What separates Chicago startups from those in the Valley or New York? Besides access to a much larger pool of capital, I believe that our startups do not garner the same level of credibility as our coastal peers. This makes it significantly harder for our startups to gain traction in the market, raise funds, or attract talent. Let me explain.
Credibility is the quality of being trusted. The easiest way to gain trust is through past actions. When you’ve worked for companies like Google, Facebook, or even Twitter, you gain credibility. Past success doesn’t guarantee future success. However, for potential investors, customers, and consumers, it’s an easy way for people to narrow down the list of companies they want to do business with and endorse.
As an example, take Airtime.com, the service launched this week by Shawn Fanning and Sean Parker. The concept is hokey at best—you can quickly “surf” for random people to video chat with. They were able to raise $34 million from some of the best-known VC firms because they had credibility. When VCs say they invest in the team, it also means they are investing in credibility. Case in point, if you look at AngelList profiles for many of the startups in the Valley you’ll see phrases like, “Founded by Ex-Googler” or “Early employee at FB”. Today, most entrepreneurs in Chicago do not have the benefit of such associations, but it will get better as alums of local successful startups like Groupon and GrubHub go on to start their own ventures.
Folks in the Valley like to talk about buzz. A prominent VC recently told me, “I wish you were in San Francisco [instead of Chicago] because the people here really get social buzz.” My company (MyServista) is located at 1871 so I talk to a lot of fellow entrepreneurs. I hear them say things like, “I am having trouble getting people to my site” or “I tweet all day but I’m not getting buzz.” It’s hard to create your own buzz by sitting in front of a Twitter feed. Buzz is just one outcome of having credibility. Without credibility it’s harder to get people interested in you, investing in you, or generating buzz. Social proof won’t make your company successful, but it is an important element in getting momentum.
It takes credibility to get credibility. It’s a flywheel that bootstrapped startups need to get moving. You need to take whatever credibility you have today and snowball it into more. You need to fight for credibility. Winning a top spot at the Booth New Venture Challenge, being accepted to a well known incubator program, or landing that first well-known customer or advisor immediately increases your credibility.
The Chicago startup community needs to emphasize the credibility flywheel as much as it does business models. Our startups need to create “credibility plans” from day one just as they might sketch out a product design. Our successful entrepreneurs and business leaders should make themselves available and sprinkle credibility on our startups whenever possible. It’s been encouraging that many of our business leaders are stepping forward, conducting office hours at 1871, and providing guidance to the growing number of startups here. However, this is just the start. To rev up the engine of growth, we need to come together and elevate the credibility of our startup community.
5 Ways To Jumpstart Your Credibility
1. Find relevant and credible mentors who can “sprinkle” their credibility on you. At MyServista we actively seek the advice of knowledgeable people who might take an interest in what we’re doing, can guide us, and who make us more credible. There are many successful entrepreneurs here who have made themselves available to us. Dig around and you’ll quickly figure out who they are. Reach out appropriately and they are likely to respond. We asked politely and we now have some fantastic people on our advisory board.
2. Make yourself highly visible to your target audiences. Participate in pitch competitions or other events with large audiences. We won “Best Pitch” at the March Built in Chicago event. This set off a chain of events such as a spike in our site traffic and our being nominated for “Best Bootstrapped Startup” at the Moxie Awards. These are small things, but they can get the flywheel going.
3. Seek power in numbers; surround yourself with other startups. When startups come together, credibility is gained for all. Being part of 1871 is a great way to become associated with a “brand name” and an entity that probably has more cache than you do. When people think about the startup community in Chicago, 1871 comes to mind.
4. Get validated. Apply for programs such as TechStars and Excelerate. I personally believe the most benefit you receive from these programs is the vote of confidence they provide. Gaining admission is a signal to the market that your idea and team has already been “filtered”.
5. Introduce yourself to the press, including influential bloggers. The NYT, WSJ, and TechCrunch logos that startups place at the bottom of the page are for one purpose only; to show that major media outlets have sprinkled some credibility on you. Start off small by going after local publications and bloggers who cover your space. Big publications will eventually pick up on it. Press is often a one-time shot in the arm, so look for ways to leverage it once the initial buzz dies down.
If you do enough of these things and assuming that you’re solving a real problem and have a great product, credibility will develop. Buzz starts. Investment dollars follow. Customers come to you. Good things happen.
-----
Please vote for MyServista as “Best Bootstrapped Startup” at the Moxie Awards. If we win, it will help increase our credibility!
Vote here:
