smart people decides to stay in the city and start a company, over time the startup community will grow and develop. And if the startup community is inclusive, they’ll want to stay.

Q: Is the notion that there's not enough capital outside of bigger startup communities changing? Are more investors looking outside their geographic bubble?

A: I would say there’s more and more venture capitalists investing in geographies that aren’t necessarily close to home, [but] I don’t think that addresses the issue. I think the issue is there will always be an imbalance of capital supply and demand and it’s a common complaint that I’ve heard from the time I started my very first company, which is ‘there’s not enough capital here’. And I think people are going to be complaining about that until the end of time. I just don’t think it really matters. I think entrepreneurs, if they’re trying to build something, they should focus on building something. It’s really hard to raise capital. And it will always be really hard to raise capital. And it should probably be hard to raise capital. So the impact on the startup community is disconnected from the availability of capital in the region. If you’re building something interesting, over time more and more capital will flow to that region.

You can follow reporter Ryan Delaney on Twitter @RyanWRVO