Top 10 Ways to Suffocate an Entrepreneurial Ecosystem

suffocate.gifWalls are great for privacy. But they impede progress unless there are doors in the walls that allow you to move freely from one room to the next. And if you can’t build doors, then tear down the walls. It’s far easier than measuring and fitting new doors for every room in the house.

Yes, I think all of these apply to Atlanta. But not Atlanta alone.

Number 1: Base every entrepreneurial event around a speaker

“Attention entrepreneurs! If you are attempting to build a vibrant, flourishing business, come see Johnny Coolguy speak at our upcoming event. Learn how hard he had it when he first started, and listen as he tells you how much money he has now! Grow your own business by keeping a chair warm for us at our monthly meeting!”

The bottom line: speakers can be fun, but they aren’t the solution for bringing people together for the right reasons. They never have – they never will. Entrepreneurial events should go beyond the speaker. Have demo sessions, semi-private networking events for investors and entrepreneurs, etc. Speakers are inspirational, and possibly a little motivational. But they’ve never helped a kid with a big idea build a business.

Number 2: Charge fees for everything

Establishing a “get-your-hand-out” mentality early on is key here! Charge yearly membership fees, charge for admission to your events, and charge for the food, too! If you can swing it, charge for the air people breathe in the room too! Think of your bottom line, baby! If you come across a young entrepreneur who is trying to start a new business, by all means help him or her, but for a fee! $50K for a business plan and $25K for a PPM are the going rates! These are all services that most entrepreneurs really don’t need but hopefully they’re too inexperienced to know better! Don’t give any advice or introductions, no matter how trivial the effort required by you, for free! Mentoring is for losers who don’t want to get paid baby!

Nickeling and diming struggling entrepreneurs for whatever you can get out of them is the wrong approach. Especially when you combine these fees with other event-related items in this list. There are plenty of other ways to monetize your organization. If you need help in this, just ask the nearest entrepreneur (imagine that!) Or better, if you believe, as I do, that all boats rise with the rising tide, then don’t charge anything. Just help people, and then brace yourself.

Number 3: Facilitate service-provider overload

“Exclusive networking for entrepreneurs and investors! Come on down! Oh, and if you need accounting services, legal work, web hosting, or lawn care maintenance, we’ll have a cadre of service-providers standing by to assist you!”

Nothing screams “our town sucks for entrepreneurship” like targeting a whole bunch of events at entrepreneurs, and then filling the meeting with service providers. This is why most entrepreneurs and investors don’t bother going to such events (and certainly why you don’t see the successful ones there.) Service providers are an integral part of any economy – and we need them! But anything that distracts from connecting ideas and capital is not something you should invite.

Number 4: Promote the “broker” mentality

“If you’re an entrepreneur in need of capital, this is your lucky day! For a small retainer fee, an equity stake in your company, and a finder’s fee of more than what a realtor makes on a typical home-sale transaction, I’m happy to help you find the cash you need! Not to your liking? No problem! For $5K, I’ll fill a room full of people that you can pitch your deal to!”

The fewer touchpoints you have in between ideas and capital, the faster your community’s path to startup nirvana. There is a reason that people constantly strive to cut out the middleman. It’s called an efficiency. I am of the belief that an entrepreneur should never ever pay to pitch their deal. Good deals will get funding. If you need help, ask for it – don’t pay for it.

On a related note, the “broker” mentality also helps to ensure that entrepreneurs don’t develop the remedial networking skills to eventually raise capital on their own. Remember, ecosystems are long-term projects.

Number 5: Hold your events at inaccessible locations

“Are you a progressive, cutting-edge organization that wants to shrink its membership faster than your competitors? Then hold your events solely in downtown urban areas, far from 75% of the population! Be the envy of the city! Hold events in locations that are most convenient for academics, consultants and other people with too much time on their hands. Make sure they aren’t held anywhere convenient for the people who are most likely to become fast-growth entrepreneurs and/or angel investors. They might actually show up!”

Local support structures need to evolve alongside the local economy. Not doing so will effectively render an organization ineffective by limiting growth and increasing member attrition and attendance.

Number 6: Become a Corporate Whipping Boy

Sign a bunch of corporate sponsors, and then sacrifice your vision by serving them instead! Make sure to turn your events into infomercials for your sponsors. We don’t get enough of them on cable. Make sure every speaker is a partner or manager for the sponsor, no matter how little they actually know or care about the real issues entrepreneurs face.

Not saying sponsors aren’t helpful – they are! After all, someone has to foot the bill for certain things. But be careful – this is an incredibly slippery slope. The minute you start serving sponsors more than your entrepreneurial constituents, you make yourself largely irrelevant.

Number 7: Create Elite “Clubs” that Purport to Help

“We are tired of the negative image that our town gets. We are friends of the entrepreneur! For only $10K per year, you can join our efforts to attract more business to our city! In fact, you will also get, as part of your membership, exclusive networking access to our top-shelf board members and our yearly golf outing! Stand up for your community!”

Sadly, this happens – here in Atlanta, as well as other places. This helps no one.

Number 8: Be a Laggard!

Why forge ahead and trailblaze the path for others, when comfort can be found in being the sole laggard? Why invest those state pension funds in private equity ventures, when you can earn a strong, undiversified, low-risk 2.2%? And ensure that no jobs or industries are created in the process? Make sure the state continues to give Wall Street the support it so desperately needs!

Number 9: Glorify Linear-Thinking, Serial Entrepreneurs

Serial entrepreneurship is great. However, serial entrepreneurs who only think about themselves are not. “Thanks for the $100M exit! I am now going to go off and plan my next big company. Oh, and I won’t be investing in anyone else’s startups. I won’t have the time. Pffffft! Thanks for having me speak at your next event, though. And did you see my latest writeup in the paper?”

Contrary to what you might think, parading these selfish-successes around as speakers, panelists, and spotlight artists is a sure-fire way to put an extra finger around the throat of your community. Stop glorifying the guy who built one company and letting him ride that event forever. Start glorifying the ones that want to create a better ecosystem for everyone. We need more Reid Hoffmans out there. All it takes is one in any community to drive change. I keep wondering who this will be in Atlanta. I have a short-list of candidates, but so far, they’ve all grossly disappointed me.

Number 10: Ignoring the Entrepreneur

Problems are solved by entrepreneurs, not by attorneys, accountants, politicians, and consultants. Not involving entrepreneurs as you try to attack a community’s early-stage woes will only lead to more artificial walls being thrown up. Period.

Cheers.

5 Comments

  1. Lance Weatherby · April 30, 2007 at 9:12 am

    You need to spend a little more time alone with Mrs. Burkett.

  2. This is a good tongue in cheek look at the problems we have here in Atlanta. Having served as a volunteer leader with several groups that purport to help entrepreneurs, I totally get #6. Thanks for sharing.

  3. Scott,

    Great post. In any exchange of product/service to customer, barrier to purchase should be eliminated.

    And yet when we slave away to build up the entrepreneurial culture, sometimes we sabotage it by putting up these artificial barriers you mentioned. Yikes.

  4. Tech Grognard · May 8, 2007 at 11:44 pm

    Scott, this is a very good post and it so true. I agree with Carolyn above as well. Groups like IEI and the MIT Enterprise crowd fall into most of these categories. They aren’t doing jackshit to really help promote entrepreneurship in this community despite what they say and do. I have been in tech sales for 25 some odd years and it has gotten worse and worse over the past 5 or 10 years here in Atlanta. Glad to see someone taking on the leadership role that is needed for change. These groups all do the same thing over and over and over again. They take your money, bore you with some speakers, and repeat the cycle. Semper Fidelis!

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