My last couple of posts have been about finding technical cofounders, either at the start or over time. Many of you have chimed in with your own experiences and thoughts. And I’ve promised to talk about what it takes to find cofounders. Here goes.

The Ideal

You hear about it all the time. Three friends leave Facebook along with two friends from Google to start a new skunkworks project. It gets some traction, some revenue, some press, raises some money, gets huge and then sells out to Google or Disney or whoever. And then the process starts all over again.

This all sounds great, but outside observers often make a fatal mistake; we think, “Wow, that was a really great idea. If I had that idea, I could have done that.” Or even worse, “I totally had that idea. I would have done that but I couldn’t find anyone to help me past my prototype.”

What the external observer fails to account for is the power of pre-existing relationships. How do companies like this get started? At bars, parties, over lunch, and over time. Notice that the company was formed by “friends.” That’s really how it works. So, how to get started?

Making Friends

Many people, especially engineers, are not particularly extroverted. But at the end of the day, if all good entrepreneurial endeavors are born from relationships, it is necessary that you be a social creature. That means cultivating many personal relationships — and not just on Facebook or Twitter either. A good litmus test? If you know somebody well enough that they would consider inviting you to their house for a party or dinner, that’s a good indicator of a strong relationship. We’ll call these “strong ties.”

There may be countless other relationships which are not quite that far along, and you’ll need those too. These are your “weak ties” and will be the people who can help you find accountants, lawyers, customers, and vendors. Some of these relationships will ultimately evolve into “strong ties” as well. You need a lot of both.

So how do you go from being “just you” to having all of these relationships? One stupid thing you could do would be to move to Silicon Valley. In one move, you will manage to weaken your existing strong ties, blow up your weak ties, and force yourself to rebuild all of that from scratch. But too many people assume this is the only answer. (In fairness, there are a lot of great people in the Valley, and if you know people there already, it might help you move forward; but that’s a subject for another post.) But even there, you have to be a relentlessly social creature and meet anyone and everyone who might be potentially interested in what you’re doing.

When I talk about becoming “social” I am not talking about being some kind of socialite, bon vivant, or “party animal.” I think we all are frustrated with the constant barrage of networking events and the people who want to “be seen” at them. I’m as cantankerous and introverted as the next geek, yet I’ve made it my business to become extremely well socially connected — and not because it’s cool to be connected, but because I’ve sought out people in my area and around the world that care about the things I care about.

Getting Out There (in Engineered Contexts)

One way you can become more social is to go to events and meet people. Startup Digest (which I co-curate here in Baltimore) is a great way to find out what events are going on in your area that might be relevant to startups.

Many “businesspeople” feel out of place at “geek” events, and vice-versa. But if you are really serious about starting businesses, you need to get to know people of all stripes. Go to each event and tell people your story and even more importantly, ask people about theirs. What’s your story? “You’ve been doing X for Y years, and now you want to try to do Z.” Nothing more than that. People want to help you succeed.

As I mentioned, we all get frustrated with traditional networking events — stand around drinking a beer, talking to 10 people who find you odd, and pretty soon you’re checking the clock. So, instead of going to generic networking events, think about ways you can “engineer the context” of the event. Here are some:

1. Events with a speaker plus networking are almost always better than events with none.
2. If there’s no speaker, make sure there’s a focus or targeted community you want to understand better.
3. Events with multiple speakers (like Ignite) are even better because they expose you to many points of view.
4. Raise your hand, ask questions; share your expertise and passion publicly and let others find you.
5. Be the speaker. Find a way to present to a community you care about.
6. Be authentic. Don’t pass yourself as expert on something you’re not.
7. Hold your own events, or sponsor others. Host a Tweetup, targeted to people you want to attract.
8. Befriend thought leaders; ask how you can help with later events.

These are just a few ways you can go about building your network of potential cofounders. But these all pale in comparison to what I’m about to tell you.

Start Coworking Today

If you really want to start building your network of potential cofounders where you are, there is simply no substitute for spending time with a lot of them on a regular basis. Coworking is a great way to do that.

Coworking is a worldwide movement based on shared workspaces for creative professionals. They’re run by their respective communities with the goal of getting teleworkers out of the house and making friends. In Baltimore, I helped to form Beehive Baltimore in February 2009, and it’s grown to include over 100 professionals in its ecosystem. On any given day, there are between 10 and 20 professional programmers, designers, marketers, and entrepreneurs that participate in our community. That same story is repeating itself in every city in every country around the world.

There’s simply no substitute to being around people, sharing ideas and the occasional laugh with them, and getting a feel for what makes them tick. In a sense, you’re engineering the kind of workplace context that occurs when “friends from Facebook and Google” leave to form a startup.

You’re creating the same opportunity for after-work drinks and weekend interaction. You’re creating a shared context for the reinforcement of ideas and exploration of imagination. And it’s vitally important you do this with others.

Relationships First, Ideas Second

Ideation is a social exercise. But ideas are cheap. If you have an idea but haven’t yet strengthened it by sharing it with others, odds are it’s still a pretty weak idea. (And if you’re scared to share your idea with someone, gosh, well, I’ll get to you later.)

I keep a list of about 150 business ideas at any given time. My idea list over the years has included ones closely resembling Google Earth, e-Bay, Foursquare. These ideas, while great, were in many ways obvious and “in the air” at that time — what mattered is execution, and others beat me to it. And that’s OK. It just shows that execution is the only thing that matters.

Sharing ideas with others allows you to get buy-in from other potential cofounders. If you are able to get three or four of your coworking friends excited about an idea, and one of them suggests a tweak that makes it even better, chances are you have something pretty strong there. Run with it. Get that team to build it at night and on weekends. They very likely will, because they believe in the idea. (IndyHall Labs is a great example of this dynamic.)

Your Cofounders Are Your First Investors

If you can’t convince technical people to at least show interest in working with you on your idea, you are likely going to have a very hard time changing that later by waving money at them. At the end of the day, people want to work on stuff they believe in. Start from there.

Also, investors will be excited to look at a team of eager people who are already working together to attack an interesting problem — much more so than a lone entrepreneur who needs to “raise money” to “find programmers.”

Put Yourself Out There

In the end, entrepreneurship is not something you really control. You have an idea of where you want to head, but almost always you end up someplace else. That’s fine. And that’s the point. Entrepreneurship is something that happens to you.

And so, if you start today and get yourself out there, talking about ideas, asking people about theirs, developing weak ties and pushing your weak ties to become strong ties, you’ll get there. And people will start finding you. Because over time you’ll learn that some of your ideas resonate, some don’t. And you’ll pursue the ideas that resonate.

Resonance drives interest. Your cofounders will find you. If you build something awesome, customers will find you. If customers find you, investment will find you. A large percentage of VC deals happen not because someone pitches them, but because VC’s find a hot growing business that’s attracting attention.

It’s been said that advertising is a tax for being boring. And there’s probably an analog in startup-land. Don’t be boring. Be remarkable. Get out there and meet the people you’re going to build your future with. That’s how this process works, and it can happen anywhere in the world if you employ the right approaches and understand that it’s relationships that drive the startup engine more than anything else.

Some interpreted my last post (about finding technical co-founders) as advice to “do nothing” — to wait until the stars align to start working on an idea. And in a way, that is what I’m suggesting. But that observation is really part of a larger picture of how a fully functioning entrepreneurial ecosystem works. In such a system, both ideas and businesses are born from personal relationships. However, outside of a few niche industries in a few niche geographies, these ecosystems do not (yet) exist. What then?

Start With What You Have

You may know I am a big fan of Dr. Saras Sarasvathy, the entrepreneurship researcher (now at University of Virginia’s Darden School of Business). Her clear-eyed analysis of the entrepreneurial process suggests that entrepreneurship is a behavior and a process. She believes that entrepreneurs are made, not born. And I absolutely agree with her.

The last thing she would suggest that an entrepreneur do is “wait” before taking action. Instead, she suggests that all entrepreneurship is a series of successive “small bets” — specific kinds of bets, with “affordable” downsides and higher, or possibly even uncapped upsides. By participating in this process, the entrepreneur actually changes the world around them and influences the success of their later activity. In short, they begin to mitigate the risks of their own bets, enhancing the upside and lowering the downside of the entire entrepreneurial process.

And this is exactly how entrepreneurship works. In this model, you never “wait around” — you start right away, taking successive small risks, and then going from there.

Doing It Right (and Wrong is OK too)

Matt Mireles wrote in on the last post to express his objection that he felt that I was suggesting that folks “never even try to get off the ground.” And I realized that wasn’t my intent at all.

Matt wrote (among many other thoughtful comments):

At least in the stall spin you have altitude to lose! Your advice seems to be “don’t even try to get off the ground.” This bothers me.

Who cares if you throw the prototype out? Who cares if you switch from PHP to Rails? That’s all sunk costs. The only thing that matters is that you make progress, build the team and get customers.
…
Case in point: SpeakerText. My original co-founder built the site in PHP and the app in Flash. The product kind of sucked, but there were some cool features, it got the idea across and we used it to get some good press. He ultimately wasn’t ready to commit and we did the whole stall spin thing you describe (although we parted ways amicably and he still helps out from time to time). Burned through some cash, our angel round imploded, etc.

Matt’s experience, of working with mercenary developers, getting it wrong, losing some cash and probably also causing a certain amount of misery in the process, is not uncommon. And it’s perfectly awesome. It’s exactly what entrepreneurs should be doing, which is failing early and failing often! Think of the lessons that he’s now learned!

Does this contradict my other advice? Not at all. Because Matt did one key thing that victims of the “stall spin” never do, which is to control their downside risks. Matt lived to tell the tale. In flying terms, he gave himself enough altitude to live through the stall spin and recover; his willingness to learn from mistakes and his awareness of what he didn’t know made it possible for him to live, where most people die.

And that’s really what the last post is all about: how to avoid making fatal mistakes by aligning common interests, which is (in effect) a way of capping downsides.

I promised a follow-up post about finding technical cofounders, which will further explore what a functioning ecosystem looks like. But here’s a preview to ponder: in functional startup ecosystems, you see more alignment of interests, risk taking with capped downsides, and strong pre-existing relationships (by way of meshed social networks). Can’t wait to share those ideas with you.

In the meantime, take Dr. Sarasvathy’s advice and start now. Just control your downside risks, learn from failure, and know what you don’t know! And meet lots of people who can help you along the way. You’ll do great things!

Avoiding The Startup Stall-Spin:
Why Your Startup Needs Technical Cofounders

I’ve spent the last several years working with early-stage technology startups. More often than not they fall into one of these two categories:

1. They have an “idea” and are trying to raise money so they can hire somebody to help them realize it.
2. They already have some money and are trying to find a “technical person” who can “build it”

Let me say it now — if this sounds like you, you are probably already doomed. Seriously. Stop now and go back to middle management, or start your efforts over from scratch. If you stick on the current path you WILL fail. Here’s why.

Mercenaries Are Not Paid to Care

If you are trying to build something, you presumably care about it and think it is worth doing. (If you don’t really care about it but just think it can make money, you should stop reading my blog altogether.)

If you can’t make other people want to join your team simply on the basis that they like your vision (and like you) then you are going to be faced with “hiring” someone to “build” your vision for you.

And that person is not paid to care about your vision. Free agent programmers, while they may be consummate professionals and quality engineers, will most often build exactly what you tell them to build.

There are three major problems with this:

1. You probably don’t know what you want to build.
2. You will probably do a very bad job of describing what you want to build.
3. You will spend most of your capital building something that no one actually wants.

And when the “prototype is built” and the “programmer” hands you the keys, who is going to maintain the code? Who is going to make ongoing structural adjustments to reflect the needs of your customer?

How will you identify and collect the metrics that will inform your business decisions?

Most entrepreneurs give fuzzy answers here, like “we’ll raise money on the prototype,” or “we’ll hire someone once we have revenue,” or the most laughable answer of all, “we’ll outsource that.”

The bottom line is that there is no substitute for TEAM. And there are lots of creative ways to build teams, but it has to start on day one.

Why Entrepreneurs Fail to Build Teams Early

This one’s really simple: isolation, inexperience, and negative reinforcement from past experience.

Isolation: most novice entrepreneurs exist in some kind of vacuum, limited to their social circles from their previous jobs, schooling, or professional discipline. As an example, many smart “businesspeople” simply don’t know any good “programmers.” Good startup teams emerge from relationships that already exist. And if you don’t have relationships with people that can help realize your vision, odds are you also haven’t asked them what *they* think of the idea. That can be incredibly revealing and instructive.

Inexperience: novice entrepreneurs are, by definition, new to the game. They don’t know that founding teams don’t come from “help wanted ads” for “incredibly talented programmer who will build my crazy web service.” They simply don’t know. Memo: this is not how it happens.

Negative Reinforcement from past experience: Many entrepreneurs and experienced business people alike have exactly one idea of how to “find people,” and that is to “find someone” who can “do the job.” And since jobs are paid for by money, they assume that funding is important so the firm can “hire people” to “get the task done.”

The very idea of “hiring someone” sets the task up wrong. Here’s why.

As the “hirer” you’re making several statements:

• I think this “job” is worth exactly this many dollars and nothing more.
• I don’t give a @#&%& about your opinions — build what I want you to build.
• You are replaceable.

And when you do hire someone on these terms, you get what you ask for — someone who will leave you for something that pays better (and who probably left something else to go bleed you dry).

The Startup Stall-Spin

As a pilot, I sometimes use flying analogies. A stall-spin, if you have never heard the term, is a dangerous situation: the plane tries to climb upward too steeply, loses lift, then begins to fall, spinning nose-first straight down towards the earth.

Often in the fall the pilot will incorrectly try to adjust the wings to “steer” the plane back into control, but at that point there is almost no air flow over the wings and this action makes the spin even worse. The only correction the pilot can make is to adjust the tail rudder to stop the spin, and then the plane will begin to regain lift and maneuverability. Often a pilot will lose over 1,000 feet of altitude in a stall-spin correction and it is certainly dangerous; for a pilot that encounters a stall-spin without some training and awareness, it is very often fatal.

Entrepreneurs need similar training to avoid (and, less preferably, correct) the “startup stall-spin.” Here’s what it looks like.

1. Entrepreneur has some “idea.”
2. They get a programmer to “build it” at considerable expense.
3. It is released to the public and is met with lackluster response by the market.
4. Revenue projections are missed.
5. Morale suffers. Everyone from employees to investors to strategic partners suffer a loss of confidence.
6. Funds are depleted. Required product changes are delayed until funds can be secured.
7. Original mercenary programmers lose faith in the effort and may even badmouth the entrepreneur.
8. New programmers become reluctant to join the effort.
9. The project becomes toxic and burns and dies. Everyone loses money.

There is only one way to recover from this, and that is to correct the original mistake: instead of hiring mercenaries, restart the effort from scratch with a real technical cofounder.

And here’s the kicker: if you can’t find one, you’re going to fail. Also, if you don’t do it before #3 (dealing with lackluster market response by making modifications) you will also likely fail.

And here’s why: you can never hire someone who will care the way a cofounder will care. And if you can’t find a cofounder, stop — unless you can get to a point where you’re generating revenue all by yourself.

Many of you may be saying, “I tried to find cofounders, but it was hard.” And it can be. And I will address that in my next post.

Meantime, I hope you give some thought to the “startup stall-spin” and how you can avoid it. In an airplane, you try to avoid stall-spins by avoiding stalls entirely. It is no different for a startup. Because recovery from that error, while survivable, is risky — and terrifying. Only a solid team of committed cofounders can keep you out of trouble!

The BP Deepwater Horizon oil spill currently unfolding in the Gulf of Mexico is already the worst environmental disaster in American history.

On June 28th, the TEDxMidAtlantic organizing team is holding a day-long event to consider the current crisis along three axes:

• Mitigation: Understanding and alleviating the effects of the spill
• Alternatives: What might an oil-free future look like and how we can get there
• Policy: How global energy policy can help lead to a cleaner and more stable future

We are partnering with a broad array of organizations and agencies, including the World Wildlife Fund, National Geographic, National Public Radio, the United States Departments of State and Energy, Mission Blue, TED, and many others to assemble a program that we hope will lead to a better understanding of the present situation and illuminate a path towards a more workable future.

Admission fees to TEDxOilSpill will also help to fund an expedition to the Gulf of Mexico. Renowned photographers James Duncan Davidson and Kris Krug are heading to New Orleans next week to record the sights and sounds of real people, real landscapes, and the real issues facing the Gulf Coast at this critical time. And they will share their stories at TEDxOilSpill.

For those of us who are entrepreneurially-minded, it is hard to sit by and watch this horror unfold. We hope that by creating this forum, we are making a valuable contribution — one that will amplify the efforts of the many volunteers and professionals who have dropped everything to respond to this urgent and ongoing catastrophe.

I was seventeen years old in 1989 when the Exxon Valdez disaster appeared to be the defining energy crisis of our age. Unfortunately, I wasn’t able to make much of a contribution then. With this disaster, which is already many times worse, I am grateful to be in a position to advance the global energy dialog — even just a little bit.

Please join us and please spread the word about this event. We are on a short timeline and are organizing speakers, presenters, and partners urgently. You can also participate in the event, wherever you are, by organizing a TEDxOilSpill Meetup in your area.

Please email tedxoilspill@tedxmidatlantic.com, and visit tedxoilspill.com for more information.

Event Details

TEDxOilSpill
June 28th, 2010
Ronald Reagan Building and International Trade Center
1300 Pennsylvania Ave, NW
Washington, DC

Register to Attend

Pride, Passion, Talent on Display at Startup Weekend Seoul

I believe that Silicon Valley may soon be going the way of the floppy disk.

For the last two weeks I have been traveling around Asia with a group of tech entrepreneurs, on a trip called “Geeks on a Plane” organized by Silicon Valley investor Dave McClure. I took the same trip last year.

Why take a trip like this? The answer gets at some very real and seismic shifts taking place in the startup world that will be big news over the next few years.

Startups Cost Less

Ten years ago a successful Internet startup might require one to five million dollars in outside funding. Data centers, engineers, and software licenses were hot commodities and could easily drain a startup’s resources.

Now it is possible to get a startup to the point of testing it in the market — with real customers — for $25,000 to $50,000. This effectively removes VC’s from the equation at these early rounds and turns things over to angel investors. As angel investing becomes increasingly professionalized, success rates increase and more people become involved with it.

“Silicon Valley is a State of Mind, Not Necessarily a Real Place”

Pay attention to this one! This is a quote by Dave McClure and it captures what is happening perfectly. Everywhere you go, there are techies and entrepreneurs who follow the tech business scene, and they are all ideological peers.

Silicon Valley is all about embracing the idea that the world can be changed for the better, and that one can (ultimately) realize rewards by changing it. If you believe this, you are a part of Silicon Valley. What about that statement is related to place?

In Shanghai, Beijing, Seoul, Singapore and Tokyo I have seen first hand the buzz and excitement that comes from people who believe that they can engage with the problems of our world imaginatively and productively. And they are not moving to Silicon Valley.

3D Printer at Singapore’s hackerspace.sg

Place as a Strategic Differentiator

Not being in Silicon Valley is very helpful if you are trying to tap into developing markets like those in China, Korea, and Japan. It is also helpful if you don’t want to have to pay Valley salaries and sucked into the echo chamber there.

As an example, a skilled developer in Silicon Valley might cost you upwards of $120,000 per year; the same person in India would cost $12,000 per year and in Singapore they would cost $48,000 per year.
If you are trying to build a product to serve the Asian market, wouldn’t you rather base your company in Singapore?

Being in “a” place is more important than being in “the” place

It is widely assumed that internet technologies like Skype and email crush distance and make global distributed business possible. True, but there are exceptions.

Real creativity, trust, and ideation has to happen face to face. This is where the magic occurs. If you don’t spend time with people you can’t create.

New-technology tools can help with execution, but only after the team dynamics are in place; they are great for keeping people connected and plugged in, but suck at creating an initial connection.

Love your place. Find the other like minded souls who love your place and start companies with those people. The creativity you unleash in your own backyard is the most important competitive differentiator you have. No one else has your unique set of talents and point of view. Leverage it.

Every City is Becoming Self Aware — All at Once

I do not know of a city anywhere in the world that is not presently undergoing a tech community renaissance right now. This is a VERY big deal.

Every city in the United States along with Europe, Asia, and South America is now using the same playbook — implementing coworking, hacker spaces, incubators, angel investment groups, bar camps, meetups and other proven strategies that will have the effect of cutting off the oxygen supply to Silicon Valley.

Let me say it again: Silicon Valley is getting its global AIR SUPPLY cut.

For the last few decades, Silicon Valley has traded on the fact that people are willing to move there to start companies. The MAJORITY of valley companies are founded by foreign born entrepreneurs. What if they stop coming? What if they find the intellectual and investment capital that allows them to self-actualize in their home turf, where they already have a competitive advantage?

The fact that we have made it so hard for new immigrants to come to the valley and create startups just makes things that much worse. That is why the Startup Visa concept is so important if America – not to mention the valley – wants to keep excelling in innovation and the economy of ideas.

“Soul-crushing Suburban Sprawl” – Paul Graham

The Valley Kinda Sucks

Everybody says that the big draw to San Francisco is the weather. True, it can be pretty nice at times. But it can also be pretty miserable.

The reality is that the weather makes no f*cking difference if you are slaving away 26 hours per day on your startup; and the fact is that humans only really perceive changes in weather anyway: you’ll notice a nice day if it has been preceded by 10 rainy ones, or vice versa. Studies have demonstrated this. Look it up.

Paul Graham said it best, “Silicon Valley is soul-crushing suburban sprawl.” And he also suggested that places that can implement a bikeable, time efficient startup environment without sprawl have a significant competitive advantage over the valley.

Nearly every major city is becoming that place for its community of entrepreneurs. All at once.

So Why Travel?

It’s simple: to go to where the startups will be coming from. Investors who wait around for startups to show up in the valley are going to miss out on serious innovations and investment opportunities.

This means leaving the Lamborghini parked on Sand Hill Road and cabbing it to a gritty hackerspace in the Arab section of Singapore to meet the innovators who are building the future. And this is something that most investors think they are too good and too important to go do.

Fortunately there are scrappy, forward-thinking folks like McClure who are willing to go out there and embrace the future and begin the creative destruction the next wave of innovation will bring to valley culture.

Our challenges are too great to demand that innovation happen one way, in one place, with one set of people. Innovation needs to be systematized and distributed, and this is the opening act.

The Future of Entrepreneurship

I had a great conversation with Dr. Meng Weng Wong today, founder of Joyful Frog Incubator in Singapore. We pondered questions:

• In the future, will companies form teams and then try to get funding, or will entrepreneurs just gather, form ideas and try things?
• How do bands form? And are incubated startups just boy bands?
• Are we not always just betting on individual ability to execute?
• Doesn’t team (and execution) always trump idea?
• Is entrepreneurship a cycle? Shouldn’t exited entrepreneurs come hang out with first time entrepreneurs and try ideas together?

These are important questions in their own right, but the most important thing is that we are asking them. And so are people around the world. And it has nothing to do with Silicon Valley, the place.

Want in on the ground floor of this next wave of innovation? Understand the change that is coming and leverage it in your own backyard. Get involved.

Because I guarantee that in five years the Valley will be a very different place and that we will see thriving startup communities bearing real fruit in every major city.

Why go to the Valley? Good question.

Thanks to everyone for engaging in this conversation!

The American educational system deadens the soul and fuels suburban sprawl. It is designed as a linear progression, which means most people’s experience runs something like this:

1. Proceed through grades K-12; which is mostly boring and a waste of time.
2. Attend four years of college; optionally attend graduate/law/med school.
3. Get a job; live in the city; party.
4. Marry someone you met in college or at your job.
5. Have a kid; promptly freak out about safety and schools.
6. Move to a soulless place in the suburbs; send your kids to a shitty public school.
7. Live a life of quiet desperation, commuting at least 45 minutes/day to a job you hate, in expectation of advancement.
8. Retire; dispose of any remaining savings.
9. Die — expensively.

Hate to put it so starkly, but this is what we’ve got going on, and it’s time we address it head-on.

This pattern, which if you are honest with yourself, you will recognize as entirely accurate, is a byproduct of the design of our educational system.

The unrelenting message is, “If you don’t go to college, you won’t be successful.” Sometimes this is offered as the empirical argument, “College graduates earn more.” Check out this bogus piece of propaganda:

But what if those earnings are not caused by being a college graduate, but are merely a symptom of being the sort of person (socioeconomically speaking) who went to college? People who come from successful socioeconomic backgrounds are simply more likely to earn more in life than those who do not.

There’s no doubt that everyone is different; not everyone is suited for the same kind of work — thankfully. But western society has perverted that simple beautiful fact — and the questions it prompts about college education — into “Not everyone is cut out for college,” as though college was the pinnacle of achievement, and everybody else has to work on Diesel engines or be a blacksmith. Because mechanics and artists are valuable too.

That line of thinking is the most cynical, evil load of horse-shit to ever fall out of our educational system. Real-life learning is not linear. It can be cyclical and progressive and it takes side-trips, U-turns, mistakes, and apprenticeships to experience everything our humanity offers us.

The notion that a college education is a safety net that people must have in order to avoid a life of destitution, that “it makes it more likely that you will always have a job” is also utterly cynical, and uses fear to scare people into not relying on themselves. Young people should be confident and self-reliant, not told that they will fail.

And for far too many students, college is actually spent doing work that should have been done in high school — remedial math and writing. So, the dire warnings about the need for college actually become self-fulfilling: Johnny and Daniqua truly can’t get a job if they can’t read and write and do math. See? You need college.

An Education Thought Experiment

I do not pretend to have “solutions” for all that ails our educational system. But as a design thinker, I do believe that if our current educational system produces the pattern of living I noted above, then a different educational system could produce very different patterns of living — ones which are more likely to lead to individual happiness and self-actualization.

If we had an educational system based on apprenticeship, then more people could learn skills and ideas from actual practitioners in the real world. If we gave educational credit to people who start businesses or non-profit organizations, and connected them to mentors who could help them make those businesses successful, then we would spread real-world knowledge about how to affect the world through entrepreneurship.

If more people were comfortable with entrepreneurship, then they would be more apt to find market opportunities, which can effect social change and generate wealth. If education was more about empowering people with ideas and best practices, instead of giving them the paper credentials needed to appear qualified for a particular job, it would celebrate sharing ideas, rather than minimizing the effort required to get the degree. (My least favorite question: “Will that be on the test?”)

Ideally, the whole idea of “the degree” should fade into the background. Self-actualized people are defined by their accomplishments. A degree should be nothing more than an indication that you have earned a certain number credits in a particular area of study.

If the educational system were to be re-made along these lines, the whole focus on “job” as the endgame would shift.

“A sturdy lad from New Hampshire or Vermont, who in turn tries all the professions, who teams it, farms it, peddles, keeps a school, preaches, edits a newspaper, goes to Congress, buys a township, and so forth, in successive years, and always, like a cat, falls on his feet, is worth a hundred of these city dolls. He walks abreast with his days, and feels no shame in not ‘studying a profession,’ for he does not postpone his life, but lives already. He has not one chance, but a hundred chances.” — Ralph Waldo Emerson, Self Reliance, 1841

And so if the focus comes to be on living, as Emerson suggested it should be, and not simply on obtaining the job (on the back of the dubious credential of the degree), then the single family home in the suburb becomes unworkable, for the mortgage and the routine of the car commute go hand-in-hand with the job. They are isolating and brittle, and do not offer the self-actualized entrepreneur the opportunity to meet people, try new ideas, and affect the world around them.

The job holder becomes accustomed to the idea that the world is static and cannot be changed through their own action; their stance is reactive. The city is broken, therefore I will live in the suburbs. The property taxes in the suburbs are lower, so I will choose the less expensive option.

Entrepreneurial people believe the world is plastic and can be changed — creating wealth in the process. But our current system does not produce entrepreneurial people.

Break Out of What’s “Normal”

It may be a while before we can develop new educational systems that produce new kinds of life patterns.

But you can break out now. You’ve had that power all along. I’m not suggesting you drop out.

But I will say this: in my own case, I grew up in the suburbs, went to an expensive suburban private high-school — which I hated — where I got good grades and was voted most likely to succeed.

I started a retail computer store and mail order company in eleventh grade. I went to Johns Hopkins at 17, while still operating my retail business. Again, I did well in classes, but had to struggle to succeed. And no one in the entire Hopkins universe could make sense of my entrepreneurial aspirations. It was an aberration.

I dropped out of college as a sophomore, focused on my business, pivoted to become an Internet service provider in 1995, and managed to attend enough night liberal arts classes at Hopkins to graduate with a liberal arts degree in 1996. This shut my parents up and checked off a box.

I also learned a lot. About science. About math. About philosophy, literature, and art. And I cherish that knowledge to this day.

But I ask: why did it have to be so painful and waste so much of my time? Why was there no way to incorporate that kind of learning into my development as an entrepreneur? Why was there no way to combine classical learning with an entrepreneurial worldview?

Because university culture is not entrepreneurial. And I’m sorry, universities can talk about entrepreneurship and changing the world all they like, but it is incoherent to have a tenured professor teaching someone about entrepreneurship. Sorry, just doesn’t add up for me. Dress it up in a rabbit suit and make it part of any kind of MBA program you like; it’s a farce. Entrepreneurship education is experiential.

I had kids in my mid-twenties and now have moved from the suburbs to the city because it’s bike-able and time efficient. And I want to show my kids, now ten and twelve, that change is possible in cities. I believe deeply in the competitive advantage our cities provide, and I intend, with your help, to make Baltimore a shining example of that advantage.

I don’t suggest that I did everything right or recommend you do the same things. But I did choose to break out of the pattern. And you can too.

Maybe if enough people do, we can build the new educational approaches that we most certainly need in the 21st century. This world requires that we unlock all available genius.

The recent discussions of entrepreneurship here prompted several entrepreneurs to contact me, both via email and in person. Here is one kindred-spirit’s story, reproduced (and edited) with permission.

Hey Dave,

I’ve been reading your blog for the last week or so, and I wanted to let you know I appreciate your thoughtful angle on entrepreneurship, design, and intellectual life. Like many of your posts indicate, the challenges of developing personal creativity and starting something new are profound in our current culture. Last June I graduated with an engineering degree from the University of Maryland. Instead of acting on ideas to change the world, I did, as most graduates do these days, took the full time job that paid the most. (Chris Dixon’s post on the topic hits it). Add consulting and government consulting to where all the talent goes in the DMV. To a college kid, the prospects of a $70,000 salary are blinding. And if you consider yourself a self-starter, you realize quickly that you are fighting a powerful majority that would call you crazy for not taking such a lucrative offer.

That said, I have devoted a lot of my free time to developing my startup ideas through mockups and requirements. Yet, despite my engineering background, I just don’t see myself as the technical co-founder that many think is the necessary half of successful startup teams. I can spend hours reworking code, but developing from scratch is beyond me. So the question I have been struggling with is how do I find the real technical partner? As you posted, startups are about the people, but finding that passionate partner is incredibly difficult.

My current idea that I have been toying with revolves around [redacted]. From mobile app, to website … I am at a point where I would consider outsourcing app development, just because I believe in my idea and want to make progress. However, say a couple months into the future, I now have an iPhone App (and a lot less money) but I still don’t have a team to further the idea. In addition, I am not so sure my concept has clear profitability, but at my age (23) what’s wrong with idealism as a starting point?

Sorry for the length, but I wanted to offer some of my thoughts as to what it means to be on the outside of entrepreneurship, wanting in. Any return advice would be great!

Regards,
Lance

My response to Lance:

Lance,

Thanks for writing! Certainly sounds like you have the right spirit about things, and I agree with you re: Chris Dixon’s post. He’s got a very good take on things.

Some things I’d recommend:

1. Subscribe to Startup Digest Baltimore. Go to http://thestartupdigest.com

2. Go to Innovate Baltimore on Wednesday 5/19 and introduce yourself. http://innovatebaltimore.com

3. Come hang out at Beehive Baltimore. It’s where the community is centered. http://beehivebaltimore.org

4. Let’s find a time to talk some more. I am out of town for two weeks starting next Friday but we can find a time in June. Pick something: http://tungle.me/davetroy

Looking forward to meeting you!

Do you mind if I share your note, along with my response, on my blog?

I want to keep reminding people that there are LOTS of people like you out there…

Best,
Dave

Response from Lance:

Sure. No problem. If you could edit out the sentence or two about my current idea, that would be great. Also, I currently live in the Northern Virginia area, so I’ve been on the DC and Baltimore Startup since I was introduced to them at BootstrapMD. I just started looking for resources like InnovateBaltimore and BeehiveBaltimore around DC. Any suggestions?

Thanks,
Lance

My response to Lance:

OK, thanks.

You should consider moving to Baltimore as the startup + coworking scene is now a lot more active. Innovate and Beehive are just the tip of the iceberg.

There are some OK things going on in the DC area (Founders Institute, Launchbox Digital, Social Matchbox, DC Week), they run on weird schedules and are not active all the time. Baltimore’s scene is a lot more persistent and becoming much more interesting. Affinity Lab is like an expensive corporate version of coworking. Beehive is real coworking.

Anyway, I’m biased, but this is something we’re serious about in Baltimore and we’re committed to making it happen, all the way from the Governor to the Mayor to each individual startup.

Hope to see you around the Hive soon.

Best,
Dave

Bill Gates: dropout. Paul Allen: dropout. Steve Ballmer: dropout. Richard Branson: dropout. Warren Buffett: dropout. See a pattern?

Entrepreneurship is the opposite of University culture, which celebrates progressive levels of achievement, with the ultimate goal of becoming a college professor. Entrepreneurs create the circumstances of their own success, by changing the world around them and making their own game.

I’m not suggesting anyone dropout, but we do have to ask: is our educational system creating maximum value for society? Or is it just creating clones, steeped in the idea that there is only one true path to security and achievement, which are then manipulated by true entrepreneurs and leaders who really know how to shape the world around them? And which are you?

I’ve been meditating on these two ideas, and they resonate for me. See what you think of them.

The Building

Imagine taking the roof off of your building and shaking out all of the people inside.

Now, rearrange the people into an optimal value-producing configuration.

I would bet that you could find a handful of combinations that unlock $1 billion in value; I’d bet you could find a few that unlock $10+ million in value; and I’d bet that 50% of the available combinations would unlock more value than the existing configuration.

What are the barriers that keep us from unlocking maximum value in our workforce? Walls, lack of connections, non-optimal application of resources, and addiction to personal cash-flow spring to mind.

Why do we perpetuate these non-optimal configurations of resources? What are you doing to unlock the potential in your building and in your broader community?

Keep the Same Team?

The more exposure I have to the world of startup investing (and to startups themselves) the more convinced I am that team is everything. At first I was more apt to evaluate a startup by its idea and its market metrics. But I’ve come to believe that all bets are bets on people.

In support of this strategy, I’ve started to look for heuristics that indicate that a particular team is worth betting on. And one question I am asking founders is this: If you do secure funding, would you keep the same people or would you hire new team members?

The answer can be revealing. If they indicate that they will keep the same team members, it’s worth asking why. And understanding the why behind the why. If there are good reasons why the team is well-cast, then this is likely a bankable team. Good reasons include expertise and real dedication. Bad reasons may include “knew them at my last job,” “he built it under contract,” or “found him at a meetup.”

There’s no hard and fast rule here, but the key thing to remember is that money changes everything. But if it changes too much of your team make-up, it’s probably not a bankable configuration to begin with.

How are you rearranging the world around you to produce optimal, bankable teams? To me, this is the essence of entrepreneurship. What do you think?

This post started out as a reaction to yesterday’s post by Matt Mireles in New York City about the dearth of talent available to startups there. I felt it was relevant to the Baltimore/Washington area and shared it with some of our local leaders. It sparked a deep conversation — which I captured below.

Dave Troy to some area investors, entrepreneurs, and economic development officials:

This blog post out of NYC is a decent analysis of the problems that east-coast tech startups face.

• Drop in “federal sector” in place of “Wall Street” and you have an almost perfect analysis of our situation here in Maryland.
• Scarce technical talent wants to be employees, not co-founders for equity.
• A large well-funded ecosystem that sucks up available talent (Wall St, Feds, etc)
• Universities are barely aware of the startup ecosystem and do not contribute a good supply of talent

As the guy points out, a few good exits and some Stanford-like thinking can quickly change things. Tomorrow he’s writing some about how the NYC community is addressing this problem.

Roger London (investor, director of America’s Security Challenge):

I agree for the most part. I would tweak it as follows (comments embedded below).

1. Scarce technical talent wants to be employees, not co-founders for equity.
Totally agree, however technical talent in this region is not nearly as sophisticated and picky as the Palo Alto engineer sited in the blog. While most technical talent here would not take equity or options in lieu of a paycheck, I believe there are many that could find a suitable combination. This crop of “vested” technologists will anchor our next generation of technology entrepreneurs. They must first get a taste for the long-term value of equity and just as importantly realize a bit of a payoff so that a “paycheck” is no longer their motivation and requirement.

2. A large well-funded ecosystem that sucks up available talent (Wall St, Feds, etc)
I don’t think our technical talent goes to work for the feds, but they are hooked on the federal R&D heroin that so liberally “strings out” our technical talent making them addicted to and dependant on research funding, thereby unwilling to consider leaving the “shooting galleries” of the university and federal labs (got carried away with the drug metaphor). The feds could do a better job leveraging that investment by coordinating private sector collaboration, specifically startup collaboration with these technologists to open their eyes to the possibilities. In the absence of any progress there, we need to make a concerted effort to bring the eventual customers and serial angel entrepreneurs to the fed researchers to identify, shape and license technology that is desired by the market.

We need to find a more efficient way to produce more profitable and more successful startups. While mentoring, incubators and similar programs are valuable, the most effective way to increase the probability of success is to bring the customer to the startup table and have them help shape the requirements and solution. Who are the largest technology consumer enterprises in the state? State of MD government, Hopkins Healthcare Systems, Constellation Energy, T Rowe Price, Legg Mason, Lockheed, Fort Meade, Coventry, Marriott, Host, WR Grace, Catalyst, Discovery, Black and Decker, McCormick immediately come to mind. There are a number of technologies that most of these companies would want to procure because it improves their performance, customer service, security, bottom line, etc….things like high speed computing and distribution, more effective customer interaction tools, more effective customer security re their identify/information and customer logins, network security, building and vehicle fuel efficiency, etc.

Almost every agency and department of the federal government also has requirements for these and by establishing beachhead Maryland customers, we can stand up and provide credibility to young companies and then help springboard them into the federal government. With varying degrees of success, organizations already exist that follow this model but their efforts should be amplified.

3. Universities are barely aware of the startup ecosystem and do not contribute a good supply of talent
See above

As the guy points out, a few good exits and some Stanford-like thinking can quickly change things. Tomorrow he’s writing some about how the NYC community is addressing this problem.

NYC does not have the research funding that we have in the state and their solution might not be replicable here. Our ecosystem of capital, talent and customers is fairly unique which is another reason why we can’t just “copy” the innovation models from NYC, Boston/MIT, Silicon Valley, RTP or other innovation regions. The assets we have in this region that are not found anywhere else is the vast amount of federal R&D (#1) and the largest consumer of technology on the planet, the federal government. Unique programs need to be developed with those two factors deeply embedded that fosters emerging growth tech companies and helps to bridge the gap between research and market adoption. That work needs to be designed and operated by entrepreneurs and early stage investors. While collaboration with academia, federal and government stakeholders is important, their participation in the design and operations should be limited or we will get more of the same.

Bob Bloncheck, investor and serial entrepreneur:

My two cents:

I think we have the opposite problem as NYC. We have a lot of young techies trying to do start-ups in the region, and not enough of the non-technical entrepreneurs.

And when the experienced non-techies do give a start-up a try, they come at it from a professional services business model perspective, which is another side-effect of the government focus (indeed addiction, Roger) in the region.

Everything is driven by a time-and-materials mindset here that permeates not only government, but other big institutions as well, and contributes to the lower risk tolerance.

I just had another conversation with an entrepreneur last week who is considering abandoning a product approach and going to a services model. And it is because a large health care institution keeps telling him that they never would buy a product/technology from a young company. But they would do business with him on a services basis using his technology.

As many of us have learned the hard way, products and services are very different. And to the extent we are trying to foster a start-up ecosystem in the region focused on products, and not just more 3-10 person services spin-offs from other services businesses,
we need (as Roger said) unique programs that would encourage these large organizations to adopt products from local start-ups more readily (and not just technologies implemented using a services approach).

And we need the universities to start teaching more:

• Product management (not just project management or business analysis – they are different)
• Product marketing
• Market focus (in addition to customer or sales focus)
• Entrepreneurship

Business model is king, and it needs to be more than just billability, if we want a vibrant start-up culture in the region.

Mike Subelsky, entrepreneur and community leader:

Thanks for sending this Dave. I can only speak for my sector (consumer Internet), but this guy is DEAD ON. Maryland is awash in entrepreneurs with good (or good enough) business ideas, who are willing to take the big risks, but who just need someone who can build software who’s willing to take on some of that risk as well.

I know this empirically, because (due to my blogging about startups in Baltimore and due to Ignite), a lot of them end up emailing me asking for advice about how to find a decent programmer. I’ve had that conversation at least 10 times in the past 2 years. One of the most promising of these people actually just gave up and started teaching himself Rails so he could get his education software prototype out the door — when that guy starts looking for funding, if he even ends up needing it, look out!

My friend Gabe Weinberg, an entrepreneur in Philadelphia, had an interesting response (link).

I’m encouraged because we’ve been working on the kind of “drawing us out” he suggests for a few years now. But there’s a long way to go. Even just in my one little neighborhood, I’m still meeting very qualified technical people who have zero idea about the startup world in Baltimore. It’s not a matter of “do they prefer cash or equity” — it’s that they’ve never been offered and have no idea such a distinction might even be available.

Brad McDearman, Economic Alliance of Greater Baltimore:

We just took a group of 40 Baltimore business, government, education and non-profit leaders to Austin to see what we could learn from that market. We were hosted by the Greater Austin Chamber and the Lance Armstrong Foundation.

I think most participants from Baltimore would say two things stuck out related to how Austin deals with entrepreneurs…and the Austin people stressed these in their presentations to us:

• Celebrate entrepreneurs and wealthy people. Make rock stars out of them…and make sure wealthy people in the community and the entrepreneurs are hooked up. Get the wealthy people to invest in the start-ups.
• IC2 at the University of Texas – this is an institute at UT that stresses and supports entrepreneurship in the region and is what many point to as being the catalyst for driving the entrepreneurial culture in Austin. They put out white papers, provide support and networking for entrepreneurs…and connect people.

Many of us came away wondering how we make this happen in Baltimore. How can we get Hopkins to take a leadership role in Baltimore’s entrepreneurial and economic development efforts? JHU is a known entity and the folks in Austin kept talking about how lucky we are to have Hopkins given their research and world famous medical center (which Austin does not have). But JHU does not lead an economic development effort the way UT does.

They have created a culture in Austin related to entrepreneurship that even the corporate businesses respect and believe in…and it seems like they did it in a grassroots way (through the entrepreneurs themselves) and through the major institution (UT). But it doesn’t appear to have had much to do with the traditional business organizations (although the Austin Chamber does receive high praise for its broad impact and support).

Scott Paley, Baltimore entrepreneur, former New Yorker, to me:

Just from my own tiny perspective, this has long been a problem in NY. When I lived up there, I’d say I was contacted at least 5 times a year by non-technical startup founders asking me if I’d leave my own company to work with them as a technical founder. Even now I still get calls from non-techs asking if I know smart tech people in NYC.

Scott Paley to Roger London:

Hi Roger,

You wrote:

technical talent in this region is not nearly as sophisticated and picky as the Palo Alto engineer sited in the blog. While most technical talent here would not take equity or options in lieu of a paycheck, I believe there are many that could find a suitable combination.

I’m curious why you think this is the case (I’m not disputing the assertion – I don’t yet know enough about the local technical scene to be able to do that.) But, why should an engineer in Palo Alto be more sophisticated? Is it cultural? The experience of having gone through multiple startups, failures, and eventual successes? As a relatively recent “immigrant” to the Baltimore area (from NY), I’d like to try to understand the region better, so conversations like these are really helpful to me.

It does seem like in SV there is a general culture (or perhaps “badge of honor”) in starting a company, failing, starting another, and eventually hitting it big. In such a culture, people optimize for equity, but I’m not certain that should be characterized necessarily as “sophistication”. Could it be that, in general, technical talent in SV is younger and less established in the typical “traps” that make it hard for people to consider entrepreneurship? Failure is “easier” in a sense?

I can say from my own experience that the idea of failing was easier to contemplate when I was in my 20′s without a mortgage and kids than it would be today.

Of course, this seems line of thinking seems most relevant for first time entrepreneurs, which takes us back to fixing what Dave wrote in the first email:

Universities are barely aware of the startup ecosystem and do not contribute a good supply of talent.

Roger London to Scott Paley:

Scott- the article described the Palo Alto engineers thinking as “sophisticated”, not my words. I do think most of what you describe re multiple startup experience is true.

Experience gained over several startups for several years each likely puts that person around 30 years or older. I don’t think however you can replicate that experience (sophisticated thinking) by working with universities and getting a larger volume of people in their 20’s.

This region also has a lower tolerance for failure. Rather than throw young people to the wolves and try to make them entrepreneurs realizing in this region you cannot erase the black mark of a failed venture, we should make them entrepreneurs-in-training and help place them in a growing company where they can still earn a paycheck, but have some skin in the game while simultaneously experience but not be responsible for the critical elements of successful entrepreneurship…. how to acquire key initial customers, product development, building a team and staff, operational infrastructure, raising capital, etc.

Jared Goralnick, entrepreneur and community leader shared an interesting response by David Fisher:

- Have better ideas and bring more to the table: There are a few non-technical people that I’d follow anywhere and its because they do have consistently great vision and ideas. Show people that you can lead and followthrough. One of my good friends Tim Hwang can’t code at all (AFAIK), but I’ve seen him execute with the Awesome Foundation, ROFLcon and the Web Ecology Project. I know that if he gets a great idea, that he will hold up his end. Do things like this and you’ll have no problem finding developers and technical co-founders.

It’s true that if you’re a “tested entrepreneur” then people will want to be part of your vision, but most people aren’t their first time around. Still, I think this speaks to the value of community involvement in lieu of us having a really technical and available scene.

I don’t think it’s actually particularly easy to find co-founder engineers or engineers in general in the valley. I bet we’re going to feel this way everywhere…

Jared Franklin, product manager at Bill Me Later:

Thanks for posting the responses in “Baltimore Area Leaders Sound Off on Startup Scene.” I completely agree with those who cited the lack of support and production from our Universities in the area. I graduated last year from Loyola as an MIS major and now work for PayPal/Bill Me Later as a product manager. I would never have landed the job if I didn’t intern for Bill Me Later 20+ hours a week for 2.5 years of my time in college. School simply isn’t enough.

Our MIS major consisted of <10 graduates in the 2010 class and I'd consider it to be the most "entrepreneurial" major at the school. Our biggest class in the business school were either general business majors or finance majors. The school did not do enough (or anything) to teach students what other majors existed or what type of jobs they help you develop skills for. Additionally, the MIS majors capstone project consisted of a business plan and a non-functioning prototype of a web product. However, a portion of a semester and lack of coding skills did not help. I wish they paired us with the CS majors to develop a product together. This would have been beneficial for both the MIS majors and CS majors. I find myself in the same predicament now, one year out of college. I generate ideas (for projects outside of work) but need someone who can code. I was exicted to see Bob Blonchecks point of view stating that he thinks we have a lack of non-technical entrepreneurs.

Anyway, thanks for the post. It was great.

Please feel free to post YOUR thoughts and comments!

• Adam Bachman wrote an interesting response, citing a paper by Dr. Saras Sarasvathy I’d also referenced.
• Keith Casey had a couple of interesting tweet responses. [one, two]

What are YOUR thoughts about East Coast startup culture?

For the last year I’ve been developing an idea for a documentary film tentatively titled “Sticker Movie” about bumper stickers and how they express tribal identity and territory. Someone inquired about the status of the project and this was my response. Consider it a glimpse into the creative thought process.

“Sticker Movie is on hiatus for the moment, mostly while I seek funding and further develop the concept. However, the more I’ve meditated on the idea, the more I have come to believe that stickers indicate something very fundamental about the human psyche, specifically the amygdala and its function in society.

Humans behave differently when they feel threatened; brain function shifts from cerebral cortex to amygdala, which mediates flight/fight response. I believe stickers are associated with territorial instinct, as originated from the amygdala, and that much of the definition of “liberal” and “conservative” rests on how specifically people modulate their amygdala/cerebral functions. I believe this is partially genetic and partially environmental. People’s early experiences (bullying, racism, teasing, aggression, prison, certain sports) can definitely activate a “zero-sum” mentality which is dominated by the amygdala.

It’s been observed that siblings are more competitive but less successful than only children. Siblings fight amongst themselves for resources and attention, while only-children may have more opportunity to be creative. Zero-sum vs. positive sum thinking, IMHO.”

I’m an only-child. And I believe that if we can deactivate the amygdala in our political discourse, we can positively affect the world. What do you think about stickers, the amygdala, and zero-sum thinking?