The Startup Community Way: Evolving an Entrepreneurial Ecosystem

The Way Forward for Entrepreneurship Around the World We are in the midst of a startup revolution. The growth and proliferation of innovation-driven startup activity is profound, unprecedented, and global in scope. Today, it is understood that communities of support and knowledge-sharing go along with other resources. The importance of collaboration and a long-term commitment has gained wider acceptance. These principles are adopted in many startup communities throughout the world. And yet, much more work is needed. Startup activity is highly concentrated in large cities. Governments and other actors such as large corporations and universities are not collaborating with each other nor with entrepreneurs as well as they could. Too often, these actors try to control activity or impose their view from the top-down, rather than supporting an environment that is led from the bottom-up. We continue to see a disconnect between an entrepreneurial mindset and that of many actors who wish to engage with and support entrepreneurship. There are structural reasons for this, but we can overcome many of these obstacles with appropriate focus and sustained practice. No one tells this story better than Brad Feld and Ian Hathaway. The Startup Community Way: Evolving an Entrepreneurial Ecosystem explores what makes startup communities thrive and how to improve collaboration in these rapidly evolving, complex environments. The Startup Community Way is an explanatory guide for startup communities. Rooted in the theory of complex systems, this book establishes the systemic properties of entrepreneurial ecosystems and explains why their complex nature leads people to make predictable mistakes. As complex systems, value creation occurs in startup communities primarily through the interaction of the "parts" - the people, organizations, resources, and conditions involved - not the parts themselves. This continual process of bottom-up interactions unfolds naturally, producing value in novel and unexpected ways. Through these complex, emergent processes, the whole becomes greater and substantially different than what the parts alone could produce. Because of this, participants must take a fundamentally different approach than is common in much of our civic and professional lives. Participants must take a whole-system view, rather than simply trying to optimize their individual part. They must prioritize experimentation and learning over planning and execution. Complex systems are uncertain and unpredictable. They cannot be controlled, only guided and influenced. Each startup community is unique. Replication is enticing but impossible. The race to become "The Next Silicon Valley" is futile - even Silicon Valley couldn't recreate itself. This book: Offers practical advice for entrepreneurs, community builders, government officials, and other stakeholders who want to harness the power of entrepreneurship in their city Describes the core components of startup communities and entrepreneurial ecosystems, as well as an explanation of the differences between these two related, but distinct concepts Advances a new framework for effective startup community building based on the theory of complex systems and insights from systems thinking Includes contributions from leading entrepreneurial voices Is a must-have resource for entrepreneurs, venture capitalists, executives, business and community leaders, economic development authorities, policymakers, university officials, and anyone wishing to understand how startup communities work anywhere in the world

Table of Contents:
Foreword xiii Preface xvii Chapter One Introduction 1 The Next Generation 2 Our Approach 3 A Deeper Motivation 5 The Boulder Thesis 7 Startup Communities are Complex Adaptive Systems 8 Where We Were in 2012 10 Where We are Now in 2020 12 Using Complexity Theory to Explain Startup Communities 14 Evolving the Boulder Thesis to the Startup Community Way 17 Part I Introduction to Startup Communities 21 Chapter Two Why Startup Communities Exist 23 What Entrepreneurs Do 23 The External Environment 25 Networks over Hierarchies 27 Networks of Trust 29 Density and Agglomeration 33 Quality of Place 35 Chapter Three The Actors 41 Leaders, Feeders, and Instigators 42 Actors 45 Chapter Four The Factors 59 The Seven Capitals 60 Factors 62 Chapter Five Startup Communities versus Entrepreneurial Ecosystems 75 Entrepreneurial Ecosystems 77 Alignment of Actors 78 Different, but Mutually Reinforcing, Purpose 80 Systems within Systems 81 Entrepreneurial Success 84 Community/Ecosystem Fit 85 Part II Startup Communities as Complex Systems 93 Chapter Six Putting the System Back into Ecosystem 95 Introduction to Systems 96 The Whole System 97 Simple, Complicated, and Complex Activities 103 Moving from Activities to Systems 107 Chapter Seven Unpredictable Creativity 115 Emergence 117 Synergies and Nonlinearity 118 Self-Organization 120 Dynamism 121 The Study of Interactions 125 Chapter Eight The Myth of Quantity 133 More of Everything 134 Outliers, Not Averages 136 Entrepreneurial Recycling 138 Leaders as Supernodes 140 Chapter Nine The Illusion of Control 151 Not Controllable 152 Not Fully Knowable 154 Feedbacks and Contagion 156 Getting Unstuck 158 Letting Go 160 Chapter Ten The Absence of a Blueprint 165 Initial Conditions and Basins of Attraction 168 The Narrative Fallacy 170 Building on Strengths and Learning from Failures 172 Cultivating Topophilia 174 Chapter Eleven The Measurement Trap 183 The Fundamental Measurement Problem 184 Actor and Factor Models: A Categorical Approach 186 Standardized Metrics Models: A Comparative Approach 188 Network Models: A Relational Approach 190 Dynamic Models: An Evolutionary Approach 192 Cultural-Social Models: A Behavioral Approach 194 Logic Models: A Causal Approach 195 Agent-Based Models: A Simulation Approach 198 Applying the Different Models 199 Part III From the Boulder Thesis to the Startup Community Way 207 Chapter Twelve Simplifying Complexity 209 The Boulder Thesis 210 The Rainforest 212 Applying Systems Thinking 214 Looking Deeply 216 Leverage Points 219 Chapter Thirteen Leadership is Key 231 Be a Mentor 234 Entrepreneurs as Role Models 235 Key Leadership Characteristics 237 Chapter Fourteen Think in Generations 243 Progress is Uneven and Often Feels Slow 245 The Endless Long-Term Game 247 Chapter Fifteen Diversity is a Feature, Not a Bug 255 Cultivate Diversity 256 Embracing Diversity 259 Think Broadly about Entrepreneurship 260 Chapter Sixteen Be Active, Not Passive 267 Self-Similarity and Replication 268 Don’t Wait or Ask Permission 269 Play a Positive-Sum Game 270 Continuously and Actively Engage 275 Part IV Conclusion 281 Chapter Seventeen Conclusion 283 Reflections 283 Summary of the Book 285 Final Thoughts 291 About the Authors 295 Acknowledgments 297 Notes 301 Index 325

About the Author :
BRAD FELD has been an early-stage investor and entrepreneur for over 30 years. He is currently a partner at Foundry Group and is a co-founder of Techstars. In addition to his investing efforts, Brad runs the Anchor Point Foundation with his wife Amy Batchelor. Brad is a nationally recognized speaker on the topics of venture capital investing and entrepreneurship. IAN HATHAWAY is an analyst, strategist, and writer. He has been an advisor and executive for leaders in technology, media, and finance on a range of innovation, strategy, and policy initiatives. He is a leading thinker and writer in the areas of entrepreneurship, innovation, cities, and the economy. Ian also advises and invests in startups in the United States and Europe.