As the son of a Hall of Fame high school basketball coach, I recently watched “Hoosiers” with my young son. This movie, about a new but weathered basketball coach at a small high school in rural Indiana, reminded me of the challenges I have faced in building entrepreneur development programs and startup ecosystems in big and small cities throughout North Carolina for the last 16 years.
Despite the high expectations of their fans and alumni, UNC Chapel Hill and Duke (and my Florida Gators) cannot win the basketball national championship every year. Other programs, like the SEC rival blue team that starts with a K, across the country are recruiting the same talent even from your state to make their programs better. What if the GOAT (Greatest of All Time) Michael Jordan had stayed in Wilmington where he went to high school and played basketball at UNC Wilmington instead of UNC Chapel Hill?
Neither can your startup ecosystem be the best in the nation from the very first day, month or year. A program has to be built through hard work, relationship capital risk, tough love, optimism and RESULTS. From that work, the players and their success will speak volumes about your program. What does Michael Jordan’s success say about UNC, which leads the nation in licensing and apparel sold worldwide?
Should you focus on the team / ecosystem or the individual players / entrepreneurs?
Is the goal to win national championships or to send more players to the NBA? The truth is that your new efforts to build a startup ecosystem are not going to reach the top to overcome the reputation of Silicon Valley, Austin, Boston, Durham or Nashville. While Boulder, Colorado, a city of 125,000, often ranks very high impact of startups and data, it is not often mentioned in the same breath as the bigger city tech hubs. Or people like Joe Procopio in Durham who’s more focused on building the entrepreneurs, more than even building startups or ecosystems.
The goal should be that you improve the players to the point that they are NBA-ready and that talent development will lead to national championships. I also recently watched a SEC Network documentary on the building of the Florida Gators National Championship team with coach Billy Donovan. Corey Brewster was the only highly recruited McDonald’s High School All American on the team. But Billy D coached up Joakim Noah from an awkward teenager to the MVP of the Final Four and a potential first overall NBA Draft pick after the first national championship.
Or in startup terms, your entrepreneurs need to begin to find investors, find bigger clients and as a result will create better jobs in your region. How do you do that? Find three simple milestones for the entrepreneurs to achieve. Ask them what they need help with. They may need help with an introduction to a prospective client where they have no contacts. Could be help with finding assistance with writing their first SBIR grant. Could be nominating that company for a startup award that leads to press coverage to reach a new investor audience.
Where do the players / entrepreneurs / startups come from?
When you start a new or take over an existing startup ecosystem, for the first three months, you will meet people who are desperate entrepreneurs and on their last breaths as a business.
The next three months, you will get referrals from local investors to rescue their investments in regional startups. My extensive contact list of executives and investors were helpful when I was recruited to Wilmington, which is a bit isolated at the coast.
After the first year, when you have proved you can help the previous two categories of struggling entrepreneurs, the good entrepreneurs start coming out of the woodwork. Or in “Hoosiers” movie terms, the most talented player in town, like Jimmy Chitwood, agrees to join the team when the townies are breathing down his neck for results. Yes, this happens in startup ecosystems when the expectations are bigger than the available resources.
This is not much different than when you are the new coach at a basketball program. You inherit players who have bad habits not broken by the previous coach. You are inheriting players you did not recruit. You are living with the reputation of that coach’s program. While you need to change the program to achieve results, the locals are comfortable the way things have always been done and they retain some clout. When my father took a coaching job in rural Florida, the best shooter on the team actually shuffled his feet and traveled before every shot.
You may inherit entrepreneurs who think they are great at the basics but you quickly find they have been playing the new game in the wrong way. They may have been judged by people who have not been active in the current way the game is played. Steph Curry and the Golden State Warriors in Silicon Valley have changed the way the NBA is played. Building a startup is much different than being middle management of a well-financed Fortune 500 company.
Building an ecosystem must include optimism (and tough love)
The entrepreneurs who are the future of your regional economy are in a very lonely position as documented by the brilliant Brad Feld, cofounder of TechStars.
Every day they may hear “no” 50 times. No from prospects, no from investors and no from a potential talented employee who has chosen to stay in their corporate job versus the risk of working for an unfunded startup. There is a role for the startup ecosystem leaders to both be a cheerleader for hope and optimism and there is a role for tough love to figure out why they are getting turned out over and over again.
Annually, I host a “Tough Love / Uncle Curmudgeon” event where out-of-town executives help my local entrepreneurs learn why the local investors may be saying no. The entrepreneurs give their investor pitch to these out-of-towners and the curmudgeons point out the gaps in the business and the pitch. Why are these curmudgeons from out of town? Because it becomes awkward to give tough love on Friday and then see the entrepreneur around town or in church on Sunday.
Reduce the barriers, red tape and realize walls don’t help entrepreneurs
Entrepreneurs don’t like to deal with bureaucracies. (So do your best to not let your organization become a bureaucracy) They and their mentors don’t have a good experience with big promises and are quickly frustrated with lack of follow up and follow through. You have one chance with them or your organization will be dismissed, so be very clear what is possible with your resources.
If you refer an entrepreneur to a government or NGO / nonprofit bureaucracy, give them the specific name and contact information about the best person at that office. These organizations can be helpful. But think of the 20/80 (or 80/20) rule that 20 percent of the people at these orgs do 80 percent of the work. (Also try to not to let your competitive nature begin to build silos among other orgs.)
Just because a city has an incubator/coworking space does not mean that it is an asset. Just because you have four walls of your incubator (or basketball gym) does not mean that the program inside is going to build better entrepreneurs (or players or a national championship). The programming to help the entrepreneurs around building value, marketing, sales and investor presentation skills from mentors is what is more important than the four walls. Within one year of opening the doors in Wilmington, the incubator I was recruited to start at the university was named one of the top 50 by the SBA and won a large grant and a trip to the White House.
Today, my nonprofit organization N.E.W. in Wilmington does not have any walls. We meet entrepreneurs in locally owned coffee shops and we have our well-attended events in a locally owned brewery. Despite the lack of resources, I recently met with an entrepreneur where we have introduced the entrepreneur to the local lawyer who just got the successful notice about their patent application, introduced them to their first local employee with significant tech startup experience and we introduced them to the final local investor to complete their round.
Where can you learn more to build a similar organization in your region?
Of course you can study the world’s largest entrepreneur support organization CED and American Tobacco Campus in Durham, the impact of SXSW on recruiting talent to Austin ,or how the transistor industry built Silicon Valley in the documentary “The Real Revolutionaries.” Or simply read Brad Feld’s book “Startup Communities” to find out what you need to offer in your community.
In Wilmington, we are about to host our State of the Startups on February 16. We will be taking a hard look at the last three years of building our startup ecosystem. Are the programs around town having an impact and creating jobs or are we believing our own press coverage and too busy patting ourselves on the back?