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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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Entrepreneurial Communities Must Be Led By Entrepreneurs

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I’m about to head out to TechStars New York Demo Day. Our investment in SideTour – one of the TechStars New York companies – was announced yesterday and I’m excited to introduce them along with hanging out with all of the other great entrepreneurs from this session. If you’ve been watching the Bloomberg TechStars series, we are doing the finale tonight where we meet with all of the teams and see where they are six months after the program ended. It’ll be happening live at 9pm ET/PT.

Since I haven’t yet figured out how to be in two places at the same time, I ended up recording a short video for a meeting on entrepreneurial communities that I was invited to. In it, I talk about my first of four principles of entrepreneurial communities, specifically that entrepreneurial communities must be led by entrepreneurs.

Following is the video along with my notes.

Four key principles of entrepreneurial communities
- led by entrepreneurs
- 20 year view from today
- engage the entire entrepreneurial stack
- continually get fresh blood into the system

briefly focus on the first – entrepreneurial communities have to be led by entrepreneurs

entrepreneurial communities have leaders and feeders

feeders include everyone that does things that are inputs into the entrepreneurial community
- lawyers
- accountants
- angel investors
- venture capitalists
- government

leaders are the entrepreneurs
- you don’t need a lot to make a huge difference
- a half a dozen is a great starting point
- but they have to commit for 20 years from today

all of the feeders have a role
- some feeders try to be leaders – this never works
- rhythm is wrong: 20 years vs. 4 of government
- personality is wrong: lead vs. support
- incentives are wrong: job vs. creative act

if the leadership of an entrepreneurial community is co-opted by local government
- there might be short term activity
- but it will fail over the long term to become sustainable

remember: the entrepreneurs need to be leaders

if you are a feeder:
- identify them
- encourage them
- support them

but let the entrepreneurs be the leaders

Can You Be A Deep Thinker While Being Insanely Busy?

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I am completely wiped out. It’s noon on Saturday in Colorado. I just had five days in a row of 18 hour days. I started the week in San Francisco and flew back home on Friday night from New York (with a red eye in between). It was awesome, but exhausting.

In addition to all the work, there was plenty of ambient emotion last week including some around mortality (Steve Jobs died and a close friend’s father died). In between everything, I spent a had a lot of meals with people I haven’t seen in a while, or whom I’m really close to. On top of that, there were hundreds of emails a day, plenty of telephone calls, and lots of random stuff to deal with. And plenty of running, coming off a weekend of back to back long runs (14 miles on Saturday, 16 miles on Sunday). And the Imperial March rang on my phone several times a day when Amy called, which always gave me a nice positive emotional charge.

I slept 12 hours last night. Amy made me a great breakfast and I’ve spent an hour catching up on unread emails from yesterday. But I’m just fried. And I’m going to crawl back into bed for a nap, go to a movie this afternoon, and then have a quiet dinner with Amy somewhere.

When I reflect on last week, I consciously spent very little time thinking deeply about anything. My runs were mostly mental garbage collection times, I slept on the airplanes, and I was in the moment the rest of the time dealing with the present. Sure, some of the discussions were longer term, strategic type things, but all the thought processes were surface level vs. deep discovery.

I’m working on a book called Entrepreneurial Communities. It’ll be done by the end of the year. I’ll likely self-publish this one as I don’t perceive any benefit to having a publisher now that I’ve done two books the traditional way. I also don’t want to introduce an additional six months into the writing to publishing cycle. I spent exactly zero time working on the book last week, although I had no expectation that I would.

But when I think about what I learned this week, and what I talked about, plenty of it pertained to the book. While I consciously spent very little time thinking about entrepreneurial communities, I unconsciously spent a lot of time thinking about it. And while my surface level discussions about longer term things didn’t impress me as deep thinking, by talking out loud about complicated issues I continued to modify the way I talk and think about them.

This is a style of mine. While I don’t “think out loud” like some do, I “refine my thought process” by talking about – and doing – things around the topics that I think deeply about. The development, creation, and sustaining of entrepreneurial communities is one of those topics that I’ve been doing a lot of thinking about lately, and anyone who knows what I spent my time on knows that many of the things I work on pertain directly to the activities around these, rather than just the thoughts around these.

By being insanely busy in areas that I think (and care) deeply about, I’m actually engaged in an “active deep thinking” rather than a passive deep thinking. It’s easy to end a week like the last one (which is a pretty typical week for me) with the reaction of “wow – that was intense and insane, but I didn’t really have any time to think about what I wanted to think about.” That’s wrong – I spent the entire week actively thinking, which makes my ability to deeply think about topics I care about even more powerful and effective.

I’m sure there is some philosophy, or psychology, about how a human links passive and active around the formation of thoughts, ideas, and theories. I’m not going to think deeply about that, especially since it’s meta in the context of this post, but I’m certain that the answer the my question that I posed in the title is a resounding yes when you combine active and passive thinking.

Entrepreneurial Density Revisted

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I’m in San Francisco right now and then New York later this week. When I look at my schedule, and where I’m hanging out, I realize that even though I’m in two very big cities, I’m going to spending most of my time in a very small area.

When asked why Boulder is such a vibrant entrepreneurial community, I talk about a concept I call entrepreneurial density. Boulder is a small town – the city itself is only 100,000 people. Yet the number of entrepreneurs in Boulder is significant. And the number of people working for startups is off the charts. Start with the definition:

entrepreneurial density = ((# entrepreneurs + # people working for startups or high growth companies)) / adult population

My guess is that Boulder’s entrepreneurial density is one of the highest in the United States. I don’t have any empirical data to back this up – it’s a qualitative assessment based on my experience traveling around and investing in different parts of the US.

While population is one measure, I’ve also started thinking about geography as another. In the case of Boulder, the core of the entrepreneurial community is in downtown, which is a 10 x 4 block area. Even though downtown Boulder is small, it has different personalities (yes – we have an east side and a west side), yet you can walk from one end to the other in ten minutes. And, inevitably, when I walk across town I always bump into people I know.

The geography index matters even in places like New York. When I stay in New York, I generally stay within walking distance of Union Square. Sure, I end up in midtown or downtown occasionally, but most of my time is spent in a 20 x 8 block area. The bay area splits similarly – I’m in San Francisco within walking distance or a short drive of many of our bay area companies, but I’m on the other end of the planet from Palo Alto.

As I think more about entrepreneurial communities, I’m starting to expand my definition of entrepreneurial density to include by population and geography. This seems to matter a lot, even in very large entrepreneurial communities like New York and San Francisco.

I’m curious about experiences in other parts of the country, especially entrepreneurial communities that are growing or trying to reinvigorate themselves. How does entrepreneurial density (either geo or population) impact you?

Joining The Board of Startup Weekend

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I spent the day in Kansas City yesterday at the Kauffman Foundation for my first Startup Weekend board meeting. I’m very stingy with my non-profit board activity after deciding in 2005 to get off any non-profit board that wasn’t focused on entrepreneurship and until yesterday the only non-profit board I’m on is the National Center for Women & Information Technology.

I was at the first Startup Weekend in Boulder in July 2007. It was created by Andrew Hyde (he was the Community Manager for TechStars at the time). While I didn’t stay the entire weekend, my partner Seth Levine and I spent a bunch of time there on Saturday, had a blast, met some new people who became long term friends (my first extended experience with Micah Baldwin where Vosnap was created), and paid for a bunch (all of?) the food, which I recall included a lot of beer, chips, and bagels. In was a completely awesome experience.

Andrew ran about 80 Startup Weekends around the world before selling Startup Weekend to Marc Nager and Clint Nelsen in 2009 who were quickly joined by a third partner Franck Nouyrigat. Marc, Clint, and Franck turned Startup Weekend into a 501c(3), got a bunch of smart people involved as advisors such as David Cohen (TechStars CEO), expanded rapidly, got a grant from the Kauffman Foundation, and are now launching an even broader effort called the Startup Foundation.

My view is that the goals and behavior of Startup Weekend, going back to the very beginning when Andrew Hyde conceived it, are completely aligned with my view that entrepreneurial communities can be created in many places and a key attribute is activities that engage the entire entrepreneurial stack from aspiring entrepreneurs through experienced entrepreneurs and include all of the various constituencies around the entrepreneurial ecosystem. I saw that in Boulder in July 2007 and I see that when I hear of other people that have participated in Startup Weekends around the world.

I’m psyched to join some other super smart people on the board, which includes Carl Schramm, president and CEO of the Kauffman Foundation; Steve Blank, serial entrepreneur and author; entrepreneurship lecturer at U.C. Berkeley and Stanford University; Greg Gottesman, managing director at Madrona Venture Group; Laura McKnight, president and CEO of the Greater Kansas City Community Foundation; and Nick Seguin, manager of entrepreneurship at the Kauffman Foundation.

If you’ve never done a Startup Weekend, try one. I bet it changes your life.

How Federal Government Can Help Entrepreneurship

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This afternoon in Boulder I’ll be on a panel as part of the White House Startup America Roundtable. If you weren’t invited to the event, there is a web site called Reducing Barriers to Innovation that you can participate in.

Over the past few years, I’ve spent some time thinking about how the government can help entrepreneurship. It started with my role as the co-chairman of the Colorado Governors Innovation Council which was my first involvement in any formal way with any government initiative. More recently, I’ve focused my energy on the Startup Visa movement and the Startup America Partnership.

When I was reviewing the agenda for the Reducing Barriers to Innovation program, the goal of the program was pretty clear:

“The Startup America: Reducing Barriers event is a regional platform that allows federal agencies to hear directly, from entrepreneurs and local leaders like you, how we can achieve our goal of reducing the barriers faced by America’s entrepreneurs. Senior Obama administration officials need input on what changes are needed to build a more supportive environment for entrepreneurship. “

On my run yesterday, I mulled over the big activities that I thought the federal government could do to “build a more supportive environment for entrepreneurship.” I came up with five things that I think are relatively easy to measure over the long run. Following are short thoughts on each of these areas with one specific idea (in italics) that I think would materially impact entrepreneurship in America in a positive way.

Tax Policy: Incent people to invest in startups. While there are several well understood tax policies that could be implemented, the simplest is to provide long term tax breaks for individuals to invest in new startup companies. As with anything tax related, there are endless politics involved and many of the things that actual get rolled out are so obscure that they either never get implemented or are to difficult for investors to understand. Make it simple – eliminate capital gains if an individual (who is an accredited investor) invests equity (i.e. risk of 100% loss of investment) in a private company with less than 100 employees.

Immigration Policy: Make it easy for foreigner entrepreneurs to come to the US, or for foreign students to stay in the US, and start companies. This is the essence of what we’ve been trying to solve with the Startup Visa movement. The new Startup Visa Act of 2011 has plenty of improvements over the 2010 Act (which was introduced but never went anywhere) but still is stuck in Congress. If the White House wants to make a difference here, it should prioritize the Startup Visa separately from “broad immigration reform” and help get it passed since the Startup Visa is much less about immigration and much more about entrepreneurship, innovation, and jobs.

Regulatory Policy: Cut as much paperwork and bureaucracy out of the system. While this one is talked about regularly by the people in government that I know, the regulatory environment just seems to get more and more complicated. The solution so far has seemed to be “hire more people to process more paper faster.” This clearly hasn’t worked – how about taking the opposite approach and cut 20% of all jobs within various government agencies responsible for regulatory activity? I don’t care if you pay the fired people for two years – give them healthy severances and incentives to go work in the private sector. Necessity will drive efficiency.

Investment: Focus investment in university research. Then open source the results. The federal government has been a historically successful investor in innovation and the creation of new technologies, often through funding university research. If you want a good example of this, read Bright Boys. Unfortunately, this has gotten really messed up recently due to our byzantine patent system and the evolving dynamics of university technology licensing organizations. The government should allocate even more money to university research programs, but the results of this research should not be able to be patented and should be free for anyone to license. This would drastically change the technology licensing game by simplifying it and shifting economic incentives aggressively to companies that actually commercialize (or productize) this research, rather than simply claim ownership to the “intellectual property.”

Customer: The federal government is an enormous consumer of products and services. While it claims to want to do business with entrepreneurial companies and so far pays its bills in a predictable manner, it’s a miserable customer to deal with. The procurement process is painful, many entrepreneurial companies have to work through government contractor gatekeepers (who take up to a 30% tax for doing nothing other than being the contracting party), and often the execution and implementation process is a disaster. Unfortunately, I don’t really have a suggestion for how to improve this since there are so many rules and regulations around this – I guess the answer is “see regulatory policy” above.

I’m continuing to think through this and refine my thoughts on it, so as always I’m open to any and all feedback, including “Feld – you are such a knucklehead – that’s a stupid idea and will never work, but try this.” Fire away.

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