Promoting local startups

Local communities have human connections that are rare in megacities with high transiency. If the right people within a local community gather to achieve something, startup ecosystems can be created. Can an investor, in a given community, get a successful startup established and running? If so, how can he do that? How can he accelerate those human connections and get to know the right people? Here are the suggestions from the book, The Rise of the Rest, by Steve Case, a co-founder of America Online.

Community champions

When looking at local community startup possibilities to invest in, one consideration is who you contact initially. You have to consider who the leaders in the community are now and explore getting their support. Contact them and then evaluate if you should meet. Be careful not to consider only one type of person. Explore the possibilities for a diverse community, including women, blacks and Hispanics. How much of your particular market is represented by these people? Once people are exposed to new networks, new aspirations and ideas can develop.

Finding the right people

How can you go about finding the right people? First, you should clarify the startup’s goals and initial project. From there, you must spot who the main influencers are around those goals. From the selected project, relationships and networks could be developed. These networks can include a wide assortment of different and diverse people by following this approach, suggested by Case:

1. Socialization and exposure. Get the widest possible assortment of people socializing. Learn and amplify what they can do.
2. Basic skills and educational development. Work on the skills and education required to contribute to the project.
3. Talent identification, focus and placement. While in training, spot talent and preferences and then direct those abilities to where they can best be utilized.
4. Internship and apprenticeships. Start programs which provide on-the-job experience and mentorship. Let people practice and refine their talent.

Business model approach

In application of the above suggestions, one idea is to take a very fragmented supplier-to-user relationship and consolidate it into one ecosystem, where the entire supply chain becomes more transparent and visible. Then, if there are concerns, they can be addressed quickly. For example, FreightWaves for transportation and distribution centers or AcreTrader for land sales. Or Atomos Space decided to go to Denver, Colorado, because the aerospace engineering talent there can be assembled into a productive unit.

Another business model promotion idea is to tap into the very entrepreneurial character of Cuban exiles or refugees. In Miami, 52% of the population is foreign-born. To generate startups, there is the eMerge conference. Yearly, the conference connects startups and CEOs from around the world. This includes investors, partners, and people with specific technical talent. It promotes the inclusion of the immigrant community within the Miami area. A simple example is the startup, Xendoo offering bookkeeping and accounting services for all small businesses. This conference could be where someone explores ideas and builds team members.

Addressing a community concern

In one community, the major need was to get young people together on healthy activities. They wanted these kids to learn useful skills and deepen their connection to their local community. One idea was tearing up an underused football field and using it to grow food and teach young people how to grow things. They got young people together around a food growing project within the community.

From that gathering of young people, community serving startups could have been explored, discussed and planned. This could also be done through community college work/study programs or government incentives.

Being adaptive

Entrepreneurs must continually adapt as business ideas come out, new products are developed and market situations evolve that require a great deal of trial and error toward the unknown. This is a special skill set in a world that can present unplanned-for events. You just have to keep asking yourself if something can be useful - and iterate based on what you find. Then, find other people in the ecosystem that want to be helpful. Those activities build ecosystem communities, leading to community loyalty and pride.

Entrepreneurship is hard, it is usually surrounded by doubters and skeptics, including family and friends that can’t envision the startup concept. On top of that, one has to confront their own fears of counterproductive events. Throughout history, great ideas got started in someone’s garage, barn or school lab. Then, someone took a chance on the idea, supported it and invested in it. None of this was well planned, and there were continual adjustments along the way.

Here is an example of how a startup gets off the ground: LifeLoop developed an app that connects families with older retired, fragile, immobile adults in assisted living facilities. The app looks at improving quality-of-life related issues in finding ways to engage grandma with her community and with her family across the United States. This all started with the statement that addresses the problem of older people that lose contact with friends and family, specifically, “There has to be a better way (than the way older people currently stay in contact).” After exploring some ideas, they started looking for the needed talent with spare and excess time available to make it a reality, as they had no budget at all. This leads to LifeLoop, which simplifies reconnecting.

One location to live-work-play

According to Case, to help people live, work and recreate in the same place, an ideal living, working and recreation environment must be found. First, a “live-work-play” environment (which is not living in one place, working in another place, and entertaining yourself in still another place) must be explored, so you don’t have to commute. In the right location, startups can achieve that. Global corporations don’t care that much about each local community. Leaders should promote those community values to all potential partners or investors.

Internet development stages and their current impact

In his book, Case introduces what he calls the “Third Wave” with the First Wave being initial internet connections and the Second Wave being software development to fully use those connections.

We are now experiencing his Third Wave, which is how all these connections impact and change our daily lives, businesses and communities. This impact consists of four factors that any leader should capitalize on:

1. Expanding community tech centers with industry expertise.

People from different places are starting to come together to share expertise and collaborate in tech centers.

2. Job-creating startup hubs.

These centralized groupings are bringing technology, expertise and local needs together to create wealth. These hubs are required to build network density in which there is close, regular contact with creators that explore possibilities and help each other succeed by moving ideas into actual products. These networks are replacing hierarchies that had created barriers to entry in the past.

3. Acceleration of local and distributed innovation.

Economic success will no longer depend on being near a river, ocean or natural resource as in centuries past, but will depend on the skills of people being assembled. That is why academic and research capacities are important. Each location must find an advantage to focus on and develop to make them exceptional.

 (Amazon was set up in Seattle because of Microsoft engineers. Dell and Southwest Airlines started in Austin because of its innovativeness. Place still matters but to a lesser degree. Ideas will come to the surface seemingly by accident, as more adventurous, information sharing and collaborating people assemble around each other. 

That is harder to do virtually but not impossible. Think of telehealth services and virtual offices, such as Talkspace the telehealth company or Pear Deck or Class Technologies that support teachers.

4. Local and national government engagement and incentives.

With local, regional and national support, the startup process will be accelerated. Startups can’t succeed on their own. They need a community that celebrates them, and they need to be able to access capital and attract talent to scale. This is where governments can help. Startup leaders have to explore how supportive governments and communities will be to any new idea.

Overcoming high labor costs

Companies like Catalyte can find people with no college degree but have the talent and desire to learn software development. People with advanced degrees might be too expensive to hire at a startup. It might be an idea to ignore typical resume key points and explore current abilities and development potential. That discovery is not that easy, but Catalyte is doing it. All leaders that want to build teams should explore how to identify this drive and talent.

Furthermore, you could look within the immigrant population, Black community, and women without college degrees and build from there. You could take people from anywhere, any demographic, any background, and identify those with software engineering development potential. In Dallas, Las Vegas, Miami, and Raleigh, immigrants are responsible for more than half the startup growth in those cities, as well as 19 other metro areas in the US, according to Chase.

Local development hubs

One of the key hubs for local economies is universities and research institutes. As their markets are small, so are their research budgets. For example, testing equipment and materials are expensive. Possibly they will have to explore sharing equipment.

Rheaply is an organization that builds connected communities with transformative technology, where every workplace resource finds its next use. It connects scientists with equipment and resources in excess to those with specific needs.

Let’s say some testing equipment (chemicals/tools/raw materials) was used to do research. What does the researcher do with the equipment after the research is completed, but other projects might follow? Those items could be shared in the meantime and then returned later.

Websites could be developed to connect a wide range of research assets to where they might be needed. That would lead to the development of a research community with a limited budget. This all leads to lower project costs, less waste and more efficiency.

Solution for weak, declining rural communities

Startups could be the solution in declining communities that no one cares about. For example, AppHarvest is a company in Central Appalachia. It developed a method of using 90% less water and the power of the sun for reliable indoor food production, regardless of unpredictably harsh external environments.

That technology could be needed in many similar regions. An estimated 30% of the food produced globally for human consumption is wasted somewhere along the food supply chain, according to the Intergovernmental Panel on Climate Change. AppHarvest, with its shorter supply chain, fights fruit and vegetable shortage through reduced waste. AppHarvest started in a depressed area. When people are inundated by talk of problems, especially ones that feel insurmountable, they tend to tune out to what could possibly be done. The AppHarvest startup team, through the inspiration of its leaders, turned away from all the problems and redirected their effort to find out how indoor food is grown elsewhere, like in Europe and other markets. Then, they came up with a business model.

Local electrical charging challenge 

For electric vehicles (EVs), charging stations are a problem, particularly in rural communities. What’s the opportunity? Ask the leaders and establishment team at SparkCharge. They created portable EV chargers and charging-as-a-service (CaaS) for EV charging that is less expensive, seamless, simple and convenient.

Rural education issues

As the globe becomes more internet connected, rural education should spread, including education for innovators and entrepreneurs which those leaders can take advantage of.

Reading the book Beyond Silicon Valley by Michael Goldberg, and taking the author’s open online course (MOOC), I discovered that even learning how to develop a local startup is available. The courses take you through how to start businesses, find entrepreneur mentors, grow entrepreneurial advocacy organizations, and energize a local startup ecosystem. For example, imagine you move to a new small city and want to develop a startup project. If you are a software developer, first you have to get away from your computer screen and start talking to community leaders. You should ask yourself what successful software related companies there are now. If you find one, go talk to them and ask what they did and how they built a community network. Their success stories will give you guides toward your own software startup.

Once you talk to a lot of people directly, you could organize an online or in-person local startup “Meetup” with the purpose of brainstorming what is needed in the community and how a startup could address those issues. For the meeting discussion, you could start with a local success story if you can find one. Then, you could start asking questions like, what does this local area have to offer (secure space, location, talent, incentives, products, etc.). What are their advantages in comparison to other regions? What is needed in this area (training, resources, funding, ideas)?

After the meetup, a document of all the local startup issues, advantages and concerns that were discussed could be written. From there, the document and issues can be presented to investors, government agencies, and local NGOs to get them thinking as well.

For example, MicroMentor is a global mentoring platform that helps change makers and innovative thinkers. These are mentors who have had businesses and know what new startups will go through. That is just one of many resources that could be explored.

You must have confidence in your region's ecosystem and its unique capacities. So, you must understand the value of your ecosystem to gain that confidence. Then, you can design a future that takes advantage of those characteristics.