So I live in Utah… moved here a few years back. Initially I had no idea why we were actually moving here, but now that we’re here it’s clear. Most of my family (on both sides of my marriage) now lives in a drivable distance away, which is a totally new experience for us. It’s something I find incredibly valuable, and the idea of just randomly deciding to be with family is worth a lot to me.
At the same time… I started a company called Vidpresso, which is a way for TV stations to use social media on-the-air. Our ambitions are much larger.
So I purposefully chose to live in the city I live in. I like it here, and I want to stay here.
Once, I worked at a Utah startup that was, frankly, embarrassing to look back on.1 Embarrassing because the product was essentially all talk, with mediawiki and php tacked on top of it. We never had a public launch. I didn’t found that company, but I did work there for free, full-time, so it was a big part of my life.
That experience made me more of a cynic of most startups that I see locally. In fact, the concept of local “startup scenes” kind of bugs me now in general. To me, startup scene implies there’s this group of people who all know each other, and they essentially congratulate each other into feeling successful… despite probably not actually having the measures of success (growth rate or revenue) that define a successful startup.
They go to entrepreneur meetings thrown by different city/state BDAs, and count that as “work time” because they’re “networking.” Who knows, maybe they’ll meet a local investor who only invests in local companies, and that’ll be the piece they’re missing, and then they’ll be huge!
Startups are not judged based on locality. In fact people targeting “local entrepreneurs” can often be more harmful than helpful.
I have no idea how Zoho is doing traction-wise, but based on the number of products and the improvement of their core products, they seem to be doing well. They now claim offices in SF, but they were founded in Chennai, Tamil Nadu, India. Zoho doesn’t win if it has the best office software in Chennai, or in Tamil Nadu, or even in India, though that would be an extremely noteworthy accomplishment. They win because they are a credible competitor to Google Docs and even Salesforce to some extent.
I don’t think there’s a better geography that knows this than SF. While the good parts of the bay area are clear (Access to capital, quality talent pool, freaking awesome weather®) if you’re the best / most talked about startup in SF and you don’t have any traction (Color being the most popular example of this phenomena) you’re a failure. And not just in skeptics’ eyes, in general bay area culture. The bay area rewards successful founders, and success is narrowly defined as someone making something that people want and are willing to pay for.
Programs like BoomStartup and other local-specific accelerators around the country are actually bad for companies generally. BoomStartup offers the same exact terms as Y Combinator ($20,000 in cash investment for 6% common stock) but I have a hard time believing a company would get anywhere close to the value out of the program, even completely ignoring the $80k YCVC note. So why apply? If you’re the best quality company, shouldn’t you be doing the best quality accelerator? And, as an investor, shouldn’t you be looking for the big hits to add to your portfolio?
In my view, I think BoomStartup would disagree with me. I bet they want to “stimulate the local economy,” but I’d argue their approach actually wouldn’t do that.
Small, 4 - 20 person companies are important, and definitely not a bad thing… but you know what’s better for a local economy? Novell. WordPerfect. Those two right-time-right-place Utah county companies did more for Utah tech than any small tech company could have, because they united the tech community around local “giants.” The companies had national recognition and customers, not local accolades. They’ve obviously since fallen from grace, but they both highlighted that big startups can come from anywhere.
By investing in companies who don’t have the broad ambition to become big companies, you inadvertently seed the community with a false sense of hope. If BoomStartup wants to be really revolutionary, they should create a value proposition that’s attractive to anyone in the world, not just Utah companies, and they should figure out a way to credibly compete with someone like Y Combinator for the best quality talent and companies.
People who are going to be successful at building lifestyle businesses (Rustin!) don’t need events / BDAs / local accelerators to help them do it. It’s inexpensive enough to start a technology company today that the talented folks can and should find a way without funding.2
And more to the point: A lot of people who shoot for the moon with big startups end up overestimating the market size of their product, and build a lifestyle business by default. So by encouraging them to think big, and shoot for something big, you end up getting the same effects as telling people to shoot small, but with the better incentive of increasing the odds of creating a giant.
Not every entrepreneur should feel like they have to build Google. But, as a community, we should aspire to and encourage each other to look up to the giants.
We do have great local giants growing up right now, like HireVue, Qualtrics, Instructure, Domo, etc. etc. And we even have baby companies with potential too3 but the validation for those companies didn’t come from entrepreneurial speed pitch sessions. Or business plan competitions. Or from networking events. Or from press coverage.
They come from building something people want. That’s it. No more, no less.
On the investment side, investors who focus their efforts locally essentially are giving handouts to local companies. And that’s even worse than not getting any investment at all. It’s like saying “you’re good when compared to all the Utah business plans I’ve seen, but if we compare you to an NYC or Boulder startup, you’re not quite there.” Good investors, in my arguably ignorant view, should invest with a thesis, and then pattern match all investments to that thesis. And “Utah companies” is not a thesis.4 If you’re a serious investor, you realize the power law dynamics at work, especially in seed stage investing, where a local investor would have the best access. As a non-top-5 startup hub, Utah investors who are serious, ie the ones founders should aspire to raise money from, can’t afford to be exclusively locally focused. At all. If they are, it’s a red flag to me as an entrepreneur that they probably don’t have the same world view of startups as me.
If you find a local company you love, that’s great, but it seems naive to think an investment portfolio is going to be successful by solely focusing on one geographic area, waiting for the next Facebook to happen.
And on the startup side, we need to create quality products first. The product should be everything in a technology company. Not the marketing. Marketing is not the hard part of building a tech company… it’s building a product that people want. Everything else that isn’t getting dollars in your pocket, building your product, or understanding your users is vanity work.5 Technology products are like restaurants: If you have an amazing product / food, it doesn’t matter which rundown shopping center you’re in / how bad you are at marketing… people will find you. It would take a critical mass of 1 person to get a start. If your product is so-so but your marketing is awesome, you’ll see a really high churn rate… so your marketing almost becomes the product.6
Lastly, I think the place that the vanity entrepreneur culture rears its head most frequently is in so-called “networking events.” Knowing who everyone is in a community is extremely important… so I’m not trying to denigrate efforts to unite communities. (Ogden now has a big sense of community solely because we have a place to go to unite.) However, the bar for a quality event is a place where people are getting together to learn and teach. Networking should be a happy side effect. People who want to genuinely learn and teach are the people who are doers, not talkers. Networking events, on the other hand, specialize in elevator pitches first, product / substance second.
Events with judging the top x companies, self congratulation or especially events solely devoted to “networking” do not help push things forward for the community, nor for the person attending. They help pump egos: Of the judge who’s asked to judge, of the entrepreneur who’s invited, of the organizer who throws it. And maybe there’s value in ego, but I don’t think so.
My general rule: Ignore events that have the word “entrepreneur” in them. That’s as good of a sign as anything that an event is a vanity event.
Examples of events that are quality: Hack nights, where people get together to learn new technologies and show off what they’ve built. Learn to code sessions. Learn to run a business sessions. Learn to market sessions. User groups. The more of these, the better. The less meaningless competitions, awards ceremonies, and networking events, the better.
Hopefully it’s clear the thesis of this essay: Quality begets quality. And quality is not a geographic trait.