The Challenge of Startup Community Building.
Finding the elusive business model for long term sustainability.
A while ago, I wrote an article which was essentially the easiest way for me to send out a message to all of the people I have interacted with in Eugene in order to say goodbye.
It triggered a series of interactions in the twitter-verse that unlocked a flood or pent up frustration on the part of people doing similar work all over the united states on the general un-sustainability of the work.
The collection of comments all were consolidated here, in Jeff Bennett’s great article Who Will Save the Ecosystem Builders? that you should read to get some of the background.
Much of this pent up frustration seems to stem from the general belief that while everyone has to some extent acknowledged that entrepreneurship is vital to the stability of our economy, we collectively have not figured out how to support entrepreneurship in any meaningful systematic way.
I think that many of us are just frustrated and somewhat confused. If it is so important, why are we in the situation we are in?
In this article, I am going to try to unpack some of my thoughts a bit, possibly just to help give myself some clarity around how we got to where we are today. Some of this will require me going back down memory lane a bit to give some background of how I got into this work, and how the view of this work was evolving in real time nationwide alongside my efforts locally, and in partnership (and by partnership, it was more like a loose collection of renegades) with others in the state.
I will try to tease apart some of the language that is being used to describe the work, and in doing so, both educate some that are not deep into this work what it actually is, and to untangle what I think is one of the major problems with this work. The terminology clarification is crucial, as in SO many of these conversations, we are using language to talk about something where we think we are talking about the same thing, when we are actually not.
I started doing startup community building by accident. I did not intend to become a ‘community builder’ or ‘ecosystem builder’ — and when I started doing it I was not intentionally trying to ‘start’ something and did not think beforehand about the sustainability of what it was I was doing.
I did what I did because I wanted to live in a town that was interesting. The ‘startup life’ I lived for a decade was exciting. I learned a lot and got to work with great people. I just wanted more of that.
Post-exit from my company, I was simply looking for something interesting to do next. What I did not realize is that for the next 10 years I would transition from a startup founder to a startup community builder, and become involved in what more broadly has become known as Entrepreneurial Ecosystem Development, a term that I have come to dislike as it has somehow made what is essentially a human process into a purely technical exercise.
Hindsight being 20/20, I look back at the mistakes I have made and the assumptions I made that were wrong. In a Steve Jobs quote, he stated that you can only connect the dots looking back, so this is my attempt to look back and connect the dots in the hope that it might help some others.
To understand the challenges, I am going to do a little retrospective on how I came to understand the power of communities and the mental model I had developed. Why this is important will become meaningful later in the article where I will talk about the challenges and where I made some fundamental assumptions that ended up giving me a huge blind spot that I wish I would have recognized a lot earlier.
It all started with games. Back in the 90’s, I worked for a video game company called Dynamix. I was lucky enough to work on two sister projects, StarSiege and Tribes. Both of these games had awesome multiplayer technology. Tribes in particular was amazing in that it was the first multiplayer only game to ever launch. Back in the 90’s, this was a bold step. Would gamer be willing to pay to only have access to the online component? Would they reject paying for a game that did not have the at the time ‘necessary’ single player experience? The answer was a resounding yes. The amount of time players were willing to spend playing multiplayer only was HUGE. The communities that formed around the game were massive and the UGC (User Generated Content) that was created by there always being something new to do provided more than enough value to keep people engaged.
The ‘content’ was mostly in the form of the communication of the community that formed around the games. People came for the game, they stayed for the community.
With Call of Duty and other franchises like Fortnite making massive amounts of $ providing online playgrounds, this realization seems obvious.
It is now. In 1997, it was not obvious.
The founding of my game studio was built on the recognition of the power of communities. I believed in a simple concept. We could make a small multiplayer game that was ‘pro’ quality, make it 1/10th the size of a ‘normal’ game (no single player), and at 1/10th the cost.
In 2001, this seemed like a stupid idea. The internet was dead, and the dot-bomb had proven that it was all just hype. I thought they were wrong. History luckily ended up on my side.
The base assumption on the power of a community to create value that people were willing to pay for was validated. Back then, people were not quite ready for subscription models, and the tech did not exist to make it easy to do a subscription based offering. Eventually this was all figured out, but back then the business model that was needed did not have off the shelf tools to implement it. What was clear is that if you create a place for a community to share an experience, and that experience is good, they will show up and they will stick around for a LONG time. (in the case of our tiny game, years.).
Around the same time I read a book my Albert Laszlo Barabasi called Linked. I became fascinated by networks, and I was in the middle of what was becoming a nascent networked economy. Later on, the concept of a platform and all the methodology for understanding double sided markets and approaches to getting value out of them became more commonplace, back then, this was pre-Facebook, pre-Twitter, pre-YouTube and pre-LinkedIn.
I became immersed in this world so much so that these concepts became, to me, obvious, and in the circles I ran in, common knowledge. This normalization of the novel became the seeds of the undoing.
Later on, the ‘problem’ became apparent, and is now called the ‘Platforms vs. Pipes’ problem that Ian Hathaway wrote about in this blog post.
It is a problem that I recognize now only in retrospect. The ‘new economy’ of networks and platforms is a fundamentally different construct than the old economy — the old economy is all ‘pipes’.
To understand it a bit better, I am going to use the example of the Erie canal. A canal was infrastructure that enabled commerce. In this construct, the canal enabled the transport of good (iron ore, wheat) to move from the point of extraction from the land to the end point in the market, to be consumed. Commerce was a one way street, from beginning to end.
This model is the lens through which most economic development professionals, politicians, and a good number of business people see the world. Inputs and outputs, cost of delivery of service.. the concept of this business model is clear and direct and easy to understand, and for the industrial age, worked.
In the knowledge economy, it fails to capture the profound change that has happened.
In terms of economic development, broadband internet is the new Erie Canal. The focus is on the enabling infrastructure. Knowledge is the new ‘good’ that gets transported on the new infrastructure. The infrastructure is not the product, the product being delivered is knowledge and ideas. The focus purely on the enabling infrastructure misses on several counts.
One, ideas are not like iron or wheat. A good idea can be duplicated millions of times to bring value to millions of people with little or no additional cost. Build once, sell it a bazillion times is what mints internet billionaires.
Two, the new economy is bidirectional. The best platforms have value flowing both ways, with participants acting as both supply and demand at the same time.
Three, it has the potential to be exponential. We all learn about it in school but many (most?) cannot seem to grasp exactly how big something can get with exponential growth — it is like compound growth on steroids (where the steroids are also on steroids).
Finally, the ideas are not like wheat and iron ore, they come from the brains of people and these cannot easily be turned into a commodity. The sharing and shaping of these ideas happens in the realm of conversation and in the context of a community. While broadband is the new canal, the community connectors are the masters of the shipyard, shepherding the ideas onto the barges and facilitating the movement of the new goods.
What I failed to understand is that many did not understand what to me had become obvious. I see only now that the simple input/output model of the industrial era ‘pipes’ model has been adopted widely for just about everything, including taxation and government services.
Metrics used to measure outcomes focus on the direct outputs of actions. Like measuring boxes put on a barge, an attempt to capture impact looks to quantify the trees without any awareness that a forrest even exists.
Entrepreneurial support is not seen as an investment, but as a cost of a service to be delivered, as if helping to seed and start high growth companies is about as important as making sure the trash gets collected.
I lacked the awareness, and the language to affect change as much as I might have been able to. I realized, too late, that the concepts and structures that I thought were common knowledge were not actually common knowledge.
I failed to understand that others struggled to see the difference between business retention of the old manufacturing base and the enabling of the new economy.
I did not spend enough time explaining it.. and bringing people along. I took for granted that they ‘got it’ — I found out later that they really didn’t and in many ways still don’t.
I still personally struggle with the large contingent of our local populace that is clinging to a bygone age — that struggles to embrace the new economy, holding us back by clinging onto models of production more suited to the last century.
I have failed in both not realizing the necessity of bringing people along — and of taking the time to clearly articulate the behavior of the new systems. I failed to appreciate that the deliberate, reasoned, and measured approach toward measured inputs/outputs is the metric by which the organizations that govern us are run. To them, I must have looked like a lunatic looking for oil, my focus on connecting everyone and anyone to try to locate a ‘gusher’ seemed foolhardy and random…
except it is not. The relentless connecting and community gardening- the planting seeds of trust — if you go long on relationships, the future has a way of creating the situation where the magic happens when the right people connect in the right place at the right time in history.
The internet took 27 years from the time ARPAnet was initiated until the time the internet took off and enabled much of the what has now become our economy.
Collaboration and community are the new resource. Creating a functional platform that allows the bonds of trust to be built and pathways for ideas yo flow are the new ‘fertile soil’. The community builders are the fertilizer that make the soil either insanely productive or unfit for planting.
We are measuring the wrong things, and the entire process of looking how to grow the economy is using the wrong model, and the wrong proxies for measuring the impact.
Trust is the new metric by which we need to assess the success of our efforts. It has always been trust — always there, under the surface, seldom noticed and never measured. The same trust networks that create great rewards for the trusted and create barriers to those who have not earned it.
We need to recognize it to make it work for our communities, and move away from measuring the delivering of programs to measuring the degree of trust that is created in communities.
As online communities start to assert their power in the current world through crypto, DAOs, and Web3, physical locations and government should take note. You are being disrupted. The communities which you fail to nurture will be your undoing.
I feel like I am getting started but this is starting to get long, so I will end this not with a final word, but as a kickoff to a beginning of a deeper conversation.
