By Brad Feld
In 2012, there was a cambrian explosion of new startup activity all over the world. The seeds for this had been planted during the preceding years, but as 2012 comes to an end, a true Startup Revolution has begun.
I’ve been involved in starting companies, either as an entrepreneur, angel investor, or venture capitalist since I started my first company in Boston in 1987. When I moved to Boulder in 1995, I didn’t have any expectation of doing business there; rather I was spending all my time traveling from Boston to NY to San Francisco to Seattle where I was investing my own money as an angel investor. At the time, there was a belief that there were only a few places in the world where entrepreneurial ecosystems could - and had - developed, with the bay area and Silicon Valley the defining one.
I’ve always rejected the idea that startups were destined to only exist in certain cities. Instead, I believed that startups could flourish anywhere. When you step back and think about it, every city was once a startup. Someone moved to a place on this planet and decided to start a city there. If every city was once a startup, why can’t every city support a vibrant startup community?
Within a year of moving to Boulder I found myself in the middle of an amazing startup community that was growing steadily every year. I continued to travel to and invest in Boston, NY, San Francisco, and Seattle, but started paying more attention to other places, like Austin, Chicago, Dallas, and Portland.
The collapse of the Internet bubble put a huge chill on the development of startups, but this only lasted for a few years. By 2003 lots of new companies were being created in Boulder and by 2007 the Web 2.0 movement was well under way.
When the global financial crisis hit in 2008, most entrepreneurs didn’t notice. Sure - it had some impact on them, but most were heads down building their new company. The number of companies created in 2007, 2008, and 2009 continued to grow. And some companies, such as Facebook and LinkedIn, that are now household names, saw extraordinary growth in this time frame.
By 2010 those of us who had been doing this for a while noticed that something special was happening this time around. I’ve begun referring to it as the climax of the hierarchy - we are now shifting into a post-information age where the network dominates. Instead of having to ask permission to do something, gain access to someone, or work on a specific thing assigned to you as is the way with most hierarchies, entrepreneurs function almost entirely outside of this in one giant, messy, network. Sure, hierarchies have been around since the beginning of man and will continue to be prevalent structures, especially in government, academia, military, and religious organizations, but businesses are rapidly embracing the network model. And startups, entrepreneurs, and startup communities are already living and working deeply in it.
When you put this shift to a network model against the backdrop of many of the ideas around the web and the Internet from the pre-bubble era (1998 - 2001), you see these ideas resurfacing and actually happening this time around. Many of the incumbent, hierarchal businesses, still struggling to get things in order post financial crisis, completely missed this new wave of innovation and were caught unaware of the changes. Many are still either in denial or not able to see the shift to a network model and as a result are experiencing dramatic change and competition aimed at the heart of their businesses.
On top of this, the cost of starting a new company had diminished dramatically. Amazon helped enable and accelerator this with Amazon Web Services, their commercial cloud infrastructure, which eliminated the substantial capital investment needed to start a web service. Web and mobile technology evolved so the cost of implementing was much lower, and new startup approaches like the Lean Startup and Lean LaunchPad caught on, creating much faster and customer driven methodologies for creating and iterating on the idea behind a startup. Finally, mentor driven accelerators such as TechStars and the ones modelled after it emerged all over the country, providing a huge new way to create companies, education entrepreneurs, engage experienced mentors with new entrepreneurs, and help create the fabric for startup communities.
This summer I wrote Startup Communities: Building an Entrepreneurial Ecosystem in Your City. My goal was to capture what I had learned over the past 17 years in Boulder and seen happen in other places, and create a tight set of principles for creating a startup community in any city. Ideally, I hope these four principles, which I call The Boulder Thesis, feel obvious.
1. Entrepreneurs must lead the startup community.
2. The leaders must have a long-term commitment.
3. The startup community must be inclusive of anyone who wants to participate in it.
4. The startup community must have continual activities that engage the entire entrepreneurial stack.
As I’ve traveled around the country the last few months and visited places like Boise, Oklahoma City, Chicago, Des Moines, San Francisco, Seattle, Detroit, Boston, Montreal, Toronto, Lexington, and Louisville, I saw entrepreneurs implementing this framework with great and enthusiastic success. They were all on a long-term journey and committed to building their companies and their communities.
2012 was an incredible year for startups, the emergence and understanding of how to create startup communities, and a commitment, by many entrepreneurs to go on a long-term journey, rather than simply do things for short term gains. The process is messy, just like entrepreneurship, and there will be lots of ups and downs along the way, but I’m confident that a new Startup Revolution has begun and will be in full swing in 2013.
Brad Feld (http://www.feld.com, @bfeld) is a managing director at Foundry Group, a venture capital firm based in Boulder that invests in software and Internet companies throughout the United States. He’s also a co-founder of TechStars, a mentor-driven accelerator that was started in 2006.