My gut tells me that most aspiring technology entrepreneurs think of San Francisco, and more broadly, the Bay Area California as mecca. In many ways it is the epicenter of tech startups, innovation, talent, and early stage investment. While fortunes have been won and lost, there is a spirit that lives strong in the culture and DNA of those who believe in impactful change. Above all, you have to be willing take big risks for what you believe in.
Now I would be remiss if I didn’t give credit to cities outside of the Bay Area that are also making waves as it relates to startups and innovation. A simple Google search will return top city rankings based on number of startups, startups per capita, numbers of people employed, concentration of venture capital, and a host of other ranking metrics. In late 2014, I constructed the following tables and diagrams from Inc.com Top 20 Cities for Tech Startup Funding. It has served as my North Star for putting early stage funding in perspective by geography in the US.
Outside of California, some of the other top cities in the US include Denver and Boulder, Seattle, Chicago, Boston, Austin, New York, and Philadelphia. Outside of the United States, other cities are also making their mark in the ecosystem. These include Tel Aviv, London, Berlin, Singapore, Toronto, Shanghai, Mumbai, Paris, Bangalore, Moscow, and São Paolo. While neither of these lists is all-inclusive, there is a method to the madness. In order for these ecosystems to flourish, they need a lot of nurturing and care.
Watering the Seed
Let’s think of a high growth entrepreneurial ecosystem as a marketplace of supply and demand. From this view entrepreneurs provide a supply of innovative and high value ventures and financiers whether they be friends and family, investors, or more structured financial institutions provide a demand for those entrepreneurs and their ventures.
Those financiers have to be ready, able, and willing to put their dollars at risk on those respective startups and their founders to solve real-world problems, grow their portfolio companies and of course make a handsome return on their investment.
While there is no perfect recipe for the success of an ecosystem as well as the associated success of any one underlying startup in that ecosystem, there are factors that when in place can act as enablers to fuel startup growth. These include a culture of innovation, communities of knowledge, access to strong leadership and mentorship, close partnerships with industry, and supportive tax and legal/regulatory environments.
Maslow’s Piece of the Puzzle
As we consider those ecosystem enablers, I would like to make an analogy to Maslow’s Hierarchy of Needs. If you can for a moment believe that technology is a living breathing organism that changes, adapts, and seeks survival and self-improvement, then this can only be accomplished when certain essentials are being met.
The above graphic maps Maslow’s Hierarchy with their associated human and entrepreneurial ecosystem equivalent. Needless to say, there are more similarities than not. A healthy ecosystem is operating near self-actualization. And while that is amazing and provides for the most resource rich environment for entrepreneurs to grow their ventures, it by no means indicates that all of the startups in these ecosystems will succeed. Many of us already know how daunting it is to roll the dice at entrepreneurship. Most startups fail and the investment community often subscribes to the 1 in 10 mantra. Defined, investors expect to lose 9 times on the companies they have backed, but they better make exponential returns on 1 in that grouping to more than compensate for the loses on the others. Of course they hope to do better, but it’s a tough game!
As we think about a startup’s chances of success, an analogy that I feel holds weight is the “where you send your kids to school” argument. Many parents feel that schools that have great teachers, are resource rich, have lots of afterschool activities, and are in a safe and welcoming neighborhoods will allow their kids to flourish. They will learn more, be more active, and ultimately be more successful in the game of life. While a lot of parents are going through the unit economics of where to live, whether to send their kids to private or public school and a host of other considerations – the fact of the matter is that there are limitations whether they be financial, geographic or other.
We have seen individual results in this world that break that model on both ends. There are people who have come from some of the poorest and disadvantaged backgrounds and have done amazing things for this world, and there are people who have come from some of the most privileged of backgrounds that have failed to reach their full potential. While there are many factors that go into this equation, there is no doubt that someone who puts in the work and takes advantage of the talents and opportunities they have been afforded will win time and time again.
Bedrock for Innovation
Reflecting back as early as 1850, the United States started receiving millions of immigrants. Early on, many of these were of German, British, and Irish. With the advent of steam-powered ocean faring vessels and the growing need for immigrants to flee poverty and famine, religious and political persecution, and other hardships, the United States began experiencing even greater waves of immigration, which included the Italians, Greeks, Hungarians, Poles, and Slavs. There is no doubt that the United States fueled a movement of freedom, growth, prosperity, and the pursuit of happiness.
Bridging from those waves of immigrants and exercising years of democracy, the United States has managed to establish a bedrock for technological innovation and change. While the US economy has had it’s ups and downs, there is no doubt that our risk tolerance, legal protections, spirit of innovation, and availability of capital has unlocked some of the most incredible technological inventions as well as the much-needed commercialization so that they can be enjoyed around the world.
For example, Thomas Edison brought incredible innovation to the world through his research and development of the incandescent light bulb in 1878. Then later in 1908 Henry Ford brought along the Model T Ford. Fast forward a bit to the invention of the internet, email, Facebook, and Google, and the iPhone and other related technological advancements, one cannot deny that there is clearly something magical going on.
A New Path is Born
This coming July marks one year since I made my first pilgrimage to San Francisco. It’s ironic that in just one year I have undergone a rapid and impactful self-transformation. And yet I am faced with another big life decision. Will I join the rank and file of other aspiring entrepreneurs and techies and show up at the entrance of the Golden Gate Bridge, or should I consider another option? I have given it a lot of thought over these past months, and as the days pass, I am getting much closer to going after an emerging market, namely that of Brazil.
Something clicked during my travels after leaving the Chicago and my full time work as a technology consultant. While it’s always a delight to experience new cultures and experiences during traveler touristic endeavors, I carefully examined others’ lives, infrastructure modernizations, people’s interaction with technology and considered ideas and opportunities for progress. I believe there to be something inherently moving about having an impact in this world. It is something that has stuck with me throughout my years of military service and was deepened by the Notre Dame family.
While there are many steps to cross between now and an eventual move to Brazil, I am working on an early stage mobile solution that could unlock short-term work opportunities in emerging markets. At a time when local economies are struggling, commodities have crashed, unemployment has risen, and currency valuations have suffered, I have developed a passion for helping others empower themselves, whether it to be helping them find a better way to help provide for themselves or their families or help give people an opportunity to solidify their presence amongst the middle class.
It is too early to tell whether the venture will be a success, but I can tell you that each day that passes I am invigorated by the opportunity to help others.
There is no shortage of problems that I will encounter along this path. If all goes well given my vision, I will be entering a market that I have little or no experience in, securing resources that I have never secured before, and working with international business complexities which include cultural and legal risks of which I am only today scratching the surface. To put it bluntly, a Dutch entrepreneur who has previously founded a business in Brazil gave me the following advice, “Don’t do it… you will lose a lot of money and get frustrated.” I don’t take that advice lightly, but at the same time I ask myself, “What if everyone turned away when things got tough?”
To follow with a hopeful comment from a close friend and fellow entrepreneur of many measures, “Well without knowing anything about your business, I’d say that launching a startup in the US is hard enough. Pitching an international one might be a tad ambitious. But if anyone can do it…” It’s a soft complement, but I’ll take it!
To outsiders and insiders alike, this might not sound like the smartest of ideas. Tenacity, focus, and faith are what I will rely on during this time. While those are great qualities to hold close, I must emphasize that this path is one that I cannot walk alone. I have been and will continue to rely on the support of friends, colleagues and family alike as they are as much a part of this as the life energy that I am investing in this venture. I am putting my faith that although Brazil and it’s mega-business center São Paulo, might not be San Francisco, it still shares in the culture and DNA to make magic happen.