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DC Startup vs Silicon Valley Startup
Mar 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

 

 

Rustbelt Resurrection?
Feb 15th, 2017 by LOONEYEXECUTIVE

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

— By Blake Glenn

 

————————

 

Hello 2017!

It’s my first post of 2017. I’ve been away a little while. During my long hiatus I helped a family member close a deal to sell a property, moved many heavy items,  took some much needed rest, discovered I need shoulder surgery (after moving many heavy items), and Donald Trump was elected President of the U.S. All of those things are true.

All. Of. THEM.

But in my near endless quest for uncovering interesting items happening in the business world, I came across an opinion piece in USA Today written by Steve Case, co-founder of AOL. For the last two years, through his Rise Of The Rest tour, Case has crisscrossed the U.S. in search of tech startup communities beyond Silicon Valley, Boston and New York City. In previous posts I refer to such cities and regions as “Outside The Valley”.

In any case, Case has spent time in a few cities that have been devastated by the decline of industrial age industries. And he has some interesting points to make about the growth of tech startups in there. Some of those key points include:

 

  • Globalization and technology are irreversible forces
  • Massachusetts, New York, and California account for 80% of venture capital investment
  • Responsibility for changing the funding dynamic starts with Silicon Valley and NY tech leaders and venture capitalists
  • Rise of the Rest cities are often too risk-averse and lack the fearlessness of Silicon Valley
  • Nascent entrepreneurial communities are often fragmented
  • Government, legacy companies and tech need to invest in unleashing America’s creativity

 

I just want to comment briefly about some of his points. First, I understand his belief that VCs need to redirect their investment resources to non-traditional cities. In fact, it may make good business sense to scour the entire country seeking out investment opportunities rather than just a select three or four cities. But that takes time, effort, and connections even for large VC firms.

So why would a VC seek out tech startups in, say, Dayton, OH, if there doesn’t already exist a strong tech startup community led by entrepreneurs? It’s the responsibility of the entrepreneurs in those regions to build their communities into viable, attractive cites whether VCs recognize them or not.

Case mentions that many cities are too risk-averse and lack fearlessness. As someone that led a tech startup Meetup group for 3 years in Dayton, I can testify to that fact. The mentality, not just of the institutions and general community, but of the people claiming to be entrepreneurs can be so damned oppressively conservative and failure-averse.

Finally, Case makes a good point about the fragmentation within many tech communities. While I led that tech startup group I attempted to organize a gathering for all leaders of regional tech groups. While my group focused specifically on tech startups there were many other groups focused on some particular technology or tech-related expertise. I contacted leaders from 17 or 18 groups in SW Ohio. We only had about five groups represented. To top the cake, the majority didn’t even respond to my invitation, including at least 3 that I already knew or had met previously. Not even a freakin’ no – just silence. And I sent at least two notices.

What Case found out during his Rise Of The Rest tour is what I learned during my three years of Meetup group dictatorship:

 

Cities with a traditional industrial base or dependence on a very narrow range of declining industries need a lot of time, patience, vodka and Tylenol as they seek to re-invent themselves into emerging tech startup hubs.

 

It’s been a little over a year since I shuttered IgniteTech, the tech startup group I founded. Over the next few weeks I’ll start posting my reflections and that adventure.  I think I’ll call it “Surviving The Rustbelt”. Catchy title huh. Then again maybe not. I’m not completely sure I’ve survived it yet. Can someone pleeeaasseee hand me a bottle of Vodka. Actually … better make it the whole case. It’s gonna be a long story.

 

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

 

P.S.  I’m actively recruiting test contestants for my business game show experiment. Interested? Please contact me so I can add you to the player pool!

 

 

The Case Of The Missing Equity! … Part II
Mar 9th, 2016 by LOONEYEXECUTIVE

A true story taken from the (Mis-)Adventures of The Looney Executive.

 

If you missed The Case Of The Missing Equity – Part I, it might help to catch up on the chaos of this tale and then come back for the rest!

 

…………………………………………………………………………………………………….

So all of that insanity set the stage for a chaotic, unfocused, middling, small business pursuing government contracts. Having advised a handful of distressed small businesses I’d become somewhat of a distressed biz profiler. I’d seen the story before. And the evidence was laid out in plain sight for all to see.

 

  • No core strategy.
  • No focus.
  • Poor leadership.
  • No bread and butter clients (i.e., clients that brought consistent revenue).
  • No nothing else that was superior or unique or special that could be exploited.
  • Chaos all around.

 

Since he and I shared an office I’d been talking to him on a daily basis. I knew the strategy because I was helping to develop it, or at least I tried. He changed it almost weekly. This was an act of desperation. And I understood. I’d been in the desperate zone myself. But my strongly encouraged advice of developing and executing a core strategy went unheeded.

One week the focus was on applying for government certifications. The next it’s on contract bidding for items outside of his niche. We bid on a few contracts. Won none of them. Winning government contracts is a volume game. The competition can be fierce. So in order to be successful, you need to produce lots of proposals. It was a jungle where only the strongest, and best-connected, could thrive. We also discussed a few unique ideas that we could launch. These were ideas that would bring his thinking more in line with that of a tech startup founder. But Ricky just wasn’t of the mindset to think, and act, too creatively. On top of it all, Ricky was focused on his PhD studies. So he’d spend large parts of days doing school work and not addressing the severely damaged ship careening toward a fiery crash.

And yet part of the promo (before I arrived) included such typical and overused mantras as “highest quality”, “number one company”, “most experienced” … huh?

Even with that I was a little surprised when one day, out of the blue, he broke the news of layoffs for some of his small staff, including me. My surprise was not the layoff itself, but that he didn’t give a heads up, and frankly that it didn’t happen sooner. But he offered what he thought was a carrot to keep us engaged. He offered us an equity stake but …

 

There was no “there” there.

There was nothing original that was being produced.

There were no long-term contracts.

There were no patents or other valuable intellectual property.

There was no A+ management team.

 

And there was a lack of trust too.

On more than one occasion Ricky told a staff member that paychecks were on the way when they hadn’t even been mailed yet. He was buying time. Not communicating with staff. Operating on the edge. Sometimes when the landlord came by to collect, Ricky would pretend to not be there. Why the landlord felt the need to collect in person was an interesting phenomenon in itself. Perhaps he too had been told one time too many times that the check was in the mail.

As the team gathered in a meeting to discuss this dire situation, I just asked a couple of entirely reasonable questions. I didn’t want to say outright that equity-for-work was a damned horrible idea and embarrass him. But I needed to know. When I asked the legitimate question of how much he currently valued the company, he blurted out an exorbitantly high number. When I followed up with the question of how he arrived at that number, he became a bit irritated and defensive. He said that he could create any value he wanted.

Clearly he was delusional. I didn’t see this as an outright attempt at fraud. He was desperate. He wanted to think that his hard work over the years translated into something of great value. Unfortunately, like for most of the hard-working 49er’s of the California gold rush, it didn’t.

This model he’d chosen to pursue was a dead end. He may get a few contracts here and there. But without a clear focus, a good strategy, and great leadership he was destined to pilot this ship aimlessly through the coldness of space until it eventually simply crashed.

 

After evaluating the situation my advice was simple:

  • Shoot this miserable, suffering beast as a means to a merciful death.
  • Kill it quickly and decisively. He, and it, would not have to suffer any more.
  • Get a job. Save money. Pay off the bills.
  • Develop better ideas.
  • Start fresh in a couple of years.
  • Better yet, pursue acquisitions as a path back to entrepreneurship.

 

But if he was crazy enough to keep going as a startup entrepreneur … start over with a core strategy around one or two unique ideas in a space that was not a low-profit, commoditized jungle.

Ricky did get a job for a while. But, ignoring my advice, he kept the company open for business doing the same thing. A couple of years later, after I was gone from the DC area, he told me he had moved into a new office park. Same business model though. I always wish him the best. I hope he succeeds.

But the old saying is true … sometimes you just can’t teach a stubborn old dog new tricks.

 

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

 

P.S.  I’m actively recruiting test contestants for my business game show experiment. Interested? Please contact me so I can add you to the player pool!

 

 

The Best Startup Cities
Nov 17th, 2015 by LOONEYEXECUTIVE

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

— by Blake Glenn

 

While playing around on the Internet the other day and going down deep rabbit hole after deep rabbit hole, I came across an interesting piece of information on startups. It’s a Ranking of the top 40 metro areas measured by startup activity. It was created by the Kauffman Foundation.

The organization does lots of research on startups. At the time I was looking at some links about tech startups. And through a series of link-following incidents I bumped into this report. I’m not certain this Kauffman list is tech startup-centric. But even if it’s not focused on tech, it’s still pretty interesting.

 

Here are some of the more interesting tidbits of information:

  • Silicon Valley (Santa Clara-San Jose-Sunnyvale) isn’t #1, it’s #3
  • California and Texas dominate the top 10
  • California has 6 metros in the top 25, four in the top 10 – San Jose (3), LA (4), San Francisco (6), San Diego (9), Riverside (18), Sacramento (23)
  • Texas has four metros on the list, 3 in the top ten – Austin (1), Houston (8), San Antonio (10), Dallas (15)

 

** GUESS THAT MEANS GO WEST … AND SOUTHWEST PEOPLE!

 

  • Highly touted emerging tech startup hub Boulder, CO isn’t on the list, unless it’s included in the Denver metro area
  • At #12 Columbus is the top ranked Ohio city and Mid-West city (technically Ohio is really Mid-East but we’ll go with tradition)
  • The next ranked Mid-West city is Chicago (21)
  • Rustbelt cities dominate the bottom 10 – Cincinnati (32), Cleveland (35), Detroit (36), St. Louis (38), Milwaukee (39), Pittsburgh (40)
  • Another metro pretty close to Dayton, Indianapolis, ranks at #28
  • A super-region that includes Columbus, Cincinnati, and Indianapolis would be great for Dayton since it sits geographically just about in the center.
  • Pittsburgh ranks lower than the other rust-belt cities on the list … that’s a little surprising since it has been cited as a great example of rustbelt renewal
  • The Washington, DC metro ranks at #30 … such a low rank for the capitol is like totally surprising … totally

 

There are many other ways to rank startup metros too:

  • Number of startups receiving venture capital
  • Amount of total VC invested
  • Number of IPOs
  • Number of cash-outs reaching $100 Mil (+)
  • Number of executive assistants, non-executive employees, janitors, and corporate dog-walkers – I mean canine pacing engineers – achieving millionaire status due to stock options

 

Also, if you’re one of the former Industrial Age powerhouses now girding for a revival and relevancy in this Information Age, I’m not sure if you should be ecstatic just to be included on the list at all, or if you should be horrified for ranking so low.

As I come across other startup lists, I’ll be sure to share.

 

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, he can be reached the old school way … blake@LooneyExecutive.com

 

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