Building Startups – the Discussion Continues

July 9, 2007

I wrote a few days ago about a blog post by Conor O’Neill suggesting a method of encouraging startups. Conor touched off quite an online discussion among various bloggers here in Ireland. Check the links below to catch up on the discussion, then I’ve got a few more thoughts to share.

Further responses from:

Joe mentions the advantage brought by a larger population in America. The discussion that follows is about creating more entrepreneurial spirit, whatever the population. There’s a tendency to look at Silicon Valley in America and extrapolate to the entire country, and thereby tag America as an entrepreneurial nation. I think that’s a mistake. I grew up in the States, in Wisconsin, a state that I think is very similar geographically, demographically and economically to Ireland. And I think it’s safe to say that Wisconsin doesn’t have an abundance of entrepreneurial spirit, especially not in the tech field, though there are pockets like Madison. I had the good fortune to be involved in an early-stage startup in Wisconsin a few years ago when I was in and just-graduated-from college. I can tell you that support was hard to find. Overall people thought we were nuts to start a company with such small chance of success, rather than take an easy-to-find job. Interest from government agencies was non-existent, support from them even worse. Investment capital was a nightmare (to this day I have difficulty with the term “angel investor” due to experience with an “angel” who was the Devil incarnate). There are lessons to be learned from places like Silicon Valley, but Ireland also shouldn’t feel that they’re entirely behind the game as compared to large swathes of America.

Most everyone in the discussion mentions the role of third-level institutions (colleges and universities for the American readers). While I think Bernie is right that the bureaucracy of these institutions can present some difficulties, I think it’s important that the hothouse experience be tagged as much an education experience as a company-starting experience. With early-stage companies and ideas, there are going to be some (lots of?) failures. With those failures may very well come a desire for investors to write if off and escape. If it’s considered part of the education experience, it’s a success, whether a company is born or not. The question is, how do we get the balance right? Focusing too much on the education will lessen the drive to make a company successful, so both goals need to be considered. I think the hothouse model can be great because using the third-level institutions it can push the development of startups into small and medium-sized communities throughout the country, or throughout a state like Wisconsin. I’d love to see the University of Wisconsin system as a whole get something like this going – I’m looking in your direction University of Wisconsin Extension and WiSys.

The role of government agencies in encouraging entrepreneurship is much lamented here in Ireland, and in the States as well. In both places, economic developers seem to focus on the big score – how do we get Big Corporation to locate in our community and provide 400 jobs? Developing entrepreneurs is, no matter how you slice it, a long-term investment strategy, and public policy seems to do long-term pretty poorly. How do we overcome that? I’m not sure. Reports such as this one from the Federal Reserve Bank of Kansas City don’t help. I think it’s a matter of the long slog involved in changing public opinion. It comes down to educating people about the impact of small business. We need to push government economic development folks to devote some time and effort to entrepreneurship. I’ll drone on more about this later, but I can’t say I have any great ideas.

Finally, the entire discussion so far has been about encouraging tech startups – not surprising since we’re a bunch of tech geeks. I think though that the discussion needs to be broader to be successful. We can’t just encourage tech startups in a vacuum, for I don’t think that strategy will succeed. We need to build a broader startup mindset, an entrepreneurial economy on the whole. We need startups in all areas, not just tech. We need welders, machinists, cleaning people, etc, and they can all start their own companies. Broadening the base of our economy is a winner for everyone. It also, hopefully, would mean more investment capital as more of these businesses succeed and choose to support others. To that end, I’d suggest folks in Ireland look at a model that’s working well in Wisconsin – Inventor’s & Entrepreneur’s Clubs. The first of these groups was started by an economic development guy by the name of Terry Whipple in Juneau County, Wisconsin. The clubs provide a place for entrepreneurs to gather, share ideas, provide support and network. After seeing success in Juneau County, the state of Wisconsin has now created a grant program to help set up other clubs throughout the state.

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