[Hidden-tech] Fwd: [New post] Bigger in Bend – Building a Regional Startup Cluster–part 1 of 3
Jim Geisman
jimg at softwarepricing.com
Mon Jan 20 19:10:51 EST 2014
I have been a minimal contributor to this list and have watched as
various folks ask questions that suggest they are trying to build their
companies (large or small -- mostly the latter).
I've been active in the Boston entrepreneurial scene for many years and
try and stay up with what's going on in BOS and out in CA.
For those of you trying to create a regional ecosystem, I think you may
find this article interesting.
Even if you don't, Steve Blank's blog is a must-read for all types of
"serious" (i.e. non-lifestyle) entrepreneurs -- especially those in tech
businesses.
I hope you find this useful.
Jim Geisman
PS Bend is as far from PDX as Gfld/Amherst/NHampton is from BOS and
probably encompasses people living in a 50 mile radius around Bend.
-------- Original Message --------
Subject: [New post] Bigger in Bend – Building a Regional Startup
Cluster–part 1 of 3
Date: Mon, 20 Jan 2014 14:01:43 +0000
From: Steve Blank <comment-reply at wordpress.com>
Reply-To: Steve Blank
<comment+chimoz4rkdljb5-auq7ijpc at comment.wordpress.com>
To: jimg at softwarepricing.com
WordPress.com
steveblank posted: "When Customer Development and the Lean Startup were
just a sketch on the napkin, Dino Vendetti, a VC at Bay Partners, was
one of the first venture capitalists I shared my ideas with. Dino and I
kept in touch as he moved up to Bend, Oregon on a mission "
Respond to this post by replying above this line
New post on *Steve Blank*
<http://steveblank.com/author/steveblank/>
Bigger in Bend – Building a Regional Startup Cluster–part 1 of 3
<http://steveblank.com/2014/01/20/bigger-in-bend-building-a-regional-startup-cluster-part-1-of-3/>
by steveblank <http://steveblank.com/author/steveblank/>
When Customer Development and the Lean Startup
<https://archive.harvardbusiness.org/cla/web/pl/product.seam?c=29512&i=29514&cs=72931baa3b05f76aca8090b33db139b0>
were just a sketch on the napkin, Dino Vendetti, a VC at Bay Partners,
was one of the first venture capitalists I shared my ideas with.
Dino and I kept in touch as he moved up to Bend, Oregon on a mission to
engineer Bend into a regional technology cluster. Over the years we
brainstormed about how Lean entrepreneurship would affect regional
development.
I visited Bend last year and caught up with his progress.
This post and the two that follow highlight what Dino has learned about
the characteristics of the startup and investing landscape in a regional
market, and what it takes to intentionally engineer a thriving regional
tech cluster.
* Part 1: Bend, Oregon Ecosystem and Entrepreneurs
<http://wp.me/prGQZ-47v>
* Part 2: Early-stage Regional Venture Funds
* Part 3: Engineering a Regional Tech Cluster
Today, with every city, state and country trying to build out a
technology cluster, following Dino’s progress can provide others with a
roadmap of what’s worked and what has not. Bend, Oregon is an ideal case
study because of its size, location and entrepreneurial characteristics.
Here’s Part 1 of Dino’s story…
---------
Let’s get right to the point… I fell in love with Bend, Oregon, once a
sleepy logging town, now population 79,000. If you like skiing, hiking,
biking, rafting, golfing, camping, fishing, picnicking, rock climbing,
/and startups/ – you’d like Bend.1_BalloonsOverBend_2
<http://steveblank.files.wordpress.com/2014/01/1_balloonsoverbend_2.jpg>
Before moving to Bend last year, my career took me from engineering
development roles at defense contractors in the 80’s to product
management and executive marketing roles in companies like Qualcomm in
the 90’s, to the world of venture capital at several firms including Bay
Partners, Formative Ventures and Vulcan Ventures.
After several visits skiing here, I had become smitten with the “mojo”
of Bend - its superb quality of life, recreational opportunities and
proximity to the San Francisco Bay Area. The vibe of Bend is appealing,
unique and unpretentious given the number of successful business, tech
and professional athlete transplants who call it home. It’s home to a
small but growing tech community that has been developing over the past
decade, and that’s what piqued my interest.
*What’s Different
*The differences between the Bend, Oregon region and Silicon Valley are
obvious. The sheer density of talent, companies, capital and
universities that exist in the Valley are second to none. It truly is
the epicenter of the startup world and it’s the regional cluster for
innovation and entrepreneurship. Working in the Valley, I took for
granted the constant and real time networking opportunities, the volume
of deals, and the ability to access nearly every corner of the tech
industry - no surprise to anyone who has spent any time in the Valley.
However, what I found in Bend was a deeply entrepreneurial community
that is leaps and bounds beyond just a destination resort town. Bend
fights way above its weight class and is professional scale for its
size. Its ability to do so is tied to the deep entrepreneurial DNA that
permeates the region (a very similar characteristic to Silicon Valley),
originally out of necessity and now out of strategy.
Job creation in Bend is everyone’s business. People who make the move
typically need to start a business to have a job. Bend is the 16^th
largest metro area in the country for high-tech startup density
<http://www.kauffman.org/what-we-do/research/firm-formation-and-growth-series/tech-starts-hightechnology-business-formation-and-job-creation-in-the-united-states>^.
Pretty amazing for a town with fewer than 100,000 people.
*Startups in Bend
*So what types of entrepreneurs and startups exist in Bend? There’s a
concentration around several sectors: software, hardware,
medical-technology, aviation, and a specialty of Oregon - craft beer
brewing. The chart below shows the clustering of startups around these
sectors.
Bend Startup Ecosystem
<http://steveblank.files.wordpress.com/2014/02/bend-ecosystem.jpg>
Bend Startup Ecosystem
In addition to the four major data centers that include Facebook and
Apple, Bend currently boasts 95 startups across multiple
technologynsectors: 47 software, 26 hardware/semi and 22 med tech
related startups. Nearby Portland Oregon (just 160 miles away) is home
to over 300 startups; between the two markets, nearly 80 new startups
are forming each year.
*Silicon Valley Transplants
*In addition to local entrepreneurs building startups, I found something
else I wasn’t expecting in Bend: a deep pool of talented Valley
transplants who’ve made their way to Bend - either during their careers
or after. There are retired Fortune 500 CEOs, senior execs from Valley
startups and public companies as well as successful entrepreneurs who
exited their companies. These smart, successful transplants have gotten
involved with the local business community as mentors, advisors,
entrepreneurs, or investors.
But the real surprise was learning that for some Bend is a Silicon
Valley bedroom community. A daily direct flight on United can have you
in your Bay Area office by 8 a.m. Monday. Every week I meet someone new
who just moved to Bend and commutes to work for Google, Facebook,
Salesforce, Oracle, Marketo, Workday, and on and on….These people are
important and useful in the engineering of a tech cluster; as startup
coaches, angel investors and advocates for the community. They
communicate and pass on the DNA of how Silicon Valley operates and what
level of performance is needed to compete on a global scale.
*Entrepreneurs in Bend
*Within the Bend tech startup community I found three kinds of
startups/entrepreneurs:
* */Scalable entrepreneurs/* similar to those you would find in
Silicon Valley (although a smaller concentration exists in Bend).
These entrepreneurs want to build a big company. They’re typically
Silicon Valley transplants who had enough success and experience to
know what they were getting themselves into, what it means to raise
capital from investors, what it means to scale a company, and how to
engineer an exit.
* */Viable entrepreneurs/* who think they are building scalable
startups but lack either a key element of their business model
and/or lack the right team DNA to “go for it..” In this region,
these are the majority of new startups I see. They have two
limitations, which I help coach to see if they have the capability
and desire to become scalable.
o They go after a market opportunity that’s too limited to result
in a truly scalable business (still might be an M&A candidate,
but at the lower end of the range).
o Most teams have a reluctance and willingness to “go for it” when
they finally do have a scalable business and have validated the
key aspects of their business model. This “small business”
mindset is a holdover of how capital starved early stage
startups are/were in Oregon. Entrepreneurs (and angel investors)
prioritize profitability over growth (this is OK for lifestyle
startups, but not for scalable startups where capturing market
share and thought leadership is vital).
* */Lifestyle entrepreneurs/* who are just building a business to make
a profit and support their awesome lifestyle (Bend has a lot of
these). There is nothing wrong with lifestyle entrepreneurs as they
are providing valuable products and services to the local/regional
economy, but these do not make for good venture or angel investments
under the traditional equity based venture model.
Regional entrepreneurs are at an inherent disadvantage in getting the
attention of customers and late stage VCs. Therefore they need to focus
on building the most efficiently scalable business model possible.
Without focus, it’s difficult to create enough signal to noise ratio to
become relevant in their market segment. The good news is that whether
you are an investor or accelerator, if your startup is located in an
advantageous regional market (defined below) and if you apply lean
methodologies, you can improve your on-base and slugging percentage.
The opportunity and challenge in regional markets is to:
* Educate the ecosystem about the differences between the three kinds
of startups/entrepreneurs
* Find, nurture and invest in the truly scalable startups and
entrepreneurs, as they will be the ones that have the potential to
deliver outsized returns
*Fixing the Missing Pieces of Infrastructure
*The evolution of very capital efficient business models and Lean
Startup methodologies has led to easier paths to funding, launching and
growing businesses. With a tech cluster developing in Bend, it was clear
that there were four missing pieces in its infrastructure.
I decided to fix each of them.
Bend needed a startup accelerator. While entrepreneurship in Bend was
talked about, and everyone read the same blogs, there was no central
place founders could get focused and intense coaching and mentorship. So
I co-founded the FoundersPad <http://www.founderspad.com> accelerator, a
12-week, Lean Startup program focused on customer development that helps
founders develop, refine and grow their business.
Founders Pad
<http://steveblank.files.wordpress.com/2014/02/founders-pad-attentive-investors-session-3-color-adj.jpg>
Founders Pad
Bend needed its own venture firm. While Silicon Valley and New York are
magnets for great startups, our bet is that awesome startups exist in
(or can be attracted to) Oregon and Northern California. So I launched
Seven Peaks Ventures <http://www.sevenpeaksventures.com> with a team of
investors that includes some of the region’s most active angel
investors. We help Oregon-based startups build and scale their
businesses by providing highly relevant mentoring and leveraging our
deep network in Silicon Valley and beyond.
Bend needs to attract more entrepreneurs. So I launched The Big Bend
Theory <http://www.interwest.com/rolling-thunder/> with Bruce
Cleveland. We’ll fly founders and their spouses/significant others
along with a team member to Bend to meet local startup executives and
community leaders and experience the lifestyle. If they choose to
relocate in Bend we’ll offer free temporary office space and help get
them funded.
Oregon State University’s new Bend campus <http://www.osucascades.edu>
didn't have a Computer Science or User Experience design program. So I
helped develop the Computer Science program at Oregon State. (We’re
looking for Computer Science professors, so email me
<mailto:dino at sevenpeaksventures.com>if you want to live and teach in Bend!)
*Lessons Learned*
* Bend is a bet on a regional tech cluster
* To build a successful regional cluster, look for an eco-system
with:
o experienced professionals willing to mentor
o entrepreneurs with the energy and drive to build businesses
o viable startups under development
* We are engineering the infrastructure that lacks: accelerator,
venture firm, outreach, university and training.
* It is critical to understand the types of startups and
entrepreneurs in your region and for venture funding
* Seek out the truly scalable startups.
*steveblank <http://steveblank.com/author/steveblank/>* | January 20,
2014 at 6:00 am | Categories: Customer Development
<http://steveblank.com/?cat=1874987>, Lean LaunchPad
<http://steveblank.com/?cat=53169179>, Science and Industrial Policy
<http://steveblank.com/?cat=137272104>, Venture Capital
<http://steveblank.com/?cat=202> | URL: http://wp.me/prGQZ-47v
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