Book Review: Startup Communities: Building an Entrepreneurial Ecosystem in Your City

I just finished reading Startup Communities. It dovetails nicely with what I've been thinking about, that entrepreneurship relies on an entire community surrounding the entrepreneur. Here's my mini-review for all you busy business people: I agree with the first part of the title and disagree with the second part. I believe startup communities are vitally important, but I'm not sure you can build one in your community.

Let's start with the first point. Schumpter talked about the "Heroic Economic Superman" who boldly innovate, releasing the winds of creative destruction upon the world. However, the successful entrepreneur is not so much a Superman working in his Fortress of Solitude, but rather like Batman, a smart, skilled mortal who relies on a team for support (and is also likely deeply psychologically damaged). Entrepreneurs rely on their family and friends to not only slip them a few dollars when they need it, but also to  accept the fact that they'll miss holidays, birthdays, and everyday social events as the entrepreneur builds the business. They rely on employees willing to accept the lower pay and increased risk of working at a startup instead of a traditional company. They rely on customers taking on the risk of buying from a startup when they could often just stick with IBM or Sysco. They rely on suppliers to trust them enough to offer them credit or other kinds of support. They rely on local lawyers and accountants having the knowledge to advise them on challenges unique to small, growing firms.  Without these things, it is very hard for an entrepreneur to build a successful startup that does more than provide a decent income for themselves.

However, the promise of the book's subtitle is that you can build this kind of ecosystem in your community. I'm not so sure about this. I've looked at plenty of communities who try to jump start an entrepreneurial culture that ends in nothing more than a lot of breakfast meet-and-greets sponsored by the local economic development agencies. Ottawa springs to mind, where the local economic development agency has a laser-like focus on fostering an entrepreneurial community in the telecommunications market and has missed the fact that technology entrepreneurship there has now moved to software and social media. One entrepreneur there told me that:

OCRI [the local development organization] as an organization that has done this area a true disservice because it believes chips and wires and cables were going to come back.

But, Brad Field, the book's author, has seen this too. He specifically and rightly warns that this kind of environment has to be led by the entrepreneurs themselves. And I've seen some amazing people starting some amazing grass roots organizations to create entrepreneurial environments. In particular, Calgary has seen the formation of some great groups in the past year, like the A100 and Startup Calgary. However, they're butting up against an entrepreneurial culture based around the oil industry. This means that investors are used to investing in oil wells, not startups. I heard tales like this constantly during my fieldwork there:

See that [oil] hole over there? I’ll thrown $100,000 down that hole tomorrow on 24 hours analysis because I know I have the map, I know where, I know who the players are, I know generally speaking what the risk parameters are. But you tell me that this software guy with this platform that’s going to match up with this and that or this little black box is going to take the world by storm, how do I know that? I don’t know anything about it.

Similarly, it's hard to keep employees at a small tech startup when they all know that they could call up a friend at one of the big oil companies and be earning six-figures with 6 weeks of vacation tomorrow (I'm not kidding, the salaries there are mind blowing if you've got the right skills). Grassroots organizations can help increase the social prestige of tech entrepreneurship — which I found to be very low there — but I don't think that they can change the region's culture, which is far more focused on making money than making cool technology. Or if they can, it'll take years.

I'm not saying that it's impossible to build an entrepreneurial community; I firmly believe that there are options besides the Waterloo or Silicon Valley model of "start 50 years ago." However, I think it takes more than DemoCamps and Third Tuesday drink nights. However, I'd be lying if I told you I knew what that was.