As we prepare to head to South by Southwest (SXSW) next week, Amy Stursberg, Executive Director of the Blackstone Charitable Foundation, sat down with Brad Feld, co-Founder of Foundry Group and TechStars, to discuss entrepreneurial hubs, building successful networks, and how to make the best use of your time in Austin.
AJS: As the Blackstone Charitable Foundation prepares to head to Austin for SXSW, we are thinking a lot about building networks and how those networks can best support entrepreneurs. From what you have seen through your work in Colorado and globally, how can networks best support entrepreneurs?
BF: Networks are critical for supporting entrepreneurship. Unlike hierarchies, which is the structure of many organizations, a startup community is organized as a network. In a hierarchy, you get more power and influence by adhering to the norms of the organization and being promoted up the hierarchy. In a network, it works in an entirely different way.
Consider an individual participant on the network as a “node” that is connected to other participants (nodes) that they interact with. We are used to this idea because of social graphs like Twitter, Facebook, and LinkedIn. However, these sites have created a misperception that the size of your node increases based on the number of connections you have. This is not true – the size of your node increased based on the number of connections multiplied by the value of the information that travels (both directions) across the node. The key is the multiplier effect.
Assume you have a few connections and high-value information traveling across them. Your node will be small, because you are not very connected to the broader network. Now, assume you have many connections, but the value of the information your give and receive is low. Again, your node will be small. In both cases, a node with a medium number of connections, that is increasing, with information value that is medium, and increasing, will always result in you being more important, and engaged, in the network.
Now, contemplate a startup community. It’s a giant network, with very little hierarchy, that is constantly changing based on the interactions between people on the network. As more people connect with each other and the value of the information that travels between them increases, the more valuable and powerful the network is. And, ultimately, this results in a much more vibrant startup community.
AJS: Building on the above, we all field far too many duplicative requests for advice, mentorship and to support organizations whose goals and objectives are similar. Brad, I heard that you receive hundreds of emails a day from young entrepreneurs hoping to meet with you. How can we encourage more collaboration between public/private partnerships and between organizations so that mentoring doesn’t fall on the shoulders of any one person?
BF: In my book Startup Communities, I talked about the importance of being inclusive to anyone who wants to engage in the startup community. As part of this, I try to respond to anyone who reaches out to me about getting involved in the Boulder and Denver startup communities. However, if I met with every one of these people, I’d never have any time to do any work.
So, as part of being inclusive, when someone reaches out to me and wants to get involved in the Boulder or Denver startup community, I respond and give them a small assignment. This gives them an opportunity to do something and engage with others in the startup community. Interestingly, I never hear from about 50% of the people! Another 25% do the assignment and come back to me for more. A final 25% go way beyond whatever the assignment was and aggressively connect to others in the startup community. The assignment sorts out people who really want to engage versus those who just want to get together with me for “networking purposes.” It also connects the ones who do engage to others in the startup community.
I don’t limit the assignments and connections to other entrepreneurs. I try to think about who to connect the person with based on what they said they do or are interested in. While I don’t always get it right, I spread the assignments and connections around to include entrepreneurs, academics, people in government, service provides, and people in large companies. One of my goals is to continue to encourage others in the startup community to proactively engage with new participants, rather than having all the activity organized around or routed through me.
AJS: Similar to Blackstone Charitable Foundation, Techstars is building a global ecosystem that helps entrepreneurs build great businesses.
While your reach is certainly impressive – you now have over 25 programs in multiple geographies and industries – how are you finding balance between your original Techstars global community and the smaller programs? How are you balancing scale, impact and effectiveness?
BF: At Techstars, we don’t differentiate between programs. Instead, we view them all as nodes on our global network. When we started Techstars in 2006, our first program was based in Boulder, Colorado, where we live. However, we attracted mentors from around the United States based on the network we had already created as investors and entrepreneurs.
As we started expanding geographically in 2009 (Boston, then Seattle, then New York) we took an approach of “scaling horizontally.” From the beginning, we were obsessed about quality over quantity, based on the premise that we could run much more impactful accelerator programs with ten companies in each location. Rather than increasing the number of companies per program, we worked at mastering the accelerator approach with ten companies and then expanding geographically so we could have programs in cities around the world.
In 2011, we started partnering with large companies, where we ran the same accelerator program, with ten companies, although this time we focused on a specific market that the large company was interested in. Current examples include Techstars Retail, that we do in Minneapolis with Target; Techstars Mobility that we do in Detroit with Ford; and the Alexa Accelerator that we do with Amazon in Seattle.
In 2015, we decided to acquire UP Global (owner of Startup Weekend and Startup Week) so we could work with entrepreneurs earlier on the entrepreneurial journey, before they are necessarily ready to go through an accelerator program. We also dramatically expanded our network around the world, given the breath of Startup Weekend’s activities internationally.
Our continuous lens is the notion of deep involvement with entrepreneurs, from the beginning of their journey through the scale up of their company. One of our values is “Techstars for Life” based on the idea that once you’ve been involved in something related to Techstars, you are part of what we are doing for the rest of your life.
AJS: And speaking of Techstars, our Blackstone LaunchPad program is excited to work with Techstars to support student entrepreneurs. In your opinion, how can universities best help foster and support entrepreneurship on and off of their campuses?
BF: As part of our value system of being inclusive, we love to partner with and support programs like Blackstone LaunchPad, rather than creating something that it duplicative.
We believe that student entrepreneurship is a critically important part of any startup community, and I spend two chapters in the book Startup Communities discussing the successful approach that several professors at CU Boulder, including Phil Weiser and Brad Bernthal, have used to link the university to the startup community.
The most important thing for a university to realize is that it is, in my parlance, a “feeder.” For a startup community to be successful, the leaders must be entrepreneurs. The feeders are everyone else. They play a critical role in the startup community, but in the absence of a critical mass of entrepreneurial leaders, the startup community won’t make satisfactory progress over the long term.
Then, instead of trying to organize the startup community around the university, everyone involved should flip this notion on its side. While the university is a great source of new raw material (the students) and an effective convening force for the startup community, it can’t try to control the startup community. If this smacks of the challenge of a hierarchy, you’ve connected the dots nicely. Universities, and the participants from the university – including staff, professors, EIRs, administrators, and students – need to get out of the university context and engage directly with the startup community. At the same time, the startup community should show up on campus and engage with the students. It must be bi-directional with the perspective of building a robust and vibrant network.
AJS: Over the past 3 years, we’ve had the great privilege to partner with you to build the Blackstone Entrepreneurs Network in Colorado. I believe this program has succeeded in large part due to the hugely collaborative communities in Denver and Boulder. It is rare to see business leaders willing to help out a fledgling company, but in Colorado it seems to be the norm. In your opinion, what has made Boulder and Denver such a successful entrepreneurial hub? What are the key drivers in this economic change?
BF: It starts with three concepts: (a) inclusivity, (b) non-zero-sum thinking, and (c) the philosophy of “Give First.”
As I mentioned above, one of the key principles for a vibrant startup community is to be inclusive of anyone who wants to engage in any manner. Inclusivity is on all dimensions – things like gender, ethnicity, educational background, work experience, sexual orientation, and success level.
If you start with that perspective, and then add on the notion of non-zero sum thinking, extremely powerful things happen. Suddenly, you realize that each new participant in the startup community has something to add. And, as more people engage, the startup community grows and becomes more diverse. In this context, I don’t win if you lose – we both can win.
Finally, wrap the philosophy of “Give First” around this. In Give First, you are willing to enter into a relationship without defining it transactionally. It isn’t altruism – you expect to get something from it, you just don’t know when, from whom, in what form, and what magnitude.
If most of the participants in the startup community Give First, a huge amount of energy goes into the startup community. This energy generates a powerful flywheel effect that grows rapidly over time.
I recognize that this is a philosophical answer, rather than a practical answer. There are many practical components of this, but in the absence of this philosophical approach, I think the Boulder and Denver startup communities would be a shadow of what they have become.
AJS: If you could encourage SXSW participants to think differently about one thing this year so that we could all collectively help move the needle together, what would that be?
BF: Give First.