June 29, 2016
If anyone is qualified to offer advice to the so called tech hubs blooming across America, it is perhaps Paul Singh, the man who is taking three laps around the country to study how these communities operate and grow.
The venture capitalist, an original partner with 500 Startups who now totes a portfolio of over 1,600 companies globally, got sick of life on an airplane last summer. He sold his car and bought a pick-up truck and a massive 30-foot customized Airstream plastered with the words, “Results Junkies.” And he set off on what he calls the Results Junkies National Tech Tour.
In his cross-country voyage, the Virginia-native is spending about a week in each city, meeting with local founders, investors and policymakers to offer advice and potentially invest in a company or two. He’s focusing on cities of 300,000 or less, and has recently spent quite a bit of time in the Midwest region.
In that time, he has gathered much about the common strengths and weaknesses of these smaller “tech hubs.” Here’s a few nuggets of advice he shared during his week-long stay in Fargo, North Dakota.
1. The 4 Ingredients to a Healthy Tech Hub
First of all, there are four ingredients that Singh has identified as factors in a successful tech hub, he said.
- Coworking space: A place for people to work together and meet each other.
- Event space: Sometimes combined with the coworking space. Again, as a hub for people to gather and meet each other.
- An angel group: Angel investors are a necessary fuel for startup growth, “because venture capitalists can’t really write the first check,” Singh said.
- A code school: Because talent is a huge problem for tech companies, particularly outside of the Silicon Valley and in the Midwest. “We have to give adults a way to learn technology,” Singh said. “That’s going to be our generation pretty soon. We have to train more people to understand technology.”
Why the focus on technology? Because, as Singh emphasized, technology is the fundamental driver of growth in the industrialized world.
“Tech companies will never create the majority of jobs,” he said. “What happens in the tech enabled sector is — you’re going to have more highly paid people, those people are now buying an extra beer at happy hour, taking family out for meals, movies once a week – all those things are trickling down and creating even more jobs.”
“What happens in the tech sector is really, really important,” he said.
Takeaway: Look at your city. Do you have these ingredients? If not, how can they be implemented?
2. Company Building Is Not Community Building
Another observation Singh has from his travels is that communities are often saturated with resources to help propel individuals into launching a business. But what happens after the initial launch?
“You’ve got 1 Million Cups and the Lean Startup – all these things that make it easier than ever to start,” Singh said. “But what happens after you’ve made your first dollar of revenue?[…]How do we start building resources for people after they start?”
Part of the problem is that the focus is sometimes on the wrong type of development, he said. In each city he visits, Singh does a debrief with local accelerators and coworking spaces. What he sees over and over, is that often these places are very good at building community, but not as good at building companies.
“I think what we have to admit to ourselves is that company-building and community-building are two very different things,” he said. “Community building is really about consistently doing events and being inclusive. We want to encourage people to start and celebrate entrepreneurship. Company building is about curation and urgency. To help people build their company, we don’t need another networking event. We don’t need another conference. What we need is to admit that it’s different. We have to ask – what do these founders need?”
Singh offers a solution: a weekly event that is only accessible for people with at least $1.00 of revenue. A dinner, a cheap hot dog, whatever, he said – but give the founders a separate place to meet.
“We need to give them a safe space to talk about the challenges they are facing,” he said, adding those challenges can be emotional and/or tactical.
Singh has been hosting these types of meals along his trip, and has said the overall feedback is, “I didn’t realize there were so many people out there like me.”
Takeaway: Consider a founders-only meet-up for those with $1.00+ of revenue.
3. Drop the Dinner Party Etiquette; Talk Traction
One of the biggest cries Singh has heard from startups is the need for better access to capital. Particularly in areas that feel far from the money on the coasts, finding investors is seen as a problem to founders, Singh said.
Singh, however, sees the problem elsewhere.
“The real challenge is that the founders in the Midwest…are taking dinner party etiquette and applying it to business conversations, and then wondering why no one pays attention,” he said.
The problem is not, he emphasized, that there isn’t enough money to go around. In fact, he said, there’s a growing number of investors who don’t care where you are located. Singh himself has a portfolio of companies in 60 countries and almost every state, he said.
So, quit complaining, he says.
“If you’re sitting in Fargo and want to raise money on the coast – lazy founders complain; smart founders ask: how can I get the attention of people who aren’t here in Fargo?” he said. “If you want to raise money from the coast, start talking like the coast.”
That means talking about traction. Singh said he’s heard many pitches in the Midwest where the founders spend 10-12 minutes talking about the product and the passion, burying the traction that investors need to hear.
“If you have no customers and are talking about product the whole time, then don’t be surprised when no Fargo investor or outside investor wants to invest,” he said. “If you have any sort of traction, start with that.”
Takeaway: When pitching your company, talk traction.
4. Get the Big Picture
Likewise, Singh said, don’t make the mistake of zeroing in too much on your hometown when starting a company. He encourages both investors and founders to look outside their hometown for investments and competition.
“If you’re a founder sitting in Fargo, you’re responsibility is not just to raise money in Fargo you’re responsibility is to raise it everywhere else,” he said. “You cannot look at Fargo as its own microbiome. You’re up against other people doing the same thing.”
This means, too, that the problems founders are solving need not and should not apply to their home base alone. In North Dakota, for instance, a huge part of the economy is agriculture and energy — and a host of startups have risen to cater to those industries. Yet while it’s okay to capitalize on that access, Singh encourages founders and future founders to think with a broader perspective.
Ever since the internet was introduced to the world, “we don’t have to be coupled with where we’re from anymore,” Singh said.
“It is interesting that you’re building the problems of North Dakota. But founders think about problems much bigger than North Dakota,” he said. “Just because you live in ag/drone country, doesn’t mean those are your only options.”
Takeaway: Take a look at the problems being solved by local startups. Now take that and put it in a global lens.
“I don’t want anybody to believe that we have this all figured out,” he said.
What he does know, however, is that technology is the fundamental driving force of economic growth.
He’s seen the proof in his hometown of Ashburn, Virginia, when a man named Steve Case moved to town and began growing a business of his own. That company is now America Online (AOL). With the growth of AOL came more jobs, more money, and new energy to what was a “pretty poor” town, Singh said.
This success story is not unique to Ashburn. Singh has watched a similar tale unfold across the country, in the rural cities of America; in Lincoln, Nebraska with a startup called Huddl. In Des Moines, Iowa with Dwolla. Even in British Columbia with Club Penguin.
“I think every city in America today has an ‘AOL,'” Singh said. “Big companies really can be built anywhere. All it takes is one founder to change that.”
Photos courtesy of Emerging Prairie.
Feature photo courtesy of Dan Francis Photography.
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