The Way Forward for Entrepreneurship Around the World
We are in the midst of a startup revolution. The growth and proliferation of innovation-driven startup activity is profound, unprecedented, and global in scope. Today, it is understood that communities of support and knowledge-sharing go along with other resources. The importance of collaboration and a long-term commitment has gained wider acceptance. These principles are adopted in many startup communities throughout the world.
And yet, much more work is needed. Startup activity is highly concentrated in large cities. Governments and other actors such as large corporations and universities are not collaborating with each other nor with entrepreneurs as well as they could. Too often, these actors try to control activity or impose their view from the top-down, rather than supporting an environment that is led from the bottom-up. We continue to see a disconnect between an entrepreneurial mindset and that of many actors who wish to engage with and support entrepreneurship. There are structural reasons for this, but we can overcome many of these obstacles with appropriate focus and sustained practice.
No one tells this story better than Brad Feld and Ian Hathaway. The Startup Community Way: Evolving an Entrepreneurial Ecosystem explores what makes startup communities thrive and how to improve collaboration in these rapidly evolving, complex environments.
The Startup Community Way is an explanatory guide for startup communities. Rooted in the theory of complex systems, this book establishes the systemic properties of entrepreneurial ecosystems and explains why their complex nature leads people to make predictable mistakes. As complex systems, value creation occurs in startup communities primarily through the interaction of the "parts" - the people, organizations, resources, and conditions involved - not the parts themselves. This continual process of bottom-up interactions unfolds naturally, producing value in novel and unexpected ways. Through these complex, emergent processes, the whole becomes greater and substantially different than what the parts alone could produce.
Because of this, participants must take a fundamentally different approach than is common in much of our civic and professional lives. Participants must take a whole-system view, rather than simply trying to optimize their individual part. They must prioritize experimentation and learning over planning and execution. Complex systems are uncertain and unpredictable. They cannot be controlled, only guided and influenced. Each startup community is unique. Replication is enticing but impossible. The race to become "The Next Silicon Valley" is futile - even Silicon Valley couldn't recreate itself.
This book:
- Offers practical advice for entrepreneurs, community builders, government officials, and other stakeholders who want to harness the power of entrepreneurship in their city
- Describes the core components of startup communities and entrepreneurial ecosystems, as well as an explanation of the differences between these two related, but distinct concepts
- Advances a new framework for effective startup community building based on the theory of complex systems and insights from systems thinking
- Includes contributions from leading entrepreneurial voices
- Is a must-have resource for entrepreneurs, venture capitalists, executives, business and community leaders, economic development authorities, policymakers, university officials, and anyone wishing to understand how startup communities work anywhere in the world
Table of Contents
Foreword xiii
Preface xvii
Chapter One Introduction 1
The Next Generation 2
Our Approach 3
A Deeper Motivation 5
The Boulder Thesis 7
Startup Communities are Complex Adaptive Systems 8
Where We Were in 2012 10
Where We are Now in 2020 12
Using Complexity Theory to Explain Startup Communities 14
Evolving the Boulder Thesis to the Startup Community Way 17
Part I Introduction to Startup Communities 21
Chapter Two Why Startup Communities Exist 23
What Entrepreneurs Do 23
The External Environment 25
Networks over Hierarchies 27
Networks of Trust 29
Density and Agglomeration 33
Quality of Place 35
Chapter Three The Actors 41
Leaders, Feeders, and Instigators 42
Actors 45
Chapter Four The Factors 59
The Seven Capitals 60
Factors 62
Chapter Five Startup Communities
versus Entrepreneurial Ecosystems 75
Entrepreneurial Ecosystems 77
Alignment of Actors 78
Different, but Mutually Reinforcing, Purpose 80
Systems within Systems 81
Entrepreneurial Success 84
Community/Ecosystem Fit 85
Part II Startup Communities as Complex Systems 93
Chapter Six Putting the System Back into Ecosystem 95
Introduction to Systems 96
The Whole System 97
Simple, Complicated, and Complex Activities 103
Moving from Activities to Systems 107
Chapter Seven Unpredictable Creativity 115
Emergence 117
Synergies and Nonlinearity 118
Self-Organization 120
Dynamism 121
The Study of Interactions 125
Chapter Eight The Myth of Quantity 133
More of Everything 134
Outliers, Not Averages 136
Entrepreneurial Recycling 138
Leaders as Supernodes 140
Chapter Nine The Illusion of Control 151
Not Controllable 152
Not Fully Knowable 154
Feedbacks and Contagion 156
Getting Unstuck 158
Letting Go 160
Chapter Ten The Absence of a Blueprint 165
Initial Conditions and Basins of Attraction 168
The Narrative Fallacy 170
Building on Strengths and Learning from Failures 172
Cultivating Topophilia 174
Chapter Eleven The Measurement Trap 183
The Fundamental Measurement Problem 184
Actor and Factor Models: A Categorical Approach 186
Standardized Metrics Models: A Comparative Approach 188
Network Models: A Relational Approach 190
Dynamic Models: An Evolutionary Approach 192
Cultural-Social Models: A Behavioral Approach 194
Logic Models: A Causal Approach 195
Agent-Based Models: A Simulation Approach 198
Applying the Different Models 199
Part III From the Boulder Thesis to the Startup Community Way 207
Chapter Twelve Simplifying Complexity 209
The Boulder Thesis 210
The Rainforest 212
Applying Systems Thinking 214
Looking Deeply 216
Leverage Points 219
Chapter Thirteen Leadership is Key 231
Be a Mentor 234
Entrepreneurs as Role Models 235
Key Leadership Characteristics 237
Chapter Fourteen Think in Generations 243
Progress is Uneven and Often Feels Slow 245
The Endless Long-Term Game 247
Chapter Fifteen Diversity is a Feature, Not a Bug 255
Cultivate Diversity 256
Embracing Diversity 259
Think Broadly about Entrepreneurship 260
Chapter Sixteen Be Active, Not Passive 267
Self-Similarity and Replication 268
Don’t Wait or Ask Permission 269
Play a Positive-Sum Game 270
Continuously and Actively Engage 275
Part IV Conclusion 281
Chapter Seventeen Conclusion 283
Reflections 283
Summary of the Book 285
Final Thoughts 291
About the Authors 295
Acknowledgments 297
Notes 301
Index 325
