This past week Carlos Kemeny wrote an interesting guest post for Venturebeat. You should read it. It will piss off a few people because it takes aim at the hype-driven "everything is awesome" notion that has sometimes been the hallmark of nascent startup communities in far flung corners of the US.
Kemeny pours some cold water on the notion that every community in the US is a "thriving startup community." More specifically, he takes direct aim at the startup communities in Colorado and in particular at my good friend, Brad Feld.
Recently, Brad Feld — co-founder of TechStars, managing director of Foundry Group, and a resident of Boulder, Colo. — suggested in his book Startup Communities that many cities can create ecosystems with entrepreneurial passion, culture, and resources. Admirably, he outlines a path for places like Indianapolis, Oklahoma City, and Tallahassee to become startup communities.
The story he tells is compelling and promotes action, especially to communities in the “pit of [economic] despair,” cities that are starving for jobs and new industry. The problem is that Feld, as well as many who have jumped on the bandwagon, have failed to evaluate rigorously the impact and sustainability of entrepreneurial communities through quantitative and qualitative data analysis.
Kemeny goes on to point out that although Boulder may indeed be receiving more funding than it did 20 years ago, the state of Colorado has actually seen a decrease in its share of the Mountain West region from 71 percent in 1995 to 57 percent in 2012, and nationally the state of Colorado has actually declined from a 6 percent to 4 percent share of total venture capital investment. His conclusion:
This could suggest that while growth in an entrepreneurial community benefits its local area, it may be borrowing support from surrounding communities in the same state or region.
Without the Boulder startup community, one might argue that these companies would have launched in Denver anyway.
So, is Kemeny right, should we be worried?
Let's first acknowledge a reality. If the whole country gets startup fever, if every community in the US opts to support entrepreurs and startup communities to the hilt, one would expect that some formerly dominant regions would see a decline in their share of total venture capital investment. And that may not be a bad thing.
But Kemeny wants to make a bigger point. You can have all the enthusiasm you like, you can't really know whether you're succeeding or not as a city, a state, or a region unless you know how to keep score - i.e., you know what to measure and understand where the benefits are going locally, regionally and nationally.
Brad has an extremely powerful perspective: startup communities can be built anywhere provided certain key things are in place - entrepreneurs must lead; they take a long view (20+ years); the community is inclusive; and their is a ongoing series of ways to engage and participate. I don't think he's wrong about these things.
We can build a healthy, sustainable startup ecosystem here in Colorado. But to do this, we need to be smart - no, we need to be wise. What does Colorado need to do to ensure its entrepreneurial ecosystem is growing, healthy and sustainable? What do the entrepreneurs need to do? What do the sources of capital need to do? What does governement need to do? What do the grass-roots organizations need to do? What do you need to do? It's not going to happen by itself.