Brad Feld: Humble, generous and just plain smart Anthony Reinhart March 5, 2013 Startups With his untucked shirt, stubbled face and a look that fell comfortably shy of sheveled, the man recently described as “the Gandhi of venture capital” paid a brief and long-awaited visit to Waterloo Region last Thursday. In visual terms, Brad Feld might have been easy to miss as he moved inconspicuously through the Communitech Hub. If anything stood out, it was his height, but even there, looks could deceive; while few figures in the venture capital world stand taller than Feld, he is not a guy to lord anything over anyone – which, of course, makes him all the more popular. Humble, plain-spoken, humane, generous – all applied in ample measure to the Foundry Group managing director, TechStars co-founder, author and marathon runner from Boulder, Colo. as he worked his way through a packed seven-hour schedule. The entirety of that time was spent inside the former Lang Tannery in Kitchener, a once-shuttered industrial ghost now humming with entrepreneurial energy as home to Google’s Canadian engineering operations, fast-growing edtech firm Desire2Learn and the Communitech Hub, where dozens of early-stage companies are starting and growing with help from mentors, academic partners and service providers. It took mere minutes for Feld, whose 2012 book Startup Communities includes his thoughts on the power of “entrepreneurial density,” to pick up on the same feeling of concentrated dynamism that has greeted thousands of Hub visitors since the facility opened in October of 2010. Less than an hour after he arrived and took a quick tour of the Hub’s 44,000 square feet, Feld declared it “awesome” in a video interview with Communitech, which will be posted here in the coming days. “You’ve got a very nice blend of different things in a very dense area that’s well done,” he said. “There’s the (HYPERDRIVE) accelerator, there’s the incubators from the universit(ies), there’s a bunch of co-working space, there’s a bunch of common space, there’s some dedicated company space, and it’s organized in a way that feels pretty democratic.” Feld continued: “It’s easy to sort of flow from place to place; it feels very comfortable moving around, but it’s all physically in a dense place. I don’t have to go across the street, I don’t have to drive down the block, I don’t have to go across town, and that’s very powerful.” Not even Boulder, a city of less than 100,000 (250,000 in the metro area) that Feld and many others have helped to nurture into a hyper-dense startup community, has a central startup node as concentrated as the Hub, he said. “We don’t have a campus like this; our campus is (the) downtown, so we have 10 blocks by five blocks, and that’s where the activity is, scattered across lots of different things,” he said. “You’ve done a really nice job of incorporating many of those things into one place. And the energy level is super-high…” After the interview, Feld moved upstairs to the HYPERDRIVE accelerator, whose second cohort of startups (11 this round) recently began their three-month sprint to validation, followed by 21 months of follow-on mentorship and fundraising opportunities. He pulled up a chair and munched from a bag of nuts as he spent more than an hour in a free-wheeling conversation with the entrepreneurs, dispensing advice on everything from how much expense money a seed-stage startup should have on hand at any time (a year’s worth), to the differing needs of introverts and extroverts, to the importance of raising the right amount of investment (sometimes it’s none at all), to balancing work with the need to replenish emotional energy. From there, Feld went straight into the Tannery Event Centre to give a talk about Startup Communities, which lays out four pillars of his “Boulder Thesis” framework for building strong entrepreneurial clusters: Startup communities must be led by entrepreneurs, not by “feeders” such as governments, service providers, investors, universities and mentors. Feeders are great for support, and “individual members of a feeder organization can play a leadership role, so (Communitech CEO) Iain (Klugman) can play a leadership role,” Feld said. “But in the absence of a critical mass of entrepreneurs who are the leaders of the startup community, you won’t have anything that sustains over time.” Leaders must take a long-term view and commit at least one generation, or about 20 years, to building the community, just as entrepreneurs must do with their companies. Feeders, such as governments and universities, typically work on schedules tied to shorter-term cycles, Feld said. Sustainable startup communities result from working hard through the inevitable ups and downs in the economy. “It’s pretty awesome to think of Communitech as 15 years old,” he said. Startup communities must be inclusive and welcome anyone from anywhere who wants to engage at any level, Feld said. Entrepreneurs who lead the community need to see its growth as a benefit for everyone, and “you have to internalize the notion that it’s not as a zero-sum game” where people compete for money and status. Feld is well-known for advocating an approach of “give before you get,” rather than the traditional, transactional approach of exchanging goods and services. Community events need to engage the entire entrepreneurial stack, which includes experienced entrepreneurs, aspiring ones, mentors, investors, service providers and anyone else, not just startup founders. The most effective events, like hackathons and Startup Weekends, go beyond mere networking and focus on engaging people in entrepreneurial activity, he said. Feld also touched on a common mistake universities make by locating entrepreneurship programs within their business schools instead of attaching them to innovation-focused faculties like engineering and computer science. When he asked the audience where Waterloo’s universities ran such programs, and was told “right here” in the Hub, Feld replied, “That’s a win.” During a question-and-answer session, Feld was asked about the perennial issue of funding; specifically, its supposed shortage for young companies trying to grow. He was quick to dispute the notion. “One of the great myths is, ‘There’s not enough capital here;’ I hear it everywhere I go on this planet,” Feld told the crowd. “Want to know something? There’s never enough capital. And, I’d like a pony. We always want more.” Capital finds companies as they begin to pick up momentum, he continued, though “it’s never an easy process, it’s never a smooth process and the timing is never in sync.” Capital also finds its way to companies when they are situated in thriving startup communities, Feld added. “Part of the phenomenon of a startup community is, a startup community’s growth in and of itself starts to create a magnet to attract capital,” he said, as investors in one company become familiar with others in the same area. “They’ll put money back into the startup community if they’re part of the startup community that helped them get there,” he said. “If they’re not part of it, they have no affinity to it and they might not think about it that way.” Feld encouraged successful entrepreneurs in the audience to contribute to the startup community’s ongoing growth by investing in young companies. When asked how communities can deal with rivalries within and between startup ecosystems, Feld pointed to what he calls “the patriarch problem” – or when he’s grumpy, “the old white guy problem” – in which wealthy, established players exert control and expect deference from young entrepreneurs. “What I tell entrepreneurs is that the best strategy to deal with patriarchs is to ignore them, completely and totally ignore them,” Feld said. “Here’s what happens: Just start doing your startup thing; create companies, do cool stuff and have fun, and some percentage of the patriarchs will come down off the mountaintop, or come out of their wood-panelled rooms, and come hang out and play, because you’re doing cool stuff and you’re cool people, and they’re attracted to you.” Since startup communities operate as networks and not hierarchies, their growth is hindered, not helped, when someone tries to control them. “And so, what happens is, if you really are building a startup community that’s a network, and somebody starts trying to grab onto a bunch of stuff, the network kind of routes around him the way the internet does around a router that’s not working,” Feld said. “This notion of inclusiveness solves a lot of that problem.” When people start competing and trying to play a zero-sum game in a strong startup community, Feld said, “the very powerful people who lead by example by not taking control, and not trying to control, actually do an amazingly good job of rapidly undermining the people who are trying to control.” Feld pointed to himself as an example. Others continually identify him as “the leader” or “the creator” or “the king” of the Boulder startup community, but “it’s bullshit,” he said. “I’m just a guy, and in fact, in the past 18 or 24 months, I haven’t been in Boulder all that much.” Sure, Foundry Group invests about a third of its funds in Boulder companies, and has enabled, supported and participated in numerous events and initiatives, but “one of the most powerful things you can do is let go of stuff you’ve created,” he said, and let others in the community run with them. As for tension between startup communities that sit geographically near each other, Feld acknowledged the mutual, if mild, scorn Boulder and its much larger neighbour, Denver, have traditionally held, but said the two cities’ startup communities have been routing around this it by forging ever-stronger linkages that benefit both cities. The message was not lost on the audience, many of whom might have said the same about Waterloo Region’s relationship to Toronto, an hour (on a really good day) to the east. “It’s a powerful resource to have cities near each other that have vibrant activity, not just around entrepreneurship, but around the city structure,” Feld said. “Toronto is a very different city from Waterloo in terms of the culture, in terms of the local resources…take advantage of that and let that build over time,” he said. “Don’t play a zero-sum game, is the punchline.” After Feld’s presentation, Communitech CEO Iain Klugman thanked him for making the trip and couldn’t help but draw parallels between Boulder’s and Waterloo Region’s startup communities. “Here in Waterloo Region the rest of the world would show up and say, ‘My God, how are you faring in the financial crisis?’ and we’d say, ‘It really hasn’t hit us,’” Klugman said. “I think there are so many aspects of what you’ve talked about that are so familiar to us that it seems very appropriate that we’ve finally connected and had a chance to have you here.” Feld’s visit was a hit with a crowd liberally sprinkled with both leaders and feeders of the Waterloo Region startup community. “I absolutely loved it,” said Dan Silivestru, who co-founded TinyHippos, a Waterloo mobile web development startup acquired by BlackBerry in 2011. “Brad really focuses his thoughts on what it takes to build a startup community, and really drives towards the key things you can do, whereas a lot of others focus on the negatives.” Silivestru said Feld’s ideas around inclusiveness were particularly resonant. “I hear that a lot from people coming in from other communities, where there’s very much that zero-sum game, as he put it,” said Silivestru, who also mentors entrepreneurs as a Communitech executive-in-residence. “The feedback sometimes is, like, ‘So, what do you want in return?’ and the answer is always, ‘Nothing; just be successful and something really good will come out of that.’” Steve Farlow, executive director of Laurier’s Schlegel Centre for Entrepreneurship, said Feld’s presentation “was highly relevant to me as a university guy,” since Laurier has opened its entrepreneurship to students beyond the business faculty. “Some of our best businesses are coming out of arts, science, music, social work,” Farlow said. “That really hit home; I wish I would have met him five years ago.” Farlow was also struck by Feld’s reference to “a culture and a heritage of entrepreneurship” as a factor behind strong startup communities. “That’s the essence of Waterloo Region, and why I think – and I’m not sure Brad would agree with this – that it won’t work everywhere,” he said. “There are certain pre-conditions that have to be there.” From the talk, Feld moved on to private dinner with a group of entrepreneurs at various stages along the startup continuum. He then headed back into the Tannery Event Centre to plunge straight into judging duties at the region’s first-ever Startup Smackdown, where 10 companies contended for top honours with 90-second pitches before a raucous capacity crowd. Ivan Lukianchuk of Will Pwn 4 Food, a gaming-for-money platform that launched Dodgebots this week, claimed victory. After sharing some generous parting words in an interview with Communitech, Feld headed to Toronto to catch an early-morning flight to his next appearance in Arkansas, by way of Chicago. Unfortunately, he received an inexplicably hostile reception from U.S. Customs and Border Protection at Pearson Airport, resulting in a missed flight, frayed nerves and a long day. If the experience doesn’t turn him off from visiting again, maybe we can talk him into staying here for good next time.