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DC Startup vs Silicon Valley Startup
March 3rd, 2017 by LOONEYEXECUTIVE

Blake Glenn’s Looney thoughts, perspectives, adventures, and insights on the world of business!

— By Blake Glenn

 

Recently I had coffee with someone that I’d not been in touch with for quite a while. He’s one of the few people that has been extremely active at the grass-roots level in the struggling tech startup scene in Dayton, OH. I was one of those people for a little over three years. But when it was clear that the level of interest from the native population wasn’t there for building a vibrant tech startup scene, I dropped that thing like an Ebola-laced hot potato. But, quite admirably I have to say, he has continued on.

At one point in our conversation, we discussed his current job situation. He had moved from a quasi-government job to a tech startup. It’s a company that provides custom software development for clients. I asked if the company was also creating products for the general marketplace. He said no, that it wasn’t a Silicon Valley-type startup.

By that he meant the company wasn’t focused on a venture-backed, fast-growth model that pushed toward a multi-billion dollar IPO within 8 hours of launching. Our conversation induced a flashback. This made me think of all the years I spent living in the Washington, DC area. Through the 1990s there were hundreds of people launching tech related startups. But the vast majority of these were not startups that had a Silicon Valley model. These were overwhelmingly focused on chasing government contracts.

They usually have a few things in common:

 

  1. These DC-type startups are usually driven by a single owner
  2. They usually don’t have a stock option plan so employees typically have no ownership stake
  3. They usually don’t get venture capital, though they may find an angel financier in the form of debt and/or equity
  4. They typically provide off-the-shelf or custom services for their government clients (custom software, tech-related training, tech components … etc.)
  5. They don’t focus on creating unique products for the marketplace
  6. They have to compete based especially on price in a usually crowded market
  7. Most amble on for years as fairly small businesses
  8. They don’t typically focus on building long-term equity with an eventual cash-out in mind – “Just get me more government contracts damnit!”
  9. When these ventures are sold, the owner(s) usually rake in all of the cash (see #2 above)

 

Now I’m not saying this is not a viable model for many business owners. Many people have achieved personal success this way. I’m just saying that it’s not the same as the fast-growth entrepreneurial model of Silicon Valley legend. I’m not saying it’s better or worse, just different. It’s a different mindset and attitude. It’s a different culture. It’s a different set of expectations. It’s the classic entrepreneur vs small business debate. These people aren’t trying to change the world. They’re just trying to get paid by Aunt Samantha.

I’m really interested in knowing the contrast of wealth creation with this model verses the Silicon Valley model. That would be an interesting comparison. Despite the media attention of the trillions in riches reaped by Silicon Valley founders and employees, the startup failure rate is quite high, even for venture capital-backed firms. Hey Kauffman Foundation there’s a study for you.

In the meantime, any government agencies out there need a professional, highly experienced, multi-talented, sometimes humorours podcast creator-producer- host looking for a government contract?

Call me baby!

 

P.S.  Startup Weekend is returning to Dayton! Make sure Dayton has a viable tech startup scene by participating. You can check out the details and register here.

 

Blake Glenn shares his looney perspectives, stories, and mis-adventures in The Looney Executive blog. He has interviewed hundreds (or at least tens) of people via  The Looney Executive Podcasts and former TV show. He’s the founder of a tech group called IgniteTech, and claims to be a direct descendant of the original Looney Executive – Because there must be SOME explanation … right?

 

If you dare, I can be reached the old school way … blake@LooneyExecutive.com

 

 


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