Don’t be fooled. Entrepreneurship is never like that. You fail constantly, suffer setbacks at every turn, and live with the fear that you won’t be able to make payroll or that your product won’t work. You have to deal with disgruntled employees, unhappy customers and concerned investors. Even when you achieve success, you wake up the next morning and find that everything is falling apart—that even before you’ve gotten over the hangover you have another big headache.
This is an important reminder. It’s certainly my experience, and I’m glad to see Vivek taking this to the readers of the Wall Street Journal.
Doesn’t it seem like every other place wants to be Silicon Valley? We call the New York tech scene Silicon Alley, Portland is Silicon Forest, somewhere in Southern California is Silicon Beach, Austin Texas is Silicon Hills, and so on. There’s job envy, and growth envy. Googling “the next Silicon Valley” generates 46 million hits.
So I like the juxtaposition of two articles in MIT Technology review that contradict each other delightfully.
The first, from MIT Technology Review on July 3, is Silicon Valley Can’t be Copied. Author Vivek Wadhwa subtitled his piece “For 50 years, the experts have tried to figure out what makes Silicon Valley tick. The answer is people.” He explains:
Note that from 1995 to 2005, 52.4 percent of engineering and technology startups in Silicon Valley had one or more people born outside the United States as founders. That was twice the rate seen in the U.S. as a whole. Immigrants like me who came to Silicon Valley found it easy to adapt and assimilate. We were able to learn the rules of engagement, create our own networks, and participate as equals. These days, the campuses of companies such as Google resemble the United Nations. Their cafeterias don’t serve hot dogs; they serve Chinese and Mexican dishes, and curries from both northern and southern India.
This is the diversity—a kind of freedom, really—in which innovation thrives. The understanding of global markets that immigrants bring with them, the knowledge they have of different disciplines, and the links that they provide to their home countries have given the Valley an unassailable competitive advantage as it has evolved from making radios and computer chips to producing search engines, social media, medical devices, and clean energy technology.
In his by-the-bootstraps guide, the 2012 book Startup Communities, Feld laid out a guru-ish, four-point plan for how to create a growing mass of startup companies. But his rules boil down to just one: entrepreneurs must be the “leaders.” Everyone else—universities, governments, investors—are “feeders” that, though important, can’t kick-start a startup community on their own. Feld says if even fewer than a dozen established entrepreneurs team up and get serious—create an incubator, for instance—that nearly any city from Detroit to Cape Town can create a meaningful startup sector.
Feld’s principles have weight because he’s lived by them. He is a co-creator of TechStars, which gives startups seed money and three months of intensive training. Conspicuously absent from Silicon Valley, TechStars instead operates in seven other American cities, including Boston, Chicago, and Austin.
To me it’s perfectly reasonably that both of these contradictory points of view could be true. That’s good editing. What do you think?
Report authors, Neil Ruiz, Jill Wilson, and Shyamali Choudhury, concluded that the government could be stifling innovation by limiting H-1B visas and not taking into account local demand for highly-skilled workers. Demand for these visas has far exceeded supply nearly every year for the last decade. Additionally, the government has been indirectly taxing U.S. R&D and innovation by imposing hefty visa fees, which range from $1,575 to $4,325 depending on employer size — plus $1,225 for expedited (read: timely) processing, according to the report.
The short video here (Vivek in the middle) talks specifically about the H1-B visa, but the high point is Vivek suggesting we should have a “startup visa” that allows entrepreneurs to come into the country. I second that motion.
To frame this battle properly, a loosely organized group of Internet leaders outwitted a well-funded lobbying organization. And they did so in grand style, convincing dozens of lawmakers to reverse their votes virtually overnight.
he goes on to liken this phenomenon to the voice of the people in Egypt and then the rest of the Middle East last Spring. But also something else altogether, this:
A sleeping giant — the technology world — finally rose. Google, Mozilla, Reddit, O’Reilly Radar, Wikipedia, and thousands of other Websites rose up to protest PIPA and SOPA.
I like the idea that the defeat of SOPA/PIPA are, like the political changes in the Middle East, due to changes in possibilities and the way people work together. I’d like to think that in this case technology is in a broad scope it’s like what happened a generation or so ago when Mahatma Gandhi, and a few years later Dr. Martin Luther King, changed the relationship between individuals and governments by establishing the power of the public non-violent protest. Isn’t that similar? Disenfranchised, silenced people discover a voice.
Was it social media that defeated SOPA/PIPA, or people suddenly getting annoyed and complaining?
Mine isn’t the greatest analogy, either: It works way better with the Arab Spring than with SOPA/PIPA, because in the first case it did seem like a collection of voiceless individuals; but in the second, that so-called sleeping giant was hardly voiceless. Just distracted, perhaps. Looking in the other direction, and then suddenly confronted with a threat.
Remember that dream we all had together, not so long ago, where a well-thought-out startup with a good understanding of the Web could grow on merit alone? Isn’t that sort of what Google did? And many others? I fear that’s not happening anymore.
The problem is that content on the Internet is growing exponentially and the vast majority of this content is spam. This is created by unscrupulous companies that know how to manipulate Google’s page-ranking systems to get their websites listed at the top of your search results … Content creation is big business, and there are big players involved. For example, Associated Content, which produces 10,000 new articles per month, was purchased by Yahoo! for $100 million, in 2010. Demand Media has 8,000 writers who produce 180,000 new articles each month … This content is what ends up as the landfill in the garbage websites that you find all over the Web. And these are the first links that show up in your Google search results
Don’t think for a minute that Google isn’t working on it. In another January post, Google search quality czar Matt Cutts wrote a blog post promising a major effort to revise Google search to deal better with spam. And that’s been happening. Google is in fact shaking things up, which is good news for the long term, but, well, Google is shaking things up. The Los Angeles Times’ reported recently…
Google won plaudits for promoting original research and analysis and banishing pages littered with second-rate content or overloaded with advertising. But the revision to its secret mathematical formula that determines the best answers to a searcher’s query also caused an uproar as hundreds of sites complained to Google that they had been unfairly lumped in with “content farms,” which churn out articles with little useful information to drive more traffic to their sites.
Google seems to be doing everything it can to improve its algorithms so that the best content rises to the top (the recent “panda” update seems to be a step forward). But there are many billions of dollars and tens of thousands of people working to game SEO. And for now, at least, high-quality content seems to be losing. Until that changes, startups – who generally have small teams, small budgets, and the scruples to avoid black-hat tactics – should no longer consider SEO a viable marketing strategy.
Tim Cohn posted The SEO is Dead Debate the following day. He doesn’t reference Chris Dixon specifically, but he has an eloquently short post, saying that SEO isn’t dead because ….
… the SEO is Dead author never offers an equal let alone superior alternative.
That one bothers me. Since when does nothing die without offering a superior alternative?
I just posted Y’want Jobs? Small business? Then fund Education on the Huffington Post. I didn’t mention in that post how angry I am at the local schools problem, starting with our public schools in Eugene OR but including the funding-the-school disaster all over Oregon, California, and, as far as I know, most of the United States.
The Eugene town council met last Monday asking for public input. The public schools face a budget deficit of something like $30 million out of something like $130 million. They’re thinking of creating a city income tax to help.
Budget problems aren’t new here. They’ve already cut kindergarten to 10 hours a week. They’ve reduced school days to 168.5. But that was before the big cuts they’re looking at now.
We should know better. This is a university town. The largest employer is the University of Oregon.
This isn’t just us, this one town in Oregon. Apparently all of Oregon and California as well are locked into state constitutional provisions, created in a burst of public selfishness in the early 1990s, that cripple funding of the schools (Prop 13 in California, Measure 5 in Oregon). I assume that’s happening in most states.
Also, some say public schools are overburdened with higher-than-market compensation and retirement plans that make what spending they are able to do less effective.
Can both of these assertions be true? Does cutting spending on schools make them better, forcing them to spend more effectively? Or does it just make them worse?
There is nothing to prevent there being many Silicon Valleys and nothing to stop most regions in the world from innovating. The focus just has to change from investing in real estate to investing in people.
So how do we invest in people? Education, perhaps?
With all the political posturing about small business, there’s not much governments can really do. Education is something they can do. And something that, frankly, they aren’t doing.
There’s been a fair amount of discussion since Vivek Wadhwa posted Can Entrepreneurs Be Made? on TechCrunch late last month. He quotes Kauffmann Center research indicating, he says, that entrepreneurs aren’t really born that way.
We found that the majority didn’t have entrepreneurial parents. They didn’t even have entrepreneurial aspirations while going to school. They simply got tired of working for others, had a great idea they wanted to commercialize, or woke up one day with an urgent desire to build wealth before they retired. So they took the big leap.
I think the problem is that we try to generalize way too much. Everybody wants to find a pattern, but things are more random than that. Entrepreneurs aren’t a homogeneous manageable type or group. They are a bunch of very diverse individuals.
This is just anecdotal data, obviously, but it makes me think. My wife and I have five grown-up children, all raised in a household steeped in entrepreneurship, serial startups, and chronically broke. Of our older three, all in their middle thirties now, one is certain he never wants to start his own company, one is immersed in entrepreneurship and has been involved in virtually nothing but startups, and one is really hard to tell one way or the other. With the other two, still in their twenties, it’s too soon to tell.
I’m one of four siblings. None of the others are entrepreneurs, and I am. Our parents were not entrepreneurs.
Every case is different. Every startup is different. Business education helped me get going on my own, but not the next person. Growing up with it helped one of our children, but not the next one.
This morning I can’t resist writing about Vivek Wadhwa’s Winner’s Curse post on TechCrunch last weekend. Odd combination: it’s interesting, thoughtful, well-written, about a subject near and dear to my heart, and, at least in the title, wrong.
In the full title of his fascinating post, he says losing a business school business plan competition is better than winning. That title assertion is my only real objection. He makes several great points explaining how business plan contests can be good for people, and how the winner isn’t necessarily the best business, and how these contests should not be confused with reality. No argument from me on any of those points. However, even if it’s not much difference, even if it means very little, winning is still better than losing.
Maybe it’s just a blog post title thing: surprise gets better traffic. Contrarian gets better traffic.
I’ve frequently been a judge at business school business plan contests (Moot Corp, Rice University, University of Oregon, University of Notre Dame, and others) and some non-school contests too (Forbes, for example). I think they’re great fun, great experience, a real educational opportunity, and pretty much right in line with his summary on that post:
This is not to say that the contests are bad. Instead, they educate students in entrepreneurship and motivate them to come up with interesting ideas. But for all of you out there who think a biz plan victory is a ticket to the big time, think again. And for all the engineering students who think any outcome but victory is a waste of time, you also need to think again.
He goes on to say that losing is better because winning generates praise too early in the business life cycle:
I submit that losing in a business plan contest is actually more beneficial than winning. There is a growing body of research that children who are praised too early and too easily end up under-performing peers who are not praised but are told, in constructive terms, they can do better.
I don’t buy that argument. I’ve been judging these contests for 12 years now, and I see a steady progression towards more and more real businesses, out there in the real world, rather than imaginary or hypothetical business. And in that case, as soon as the awards ceremony is over, the winners are right back out there in the real world, fighting the real battles on the front lines, with no time to bask in any glow. It’s reality for all, winners as well as runners-up and also-rans and losers.
So agreed, winning doesn’t mean much; but it’s not bad.
I’ve seen some really good winners in these contests. Look for example at Klymit, or Qcue, just to name a couple. These are companies which won business plan contests and continued growing. Wadhwa says “not a single home-run has emerged from this now-omnipresent practice.” But hey, that’s placing the bar pretty high. We’re talking about a few dozen such contests per year. Is there nothing between home run and failure?
By the way, this is the second really good post by Vivek Wadhwa about entrepreneurship on TechCrunch in barely a week or so. I posted here on the first one. Good stuff. His work is a nice addition to TechCrunch.
Frankly, I don’t normally associate TechCrunch, probably the world’s best-known high-tech-new-stuff blog, with thoughtful reflections on entrepreneurship; much less so with “God is your co-pilot.” Still, there it is: there’s an excellent post called God is Your Co-Pilot, and Stuff that Piggy Bank, on TechCrunch, with good information and food for thought about entrepreneurship.
The post is by Vivek Wadhwa, “entrepreneur turned academic,” who teaches entrepreneurship at Duke (and elsewhere). Early on, he says:
I’ve never been religious myself and have always believed that with hard work and determination, you can surmount just about any obstacles. But I also learned the hard way that you can do everything right and fail. Sometimes you do just about everything wrong and make it big. My belief: success is 51% luck and 49% execution. You need to execute with precision, but a little luck goes a long way. It is always good to have God on your side.
Nearly all (96%) said that prior work experience was an important factor in their success and 58% ranked this as extremely important. The vast majority (88%) said that previous success and failures were important. But lessons from failures were judged as extremely important by more respondents than lessons from success. That’s right, those that had experienced failure valued it more highly than their successes.
Like all such studies, this one too is flawed, but nonetheless interesting. Flawed because, if for no other reasons, it’s about successful entrepreneurs with surviving companies, not everybody who tried (survivor bias, again, as in some of my recent posts on this blog). But it’s still interesting. Among some high points (quoting from the TechCrunch post):
Most of the businesses involved (70%) were financed with personal savings, not investment, and not bank loans.
Hardly any of the company founders ranked state or local government assistance as important.
70 percent said their university education was important and Ivy-League graduates valued this more, with 86 percent indicating this was important. But only 20 percent of all entrepreneurs and 18 percent of Ivy-League graduates ranked university education as extremely important
The alum networks which are supposed to be really valuable for business contacts, weren’t ranked that highly. Only 19% of the entrepreneurs believed that university or alumni networks were important for their business.
So where does luck come in, you ask? Read the post. For my part, I’m superstitious, so I’m not going to deny luck for a second; that would be tempting fate.