Month: October 2012

Brad Feld on Startup Communities

One of the most persistent debates in the tech world is about the best place to start a startup. Brad Feld’s Startup Communities starts with a different question. It’s not a book about ‘where is best?’ but rather ‘how do you make any place better for startups?’.

He calls his theory ‘the Boulder thesis’ based on the startup community he knows best (I’m looking forward to visiting in a few weeks time) and identifies four features of a successful approach:

  • The community should be led by entrepreneurs (although other players need to be involved)
  • Those founders have to take a long term view (20+ years)
  • The community has to be inclusive
  • It needs to have a continuous stream of activities to engage people (and not just conferences)

This short animated sketch from the Kauffman Foundation is a good introduction to the ideas, but you should also read the book because it’s pretty good. I’m biased however because it’s basically about what we’ve been doing for the last five years with Social Innovation Camp and Bethnal Green Ventures. We’ve had a slightly different twist because we’ve been trying to build a startup community with a particular focus — using tech to solve social problems — but a lot of what Brad writes rings true.

The section that I thought was most interesting was about the role of the various events and programmes in Boulder. These range from OpenCoffee through to the Tech Meetup and Startup Weekend and then, perhaps most importantly, the Techstars accelerator programme.

Without belittling how hard it is to get these things happening, it made me realise the power of the accelerator model as a convenor and focal point for a startup community. An accelerator programme costs roughly the same as a medium sized conference but because it’s much more practical and engaging than most events. It made me realise I haven’t been to a really good conference for years but I have learned a lot through more practical events like hack days and accelerators.

If the trend continues and the good programmes keep getting better and learning as they go, I think we could see thousands more ‘startup communities’ focusing on lots of different sectors in lots of different places, whether it’s in food or technology, in the global south or north. That’s a pretty exciting prospect is one of the few realistic ideas I’ve heard for creating significant numbers of new jobs.

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Software’s unbalanced diet

I’ve been thinking a bit more about what’s going on in the economy and its relationship with technology. It was Albert Wenger’s post about whether the rise in consumer debt had something to do with technology’s effect on the economy that got me thinking although I’d been wondering for a while whether technology had something to do with the rise in public sector spending.

Marc Andreessen writes that ‘software is eating the world’ but I’ve started to think that it’s eating a very strange and unbalanced diet which is having nasty consequences. The fact that we’ve used technology to only revolutionise certain industries is a bit like just eating all the fatty, sugary stuff and skipping the healthy parts. The reason we haven’t really noticed that software has avoided making great leaps forward in some of the most important sectors is that they’ve actually been improving without it.

Take education, which in the UK seems to be getting better and better. The statistics are of course a bit controversial, but one example is that 11 year olds have gone from 49% reaching level 4 or above in 1995 to over 80% in 2011. However education is also getting a lot more expensive. It’s doubled in cost since 1997 and some forecasts I’ve seen show it continuing to increase over the coming decades simply because of the increases built into the current system (buildings needing to be replaced, teachers getting more expensive as they get more experienced and qualified etc).

Likewise, healthcare. Between 1997 and 2009, the National Health Service made a 20 per cent reduction in the mortality rates of cancer patients aged under 75 and a 40 per cent reduction in mortality rates of heart disease patients under 75. But, again, it’s getting a lot more expensive. It went from costing £50 billion per year to £120 billion between 1997 and 2011. That increase went into new buildings, new staff and better pay and conditions for those staff. It also went on technology but in such a terrible way that it likely made the system more inefficient overall.

You could blame the increase in cost of both of these on the Labour Government but I think it’s much more systemic than which flavour of politician is in power. Other countries saw similar trends and even in the US where healthcare is run outside of the public sector, the costs rocketed in both real terms and as a percentage of GDP. The truth is that we’ve entered a period of history where we need good education and need good healthcare but compared to the efficiencies that technology has created in other parts of the economy (see Race Against the Machine), healthcare and education remained almost untouched. Even worse, the changes that technology has created in other parts of the economy, left us unable to raise the taxes to pay for the rises in costs.

Now I think if we have any chance of retaining the improvements in quality we need to make public services radically better and cheaper. Some work that Mastodon C did during the BGV programme found over a quarter of a billion of unnecessary overspend in GP prescriptions. Another of our companies, Dr Doctor,  is looking at how missed and cancelled appointments affect the NHS and has found another £900 million of potential savings. The problem is that IT has been seen as a cost in the NHS for the last 20 years whereas we actually should only be using it to save money AND improve outcomes. I think things will get better and I’m bullish about health and education because I know that good people are already working on them and investors are moving into them as areas as well. But there are services that are getting worse and more expensive which I really worry about —  social care, prisons and the courts for example.

Another worry I have is that no matter whether the economy starts growing or not, we’re still going to have a really difficult time creating more jobs. Andrew McAfee and Eric Brynjolffson’s research points to this but this piece for Planet Money is even more stark — economists just can’t find a future scenario where US employment will return to pre-2008 levels. Put simply — society is going to get better but we’re going to have less jobs. On the one hand, that sounds great (we’re going to have to work less). But society just isn’t set up for it (if you don’t work, you don’t count). I can’t pretent I have an answer to the conundrum but for me it means that what your startup does is a much more important decision than it used to be. Software isn’t eating the world, it’s eating the unhealthy bits and unless we rebalance our efforts to use it to make publicly valuable sectors vastly more efficient, we’ll be in even worse trouble than we are now.

Bethnal Green Ventures 2012

So BGV 2012 is over. Demo Day for the teams was last Thursday and 150 people came along which caught us slightly unaware. The 9 metres of pizza we’d ordered were scoffed in all of about 5 minutes and it was standing room only. The teams had been practicing their pitches for weeks and getting lots of feedback from the mentors but it’s very different standing up in front of a packed theatre. They did a great job.

It’s a bit soon to say whether the programme was a success or not but the early signs are good. Our secret mission with BGV is to create a huge community of people with the skills and networks they need to use technology to change the world for the better. Just the interest we got in Demo Day seems to suggest we’re on the right track.

Glen, Lily and I couldn’t have done it on our own so a huge thank you to:

  • Our partners – Nesta, the Young Foundation and Google. All have been brilliant.
  • The team at Campus – to Eze, James, Anastasia and Hazel who all made it so much fun to work there. The eagle eyed amongst you will notice that we were supposed to be based in Bethnal Green but when Anastasia got in touch saying that Google were opening a building for startups in Shoreditch and would we like some space, we decided we didn’t mind walking a mile and half down the road. We’re very glad we did.
  • Our speakers and mentors during the programme – We’re incredibly grateful for your generosity and honesty during the programme.
  • To our board — who helped shape the programme and made sure we didn’t do anything too silly.
  • And finally, the teams. We’ve worked with them pretty intensively and learned a lot about each other over the last 12 weeks. They’ve all given up an incredible amount to take the difficult path of starting something new and we look forward to seeing them go from strength to strength.

We’re spending the next couple of months writing down what we learned and talking to other programmes to see if we can draw out some lessons — I’ll be writing some of that here as we go. We’re also putting together some pretty ambitious plans for making BGV bigger and better over the next five years. More on that soon as well.