“A gift is pure when it is given from the heart to the right person at the right time and at the right place, and when we expect nothing in return”
To hear economists and Wall Street analysts tell it, you might think that start-ups are all about the dream of an IPO, making billions and all the things that go with it. It’s all about self-interest, right?
But what if building a successful start-up community was more about unconditional giving with little expectation of return?
Rolled-Up Sleeves, Low Expectations
A Boulder, CO, conference, Startup Phenomenon, made the compelling case that giving was a key ingredient in the secret sauce of successful start-up communities.
Boulder and many of the people who attended should know: Boulder, CO, has the highest density, per capita, of startups in the U.S., and Colorado has four of the top 10 regions in terms of startup density, according to the the Governor’s Office. The startup culture is thick at the intersection of the Rocky Mountains and the Great Plains.
We’re not just drinking our own Kool-Aid.
According to Mark Solon, a general manager from Highway 12 Ventures in Boise (offering an outsider’s perspective as quoted in Brad Feld’s book, Startup Communities) “In Boulder, people are willing to work harder and devote a greater amount of time to help startups succeed with no expectations of reward.”
Now, it might be easy to write this culture of giving off as a little too much peace and love talk in the “People’s Republic of Boulder”, but with economic results like this, results sought by communities around the country and around the world, it’s worth closer examination.
The Startup Phenomenon conference was inspired by Feld’s book. Feld, a well-known VC, believes in doing and giving before getting. This may seem like heresy from someone with “capitalist” in his job description, but he was one of the first avid VC bloggers and an early investor in social media, actively investing in companies that promote sharing of knowledge. Of course, as a successful venture capitalist, that doesn’t mean he doesn’t want to see big returns. His firm, Foundry group has just raised another $225 million fund, Foundry Group Select, to invest in later stages of their successful early stage investments. They’ve invested in FitBit, already a household name, among several other notables.
Feld and others at the conference seemed to understand that many startups can be high-risk leaps of faith, but the odds were dramatically increased by a community that builds and does together, a “doerocracy.” Giving isn’t necessarily about cash, it’s about giving time, effort and knowledge over the long term. Much like entrepreneurs investing sweat in their own startup, we each have the potential to provide sweat and knowledge equity to the the “startup” of our town, city and community.
Feld said during his opening remarks, with “every city was once a startup” (some succeeded, some didn’t) and “your network depends largely on how deeply you engage with it.” In other words, tight networks don’t build over light banter at cocktail receptions, they connect over getting things done, and that often means just rolling up your sleeves and doing work for the sake of doing it with no expectation of benefit.
When people come to him for help, he firsts asks them to get involved in the community. It’s also a kind of filter. If they aren’t first willing to give, they are unlikely to inspire help (and dollars) down the road. There’s an important kind of faith in working hard with a group that’s committed to the long term (part of Feld’s Boulder Thesis), but not with an expectation of direct benefit.
Feld also mentioned the “rise of the network and the death of the hierarchy.” New communications platforms and collaboration tools are reducing the need for hierarchical command and control, allowing new forms to rise up on their own. The donations of knowledge and expertise are key side benefits to these new structures, as highlighted by Angela Dunn last week in her post last week on inspirations from other industries.
What do we call these new form factories?
Feld doesn’t like the term “ecosystem” and prefers “communities”. Communities are about networks, sharing and healthy competition while ecosystems have some hierarchies (food chain) and seemingly emphasize competition over cooperation.
Communities as Wells for New Forms
In his book, Feld mentions Richard Florida’s work on the Creative Class that can give rise to “meaningful new forms,” but the fuel for these new forms is the openness to new ideas. For me, this is the critical piece: New, more open communications platforms, enabling networks to self-organize, allow for the collection and emergence of new forms and patterns that can pull teams together to create value. Feld’s “Boulder Thesis”, described in his book, includes “Fostering a Philosophy of Inclusiveness” and creates an environment open to new ideas and sharing.
While open platforms and open data weren’t a central theme at Startup Phenomenon as much as shared knowledge and commitments of time, when asked, many startup community leaders would share the importance of open, shared data in the development of their communities and projects.
It’s clear from reading Code for America’s book “Beyond Transparency” (must read) that open data is a valuable source of new patterns, but also a platform to bring people together to work to find new solutions. McKinsey’s recent report estimates there is $3 trillion in untapped open data potential.
In Steven Johnson’s book “Where Good Ideas Come From” in the “Platforms” chapter, he uses the example of coral reefs as having the power to harness energy from the sun to build complex networks of interdependent life. The foundation is the coral, that serves as a safe harbor and platform on which to harness sunlight and turn it into new forms. He compares this to platform architectures that share resources of knowledge, code, data and more.
Data could serve as the platform for many burgeoning new communities to come together to find solutions to shared problems, particularly in health care. I’m starting to work with a few groups to do just this, more on that in a bit.
The Biology of an Economy
Not unlike Johnson’s chapter on platforms and coral, several speakers at Startup Phenomenon made comparisons of communities to biological or chemical systems and harnessing the potential energy of the community, including Ken Bautista from the Startup Edmonton community. Anil Dash used the example of the U.S. Constitution as an open framework to drive flexible innovation in government (although he thinks maybe this flexibility has run it’s course). “Good to Great” author Jim Collins described the importance of being able to respond to luck by having awareness of new opportunities through a kind of pattern matching and ability to respond, recognizing new forms when they arise.
The creation and recognition of new forms is what biological systems are particularly good at doing, and makes me believe economists in charge of improving economic conditions couldn’t learn a lot more from biology and chemistry, and people like Brad Feld, than many of their current models and “rational, self-interested” investors. A “rational” investor in an economic model would never give without direct expectation of reward.
Giving Drives Engagement
Another important aspect to giving is that giving drives engagement. It’s a natural tendency to pay attention when we are given something.
Jane McGonigal, a leading game designer, describes in her book, “Reality is Broken,” that a significant part of the appeal and success in Farmville (a game from Zynga, a company which has had an IPO and was a Foundry Group investment success), is in the giving. People check-in because giving people small gifts in the game is shorthand for “I care and I’m thinking about you,” and that drives engagement and people returning to the game.
Makes me wonder how people would respond if the healthcare system offered similar kinds of rewards for patients. What more would people do if they knew people were “gifted” little tokens from their physician, caregivers, friends and family? What if there were better ways to share the benefits of an activity? I predict we’ll see a lot more of this.
New Corporate Forms for Societal Benefit
One area on the theme of giving driving economics in startup communities is the increased attention on social ventures. My colleague, Nate DiNiro, attended a Social Venture Society “Hacking Social Impact” event last week to develop that community in Portland, Ore. Meanwhile, at the Startup Phenomenon Conference, there was talk of a new social venture angel fund in Colorado.
Part of the excitement and attention may be coming from the emergence of B Corporations, a new type of corporate legal structure that focus on societal benefit as a return on equal footing with shareholder value.
According to Wikipedia (http://en.wikipedia.org/wiki/Benefit_corporation), “B corporation is a corporate form in the United States designed for for-profit entities that want to consider society and the environment in addition to profit in their decision making process.” B-corps were approved by both Colorado and Oregon and multiple other states this year, and will be effective in early 2014. If giving (providing benefit to society) is a part of B-corp focus and a core part of developing startup communities, could a new wave of B-corps usher in a new wave of innovation?
I hope so for healthcare innovation. Healthcare is a social activity, and in a value-based care world, a lot more healthcare ventures will be social ventures.
I’m looking forward to helping merge social, healthcare, and nutrition communities between Denver, Boulder and Portland in the coming year and donating a lot of my time to help make that happen.
We’re building a working, sharing, and open community through Health 2.0 Denver/Boulder. My secret plan is to build a foundation of shared data to help support it. As a start, after the Startup Phenomenon event, we had a “business model hackathon” helping local fertility app company Kindara develop ideas around what products and services they might develop with their summary data. This was great way to learn how people think and work. We’re looking to scale this event and open to suggestions.
We’re also looking forward to another community event December 14 with Impact HUB Boulder called “Healthcare Scrimmage.”
“The Healthcare Scrimmage is a day-long event that brings together ten organizations making a positive impact in their community, 80 exceptional professionals sourced from ReWork, Impact Hub Boulder, and TEDxMileHigh, a panel of mentors, and the ReWork team to teach Rapid Prototyping and move the needle on a problem that each organization is facing.”
Great people, big problems, donated time, scalable learning: a great recipe.
There seems to be endless new ideas of ways to structure events beyond the typical cocktail reception and Powerpoint presentations to build relationships that serve as the cornerstone of community.
As we move into the seasons of thanks and giving (is it any wonder why we give thanks, and then give?) across the nation and in the world, I’m thankful to live in such a phenomenal supportive place.
My recommendation: if you want better economics in your community, don’t worry about the rational investors and economic models as a starting point. First, set aside some time where you can get things done with your peers without expectation of a get. The indicators are starting to show a strong correlation between the notion of giving and economic success. After all, it’s a well-worn truth that trust drives economics and exchange. Giving is a profound way to develop that trust within a community network. So, give thanks, then find the right community, and give a bit of yourself. Good things will follow.
Latest posts by Leonard Kish (see all)
- Using Incentives to Move from Health Care to Health, Part II. Michael Dermer Q&A - November 11, 2014
- Using Incentives to Move from Health Care to Health: Interview with Michael Dermer - October 28, 2014
- It’s Not Just a Watch, the World is the Interface in the New Behavioral Economy - October 1, 2014