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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Where Will Techstars Fit Into The Narrative of the Boulder Entrepreneurship History?

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I was having a conversion on Friday with Brad Bernthal, an Associate Professor at Colorado Law School who directs the Silicon Flatirons Center’s Entrepreneurship Initiative. Brad and I – in addition to sharing a first name – are close friends. We were talking about the recent amazing Techstars Demo Day that we had just had in Boulder, and Brad – in a professorial tone – started hypothesizing about the importance of Techstars in the Boulder startup community. We went back and forth a little and I encouraged him to put it in writing so I could use it as fodder for a blog post. He did me one better, and wrote a guest post. It follows.

It is time to consider the following question:   When we look back, where will Techstars fit into the narrative of Boulder entrepreneurship history? 

This question will not keep many of the entrepreneurs in Boulder up late at night. Looking forward – not back – is the Boulder startup community’s natural disposition.  But sometimes we need to understand where things fit in and what they mean in the bigger scheme.  During Techstars 2013 Boulder Demo Day, led by Managing Director Luke Beatty – who skillfully took the baton from Nicole Glaros –  it occurred to me that reflection is now warranted.

Full disclosure:  I am a Techstars mentor as well as a CU Associate Professor of Law, which makes me a weirdly situated participant/observer, and I’m admittedly rooting for Boulder.  I am also not a historian and, from time to time, my prognostication skills  are suspect.  (Indeed I five years ago predicted the return of short shorts – 1980s style – in the NBA.  No players appear to have received that memo.)  With that, here some thoughts on how Techstars will be viewed in Boulder startup history.

Is it time to think about Techstars as historically significant in Colorado?  Yes, it is.  Techstars was one of the pioneers of the mentor-driven, time limited, entrepreneurial supercollider known as the Accelerator.  Techstars now belongs in the company of other Front Range pioneers who helped craft an industry, a list which includes natural foods leaders folks – who built companies such as Celestial Seasonings, Wild Oats, and Alfalfa’s – and early movers in the disk storage industry, most notably StorageTek and its progeny.   The first Techstars class matriculated in 2007.  Six years later,  TechStars is a global operation and, more fundamentally, the accelerator model is among the decade’s most important entrepreneurial innovations.  Irrespective of what happens to Techstars ahead, development of the accelerator as a global industry ensures that Techstars will remain historically relevant.

How important is Techstars’ economic impact? TBD, but traditional metrics won’t capture its benefits.  It is premature to say where Techstars will rank, in terms of regional economic impact, on a historic scale in Colorado’s Front Range.  Techstars is a magnet for creative class talent.  But it is not itself a huge employer relative to other area homegrown companies like Level 3 or StorageTek, or even rising companies like Zayo, Rally, LogRhythm, and SendGrid.  Techstars’ geographically dispersed structure shares the wealth across multiple startup communities spanning Seattle to London.  As a result, as Techstars scales up, its direct local economic benefits– unlike a Microsoft in Seattle, Google in Mountain View, or Dell in Austin – are realized in several locations, not primarily one.

My bet is that the geographically networked aspect of Techstars will emerge as its long term gift to Boulder.   Traditional metrics of employees and annual revenues won’t capture Techstars’ most important impacts.  In reputational benefits to Colorado, the near term impact is already outsized.  Long term, as Anno Saxenian explains, the value of  cross-regional connections – whereby one location is closely tied by personal relationships to other geographic startup locations – is a crucial advantage for 21st Century innovation hubs.  Boulder is comparatively not well situated to have large scale immigration ties a la Silicon Valley or New York.  But Techstars generates tremendous cross-regional connectivity for Boulder to other startups communities.  My prediction is that cultivation of cross-regional networks will be Techstars’ biggest economic impact.

What will TechStars mean?   Intergenerational connections in entrepreneurship.  Techstars as a movie script pitch:  company attract wicked smart next generation talent and pairs them with their elders.  Mr. Miyage / Daniel with mouse clicks.  Sparks ensue. Like many successes, this formula seems obvious in the rear view mirror.  But building trusted networks is hard work that takes a deft touch.  And the intergenerational network at the heart of Techstars sets a community norm that those who have success should pay it forward to the next generation.  This resonates as Techstars’ long term significance.

Zayo Group – One of Boulder’s Amazing Startup Stories

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I’m intensely proud of both the amazing startup community in Boulder as well as the many significant companies that have been – and are being – created in the little town of 100,000 people I call home. I regularly talk about the ones we’ve invested in through Foundry Group, but this only covers a part of the awesomeness that is going on here as Foundry Group has a very tight thematic focus.

As Boulder continues to gain visibility as a great place to create companies, I’ve decided to highlight some of the entrepreneurs – and their companies – who have contributed to Boulder in significant ways.

Dan Caruso, the co-founder/CEO of Zayo Group, is one of them. I first met Dan around a decade ago when Howard Diamond, another incredible contributor to the Boulder startup community, introduced us. Howard was at Level 3 at the time – they had acquired his previous company Corporate Software (which I was an investor in) – and he knew Dan through that experience. Over the last decade, I’ve gotten to know Dan, watched as he’s built an incredible $6 billion market cap company headquartered in Boulder, while contributing relentlessly to the Boulder startup community.

I asked Dan to write a guest post talking about Zayo’s story. It’s great – and follows. Dan – we are lucky to have you – and Zayo – in Boulder.

“Fiber in Downtown Boulder?” was the title of an email sent to me by Brad, after he had heard from one of his CEOs that Zayo is constructing fiber in Boulder. “If true, how can I help?”, he continued.

Years ago, when I first met Brad, I didn’t “get” him. I had recently left Level 3 Communications. I was one of the day one execs of LVLT, as well as an early member of the management team of MFS Communications. It is understandable that I considered myself to an accomplished entrepreneurial-minded executive. Yet I felt so disconnected to Brad and the culture around him. It took me several more years to understand Brad, and during this time I developed a deep appreciation of his passion for entrepreneurism. I was drawn to his unique ability to promote ideas, create awareness, and fuel momentum. I sought to mimic his propensity to leverage social media.

“How can Brad help?”, I pondered.

“Help me create more awareness about the contributions that Zayo is making toward the Front Range entrepreneurial community.

Brad, entrepreneurial as ever, delegated the task back to me. “How about you write a post for my blog?”

Sensing an opportunity, I responded “How about I write two?” This is the first. The next one will describe our extensive fiber build across the front range.

I will provide a quick synopsis for those who prefer a two-paragraph summary. In late 2006, Zayo was a pure start-up headquartered behind Nick and Willy’s on 8th and Pearl. Today, Zayo has eclipsed $1.1Bin revenue and $600M in EBITDA, leading to an estimated Enterprise Value in the vicinity of $6B. We have 3 offices in Colorado, with our headquarters on the 2nd floor of 29th Street mall. In addition to directly employing 250 people across the Front Range, we indirectly employ many more related to our multi-million dollar fiber build across the front range. Dozens of recent graduates of Colorado’s university system are Zayo-ites.

Boulder is an incredible entrepreneurial community, and I enjoy being immersed in it. I am excited to see this innovative energy spreading across the front range, through Startup Colorado and other initiatives. I am proud that Zayo is a vibrant example of our community’s robust start up ecosystem.

For those who prefer a slightly longer version, here is the Zayo Story in a nut shell.

In June of 2006, we sold what remained of ICG Communications to Level 3. The ICG team went to Level 3 as part of the transaction. I didn’t.

Two years prior, ICG was a public company preparing for its second bankruptcy. My group was the only that offered an alternative to Chapter 7/11. We paid them $8.7M and took them private. By the time we sold to Level 3, our total proceeds to equity owners and management were $225M. For those without a calculator nearby, that’s a 25X return in 2 years.

Nonetheless, I was out of a job.

Though ICG was headquartered in south Denver, we opened up a small satellite office on 8th and Pearl — right behind Nick and Willy’s. In the sale to LVLT, we kept a portion of this office. One by one, many of my colleagues extracted themselves from Level 3 and pondered “what now”. By late 2006, we formed Communications Infrastructure Investments. Today, CII d/b/a Zayo Group.

Our investment thesis was simple. Bandwidth was busting — and this would continue beyond our children’s lifetimes. Fiber was the workhorse of the Internet — and nothing would alter its importance for as far as the eye could see. Most importantly, drinking too much tequila leads to a hangover that makes it hard to look at — let alone taste — tequila again.

Point 3 requires more of an explanation. The late 1990s saw a fiber tequila party that started out wild — investors poured money into start-ups and fiber networks were constructed throughout the land. Way too much fiber tequila was gulped, and the ensuing telecom meltdown caused a hangover of epic proportion. As we hit the early 2000s, investors and strategics felt their stomach’s gargle at the sight of a fiber-labeled tequila bottle. You know that feeling?

Our ICG experience gave us different perspectives. First, many fiber networks had consolidated into a handful of platform. The balance between supply and demand of bandwidth was rapidly improving.

Second, we saw an opportunity to be a consolidator of the remaining fiber properties. We called these fiber orphans — companies whose roots dated to the telecom boom but which had not yet been consolidated into a nationwide platform. These companies somehow navigated their way through the meltdown. By 2007, they were doing quite well. However, the tequila hangover persisted and few investors or strategics were paying attention to them.

Third, we developed a thesis around “Bandwidth Infrastructure”, a term we coined. We did not desire to be a traditional telecom company. Instead, we sought to provide raw fiber, wavelengths, ethernet, IP, and technical space to those entities that needed a whole lot of bandwidth. Circa 2007, this was considered a ridiculous approach. Even today, we are sometimes poked by rivals for our infrastructure approach.

Between 2007 and 2013, we acquired 25 companies. We now have over 80,000 route miles of fiber, mostly in the U.S. and London. Our fiber is connected to nearly every significant colocation, hosting, and carrier hotel facility. Our biggest customers are the wireless carriers and big content/Internet companies. We raised $2.7B of debt and $870M in equity in three rounds. Our initial investors have not sold, though they are enjoying a 4 – 5X mark. Our equity IRR has averaged around 50% since inception.

Zayo is in this for the long term… the very long term. My aspiration is to be at the helm of Zayo for a few more decades. Zayo will be to bandwidth what Amazon is to the cloud and what Equinix is to colo. Zayo will foster the development of additional start-ups, either within Zayo or as spawning-offs. The bandwidth supplied by Zayo will positively effect the lives and livelihood of countless people throughout the world. As Zayo continues its quest, it will bolster Boulder and the Front Range’s reputation as a top tier centers for Entrepreneurship and Innovation.

Entrepreneurial Density and Venture Capital

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Richard Florida continues to write amazing stuff about Startup Communities in The Atlantic Online. Two of his latest articles talk about entrepreneurial density and venture capital.

For a long time I’ve suggested that an interesting measure of entrepreneurial density would be ((entrepreneurs + employees of startups) / total population). I asserted in my book Startup Communities: Building an Entrepreneurial Ecosystem in Your City that I thought Boulder had the highest entrepreneurial density in the world. I qualified this by staying I had no real empirical data – it was merely an assertion based on my experience.

Richard took this notion a step further in his article High-Tech Challengers to Silicon Valley and actually did some math. In it, he looked at Venture Capital financing (total dollars and number of deals) on a per-capital basis. Boulder came in third, behind “San Jose-Sunnyvale-Santa Clara, CA” (what most of us think of as “Silicon Valley”) and “San Francisco-Oakland-Fremont, CA” (what most of us think of as San Francisco.)

Venture Capital investment per capita

 

The comments are fascinating and generally miss the point. One in particular, called Richard unethical, although it was from “WithheldName” (also known as Anonymous Coward).

“It’s totally unfair to make Boulder separate from Denver. Combine Boulder and Denver. It’s called the Denver-Boulder Metropolitan Statistical Area for a reason. Was Cambridge separated from Boston? Of course not. The author was from Boulder. This data was slanted to Boulder. It was totally unethical.”

This particular person doesn’t understand that Boulder and Denver are separate startup communities. In contrast, Cambridge and Boston are one startup community, consisting of six startup neighborhoods (three in Cambridge, three in Boston, all within a 15 minute drive of each other, even in traffic.)

More importantly, the author of the article wasn’t from Boulder. I’m from Boulder. I didn’t write the article – Richard did. And – he was pretty clear about all of that, so our friend needs to rethink his definition of the word “unethical.”

That said, the more interesting study is by zip code, not by city or MSA. Mixing MSAs and cities creates a comparison that isn’t precise. And Richard acknowledges this:

“I’ll continue to track the evolving geography of start-ups and venture capital in future posts. Next week, I’ll look at the economic, demographic and social characteristics of metros that are associated with venture capital and start-up activity. In future posts, I’ll delve more deeply into all of this, using detailed data by area code and zip code level to tease out the changing geography of venture capital and start-up activity and its distribution across cities and suburban areas.”

I think the real magic in the analysis around entrepreneurial density will happen at the zip code level on a per capita basis. Look for 80302, 02139, and 10003 to show up high on the list along with some starting with 94xxx.

How’s That No Travel Thing Working For You?

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I stopped travelling mid-May (I arrived home in Boulder from San Francisco on 5/17). I’ve decided not to travel at all for the rest of 2013, except for three personal trips (my parents 50th anniversary, Amy’s birthday, and my birthday.) After travelling 50% – 75% of the time for the last 20 years, I needed a break.

It has been awesomely mindblowingly great to not travel.

I’ve had three other periods of extended no-travel in the last 20 years. I stopped travelling for three months after 9/11. Two summers ago Amy and I spent 60 days together in Europe (half in France / half in Tuscany) just living (no travel). Last summer we spent 90 days at our house in Keystone. It’s clear I had a taste of this, but nothing like where I am right now.

Even though it has only been seven weeks, when I look forward to the rest of 2013 I feel huge amounts of open space and time in front of me. I know this has helped me come out of the depression, which I just wrote about in an article in Inc. Magazine, that I struggled with for the first part of this year.

But it’s more profound than that. In a few short months, I’ve changed my work pattern a lot. I feel so much more rested and alert. When I’m doing something, I’m in the moment. The companies I’m an investor in are all over the place, but I feel like they are actually getting more of my attention because I’m not being torn in a zillion different directions.

I don’t feel like I’m constantly trying to jam in the “work” around all the friction time – in airports, in taxis and cars being driven to things, before I head out to yet another dinner on the road, or late in my hotel before I go to sleep. My environment is familiar and comfortable and things just flow.

I’m mastering video conferencing – I’ve now got every configuration a human could need. I figured out three big things that solve for 99% of the strangeness of it.

  1. Make your video conference full screen – don’t have ANYTHING else going on your computer other than what is in the meeting.
  2. Use a BIG monitor – seeing heads that are normal size makes a huge difference.
  3. Make sure your audio and video are on channels with enough bandwidth. Shift to a conference call for audio while keeping video up if you are having performance issues.

I’ve also started using my Mezzanine video conferencing system extensively – it’s just incredible. More on that in a separate post.

I love Boulder and I’m finding myself running a lot again. It’s hard to run as much as I’d like when I’m on the road – early morning meetings, fatigue, and being in random places gets in the way. But here, I just put on my shoes and head out the door for one of my favorite trails. With or without Brooks the wonder dog.

On that note, I think I’ll go for a run right now.

Gluecon Year 5

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As we enter the 5th year of Gluecon, I’m very excited to see it come together. Eric Norlin has been saying year after year that his goal is to make Gluecon “the most technical, developer-focused conference” out there and I love watching him try.

You can check out the most recent agenda here, but some of the sessions that are indicative of what Eric’s talking about include:

  • Building a distributed data platform with Node.js, Storm, Kafka, and ZeroMQ
  • An Enterprise Mobile Reference Architecture
  • Building using Netflix’s Open Source Architecture (a 4 hour workshop)
  • Using Swagger to Build a Great API Interface
  • The Pros and Cons of Choosing Go
  • Availability During Cloud Outages: Multi-Regional, Self-Healing MySQL
  • Node.js is for APIs

Beyond the content, I can personally testify that you’ll find an amazing group of people to hang out with, a truly welcoming atmosphere, and the best conference wifi you’ll find anywhere. Plus, it’s in Boulder at the beginning of summer!

Be sure to grab the early bird price (which ends April 7th) while you can — and use “brad12″ to take an additional 10% off.

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