Professional football feeds on a reliable stream of incredibly talented, well trained players from top collegiate programs. Elite high school players jockey for scholarships, replacing graduating and drafted college talent. Football is inclusive at its lowest levels where all kids have an opportunity to participate. At each level, coaches and training staff teach the game and foster physical skills.
As an Entrepreneurial Resource Provider* (ERP) you are not Bill Belichick or even in the NFL. Entrepreneurship is not football.
There are no lower level leagues feeding your program. So, when you cherrypick the most promising companies and reject the rest without explanation, you sabotage talent development in your community.
All of us entrepreneurs are jumbled up; there is no Scouting Combine to generate reliable performance data. There are no millionaire college coaches in startup-land. No youth flag football programs run by doting parents.
The lionâs share of your work as an ERP must be on the most promising cohort of companies you can recruit. (Thatâs how you told your financial backers youâd spend their money.) But, you ignore those who do not make todayâs team at your peril. If you donât offer them a hand up, the âgameâ will lose talented prospects forever. Your community will suffer.
As an ERP, responsibility for talent development is in your hands. Less promising entrepreneurs need help identifying which fundamental aspects of their game are lacking. They will have to put in the hard work to improve, but without guidance from you, they donât know if they should study film or hit the weight room.
What are you doing to support the companies that arenât ready for the big leagues in your community?
* ERPs are organizations including accelerators, venture capital funds, SBDCs, government grant-awarding agencies, angel investment clubs, co-working facilities, etc.
(Image credit: Wikimedia Commons. Football stats from here, here and here.)
Why startup community leaders should treat you like a diva
Dear Volunteer:
When you engage with entrepreneurs, you help them avert disasters and steer for successes. Your contributions are not for sale. Theyâre freely given, which makes them all the more valuable.
You give before you get. You are here to help. On behalf of entrepreneurs everywhere, Thank You!
Too often, you have raised your hand to help only to have the overwhelmed leaders fail to get back to you. Too often, leaders shrink the volunteer pool down to an easier-for-them-to-manage size, and wind up asking too much of you. Too often, youâre asked to sit through meetings where you cannot add much value.
Itâs time for them to start treating you and your fellow volunteers like divas. After all, there is no show without you.
What would Van Halen do?
Back in the day, hard partying Van Halen had an infamous contract rider specifying their dressing room be stocked with a bowl of M&Ms with all of the brown candy removed.
But, âDavid Lee Roth was no diva; he was an operations master.â The bowl of M&Ms was the canary in the mine: when a venue wasnât paying attention to the details, it was easy to tell. To the casual observer the band were divas in the extreme.
You should be treated like David Lee Roth when you give the community your time. What should you ask for?
The Startup Volunteers' Bill of Rights
Since the folks organizing your startup community are often unpaid themselves, we cannot ask them for complex contract riders. But, you can start to lay down some solid operational practices in exchange for your time and expertise. Hereâs what to ask.
~ ~ ~
Dear Community Leaders:
(1) Give us volunteers an Ă la carte menu with specific time estimates associated with each option. Allow us to pick one activity, or participate in multiple areas.
(2) Measure our time invested. Be sure to account for travel time, consensus-building meetings, and organizational chores.
(3) Attempt to measure the value of our contributions. If I am adding value, you, as leaders, should be able to measure it. (If you cannot measure it, it might be time to look for a new operational model.)
(4) Use the resulting ROI data to optimize the program moving forward. My time is precious. Its investment deserves a clear return.
_I hereby challenge our leaders to deliver a positive return on the time and energy invested by the community. _
Sincerely, One of your amazing volunteers
~ ~ ~
If startup leaders would follow this approach, the âconcertâ youâve signed up for will be a better experience for everyone. Rock on, Divas!
Leading your startup community involves quite a bit of cat herding. When youâre herding cats, it helps to have some cat food.
Itâs easy to convince yourself that the $30k or $300k you worked hard to secure from sponsors or tax payers is both the ultimate lure for startups and the ultimate legitimizer of your program for the volunteers you recruit.
It isnât.
If you replace cash with pilot projects with large organizations, youâll make more progress for your startups, secure your cat food more easily, and build a more relevant ecosystem.
More Progress
For a startup company, the opportunity to win large organizations as early customers provides validating traction, crucial product feedback and the potential for recurring revenue. These benefits outweigh a one-time injection of cash for your startups, and therefore for your community as a whole.
Easier to Secure
Our close collaborators, Prime Health, put on a magical event during Denverâs recent Startup Week. Eight startups made five-minute pitches to 18 large healthcare organizations with 575 in the audience. Delighting everyone, every single startup won multiple offers for pilot projects right there on stage.
Behind the scenes, Primeâs conversations with its large partners went something like this:
âWe know your organization is always looking for the next innovation to move your industry forward. If we were to present you with a curated group of startups we determine to be among the strongest in our community, would you be willing to look at doing pilot projects with them? Thereâs no obligation for you, of course.â
âWould some of the key members of your team be interested in coming to speak with our startup community about the challenges facing your industry?â
âWould your company to provide us with some volunteer hours to help evaluate and mentor our startups? Weâll give your team members a la carte menus of various opportunities to engage.â
Itâs easier to secure this type of cat food than cash. The value proposition to the large organizations is clear, and the âaskâ isnât held hostage by an opaque budgeting process.
A More Relevant Community
Channeling Steve Blank and Brad Feld respectively, startups need to âget out of the buildingâ to meet with customers, and your startup community should engage with the âfull stackâ in your ecosystem. By building relationships with a roster of large, high quality partners / potential customers your community gets out of its echo chamber and into the marketplace.
As you begin to think about community-building as cat herding, consider adding some juicy, fresh relationships to the dry kibbles that are novelty-sized checks! Your community will be healthier, happier and easier to herd if you do.
Valid Evaluation and the Kauffman Foundation Announce Data Collaboration Project
Evidence-based assessment data from experts in entrepreneurial communities offer promising insights
Kansas City, Missouri âą Denver, Colorado
Today the Valid Evaluation (Valid Eval) and the Ewing Marion Kauffman Foundation announce that they are collaborating on research to more accurately pinpoint paths to success for startups and small businesses.
The partnership will delve into research on Valid Evalâs multiple expert evaluations of more than 2,000 companies throughout the United States to try to understand the impact of structured feedback and evaluation in the entrepreneurship process. The Kauffman Foundation is a leading force in research and policy topics on entrepreneurship. The partnership is part of Kauffmanâs Startup Data Initiative program, which is attempting to better understand how critical segments of entrepreneurship programs work, such as evaluation and feedback, and what can be done to improve specific aspects of entrepreneurial support delivery.
Valid Eval takes a unique approach to assessing entrepreneurs. It structures expertsâ opinions about the strengths and weaknesses of entrepreneursâ strategies using evidence-based frameworks known as rubrics. Valid Eval deploys its online assessment platform where experts already judge and critique startups and small businesses. For example, government grant programs, incubators, universities and Small Business Development Center training courses are current Valid Eval clients.
âMeasuring what is happening within large numbers of entrepreneurial companies as they develop is notoriously difficult,â said E.J. Reedy, director of Research & Policy at the Kauffman Foundation. âOur team will look at Valid Evalâs standardization of the evaluation and development processes to better understand if such structured work is helpful to improving entrepreneurial outcomes.â
âWe are honored to have the Kauffman Foundationâs research team assist Valid Eval in garnering greater value from our large and growing dataset,â said Valid Eval CEO Adam Rentschler. âI believe we have an opportunity to fundamentally improve how communities unlock economic growth for entrepreneurs. This project aims to find the âkeysâ for that growth from within the data we have already captured.â Â
Terms of the partnership are not disclosed.
About Valid Evaluation
Founded in 2011, Valid Eval is an online evaluation system for organizations that make and defend tough decisions. It provides insight into the decision-making process, illuminating the details of evaluator assessments while reducing subjectivity and minimizing bias. Valid Eval surfaces and organizes the normally hidden criteria used in complex evaluations, which increases evaluator accountability and confidence in outcomes. Itâs based on widely accepted principals of cognitive and behavioral science, and uses purpose-built rubrics â performance standards and scoring criteria â developed in consultation with experts in the field. Valid Eval synthesizes and contextualizes diverse responses from evaluators who have relevant expertise, providing clear, concise, credible feedback that people can easily prioritize and act upon.
About the Kauffman Foundation
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo., and has approximately $2 billion in assets. For more information, visit www.kauffman.org, and follow the Foundation on www.twitter.com/kauffmanfdn  and www.facebook.com/kauffmanfdn.
StartX is NOT the Future of Accelerators. You are.
Chad Byers' post about StartX (quoted below) makes some good points. But, lost in the âStanford is Awesomeâ message is the much larger -- although less obvious -- trend that is emerging. Startup Communities are accelerating their own members.
What can our (non-Bay Area) communities offer relative to the points Chad makes?
No equity stake required to help the companies? Check.
Passionate and skillful mentors? Check.Â
Demo day? Well, probably not. But, we question the value of dog and pony shows in the first place.Â
The "superior model" we need to tap is the expertise, talent and generosity in our local communities. What's needed for that? The right dot-connecting entrepreneurial leaders and the right tools to make mentorship more effective and efficient.
I am not arguing that StartX is currently the best accelerator in the world, but I am arguing that because of this superior model, it could be someday. [...] This model could be successful in the many great universities across this country.
Parody Twitter account @BoredElonMusk shares a snarky (and legitimate) criticism of @angellist and its reliance on "social proof" to evaluate entrepreneurs.Â
Coaches' Film for Startups. A reaction to "How Experts Think."
Kevin's piece (re-blogged below) invokes Tom Brady, chess grandmasters and radiologists.
Experts do not think less. They think more efficiently. The practiced brain eliminates poor solutions before they reach the conscious mind.
[Chess] grandmasters evaluated few moves and re-evaluated them less often than other players.
The more we learn from our experience and the experience of othersâââwhether in chess, radiography, football or anything elseâââthe more selective our attention will become, and the faster we will think.
Valid Eval exists to help startups climb the expertise curve more quickly.Â
Like grandmasters, the best quarterbacks experience as many games as possibleââânot just by playing and practicing, but also by studying... coaches film.
It's helpful to think of our system as scalable "film study" with multiple expert coaches. No football coach would ever use just the scoreboard to help players improve. Yet, this life-lesson approach is typically startups' primary learning vehicle. Â Â
Each of our customers assigns experts to evaluate entrepreneurs' "game film." Each participant benefits from a collective critique of their fundamentals, not just the game's outcome.Â
In doing so, we help our clients create more elite startup quarterbacks.Â
Randall Wright gets it wrong in this MIT Tech Review piece, "Thinking of Running an Open Innovation Contest? Think Again."Â
Innovation begins when those who are fluent in their fields begin to cross domain boundaries. Boundary-crossing is more frequent when people with different areas of expertise are given the time, space and resources within which they can collaborate. Sometimes, a contest can create just such an environment -- to miss this fact is to miss the best reason to have a contest in the first place!
My team and I firmly believe that all innovators (and would be innovators) deserve the benefit of feedback from their field (the experts in their community) as to what works and what doesn't with their idea. Innovation doesn't exist until the new concept is adopted by the culture that surrounds it. Closing the feedback loop on innovators via experts' thoughts is what's needed.
Contests' extrinsic rewards aren't helpful to innovation. But, specifically encouraging boundary-crossing and creating an environment in which experts in the field will evaluate a given innovation is tremendously helpful to the process of innovation. Good contests focus on the latter, though the former certainly does tend to put "butts in the seats."
Should one rely on contests to drive innovation? Of course not! But, to dismiss the role that a well designed contest can have on innovation is wrong.Â
The entrepreneurs seeking your funding, or applying to your program want feedback. You should not give it to them.
You are better off keeping them in the dark. Theyâll find their way to success â or not â without your help. So what if theyâre doomed to repeat mistakes they donât know they are making? If you give them a little bit of help, theyâll want more. Theyâll waste your time. Theyâll get angry when you start to explain why their âbabyâ isnât beautiful. Theyâll never be satisfied.
Far too many leaders of startup communities around the world adopt that attitude. They channel Will Ferrellâs Ricky Bobby (if you ainât first, youâre last) and will flatly tell you, âFeedback is dangerous.â
People running famous accelerators say, "Feedback is dangerous." Our competitors say that too. (Opacity offers protection. Better to choose the winners behind closed doors. No one can argue with logic they cannot see.) Lots of folks seem to feel that way.
This is a misguided attitude. It hurts the entire community.Â
As a leader, an investor or a grant awarding agency, you lose nothing by helping others in the community â no matter how broken their businesses may be.
Itâs time for startup communities to dump Ricky Bobbyâs attitude in favor of Winston Churchillâs, who said, âSuccess is the ability to go from one failure to another with no loss of enthusiasm.â
Entrepreneurs fail constantly as they seek the right strategies for their businesses. Their failures tend to happen in their blind-spots. They need you â those they look up to and from whom they seek funding, awards and admissions â to provide them with honest assessments of where their weaknesses are. Only then can they see their shortcomings. Only then can they improve.
Feedback isnât dangerous; it unlocks human progress.
My recommendations for entrepreneurial leaders, conveners and feeders:
Establish boundaries with entrepreneurs. Let them know that feedback is not an invitation to start an endless argument. Remind them that every business cannot win your prize / investment / grant. Then, give specific and actionable feedback. (Specificity helps avoid arguments and needless followups for clarification.) Next time your path crosses with the entrepreneurs who did not finish on the podium, you will see progress and growth.
Feedback allows us all to win.
If you are in the evaluation and winner-picking business, donât be a Ricky Bobby. Everyone who builds a âcar" to enter your âraceâ deserves a chance to do better next time.
If your community doesn't adapt, you are in danger of burning through your mentors' goodwill, and your startups will increasingly be left to fend for themselves.
Why? The learning model in which we are stuck is based on one-to-one exchange of intuitive impressions that experts share with startups. This has two implications:
(1)Â Mystery. Many experts in startup communities insist the difference between a fundable strategy and a one that cannot attract funding is like the difference between art and porn. âI know it when I see it,â theyâll tell you. (Smut, like a good strategy, is difficult to define in the abstract.)
(2) Access. This type of learning relies on high caliber experts who are gifted in applying their intuition to the unique strategic challenges of a given startup. Mentorsâ volunteer time is a scarce and carefully guarded resource. This makes sense; we are making novice entrepreneurs much faster than we are making new, kick-ass mentors.Â
Mystery creates efficiency problems. Access constraints are a symptom is a growing supply and demand imbalance in our communities. The intuition our communities rely on as the wellspring of entrepreneurial learning doesn't scale. Until we address this issue, our communities cannot scale either.Â
Mystery
Until recently, entrepreneurs and VCs had a relationship like Dark Ages serfs had with monks in their libraries. Back in 2004, I was given a ~100 page binder on venture capital financings. It was put together by some generous deal attorneys in Austin. For over half a decade it was a unique and prized possession of mine. It was the equivalent of a pre-Gutenberg book.
Venture financing education has come a long way since then, via online resources from Mark Suster, Paul Graham and Y Combinator, and books like Venture Deals. Weâve entered the age of the printing press. But, any entrepreneur worth her salt will tell you success in business isn't found in any blog or book.Â
Where the rubber meets the roadâentrepreneurs getting feedback from mentors (and potential investors) on their strategy specificallyâweâre still stuck. Itâs still a process based on the mysterious intuition of experts. Mystery slows down learning. It means mentors too often get bogged down in the basics, wasting valuable time. Startups get "whiplashed" by mentors only because mentors' rationale is opaque.Â
Mystery is an enemy of a scalable learning environment.Â
Access
The promise of access to a meticulously curated group of the best mentors drove roughly 1200 applicants to seek one of the 12 spots in the the TechStars Boulder 2012 class. Many companies, Valid Eval included, coveted that access.Â
For 1188 of us, the message we got was unambiguous: "Sorry, Folks! Park's closed."Â
We found the "moose out front" a poor substitute for helpful mentoring.
Our options: (1) go back to painful, slow, risky trial-and-error, or (2) network like demons for the opportunity to burn time in coffee shops hoping to gain a pearl or two of wisdom from the mentors willing to meet with us.Â
As the demand for mentors climbs in our communities, the supply of learning opportunities for each individual startup decreases. The pent-up demand cannot be met by making more experts in the short- or medium-term. Events like Open Coffees, Boulder Beta, the Open Angel Forum, and tech meetups help increase the velocity of collisions between mentors and those seeking their help, but they don't do a thing to address the fundamental shortage of mentor expertise available to the burgeoning legions of entrepreneurs who need their help.Â
We need a force-multiplier, not more get-togethers. We need more efficient learning solutions.Â
The Solution
Successful startup communities will morph into scalable community-based learning environments.Â
First, we need to surface the tacit knowledge of our experts. We structure that knowledge and collectively work to improve the rubrics we use to measure startups' strategies. Startups and mentors enjoy a common "language" and startup fluency improves. This makes interactions more meaningful and substantive. Once the Mystery falls away, real growth is possible.Â
With efficient, evidence-based workflows, experts can help more entrepreneurs achieve more progress in the same amount of time: efficiency. Known-good rubrics, which rely on evidence rather than intuition, make it less necessary to rely so heavily on elite mentors. Near-experts (and even peers!) can provide valuable, actionable feedback. Thus, the pool of people who can be helpful to a given startup expands. Efficiency and an expanded pool of mentors eases Access problems.Â
Mystery and Access donât have to be constraints to our startups' learning. We deserve communities that donât rely on one-to-one intuition exchange to foster development.
Accelerating to Oblivion: Where Will You Be When the Incubator Apocalypse Comes?
by Tommy Perkins
Still, let's assume that this accelerator/incubator bubble is a thing, because it probably is. This isnât the first time the alarmâs been sounded. Plus, if Robert Scoble thinks thereâs sour milk coming from a bell cow like Y Combinator, it seems safe to assume that the same is probably true at at least one of the 100(!) other incubators out there.
Is yours one of them? More importantly, is there an objective way to tell, besides waiting for one of your judges or mentors to squawk to the media? Here are some questions to ask yourself:
* Â How prepared are your entrepreneurs for the scrutiny to which your accelerator subjects them? How are you measuring their readiness?
* Â What dimensions are your companies most commonly getting passing grades on? What are they frequently getting dinged on? How often do you adjust your curriculum to address this data?
* Â How much of the feedback your entrepreneurs receive are they applying? Is their application of this feedback having the desired effect?
The answers to these questions are knowable and quantifiable. If you donât have data-driven answers to these questions, youâre running a steep risk of being part of the shakeout.
Obviously, Valid Eval has a platform to help you get at these answers and weâd be happy to discuss it with you, but the point of this post less to pitch than it is to hold a mirror to our ecosystem. As the Xconomy post linked above notes, US policy is to innovate our way out of our economic malaise. Growth will come primarily from startups, or not at all. So thereâs a lot more at stake here than us selling you a license.
Realistically, anything that grows as fast as the recent incubator boom has is no more likely to quietly level off than it is to continue along its current geometric curve. There will be a bloodletting. For some incubators, the problem will be one of filtration and capacity: If youâre as services-intensive as an incubator, you canât flood your system to the point where each mentorâs time, energy and expertise is being amortized across dozens of businesses. Thatâs how you get to a stat like this from a 2011 Kauffman Fellows Program study: 44% of seed accelerators have never seen one of their companies raise an institutional round of financing. Sure, there might be a few bootstrap zealots in there, but nearly half of them? Come on.
Regardless of your gearing ratio or your religiosity about bootstrapping vs. venture capital, it still comes back to quality, not throughput. The incubators and accelerators that survive the shakeout will be the ones who consistently match engaged judges and mentors with prepared entrepreneurs who can take effective action on the feedback theyâre given. Even if you think that sounds like you, do you have the data to prove it?
This is a response to Brad Feldâs recently published book Startup Communities, which is summarized in a 3.5-minute video here.
VEâs evaluation strategy is grounded in cognitive science research on the social construction and cultural distribution of knowledge. Cognitive scientists, like John Seely Brown (Figure 1), have compared community knowledge to an iceberg, divided between the explicit knowledge of individuals (and artifacts) and the tacit knowledge of groups (and their cultural practices). This knowledge is unevenly distributed, with the vast majority of a communityâs expertise residing in the hidden world of social groups and their practices.Â
Figure 1: John Seely Brownâs View of Knowledge
This inequitable knowledge distribution is particularly formidable for newcomers to a practiceâconstrained by access, most of what matters remains hidden from their view.
VE began tackling this problem by focusing on what Brad Bernthal described in Feldâs book as the âglorious messâ of business plan competitions. Similar to the motivation behind TechStars, VE believed there must be a better way for experienced entrepreneurs to help those getting started. Most business plan competitions rely on rank-and-order scales to make decisions, providing limited to no feedback to entrants who dedicated significant time to their submissions. VE began addressing this problem by using performance rubrics to make the expectations valued by startup veterans visible to newcomers.Â
VE worked closely with experts to develop rubrics that surface, prioritize, and capture performance criteria tacitly used by veteran community members to make decisions. VEâs mission, aligned with the Boulder Thesis, is to make these privately held assumptions highly transparent, open, and accessible to entrepreneurs new to the process. Newcomers use the rubrics as a shared frame of reference to begin with the end in mind, chart their progress over time, and navigate risk through self-assessment. Interacting with the rubric, as a cultural artifact, entrepreneurs begin to align their decisions more closely with community stakeholders and participate more fully in their practices.Â
While designed to support newcomers, VE has found developing rubrics to be mutually beneficial for community veterans as well. In order to develop a rubric, experts involved in their development must externalize knowledge hidden even to themselves after years of experience; a dynamic known as the paradox of expertise. Creating a rubric forces veteran community members to articulate values and priorities in ways that place them in the role of âlearnerâ and away from that of âknowerâ. Additionally, once externalized, rubrics optimize the time and expertise of community veterans and volunteers when mentoring. Embedding common feedback in a rubric frees veterans to provide even more customized recommendations about what they believe matters.
VEâs evaluation software currently adds value to startup communities by providing entrepreneurs with reliable and trustworthy feedback from veteran practitioners. VE believes this service is critical to both newcomers and veterans of a startup community. Entrepreneurs benefit by having more data from community insiders to make better, more informed decisions. Veterans benefit by being forced to regularly explicate and test their theories on what matters and how to most effectively provide feedback. In this way, startup communities begin to generate consensus around cultural practices, values, and priorities.Â
VEâs plans for software development involve tapping an additional reservoir of tacitly held community knowledgeâthe expertise embedded in the horizontal exchange of information between peers. Like Feld, VE believes the informal connections made between peers and near-peers (those slightly ahead in the startup process) are an invaluable resource within the entrepreneurial community. VE is eager to develop mechanisms to surface, capture, and track the collective feedback of oneâs peers over the developmental trajectory of a startup.
