Paths to Entrepreneurship

As one of just a handful of private foundations with an emphasis in entrepreneurship, Kauffman has felt called to re-think its program strategies, for two reasons.

The field has been changing dramatically, and the need is great. Despite a plethora of new efforts to create and support startups across the United States, startup rates actually have declined slightly. More than ever, there is a need to focus on what works, and do more of it. 

Thus we have outlined a mix of strategies that have a common theme: a focus on tangible results in volume; that is, helping as many entrepreneurs as we can in starting and growing their firms. We have set the bar high and will leverage the work of many to go over it. Enhancing the Program Portfolio

We’ll start by building on current Kauffman programs that are best-in-class. For example, the intensive Kauffman FastTrac^® program and the online Kauffman Founders School already have helped thousands of entrepreneurs to take big strides. Both will continue, and we’re working to better integrate those two programs so we can serve even more entrepreneurs. However, such programs, which are owned and operated by the Foundation itself, can only be part of the solution. We aren’t big enough to serve the diverse needs of U.S. entrepreneurs on our own. Even if we tried, we might miss out on great program ideas hatched by others. 

Our plan is to maximize impact by honing what we have, while looking beyond the Foundation for leverage. We’ll look for exemplar models of entrepreneurship support and, likely through a competitive RFP process, invest in those organizations to help them expand and scale.  

Face-to-face work remains essential too. One way is to leverage networks of entrepreneurs. Kauffman will continue sponsoring events like the Global Entrepreneurship Congress, an international forum of Global Entrepreneurship Week, where private- and public-sector “startup champions” share news and best practices. Meanwhile in the United States, big things are happening on the regional scale. An Emerging ‘Metro Strategy’

Kauffman’s 1 Million Cups (1MC) initiative, piloted in Kansas City, is taking off. This simple, low-cost program brings together a city’s entrepreneurs and businesspeople once a week over coffee to hear startup pitches and make connections. Early results were so strong that over fifty cities have picked up the 1MC program, with more joining constantly.

The popularity of 1MC isn’t surprising. Starting a venture is a complex task, and entrepreneurs thrive best in places where they have communities or “ecosystems” to draw upon—people who can stimulate their thinking, offer advice or assistance in many forms, and even participate in their ventures.

Entrepreneurs thrive best in places where they have communities or ‘ecosystems’ to draw upon

@KauffmanFDN

Today’s economy may be global in the largest sense but it is still made up of many metro areas that function as natural economic units thereof. Economists call them Metropolitan Statistical Areas (MSAs). Studies confirm that MSAs perform best when they breed new businesses prolifically. Therefore, Kauffman will experiment in selected metros, including in Kansas City, with ways to get everybody cooperating to that end. Ultimately, we plan to launch a competitive metro challenge to support the best ideas for spurring entrepreneurial activity in select metropolitan regions.

The thinking behind Kauffman’s emerging metro strategy is that all sectors play vital roles, and that when collaborating equally, can produce difference-making entrepreneurial growth—regardless of the region’s current size or strength.An Exciting Path

Overall, the outlook is very bright. The Kauffman Foundation has an excellent base of existing programs to build upon. We are branching out to engage with new partners at a time when people everywhere have come to see the importance of entrepreneurship, and are working to foster it as well. 

The ingredients could not be better. By combining them to serve more entrepreneurs more effectively, we can assure that future outcomes can—and will—be much better. 

The Power of Positive Caffeinating

By C. Taylor Brown, Senior Program Coordinator, Entrepreneurship, Ewing Marion Kauffman Foundation

Prentiss Earl III, Manager, Entrepreneurship, Ewing Marion Kauffman Foundation

How many cups of coffee do entrepreneurs drink while trying to launch a successful startup?

No one knows for sure. But we do know that entrepreneurs network, problem solve, and advance their business ideas better together—and more often than not, there’s coffee involved.

This idea was the genesis of 1 Million Cups (1MC), a Kauffman Foundation program founded to engage, educate, and connect entrepreneurs in their local communities. Since its launch in Kansas City, Missouri, in April 2012, the program has grown to more than 50 cities (as of late 2014) with thousands of participating entrepreneurs.

1MC helps build startup ecosystems at the grassroots level through a simple format: For one hour every Wednesday morning, two early-stage startups present their companies to a room full of their peers, mentors, advisors, and potential investors. Each founder presents for six minutes, followed by a twenty-minute question-and-answer session with the audience.The power of local, interpersonal networking is evident from 1MC’s rapid growth in cities across the country. Local community organizers, all entrepreneurs, are the fuel behind this growth. Each 1MC city is led by a team of entrepreneurs who volunteer hours every week to caffeinating their local 1MC.

To get a flavor of what happens at these weekly gatherings, read what community organizers from two local 1MC programs have to say about their experiences.

Follow C. Taylor Brown on Twitter: @CTaylorBrown24
Follow Prentiss Earl III on Twitter: @PrentissEarl03

Orlando’s First Cup of a Million

By Shea Glenny
1MC-Orlando Community Organizer
Director of Strategy, Root Radius

At Orlando, Florida’s first 1 Million Cups event, a hesitant Javier Rodriguez presented G.I. Money magazine more as a favor to one of our co-organizers than anything else. Orlando startup founders’ past experience with pitch events were the competitive poke-holes-in-the-concept type that only the thickest-skinned entrepreneurs could endure.

Bringing to town a new event that was built around community support and advocacy for the founders was essential. Not only did we want to nurture our city’s entrepreneurial ecosystem, we wanted to bring fragmented and isolated groups together in one space. To recognize the significance of our event launch date, September 11, we decided to feature veteran-owned startups.

G.I. Money is a publication and website that strives to be the leading and authoritative resource on financial matters for the military audience. They develop educational content for important topics that affect military families, including the military-to-civilian transition, entrepreneurship, career advancement, frequent moves/PCS, and Deployment.

Since Javier agreed to share his story with the audience of strangers as a leap of faith, he was surprised by the enthusiastic support and encouragement he received during his presentation. Struggling to find a good solution for getting out of the red and into the black, he boldly ended his six minutes with an “ask” for some strategic introductions from the assembled group.

Someone in the audience matched him with a sales consultant who guided and coached Javier in the following months to modify his sales approach dramatically. A complete stranger in the audience quickly turned into a brand ally and generously made a key introduction that turned G.I. Money into a profitable venture—thanks to the opportunity to share a story and ask for help at 1 Million Cups Orlando.

Follow Shea Glenny on Twitter: @danyashea

From Casino Past to Entrepreneurial Future: Reno Remakes Itself

By Zachary Draper
1MC-Reno Community Organizer
Owner, Zadra Design

Douglas Erwin
1MC-Reno Community Organizer
Vice President of Entrepreneurial Development, EDAWN (Economic Development Agency of Western Nevada)

Since the 1930s, Reno, Nevada’s image and economy have been dominated by a collection of downtown casinos. Across the nation and within the community, Reno was known as a gambling town. But in 2008, as the housing market crashed and gaming revenues fell drastically, Reno found itself tethered to a decaying downtown and a dominant industry in steep decline.

It was during this period of economic turmoil that Reno found immense opportunity; however, there were some major obstacles to overcome before its potential could be realized. The leaders envisioning the community’s new future recognized that Reno lacked the entrepreneurial sophistication of established start-up hubs like Boulder, Colorado; the community faced an identity crisis as it confronted the decline of gaming; and existing efforts to build an entrepreneurial ecosystem had been fragmented and scattered.

Essentially, Reno leaders tasked themselves with building an entrepreneurial ecosystem from the ground up, forging a new future for Reno.  

Connecting the Ecosystem

Reno never suffered from a lack of entrepreneurial energy, but the entrepreneurial support community lacked cohesion and much of its programming was dated.

Two catalysts helped change the conversation about entrepreneurship in the community. The first was the creation of Entrepreneurship Nevada, an organization comprised almost exclusively of entrepreneurial support groups. With little formal structure and a broad mission to foster engagement and collaboration among these support groups, Entrepreneurship Nevada helped break down silos and get groups working together, instead of against each other, for the benefit of the community.

The second was Reno receiving a 2013 IBM Smarter Cities grant. Cities selected for this grant were challenged to, “be one strong voice. Present one regional economic development face to the outside world.” The grant helped the city realize that a piecemeal approach to economic development was ineffective. It also helped empower the Economic Development Authority of Western Nevada (EDAWN) to be the strong voice that was needed.

EDAWN created an entrepreneurial development strategy that leveraged the concepts from Brad Feld’s Startup Communities and Victor Hwang’s The Rainforest: The Secret to Building the Next Silicon Valley. EDAWN embraced these insights and developed a four-point strategy that optimized its role in the startup community:

• Communicate: Utilize the new profile of EDAWN to tell the story of Reno’s startup community both internally and externally.
• Catalyze: Identify gaps in the ecosystem, find entrepreneurs to lead initiatives, and support the programs with both human and financial resources.
• Connect: Bridge the gaps between the startup community, the broader business community, and the regional governments.
• Showcase: Shine a spotlight on the successes in the community to help startups break out from the noise and highlight entrepreneurial role models.

Best-in-Class Programing

Many local support programs were in place, but more needed to be done to grow the sophistication of the entrepreneurial support system.

To add cachet and credibility to the fledgling startup scene, more focus was placed on implementing nationally recognized programs like Startup Weekend and the MIT Venture Mentoring Service.

Reno was the fifth city to implement the Kauffman Foundation’s 1 Million Cups program. The constancy of 1 Million Cups, week in, week out, made it a keystone of the ecosystem. Its popularity spread rapidly and became the place in Reno for weekly inspiration, support, and connectivity.

Although many positive things (funding, connections, and startups) have come out of 1 Million Cups, its biggest impact was on the community itself. 1 Million Cups helped Reno entrepreneurs believe in themselves and recognize the growing support community around them.

Entrepreneurial ecosystems are complex and multifaceted. Reno civic and business leaders realized this and started assembling all the pieces of the puzzle, including funding, mentorship, support services, and education.

Agile Community Development

The entrepreneurial ecosystem is in constant flux, and it’s very difficult to determine which initiatives will succeed or fail. Utilizing concepts from agile development and The Rainforest, community leaders started experimenting with new initiatives.

Through this process, a theme emerged that may be at the core of Reno’s revitalization. The common theme is pretty basic but also profound when you deconstruct it: simply put, everyone in the ecosystem loves living in Reno and is passionate about shaping Reno’s future. Community leaders recognized that everyone has a unique role to play in the ecosystem, and as leaders they are simply helping channel people’s intrinsic motivations toward a broad common goal.

Today, the results of Reno’s efforts already are materializing. Reno’s downtown is in transition. Vacant casinos left over from a difficult evolution from gaming to entrepreneurship still are scattered throughout the downtown core, but at the south end of downtown, the new Reno economy is taking shape.

A growing number of tech startups have collected in an area now referred to as “Startup Row.” It is home to growing businesses like microcontroller hardware developer Pinoccio, game developer Crazy Tooth Studio, business intelligence company Inqiri, and fitness software company TrainerRoad

At the center of Startup Row is the Reno Collective, a collaborative working space where many startups have been spawned, grown, and spun out on their own.

Reno always has been an events city, and the entrepreneurial efforts also have impacted that aspect of the community. Now, people are just as likely to participate in a TEDx event, MakerFaire, or Hackathon as they are to go to Hot August Nights or the National Championship Air Races.

Reno’s story is still being written. The city still is in transition from the gaming capital of Northern Nevada to a vibrant entrepreneurial economy. The city has succeeded in attracting large corporations like Apple, Microsoft, and Intuit, and nurtured a homegrown crop of tech startups like Pinoccio and TrainerRoad.

The transformation still is ongoing, but Reno’s determination to use a deep recession as an opportunity to reinvent itself already is succeeding. A dedicated team of local leaders with a collaborative mindset and singular focus on entrepreneurship is assembled and laser-focused on seeing its efforts through until Reno’s entrepreneurial ecosystem is fully thriving and transforming the landscape for generations to come.

Follow Douglas Erwin on Twitter: @douglas_erwin
Follow Zachary Draper on Twitter: @ZacharyDraper

Sparking Innovation Through Entrepreneurial Density

A roundtable interview with:

Adam Arredondo
Director of Entrepreneurship, CEED

Matthew Marcus
Co-leader, KCSV

Jonny Kot
Principal, Tech-Pointer

Brittain Kovac
Director of Internal Navigation, Leap2

The Kansas City Startup Village (KCSV) is a cluster of startup businesses that straddles the Missouri-Kansas state line. Boosted by Google Fiber, the KCSV is committed to growing a community of startups and providing support for entrepreneurial growth across the Kansas City metro area. In the spirit of collaboration and community, we have answered these questions together as KCSV co-leaders.

What is the Kansas City Startup Village (KCSV) and how did it get settled?

The Kansas City Startup Village is a grassroots, entrepreneurial-led movement focused on growing a dense community of startups by providing support, resources and the opportunity for innovation sparked by close proximity. Centered right on State Line Road in Kansas City, which marks the border between Kansas and Missouri, KCSV startups can root themselves in either state while still taking part in the dense, collaborative community.

Based on the guiding principles set forth in Brad Feld’s Startup Communities, the KCSV has no financial motivation or overarching goals beyond supporting entrepreneurs and startups: it is a project open to anyone who wants to get involved. We want doers.

The village was settled in September 2012 after a number of simultaneous and serendipitous events. In summary, three properties within a half block of one another came online with startup activity in the first neighborhood in the world to get Google Fiber—without any planning. Shortly thereafter, village entrepreneurs started talking about what was necessary to support more startups, how they could expand their community, and how they could help Kansas City grow as an entrepreneurial hub.

A gathering of dreamers, innovators, and community leaders, the KCSV is a diverse group of entrepreneurs working together not only to support one another while they build new businesses, but to support the growth of Kansas City as a prominent startup city.

What growth has the KCSV seen and what are some highlights? What are the challenges?

For a grassroots organization still in its infancy, the KCSV has experienced outstanding growth. From three properties and five startups at its inception to fifteen properties and twenty-five startups today, the KCSV continues to see steady growth. We’ve hosted visitors and press from around the world, including The Wall Street Journal and The Sydney Morning Herald, and delegates from more than twenty countries. Companies within the village have received over $8 million in investment dollars, which has resulted in the creation of over seventy-five jobs. Thanks to support from the Kauffman Foundation, the village hired its first part-time paid co-leader on June 1, 2013.

While there are certainly challenges the KCSV must face, as with any entrepreneurial endeavor, most of our challenges are problems of opportunity:

1. There are more people and startups who want to move to the KCSV than we currently have room to accommodate; we need more space.
2. Funding is a challenge for most any startup and maybe more so for startups in the Midwest. We’re working to change the way people think about Kansas City and invite potential investors from around the country to take a look at our talent and growth. Some of the smartest and brightest are building businesses right here in Kansas City—we are not flyover country.
3. Communication and collaboration with other startup communities in the area must continue to grow and thrive. Together we can achieve more than we can alone. As Kansas City, Missouri, Mayor Sly James likes to say, “If you want to travel quickly, go alone. If you want to travel far, go together.”

What is the KCSV’s vision, and how is it an integral part of the larger KC startup and entrepreneurial community?

Our vision is to build a collaborative community of startups where entrepreneurs can share resources, inspire one another, and build a better future for Kansas City. We will attract and retain top talent by partnering with the greater Kansas City startup community to help change the perception of Kansas City from a cow town to a vibrant, innovative, fiscally successful city. We are inclusive, welcoming all entrepreneurs, leaders, allies, and the greater community to build an exciting business landscape.

Kansas City means business, and we intend to let the world know that our partnerships with community, civic, and technical leaders lead to greater economic development opportunity for entrepreneurs and for the metro area.

What impact is the KCSV having on the community at large?

The KCSV co-leaders are passionately committed to helping the larger Kansas City community flourish. With support from organizations like the Kauffman Foundation, we are helping Kansas City become a tech hub that draws top talent and helps the local economy. Traditionally, it has been larger Kansas City-bred companies like Sprint, Cerner, Hallmark, and Garmin that have seen the most growth and success. However, with the rise of entrepreneurship here in Kansas City, the KCSV is giving local startups and entrepreneurs the platform and foundation they need to get their businesses off the ground. This in turn has resulted in job growth and investment dollars, much of which is coming from outside of Kansas City.

What’s more, the KCSV has helped mold and change the way people think about entrepreneurship from a solo, isolated model to one of collaboration and mutual support. We are proving that geographical density can provide support, a quicker ramp to commercialization and monetization, and access to people with new and pioneering ideas. We are redefining the idea of lone entrepreneurship into an entrepreneurial community where help is freely found and given.

How can the KCSV model be replicated? What can other entrepreneurial cities learn from the KCSV?

While the KCSV emerged organically, we believe this model can and should be replicated. There are several key points we would urge you to consider:

1. The village must be entrepreneur-led. Decisions should be community based, although a core group of co-leaders may sometimes make decisions for the entire village. Without any bureaucratic red tape or organizational boards to answer to, the entrepreneurs are free to try a variety of tactics for growth and success. By keeping decision making local and individually based, entrepreneurs may continue to move and adapt quickly.
2. The village exists to support entrepreneurial effort, not dictate methodology. Civic leaders can support, but should not impose. Trust your entrepreneurs.
3. Proximity is key. Villagers need to be able to find each other easily, spend time together during off hours, and share ideas. Population density supports creative sparks.
4. Local entrepreneurs need a place to meet, talk, and share ideas as the village is developing. The Kauffman Foundation’s 1 Million Cups program is an excellent example of this modern village green.
5. Common core values are vital. We suggest co-leaders of the community read Startup Communities by Brad Feld and enact the detailed guidelines and principles he describes.

If you find this interesting and want to learn more, please visit www.kcsv.org.

Follow the Kansas City Startup Village on Twitter: @KCSV
Follow Adam Arredondo on Twitter: @KCdondo
Follow Johnny Kot on Twitter: @JonnyKot
Follow Britain Kovac on Twitter: @BrittainKovac
Follow Matthew Marcus on Twitter: @TheMarcus

Entrepreneurial Density Meets High-Speed Connectivity in Kansas City

By Brad Feld
Author, Startup Communities: Building an Entrepreneurial Ecosystem in Your City and Co-founder, TechStars

In February 2013 I bought a house in Kansas City, Kansas. I live in Boulder, Colorado, and have no intention of moving to Kansas City, nor do I have any family there, so on the surface it might have seemed an odd choice of a place to buy a house.

But for those who follow startup communities, Google, and the things I’m involved in, the puzzle pieces fit together nicely.

In 2012, I wrote a book called Startup Communities: Building an Entrepreneurial Ecosystem in Your City. In it, I spelled out something I called the Boulder Thesis, where I asserted that if you followed it, you could build a thriving startup community in any city in the world.

In addition to being a writer, I’m a partner in Foundry Group, a venture capital firm based in Boulder that invests in high-tech startups throughout the United States, and I’m a co-founder of Techstars, the leading mentor-driven accelerator in the world. As a result, I’m fascinated with the potential impact of Google Fiber and the idea of what could be done with 1 gigabit Internet connections to a home or office.

Part of the way I live my life is to run endless experiments and learn from them. So, rather than hypothesize about the impact of Google Fiber, I decided to participate. When I realized there was a startup community experiment going on in the Kansas City Startup Village (KCSV) around Google Fiber, it became easy to buy a house in the middle of it.

As part of the experiment, I decided to make the house available to startup founders who wanted to live in the KCSV. With the help of the Kauffman Foundation, I ran a competition for companies that had innovative ideas around using Google Fiber. Of the applications, we chose Handprint and gave its founders a year of free rent in the house. It was fascinating to watch them engage in the Kansas City Startup Village while they grew their startup.

We’ve selected a new company for the second year and are excited about a few things evolving with them. This company already is an active participant in the Kansas City Startup Village, so we’ll now work with this growing company and use the house to help them expand in the neighborhood.

The experience I’ve had over the past year reinforces my belief in the Boulder Thesis and, specifically, the notion of entrepreneurial density. The Kansas City Startup Village is an outstanding example of the power of concentrating a lot of startup activity in one geographic neighborhood, in this case around the implementation of Google Fiber.

Follow Brad Feld on Twitter: @bfeld

By Maria Meyers, CEO, U.S. SourceLink and KCSourceLink

Entrepreneurs need thriving networks. This precept has revealed itself over and over in the ten years since U.S.SourceLink began bridging resource organizations to one another and to entrepreneurs throughout the country.

It’s simple: The more contacts entrepreneurs can make early in the life of their companies—that is, the more help and information they can get—the greater their chances of getting products developed, finding viable markets, surviving the first years, and growing toward success.

Location and industry aren’t the critical issues. Both information and social contacts make the difference. Regardless of where companies are located or what their products are, virtually all entrepreneurs grapple with how to start and fund their businesses, and eventually, how to grow their businesses and scale globally. Gaps in knowledge and experience complicate the startup process and extend the time it takes for startups to grow.

Entrepreneurs need support networks that provide trusted referrals to investors and other funders, as well as experts in operations, marketing, technology, sales, and dozens of other business-related services.

Communities can help entrepreneurs, first by creating a vibrant network of resources to support them and then by helping aspiring and existing business owners connect to the network.

Defining the Need

Startup business owners often don’t know the right questions to ask in the early stages of their businesses or even how to access the right people and information. Without a network, they can have difficulty finding the information they need to investigate and refine their business concepts.

While most cities have an abundance of relevant support organizations staffed with dedicated, passionate people who are willing to drop everything to try to help an entrepreneur who walks through the door, it’s important to understand that support organizations also have target markets—particular entrepreneurs they are best suited to serve.

Someone seeking a loan for a micro enterprise, for instance, may approach a high-tech incubator to request funding, when the incubator is better at finding equity funding. Neither the entrepreneur nor the support partner is well served.

A cohesive network of entrepreneurial-support organizations can let each organization act as a node, providing an entry point into this crucial resource network.

When entrepreneurs connect to even a single node, they gain access to a trusted advisor who will link them to the broader, highly confidential network, where they find a safe haven to talk through their questions and get help moving into the spaces where their companies can thrive.  With the addition of a central hub, there can be a single place to promote network access and organizations can refer entrepreneurs to the best resource to meet their need.

We established KCSourceLink in 2003 in the Kansas City region to connect entrepreneurs to the right resource at the right time. For the first time, regional support organizations were connected through a central hub, establishing an entrepreneurial-support network.

Support organizations began to work collaboratively and small-business owners had easy access to the knowledge stockpile, making the entire entrepreneurial ecosystem more efficient, visible, and relevant. 

Community connectors within U.S.SourceLink regions, like KCSourceLink, IASourceLink, or VASourceLInk can become the primary entry point into the entrepreneurial network because they meet the entrepreneur’s need for a one-stop location where the business exploration process can begin.

The issue that stands in front of a startup owner is how quickly he or she can get the company’s products or services to market. The entrepreneur is spending money until the company starts making money, so the faster he or she gets to market, the faster the track to business success.

The regional U.S.SourceLink affiliate will do quick research for the owner, get him the right information, connect him to the right resources, and save him hours of time. We simply meet entrepreneurs at whatever stage of business they find themselves and help them move forward quickly in the marketplace.

Finding and Filling Network Gaps

When KCSourceLink launched, we immediately made the entrepreneurial-support organizations visible and gave people a place to connect to the network and the organizations that support entrepreneurs.

Because creating a tangible, consolidated, entrepreneurial ecosystem is appealing—and because it is lacking in so many locations—it wasn’t long before other organizations began asking how they could implement similar programs. By early 2005, we were expanding into our first additional cities under the national umbrella of U.S.SourceLink. We now have more than twenty affiliates nationwide, from AKSourceLink (Alaska) to SourceLink Dallas to the newly launched Loudoun County, Va., program.

One of our first expansions was into Kansas, which operates through NetWork Kansas and encompasses 500 organizations statewide. NetWork Kansas has built fascinating and sustainable programs upon those partnerships. Through e-communities, for example, it is providing funding to rural communities to invest in their own local businesses. This tells us that beyond just connecting to and helping the entrepreneur, support organizations can generate additional funding and make sure that the funding that arrives is used strategically.

Support organizations can generate additional funding and make sure that the funding that arrives is used strategically.

@mariaemeyers

It has been incumbent on U.S.SourceLink affiliates to unite the resources available to entrepreneurs and match entrepreneurs to those who can best help them grow. Equally important is the work we have done with partner organizations to identify gaps in the entrepreneurial ecosystems and steadily build programs to fill those gaps. Having a systemic network of groups working jointly to elevate entrepreneurship allows us to adjust programming organically.

It’s a continual process. Gaps are never completely filled, but a strong network focuses ongoing conversation on the basic entrepreneurial question: “How do I start and grow a business?” As community connectors and their partner entrepreneurial-support organizations build on the assets that exist and consistently recognize and work to fill the gaps, they are engaged in the very process that builds efficient entrepreneurial ecosystems.

Follow Maria Meyers on Twitter: @mariaemeyers

By Shane Reiser, Co-founder, Startup Genome

Startup community builders are a special breed of people.

Usually entrepreneurs themselves, these are the people who give their time and money to help other entrepreneurs in their city, state, or country.

As I got to know more startup community builders in different parts of the world through UP Global and now through Startup Genome, I noticed that many were cataloging their local startup community.

This is what they typically did:

1. They made a list of local founders, startups and investors in a spreadsheet or on a whiteboard.
2. Some included community resources like accelerators, coworking spaces, service providers, etc. Some did not.
3. Some asked other leaders in the community to contribute to their list. Some did not.
4. After getting busy themselves, many abandoned the project and the list became outdated within a matter of weeks.

Some community builders even took the effort a step further and tried to visualize it, like this:

They ended up staring at a list or mind map like the one you see above, not knowing what to do with it. It simply didn’t help them make decisions.

When we asked why they created such a catalog in the first place, they knew they had a good reason, but couldn’t articulate it. Several said it would help them “identify the gaps in their community.” Exactly how the data would reveal those gaps was unclear.

So, is it useful to track your startup community?

To decide if Startup Genome was worth building, we talked to hundreds of potential users—community builders, startup founders, corporations, etc. We found that if done collaboratively, tracking a local startup community pays off in the following ways:

1. Save the dying startups.

It’s just as important, and arguably more efficient, to help existing entrepreneurs succeed than to focus on creating more entrepreneurs in your community.

Startup Genome tracks leading indicators of a startup’s growth or decline, including web traffic, mobile app downloads, earned media mentions, search engine optimization, and number of employees. When one or more indicators decrease quickly over time, we flag them and investigate.

If we know which entrepreneurs are struggling, we can help them. Reaching out to a fledgling startup and helping it overcome an obstacle could mean the difference between life and death.

If we know which entrepreneurs are struggling, we can help them.

@shanereiser

And when a company dies, it’s important that the people get absorbed back into the startup community. If we know a company is closing its doors, we can help those affected land at another local startup instead of leaving town.

2. Find the success stories.

We can use the same leading indicators to identify growing startups and uncover stories to tell about the startup community. We can feed these stories to media outlets, and before we know it, word starts to spread about the successful startups coming out of our city. A national media outlet writes a piece about a local startup. Investors from out of town start visiting. New talent starts moving in. Students begin choosing to work at startups after graduating. We win. Local entrepreneurs win. The startup community wins.

3. Measure impact.

How do we know if our efforts are worth it? Does our event or program make a difference, or do we just believe it does?

Not all outcomes are measurable, but the data can tell us something. For example, we can track the people who attend events and see if they start a company or get a job at a startup within a year. Did they move to San Francisco? Did they join an accelerator? Did their company raise money? How many people does their new company employ? Did they add a new programming language to their list of skills on LinkedIn? Did they open a GitHub account? Did they go back to school (or quit)?

As community builders, we tend to use feelings when deciding if an event was successful or whether to build a new program. Events and programs often can feel like a good thing, but measuring the results can help us make better decisions about which programs to expand and which to kill. Bonus: those metrics are helpful when pitching sponsors.

4. Raise awareness of programs and services for entrepreneurs.

By maintaining an updated list of programs and services and getting it in front of entrepreneurs on a consistent basis, we can drive adoption of those programs and help more entrepreneurs.

Seems simple, but these important pieces often are overlooked:

• Keep it current.
• Be inclusive. Everyone should help build it. Everyone should embed it on their website and refer people to it. One list>many.
• Make it easy to consume with helpful categorization and filters.

5. Benchmark and compare.

We can use the data to compare our community to others, but we should make such comparisons against a sister city, nearby cities, or communities just one or two years ahead of ours. If you’re Omaha, Nebraska, you have a lot more to learn from Kansas City or Chicago than from San Francisco.

The most useful comparison is against past performance. We can use the data to create an annual report for our local startup community and compare it to last year’s results.

6. Most important reason: Unite (or defrag) your community.

Startup Genome ran an experiment to discover the biggest challenges faced by startup community builders around the world. “Fragmentation” or “silos” was mentioned three times more than the second most mentioned challenge.

The exercise of mapping startup communities can itself be a mechanism for bringing a community together. The map of Omaha on Startup Genome is curated by a dozen people including entrepreneurs, event organizers, journalists, freelancers, corporate partners, people involved with the local accelerator, the Greater Omaha Chamber of Commerce, and the city’s economic development department. Everyone contributes, everyone is proud of it and everyone uses it and embeds it on their websites.

Another challenge frequently cited in our experiment was a lack of understanding by government and corporate partners. If we track our startup communities, we can use the data to create new formats and visualizations to help others grasp its history and composition.

When they understand, they are more likely to get involved.

Another benefit we’ve observed is the willingness of the community to work together to solve any problems that the data reveals.

How can you get involved?

We invite you to check out your community’s map on Startup Genome. If there’s no curator for your community, be the first. It’s easy. Email shane@startupgenome.com for help getting your community on the map.

Follow Shane Reiser on Twitter: @shanereiser

Lifelong Learning for Entrepreneurs

By Wendy E.F. Torrance, Director of Entrepreneurship, Ewing Marion Kauffman Foundation

Mission of the Kauffman Founders School: Create and disseminate knowledge to enhance the training of entrepreneurs and provide current, best practices content to entrepreneurs, along with tools and resources to help them accomplish their goals.

During my years at the Kauffman Foundation, I have seen firsthand the effect that education can have on the development of entrepreneurs and their companies.

Armed with knowledge about founding team dynamics, the realities of various forms of venture financing, strategies for handling objections in the sales process, and the ins and outs of intellectual property law (as a few examples), founders can better assess the consequences of their choices, increase their effectiveness, and ultimately improve their prospects for success—or understand when a course they’re on may not yield the results they wish.

Indeed, central to the foundation’s mission is to provide entrepreneurs with the skills and essential knowledge they need to grow innovative, sustainable enterprises that create jobs and wealth for America. As Mr. Kauffman put it so well: “Every individual we can inspire, that we can guide, that we can help to start a new company is vital to the future of our economic welfare.”

The Kauffman Founders School taps the potential of online education by presenting rich content that engages entrepreneurs in learning through lectures featuring leading subject experts. These lectures are designed to give founders a learning experience that will make a difference in what they do in their business today, tomorrow, and in the future.

Curated Content on Relevant Topics

Founders School presents information on topics that often are overlooked in traditional entrepreneurship curricula (sales, for example) and addresses crucial junctures or dilemmas that often derail entrepreneurial businesses.

Founders School curates content for founders, identifying leading experts with substantive knowledge, deep experience, and the ability to teach cogent lessons that will provide founders with clear steps to apply what they’ve learned. Carefully selected suggested readings and discussion questions also aid founders in applying lessons learned to their ventures. Entrepreneurs are encouraged to discuss questions with their teams, and to carry the questions into conversations with mentors, investors, and financial or legal advisers.

One of the first series presented on Founders School covers the important and timely subject of entrepreneurial selling. Mr. Kauffman was a consummate salesman. From his early experiences selling eggs and laundry services, he developed skills that propelled him from salesman to Midwest regional manager at Lincoln Labs and, ultimately, helped him build his own company, Marion Laboratories, into a multimillion-dollar enterprise.

The Founders School entrepreneurial selling series is presented by Craig Wortmann, a lecturer at the University of Chicago Booth School of Business. 

Wortmann’s course at Booth was named one of Inc. magazine’s best courses in entrepreneurship in 2011. His Founders School series provides entrepreneurs a crucial understanding of how important their role as founder is to selling in the early days of their venture. He provides invaluable tools and information that will help entrepreneurs build a successful sales model cycle and find their way to those early sales that can make such a huge difference to the business.

Anytime, Anywhere, a Focus on Impact

The Founders School content is organized in a modular fashion that allows exploration in a linear progression or on an as-needed basis for entrepreneurs in the midst of tackling tough issues. Founders are in control of what subjects they study and when. The lectures and suggested readings, along with the questions and tools, provide context that helps founders evaluate how the information applies to them, their team, and their venture.

Founders are encouraged to use the knowledge and skills that they acquire through Founders School to change how they approach their business and their own decision making. This functional use of the lessons is facilitated by an “impact guide” provided for each subtopic. The impact guide asks the question: What will you do differently as a result of the lesson you’ve learned?

In addition to the online content, Founders School LIVE events are held in Kansas City, Missouri, and other locations. These LIVE presentations bring entrepreneurs together to learn from experts in person, engage with other founders, and ask questions.

Not Just for Founders

Kauffman Founders School is designed with founders in mind, but it also serves as a valuable resource for those who work, mentor, and teach founders in a variety of contexts.

Mentors working with founders; leaders of accelerators, incubators, and other training programs; and teachers of entrepreneurship at a variety of educational levels use Founders School to provide lessons to the founders and students with whom they work. Lectures and discussion questions from Founders School can help create common knowledge among participants in a new accelerator class, spark conversation, and establish expectations.

Teachers of entrepreneurship can use Founders School to augment their own lectures and provide rich online content for students. Research on online learning suggests that a blended learning approach—one that engages students in online lessons and classroom discussions—can generate positive outcomes. Using a flipped classroom model, instructors can provide their students with assignments to watch and read before class, and then facilitate a discussion with their students based on the material.

Inspire, Guide, and Help

At the Kauffman Foundation we believe that knowledge can make a difference for entrepreneurs at any stage. Founders can learn how to create a sustainable founding team and a scalable venture; they can acquire the skills to make them better salespeople; they can learn to create value from their intellectual property; and they can burnish their presentations skills to generate interest from investors and customers. If this knowledge helps founders, then we will have achieved, at least in some measure, our mission to inspire, guide, and help.

Follow Wendy Torrance on Twitter: @weftorrance

Five Key Principles That Drive Success

By Craig Wortmann, Kauffman Founders School Expert, Clinical Professor of Entrepreneurship, University of Chicago Booth School of Business

Founders selling their products or services face challenges that are unique to both the startup experience and to the entrepreneur. Early on, there’s a tendency to underestimate the importance of the sales process and the skills and discipline required to be successful.

Many companies—startups and beyond—focus too much on the bottom line when, in fact, it’s the top line, or sales revenue, that truly drives success. The best entrepreneurs understand that the top line is critical, that they must be the first ones to generate that top line, and that they need discipline, specialized skills, and knowledge to do so.

Here is a glimpse into five key principles for effective selling, which are expanded upon in the Kauffman Founders School Entrepreneurial Sales series.

1. Narrow and filter your targets.

The more narrow and filtered the sales effort, the greater the chances of increasing the entrepreneur’s customer base and, therefore, sales revenue. Entrepreneurs must think through the nature of their target market, its pain points, and the impetus that will convert customers into buyers. Founders then must go through a process of filtering out an entire universe of noise to focus on a defined set of criteria—the specific type, size, capabilities, or geographic region of a company, for example.

2. Master the art of conversation.

Whereas marketing is directed from one to many, selling is directed from one to one. It’s about engaging individually in conversation, eye-to-eye or voice-to-voice, and understanding the construct that allows entrepreneurs to identify the five people in the room who are genuinely interested in their company’s products or services—and, for those who are not, how to disengage quickly and respectfully, and move on.

3. Ask qualifying questions.

Once a conversation presents a potential opportunity, there is a process to qualify which person is the final decision maker. High-performing salespeople become very good at streamlining this process and gauging whether they’re spending their time productively. Answers to three key questions early in the conversation can help: Does this person have decision-making authority? Does he or she have budget authority? Can this customer work within a timeline that makes sense for the entrepreneur?

4. Expertly handle objections.

Prospects will raise objections. To effectively handle them, entrepreneurs must discipline themselves to ask questions and listen. This allows them to gain credibility, clarify the objection, and respond in a positive and effective way. There are eight to ten objections that are common to the sales processes of all companies. However, there also are eight to ten others that are unique to the entrepreneur’s business and must be anticipated, prepared for, and, ultimately, overcome.

5. Tell your story.

Stories do two things that facts, data, and evidence cannot: they provide context and connect to emotion. By definition, entrepreneurs are enthusiastic, passionate, and believe deeply in their idea—these are powerful elements to drive stories. The first customers always are the hardest to win, and when entrepreneurs are just getting started, early prospects especially want to know the company’s personal backstories.

To overcome the entrepreneurial sales challenge, founders should practice these principles with real customers as early and often as possible. By opening the door, walking outside, and meeting the market, by going to pitch contests, networking events, and new venture challenges, founders can learn about how to sell and how to talk about their company. This learning—live and practical, online and virtual—all fits together, and the sum is far greater than the parts. That’s the real beauty of it.

Follow Craig Wortmann on Twitter: @craigwortmann

Something for Everyone

An Interview with Sheila A. Mixon
Senior Vice President, Greater Cincinnati Urban League

For more than twenty years, Kauffman FastTrac^® programs have helped more than 350,000 aspiring and established entrepreneurs start and grow companies around the world.

It all started on a bitterly cold Kansas City day in January 1993 when founder and benefactor Ewing Marion Kauffman scheduled the launch of a new program for entrepreneurs: FastTrac. 

On the morning of FastTrac’s scheduled launch, nature delivered a blow—one of the worst snowstorms in the city’s history. Because people were being asked to stay off the roads, and Mr. Kauffman himself was extremely ill, his staff debated whether to cancel the event. 

Mr. Kauffman decided to hold the event in case someone did go to the trouble to attend. Nine hundred people showed up. While some came because it was sponsored by “Mr. K,” as he was affectionately known, most came because they had a hunger to learn how to start and grow businesses. They wanted to invest in themselves, even if it meant braving the blizzard. 

Today, a global network of affiliate organizations delivers FastTrac programs to meet the training needs of entrepreneurs around the world. Through a variety of courses, workshops, and supplemental programming, entrepreneurs are introduced to the frameworks, tools, resources, and networks necessary to successfully start and grow their ventures.

Since the Greater Cincinnati Urban League, an affiliate organization, began offering FastTrac in 2008, nearly 100 entrepreneurs have gone through its programs. In this interview, Sheila Mixon, a senior vice president at the organization, talks about the approach the Urban League takes to customizing FastTrac courses for targeted demographic groups.

What are the advantages to offering FastTrac programs based on demographics?

While the Greater Cincinnati Urban League serves entrepreneurs across the board, we’ve also learned that, when business owners have the opportunity to interact within ethnic or demographic groups, they’re more inclined to share their challenges than they are when they’re in larger, cross-cultural audiences. Keeping class sizes small creates intimacy and allows participants to become very familiar with each other’s businesses so they can serve as one another’s unofficial advisory boards. The FastTrac program has helped us identify segments of growth for like-minded business owners so that we can better serve entrepreneurs within target markets—specifically, women, minorities, and veterans.

How do you implement FastTrac’s programs for veterans?

We use the FastTrac NewVenture program, which is designed for entrepreneurs in the early stages of business development, as a basis for our veterans’ program. A business advisor for our Small Business Development Center who also is in the Army Reserve teaches our ten-week veterans’ sessions. We keep the class size to no more than fifteen and, because everyone in the room is a veteran, they can draw from one another’s experiences. Executing the FastTrac NewVenture program in a veteran-focused context helps participants transfer the experience gained in their military careers into entrepreneurial skills, and gives them tools they need to turn their ideas into businesses.

For veterans who may be farther down the road in developing their businesses, we also can create tailored FastTrac GrowthVenture programs.

You offer FastTrac GrowthVenture programs for minority and women business owners. How are those structured?

We started our African American Business Development program in April 2008, and it is our signature program. The class size, again, is ten or fewer business owners. We hold an eight-hour class, one day a month over a six-month period. We’re now in our tenth class. The fifty companies that have gone through the program have created an alumni group that meets monthly so they can continue their entrepreneurial education beyond the GrowthVenture program.

Our FastTrac GrowthVenture program for women business owners is fashioned in a similar way.

How do you engage the broader cross-section of entrepreneurs as well?

The FastTrac NewVenture program can cross all industries and demographic groups by helping to identify where each company is in its business growth trajectory. Early-stage companies can progress through FastTrac NewVenture, gaining access to the coaching needed to prepare them for growth. FastTrac NewVenture becomes a feeder into the FastTrac GrowthVenture program, helping to propel newer businesses to the next level.

Whether or not your clients are in a certain demographic program, and whether they’re in a FastTrac NewVenture or FastTrac GrowthVenture program, how effectively does the program help them meet their entrepreneurial goals?

To begin with, the material that’s offered is relevant, up to date, and easy to comprehend. It’s some of the best material I’ve seen. I also like that it gives business owners a tool kit for growth, but requires them to figure out which tools will have the greatest impact on their businesses.

FastTrac participants also have access to the program’s website, which provides financial templates, other tools, and expert tips that are critical for growing a business. I still go back to the website regularly to use those tools to present to our classes. And, after completing the FastTrac program, alumni entrepreneurs can continue to use the information on the website. That is invaluable.

The Global Entrepreneurship Congress

By Mark Marich, Executive Vice President, Global Entrepreneurship Week

The Global Entrepreneurship Congress is an inter-disciplinary gathering of startup champions from around the world—where entrepreneurs, policymakers, researchers, investors, and the organizations that support them work together to build strong entrepreneurial ecosystems.

Over the past five years, the GEC has connected delegates across borders and sectors as they explore the policies and programs that help entrepreneurs start and scale new firms. It has featured well-known entrepreneurs like Richard Branson and Marc Ecko, startup community leaders like Brad Feld and Dave McClure, and government leaders at all levels.  

Anchored by the Start+Scale Forum and the Research+Policy Summit, the GEC includes dozens of related parallel events conducted by leading global organizations actively supporting the spread of an entrepreneurial culture—as well as local fringe events aimed at helping nascent entrepreneurs start and grow new firms.

The Kauffman Foundation hosted the first GEC in Kansas City. Mo., in 2009 to convene Global Entrepreneurship Week partners from around the world. Since then countries and funders have hosted GEC in Dubai, UAE; Shanghai, China; Liverpool, UK; Rio de Janeiro, Brazil; and Moscow, Russia. Milan is hosting GEC 2015 and Medellin, Colombia, will host GEC 2016.

Thousands of delegates each year leave the Congress with a new network and fresh ideas to apply at home, reinvigorated by the support of other like-minded risk takers. Here’s a sampling of just some of ideas shared and impressions made at this global experience:

“The most critical thing we can deliver to entrepreneurs is not money—it is our time. It’s mentorship. It’s finding any way you can to donate some of your time to aspiring entrepreneurs to help them.”

–Jeff Hoffman, co-founder of Priceline.com, U.S., at GEC 2013 in Rio de Janeiro

“A strong economy needs to encourage entrepreneurs to create and grow their businesses. It is great to see the Global Entrepreneurship Congress, a showcase of entrepreneurial talent, in Liverpool.”

–Richard Branson, founder of Virgin Group, U.K., at GEC 2012 in Liverpool

“When I got the opportunity to come to the GEC, I had to come. You can always learn so much in talking to other entrepreneur, and hopefully I can share my experiences and somebody can learn from us as well.”

–Peter Vesterbacka, Mighty Eagle, Rovio (makers of Angry Birds), Finland, at GEC 2014 in Moscow

“The GEC is a global platform that allows us to talk to entrepreneurs from around the world and get a better perspective on what we [Indiegogo] can do internally to service markets that aren’t quite as easily accessed.”

–Liz Wald, vice president of International, Indiegogo, U.S., at GEC 2014 in Moscow

“The Congress is important for me because it brings together the ecosystem builders who are working on similar opportunities and trying to address similar challenges in other parts of the world.”

–Ben White, co-founder, VC4Africa, Netherlands, at GEC 2014 in Moscow

“There are a lot of differences in terms of where people are in the way they coach and mentor startups, but the central theme is that everyone is moving toward building entrepreneurial skills among their communities and help entrepreneurs be more successful … it is important for so many countries to be really good at that. “

–Michiel Muller, serial entrepreneur and angel investor, Netherlands, at GEC 2014 in Moscow

“Entrepreneurs are like waves and waves are everywhere. Not only in San Francisco but also between the Caspian Sea and Persian Gulf. Nothing can stop waves—and nothing can stop entrepreneurship.”

–Said Rahmani, founder of Sarava, Iran, at GEC 2014 in Moscow

How to Boost the Value of Business Competitions

By Katie Baker, Director, iStart, Ewing Marion Kauffman Foundation

For startup founders, business competitions can provide concept validation and a fast track to new mentor relationships, funding, and partnerships.

Host organizations can cost-effectively test ideas targeted at problem-solving or new industry sectors, grow their entrepreneurial networks, and tap into fresh talent from around the globe.

For everyone who participates, business competitions open doors. But that doesn’t mean they’re all created equal.

How competitions are planned and conducted is critical to the organizer’s brand and the program’s success. Kauffman Foundation’s iStart platform has had participants in  business competitions in all 50 states and 138 countries (as of fall 2014) since it launched three years ago. As an advisor to hundreds of business competitions and a judge for dozens over the years, I’ve identified some best practices that can make a competition more effective for everyone involved.

Implemented consistently, these best practices simplify the process for participants, judges and the organizing entity, regardless of the contest’s complexity.

Start with the end in mind.

The goal informs the competition structure.

Organizations have all sorts of competition goals—to create companies, focus attention on finding solutions to specific problems, contribute to the entrepreneurial ecosystem or many others. The objective helps narrow down which one of five competition types to hold:

• Business plans
• Startup ideas
• Pitches
• Business models
• Problem/solution
• How much time is available to carry it out?

Business competitions provide applicants with invaluable experiential learning. Pitches and idea competitions require less time to set up and administer than the other competition types do.

What will get attention?

If creating buzz around the competition is important, incorporate elements that make it newsworthy. Think beyond prize money alone. This might mean assembling a group of exceptionally successful, entrepreneurial judges with whom applicants can network, or following the lead of Start-up Chile, which invites talented entrepreneurial teams with high-growth-potential companies to apply for $40,000 grants. Recipients move to Chile for six months to develop their companies and shape the local culture to embrace entrepreneurship.

Align the application and criteria with the goal.

Criteria come first.

Judges will assess applicants based on criteria you outline. If the desired outcome is to get the winning company funded, for instance, the criteria need to allow judges to determine whether they see each competitor as worthy of investment or of recommendation to others in their funding networks. If the goal is, say, to get noticed for social impact, the criteria would focus on the solution most likely to generate media attention.

Facilitate the judges’ decision making.

The application should elicit information that makes it easy for judges to reach conclusions. If your competition involves a live event where candidates will pitch in front of the judges, for example, each applicant should submit a sample video, as well as written information, so judges can consider content and presentation skills as they choose finalists.

Make expectations clear.

Setting clear parameters and deadlines gives applicants greater confidence that they’re responding in a way that will please the judges—and, if you provide well-defined directions, it’s easy to identify applicants who haven’t complied and therefore shouldn’t progress to the next round. Ask questions relevant to the criteria by which applicants will be judged. Clearly detail your expectations for response length and content. Establish reasonable deadlines, with less time available if questions are designed for brief responses or more time available if candidates are likely to be full-time workers. Maintain clear lines of communication, allowing applicants to contact you if they have questions.

Choose judges and sponsors carefully.

Make the numbers work to your advantage.

Every application should have a bare minimum of three judges. To ensure a democratic judging process and a better overall outcome, five or seven judges are even better. Select an odd number of judges so you have a built-in tie breaker.

Achieve a distinct mix.

Seek a racially, age- and gender-diversified judging panel that includes successful entrepreneurs with varied expertise. Avoid staffing the panel with representatives from your organization, but do allow sponsors to add one or more judges. Investors and university professors—particularly those well versed on the competition topic—can bring a unique perspective, as well.

Help judges understand their roles as resources.

Feedback is critical to fulfilling competitors’ experiential learning expectations. Require judges to explain why a candidate did or didn’t move to the next round in the competition and to let applicants know how they can improve. The technical platform can aid in this process, reminding judges to explain their assessments of each applicant.

Offer applicants as much value as possible.

When people know the competition offers a chance to reap real advantages, they are more likely to dedicate the time and effort it takes to perform well. This doesn’t necessarily have to come from a monetary prize, although it helps. Other benefits, such as free legal advice, free publicity for the winning business plan, or access to new funding sources, also have value and may be available from those within your network who have a passion for entrepreneurship.

Select a reliable, robust platform.

Tech support streamlines the competition.

From start to finish, a comprehensive platform with a knowledgeable, responsive tech support team ensures that the competition will run flawlessly. The ideal system is customizable, allowing organizations anywhere in the world to run any types of business competitions they choose. Such a platform can tailor look-and-feel, allow setup in minutes, and create efficiencies by sending automated deadline reminders, communicating updates to all recipients simultaneously, and providing custom reports.

Learn from every competition.

Track outcomes.

Capturing results, such as the number of participants who received funding, launched companies or implemented ideas because of the competition, validates the contest’s significance in the overall entrepreneurial community. The more you can harvest and report results, and identify areas for improvement, the better your future competitions will be.

Follow Katie Baker on Twitter: @LaughingKatie

Case Study

How Competitions Accelerated a Startup

As someone who loves wine and has spent much of his life working in restaurants and bars, Joseph Sheahan recognized a problem. Like him, a lot of people enjoy wine, but not as many are knowledgeable about it.

That led Sheahan to found Savvo Digital Sommelier Solutions, a company that initially began as an online platform for wine education, but has since transformed into an in-store kiosk that helps shoppers pick wines based on preference and circumstance.

“After talking to numerous consumers, they all said, ‘Yeah, I wish wine was easier. I don’t really have time to learn about wine necessarily, but I just wish I could find the right wine for me.’ And that’s what led us to solving the problem of selection in the retail environment,” Sheahan said.

The store-specific module provides feedback to consumers based on the information they enter, from food pairings and taste preferences to regions and flavors. Basically, it acts as a guiding hand for selecting wine, and provides supplementary information as well.

[Competitions] help you figure out what you’re supposed to be thinking about

Joseph Sheahan

Sheahan and his team created the product after extensive research, and it didn’t come without some pivoting. Before anything was built, the company spent a lot of time discussing the problem with customers, narrowing in on the market and—from three or four potential solutions—eventually came up with the kiosk concept. Not only were consumers enthusiastic about the idea, but retailers and wine suppliers were, too.

The entire process would never have begun, however, if he hadn’t gone back to school. Following his work as a bartender during his undergraduate years and some fine dining jobs later on, Sheahan figured there could be further applications of his knowledge and experience. So he enrolled in business school at the University of Illinois-Chicago, where entrepreneurship classes opened his eyes to a world of possibilities.

While in school, his startup vision began to see light, first through a venture called NovoView Diagnostics. The group was formed during a “Technology Ventures” class and brought Sheahan together with fellow student Dominic Blank. The experience gained from commercializing technology and structuring a business model for NovoView laid the foundation the duo needed to start Savvo.

“I wanted to kind of find a way to blend my hospitality and wine experience with something that has a new-venture twist to it,” Sheahan said.

Instead of moving to the West Coast where wine consumption is higher, the co-founders kept the business in Chicago. “Chicago is a pretty good spot for us in terms of having a large concentration of people that drink a lot of wine but who might not be the most sophisticated wine drinkers on the planet,” Sheahan said.

Savvo found success in competitions through iStart, and Sheahan found that the site’s user-friendliness was beneficial for NovoView. Even after Savvo took flight, the company entered and placed second in the Chicago State University Entrepreneurial Idol Competition.

Just like their customer research, contests like Chicago State’s gave the founders a chance to validate their idea and learn more about positioning. On the more tangible side, the free publicity and prize money also were a big plus.

“It just helps you figure out what you’re supposed to be thinking about,” Sheahan said. “Without that kind of firsthand experience with these professionals and these investors, I’d have no clue what was necessarily important.”
           
The lessons learned from participating in competitions enabled Sheahan and Blanck to bring an adaptive entrepreneurial approach to the process of helping wine consumers make informed buying decisions—and helped make the Savvo startup process a successful one.

How to Build a Board of Directors

By Suren Dutia, Senior Fellow, Ewing Marion Kauffman Foundation

Smart entrepreneurs know that the right board of directors will help them scale their business and create wealth.

But smart entrepreneurs who are actually running startups barely have time to sleep, much less step back from the day-to-day and think through this big-picture topic.

There are a wealth of books, articles, and other resources offering guidance on how to assemble your board, and I highly recommend that you read some (if not all) when you have time to consider them in depth.

But if all you have today is five minutes, here are five things I’ve learned in my own years of serving on startup boards—and building my own—that apply to any company beyond the proof of concept stage.

1. Yes, You Need a Board

Nobody can build a successful business alone. Even the most talented entrepreneurs need experienced, invested people to offer insight and advice. An effective board provides invaluable guidance on how to:

• build a viable business
• set the strategic direction
• assure accountability
• maintaining good governance, and
• achieve long-term goals.

2. What a Board Does

Generally, a board’s key functions include:

• Nominate and (if needed) hire the CEO and provide mentoring support.
• Work with the CEO and management team to develop a clear strategic direction and business focus.
• Approve the operating budget based on market readiness of the company’s products and technology.
• Monitor organizational performance and advise the CEO and management team on significant issues, mobilizing resources when needed.
• Provide general business oversight on behalf of all the shareholders, conforming to legal and ethical standards.

3. Who Should Be On a Board?

Consider these criteria when selecting board members:

• Diversity. Individuals from different demographic and professional backgrounds and skill sets can bring their unique expertise to bear when making decisions for your company’s future.
• Relevant experience. Board members’ abilities should complement your skills and provide extra support in areas where the executive team is deficient.
• Independent judgment. People with no conflicts of interest, such as investment in the company, can be more objective in protecting shareholders’ interests.
• Connections. Ideally, board members should enhance the startup’s reputation by bringing their own credentials and networks.
• Agility and availability. Members must be able to invest time and respond swiftly to market conditions and inevitable emergencies that arise.

4. How a Board Operates

Establishing strong guidelines can be tricky, but will give your startup a strong advantage if done right. The process should include:

• Draw up official bylaws that lay out specific responsibilities and authority.
• Rotate board members if possible to continue generating fresh ideas.
• As the company grows, establish these three standing committees to analyze issues in depth and make recommendations: finance and audit, nominations and governance, and compensation.
• While there is no “one size that fits all,” I recommend that a start-up board have between five and seven members.
• Establish a meeting schedule and clear communication channels. Appoint a board chairman who can set meeting agendas and keep members informed.
• Boards should meet every two months to stay up to speed on business developments and resolve challenging issues. Evenly divide meeting time between presentations, discussion, and decision making.
• To facilitate productive meetings, board members should receive a board package, including an agenda and supporting documents, preferably one week prior to the meeting.
• Create opportunities for board members to connect with the CEO and senior executives, such as board dinners or an annual retreat, to help board members feel committed to and engaged with your business.

5. How to Compensate Board Members

At the early stages, compensate outside/independent board members with equity to conserve cash. (Founders, the CEO, and major investors should not be compensated for this role.)

Once your board is well established, members should receive between 0.5–1 percent of the outstanding shares vested over two, three, or four years. The lead director or chairman should receive 10 percent additional compensation.

A strong board can contribute greatly to helping your business grow and thrive, and its activities can result in a well-timed exit strategy that creates an opportunity to sell the company, make an Initial Public Offering (IPO), or further scale and grow the business.

If you’re willing to devote the time to assemble a capable board, you’ll have an invaluable asset in achieving the kind of wealth creation envisioned by every entrepreneur.

Download this comprehensive primer on building a startup board.