January 3, 2020, seems like a very long time ago. That day, I wrote a post titled The Future Of Work Is Distributed. I had no idea that four months later, all office workers in the world would be working from home, and within six months, the idea of distributed and remote work would be a topic discussed daily.
When the Federal tax laws were changed in 2018 to eliminate the deductibility of state income tax, I made the assertion, in the context of Startup Communities, that this would cause movement of people and companies across state lines, as this now created another layer of competitive advantage for states with no income tax. I remember most people waving this off, especially those living in high tax states like CA and NY.
In the last 12 months, there has started to be a migration of corporate HQs, VC firms, and high net worth people from high tax states. When Oracle announced that it is moving its headquarters from Silicon Valley to Austin, Texas, this issue hit its tipping point. We are officially on the other side of a phase transformation.
I remember the creation of Oracle’s Redwood Shores Headquarters. One of the clients of my first company was Damner Pike (an affiliate of Colliers International), a real estate firm in San Francisco that was the broker for Oracle. The Oracle / Redwood Shores HQ was a big deal at the time.
I know Oracle is not the first company to move its headquarters recently. And the same article lists both companies and individuals who have moved to either Texas or Florida recently. And many others, including a lot who aren’t being public about it (pro-tip: Ask your friendly, neighborhood VC where he or she is Zooming to you from.)
There are three states on the 0% State Tax list that I expect many corporations, VC firms, and HNW people will move to in the next 12 months. They are Florida, Texas, and Washington (State). The more adventurous will move to Alaska, Nevada, South Dakota, and Wyoming.
Distributed work is here. And State Taxes are now a competitive disadvantage. While many people will say “tax rates had nothing to do with our move,” I expect this is actually at the top of the list of factors for many people who now realize they can work from anywhere. And, this mobility of people and companies in the US will have significant long-term impacts on startup communities throughout the country.
The audiobooks for The Startup Community Way and Startup Communities, 2e are both available. I’ve gotten this request from many people, so I’m glad they are finally out.
If you are an Audible listener, you can get them at:
The Audiobook.com versions are available at:
My new book with Ian Hathaway, The Startup Community Way, is officially out. When I saw the Kindle download first thing this morning, I felt a moment of unbridled joy.
Writing a book is extremely hard. I’ve now written seven of them, all about startups and entrepreneurship. My next one, which I’ve been working on for a year with Dave Jilk (my first business partner), combined entrepreneurship and philosophy. Well, Dave’s been working on it a lot more than I have – I’ve been the slacker in this particular effort. But now that The Startup Community Way is out, and the 2nd Edition of Startup Communities is also out, I’m hopeful that my writing energy will shift to the book I’m working on with Dave.
Some of the inspiration for The Startup Community Way came from Eric Ries. I met Eric in 2007 or so and he’s another example, like Tim Ferriss, of a “good friend and colleague” from a distance. We’ve only physically been in the same space a few times, but I’ve learned an enormous amount from Eric, feel emotionally close to him, and have a deep respect for the work he does.
When Ian and I were struggling with the title for this book, batting around silly things like The Next Generation, my eyes landed on Eric’s book The Startup Way on one of my infinite piles of books. This was his sequel to The Lean Startup, which created the phrase “lean startup” and the lean startup movement.
This was analogous to what happened with Startup Communities. Prior to the first edition, released in 2012, the phrase “startup communities” didn’t exist. The book kicked off a new concept, which is now pervasive throughout the world.
I asked Ian what he thought of The Startup Community Way as a title, partly as an homage to Eric. Ian’s first response was “I like it, but will Eric go for it.” I sent Eric a note and he quickly responded that not only was he supportive of it, he loved it.
At the beginning of 2020, I sent Eric a copy of the draft and asked him if he’d write the Foreword. Again, he quickly responded that he would and cranked out a draft of a foreword that, other than a little editing, we included. He did an outstanding job of connecting the lean startup and startup communities to complex systems. And, he was incredibly generous with his thoughts out linkages and impact between our work.
With Eric’s permission, the Foreword it’s blogged below. I hope you like it and that it inspires you to buy and read both The Startup Community Way and The Startup Way.
In 2020, startup communities, which once appeared on the landscape of business (as well as the literal landscape) like so many rare animals, are long past the point of being uncommon or even unusual. As you’ll read in the many compelling stories of progress that follow, they’re coming together everywhere now, both in this country and around the globe, filled with energy and potential and the desire to look ahead to the kind of future we all want for our society. This is a critically important development. Quite simply: We need entrepreneurs and their ideas to keep our society moving forward, not just economically but equitably. The nurturing of startups, which is amplified by magnitudes when they share in a community of organizations and people, is the best way to make sure we achieve that goal.
That startup communities exist in such abundance is thanks, in large part, to Brad Feld. Every startup is unique, unpredictable, and unstable, but that doesn’t mean they can’t be managed for success, provided it’s the right kind of management. The same is true of every startup community. That’s the subject of Brad’s book, Startup Communities: Building an Entrepreneurial Ecosystem in Your City. It lays out clear practices and principles for managing the bottom-up (versus top-down) structure of startup communities, which, because they’re built on networks of trust rather than layers of control, can’t be maintained in the same way that public goods and economic development were in the past. Rather than a rigid, hierarchical set of rules and processes, they thrive on a responsive, flexible method of working that uses validated learning to make decisions with minimal error. Like entrepreneurs, startup community builders can’t rely on hunches or assumptions; they need to get out there, gather data, and see what’s happening for themselves. Only then can they bring together diverse, engaged organizations that draw on each other’s energy and experience and are led by committed, long-term–oriented entrepreneurs. By detailing a system that was hiding in plain sight, like so many methods used by entrepreneurs, Brad made it available to anyone worldwide who wants to bring innovation and growth to their city or town.
All of which is why, now that we’ve reached the next phase of startup community development, there’s no one better than Brad to address its central issue: what happens (or doesn’t) when startup communities co-exist with other, more traditionally hierarchical institutions that, as much as they’d like to work with their innovative neighbors, can’t break free of their old rules and management styles? And how can we ensure that all of these players work together with respect for each other’s strengths, and with clarity, to maximize their positive effect on the world around us? Brad’s answer, once again, is to clearly lay out the methods and tools that can affect this change. He and his co-author, Ian Hathaway, have combined deep experience with rigorous, intensive research and analysis to create a framework for this necessary path forward.
Every entrepreneur continues to iterate on their original product, and Brad is no exception. This book, The Startup Community Way: Evolving an Entrepreneurial Ecosystem, isn’t just a follow up to Startup Communities; it’s a refinement of those initial ideas—as well as an expansion of them. It encompasses the increasingly common and often complex relationships and interdependencies between startup communities and legacy institutions including universities and government (both local and federal) and corporations, culture, media, place, and finance. By situating startup communities within this larger system of networks, Brad and Ian shine light not only on the interconnectedness between them, but their connections to the larger community and society as a whole. The Startup Community Way zooms out to look at the big picture even as it provides a close, highly detailed look at each of the actors, factors, and conditions that can combine to create a successful entrepreneurial ecosystem. It also examines some of the mistakes that are routinely made, like trying to apply linear thinking to the distinctly dynamic, networked relationships in startup communities, and trying to control them rather than let them operate freely within thoughtful parameters. All of this is presented with the sole goal of helping to forge deeper connections between often disparate parts so that they can better work together toward a common purpose.
I feel a deep kinship with Brad, whose work echoes in many ways the development of my own thinking about entrepreneurship and its uses. I began with the methodology for building successful individual startups in The Lean Startup and moved on in The Startup Way to applying those same lessons at scale to bring entrepreneurial management to large organizations, corporations, government, and nonprofits. I share Brad’s faith that the entrepreneurial mindset is crucial not just for improving our present day-to-day lives but also for ushering our world into the future as we apply it to all kinds of organizations, systems, and goals, including those involving policy.
One revision Brad has made since the publication of Startup Communities resonates with me in particular: Where he previously called for startup communities to operate on a simple 20-year timeline, he’s changed that to a “20 years from today” timeline. The work of innovation is continuous, and thinking truly long-term is crucial in order to reap its true benefits. What I mean by long-term thinking is an ongoing, honest, and comprehensive consideration of what we want our companies to look like—and our country and our world—for upcoming generations. In order to have the future we strive for, one in which opportunity and assets are fairly distributed, thoughtful management and care for the planet and all of the people who live on it with us is central, and we need to look beyond the right now to the realization of all the promise of the work that’s already been done. This book is a perfect entry point for doing just that.
Eric Ries Author
The Lean Startup
Tim Ferriss did one of his very long-form (150 minutes) podcast with me last week. I met Tim for the first time in 2007 and we’ve been friends since, although we’ve spent relatively little time together in person. Like many of my friends, I have a very comfortable remote relationship that has a lot of emotional intimacy in it. While many humans find this difficult, I never have and enjoy it a lot.
I think this comes through nicely in the podcast. It helps that Tim is particularly amazing at the long-form podcast interview. While the setup was around my new book, The Startup Community Way, which comes out tomorrow (please pre-order – authors love pre-orders), I don’t think we talked about the book at all until around hour two!
The following are the show notes. I hope you get a chance to listen to this. And, if you have any thoughts or feedback, drop me a note!
Tim – thanks for doing this. I’m honored to be part of your podcast cannon (#448!)
My new book with Ian Hathaway, The Startup Community Way, comes out on 7/28. We’ve begun the pre-order campaign. Since every author loves pre-orders, so if you want to do something that will make me smile today, pre-order your copy here.
To give you a sense of the book, following is the Table of Contents, in detail.
CHAPTER ONE: Introduction
– The Next Generation
– Our Approach
– A Deeper Motivation
– The Boulder Thesis
– Startup Communities are Complex Adaptive Systems
– Where We Were in 2012
– Where We are Now in 2020
– Using Complexity Theory to Explain Startup Communities
– Evolving the Boulder Thesis to the Startup Community Way
PART I: INTRODUCTION TO STARTUP COMMUNITIES
CHAPTER TWO: Why Startup Communities Exist
– What Entrepreneurs Do
– The External Environment Networks over Hierarchies
– Networks of Trust
– Density and Agglomeration Quality of Place
CHAPTER THREE: The Actors
– Leaders, Feeders, and Instigators
CHAPTER FOUR: The Factors
– The Seven Capitals
CHAPTER FIVE: Startup Communities versus Entrepreneurial Ecosystems
– Entrepreneurial Ecosystems
– Alignment of Actors
– Different, but Mutually Reinforcing, Purpose
– Systems within Systems
– Entrepreneurial Success
– Community/Ecosystem Fit
PART II: STARTUP COMMUNITIES AS COMPLEX SYSTEMS
CHAPTER SIX: Putting the System Back into Ecosystem
– Introduction to Systems
– The Whole System
– Simple, Complicated, and Complex Activities
– Moving from Activities to Systems
CHAPTER SEVEN: Unpredictable Creativity
– Synergies and Nonlinearity
– The Study of Interactions
CHAPTER EIGHT: The Myth of Quantity
– More of Everything
– Outliers, Not Averages
– Entrepreneurial Recycling
– Leaders as Supernodes
CHAPTER NINE: The Illusion of Control
– Not Controllable
– Not Fully Knowable
– Feedbacks and Contagion
– Getting Unstuck
– Letting Go
CHAPTER TEN: The Absence of a Blueprint
– Initial Conditions and Basins of Attraction
– The Narrative Fallacy
– Building on Strengths and Learning from Failures
– Cultivating Topophilia
CHAPTER ELEVEN: The Measurement Trap
– The Fundamental Measurement Problem
– Actor and Factor Models: A Categorical Approach
– Standardized Metrics Models: A Comparative Approach
– Network Models: A Relational Approach
– Dynamic Models: An Evolutionary Approach
– Cultural-Social Models: A Behavioral Approach
– Logic Models: A Causal Approach
– Agent-Based Models: A Simulation Approach
– Applying the Different Models
PART III: FROM THE BOULDER THESIS TO THE STARTUP COMMUNITY WAY
CHAPTER TWELVE: Simplifying Complexity
– The Boulder Thesis
– The Rainforest
– Applying Systems Thinking
– Looking Deeply
– Leverage Points
CHAPTER THIRTEEN: Leadership is Key
– Be a Mentor
– Entrepreneurs as Role Models
– Key Leadership Characteristics
CHAPTER FOURTEEN: Think in Generations
– Progress is Uneven and Often Feels Slow
– The Endless Long-Term Game
CHAPTER FIFTEEN: Diversity is a Feature, Not a Bug
– Cultivate Diversity
– Embracing Diversity
– Think Broadly about Entrepreneurship
CHAPTER SIXTEEN: Be Active, Not Passive
– Self-Similarity and Replication
– Don’t Wait or Ask Permission
– Play a Positive-Sum Game
– Continuously and Actively Engage
PART IV: CONCLUSION
CHAPTER SEVENTEEN: Conclusion
– Summary of the Book
– Final Thoughts
Remember – it’s pre-order time! And, the Startup Community community is now over 2,000 people and very vibrant so jump in.
As I caught up this morning on the posts in my new Startup Community community (over 1,000 people have already joined – that was a pleasant surprise – click here to join us) I noticed one from a member from a founder in Adelaide. It was in response to a prompt from Tom Higley to kick off the Complex Systems topic discussion.
The response (one of many) was:
The video is an excellent short description of Complexity Science with an example of adopting a complexity science mindset to the problem of Urban Greening.
It immediately reminded me of Kimbal Musk and Hugo Matheson’s The Kitchen Community Learning Garden initiative (now Big Green) that has transformed a lot of schools in Boulder before starting to expand around the US.
I’m starting to feel like my answer to any question I get should be “It’s complex.”
My new book The Startup Community Way: Evolving an Entrepreneurial Ecosystem is coming out this month (pre-order it here.)
At the same time, the 2nd edition of my book Startup Communities: Building an Entrepreneurial Ecosystem in Your City is also coming out (pre-order it here.)
Ever since I started thinking, writing, and talking about startup communities, I’ve always wished there was a global virtual community for anyone interested or involved in startup communities. While there have been some efforts by others over the years, nothing has ever seemed to gain critical mass, really stick, be inclusive of anyone who wants to be involved, and be useful over the long term.
So, with the launch of these two books, I’m going to give it a try. I’ve always been obsessed with virtual communities, distributed work, and remote life. At the same time, historical startup communities have been extremely geographically focused, as a physical place is a key component of how to build a vibrant entrepreneurial ecosystem. In this Covid moment, exploring this virtual startup community seems relevant.
I’ve shifted this community from “alpha” (where I was setting it up on the fly) to “beta” (where there are now over 200 people in the community that have helped shape it and are engaging with each other. We are a week into this experiment, so if you want to get involved at the beginning, now is the time.
Come join the Startup Community community!
My first reaction to this photo was “you’ve got to be fucking kidding me.” My next reaction was the title of this post, “Humans Just Don’t Understand Complex Systems.”
The Covid crisis is a complex system. I’ve had my head deep in complex systems for the past year as I worked with Ian Hathaway on our new book The Startup Community Way. We never anticipated that the framework we used for the book around complex systems would broadly apply to the world beyond startup communities, but we find ourselves in the middle of a moment where, as a species, our lack of ability to understand how complex systems work is causing accelerating misery all over the world.
We are about to launch the pre-order campaign for the book (if you are interested in it, now’s the time to go preorder The Startup Community Way) and I spent the morning finishing up some content that our PR firm asked for.
A few of the things I wrote jumped out to me in the context of the above photo. One of the phrases was:
“As complex systems, these communities go through tipping points or phase transitions, where the overall state suddenly goes through a radical transformation. Seemingly small actions produce dramatic success but are the result of the infinitesimal, often unseen changes happening over time.”
Sound relevant to this moment? It’s framed in the positive, but applies equally to the negative, where “Seemingly small actions produce dramatic failure but are the result of the infinitesimal, often unseen changes happening over time.”
I’ll end with my answer to the question: Why do we need startup communities now more than ever?
Sustainable economic growth has slowed in many parts of the world. The income and wealth divide within many countries has been dangerously accelerating, and with the Covid crisis, massive global economic dislocation is upon us. Entrepreneurship is the means for upward mobility and wealth creation. Startup communities are critical for improving the impact of entrepreneurship in local geographics and dramatically increase the probability of success of positive economic growth over a long period of time.
In this moment, I’ve decided to create a Startup Community community—a global network for anyone interested in or involved in startup communities around the world. I just spun up a Mighty Network community to experiment and see if that’s a good approach, vs. a Slack community or something else. If you are game to engage as an early alpha user to give me feedback, please jump in and join the Startup Community community.
Don’t forget to pre-order The Startup Community Way. And, the 2nd Edition of Startup Communities is coming out at the same time, so if you want a refresh, pre-order it also!
I was at a dinner event last night in Denver where, predictably, coronavirus (which I’ve been trying to call Covid-19, but everyone seems to default back to coronavirus) came up.
I’ve tried to avoid being “that person” who has a strong opinion because so much is changing so quickly. Instead, I’ve tried to have a “clear opinion” based on what I currently know and how it’s impacting my world. I was particularly sensitized to this since, at a board meeting earlier in the day where it came up, someone asked me directly, “How do you think coronavirus will impact things?” A few minutes later I realized I was stuck in exactly the kind of rant that I was trying to avoid.
Over the past year, as Ian Hathaway and I worked on our upcoming book The Startup Community Way, I’ve thought a lot about complex systems. We based our conceptual framework on the theory of complex adaptive systems (which we’ve shorted to complex systems in the book for ease of reading) and it has been a really enjoyable intellectual rabbit hole to go down with Ian.
How Covid-19 is playing out is a classic example of a complex system. One of the key attributes that we discuss is contagion – both positive and negative. And, with Covid-19, we are seeing negative contagion at multiple different levels, most notably biological and economic. But, there are several others including one I’ll label hysteria.
Here’s an example. When a large technology company in a city shuts down its offices, cancels all travel, and insists everyone works remotely from home, other large technology companies around the world and other companies in the city pay attention to this. Suddenly, there is a conversation going on everywhere that is the equivalent of “should we do the same thing?” The emotional cadence of this conversation is high, so companies over-index on trying to figure out the right answer, where there isn’t really one given the nature of a complex system. Rational thinking generally aligns with “we’ll do whatever the CDC is suggesting we do”, but anyone who either doesn’t trust the government or authority figures won’t be satisfied with this. They will become more agitated (negative contagion on hysteria), which will generate more conversations and potential actions. Regardless of the actions, the cost of the conversations will be high, generate more uncertainty and agitation, and the negative contagion will continue.
I’m not suggesting that Covid-19 is no big deal. I’m not asserting that companies shouldn’t shut down offices or people shouldn’t work for home. Rather, I’m giving an example of negative contagion on a dimension (hysteria) that is appearing in complex systems that I’m involved in.
Intellectually, it’s fascinating. Emotionally, it’s challenging.