Jason Evanish (Co-Founder of Greenhorn Connect) recently posted a question that really got my wheels turning. He asked his community:
“We need to change our mindset if we’re going to successfully change the startup culture in Boston. I believe we need to change how we think about young talent. What do you think needs to change?”
As an entrepreneur and co-chair of Boston World Partnership’s Strategy Session team for early venture companies, I felt like I had something to contribute to the conversation. This post expands on my initial thoughts, describes our current business landscape and suggests a specific model for bridging the worlds of old business and new business.
But first, the big setup:
All across our cities and towns, heck, all across our world (as we’ll learn in a minute) people are working when they should be sleeping. 4am, 2am, it doesn’t matter. They are online, and they are planning our future. Who are these people, and what do they want?
A cursory examination shows few similarities:
- Many are young, but some are mid-adulthood and others are seniors.
- They come from all walks of life (rich, poor and everywhere in between) and all over (from big Western cities to developing nations).
- The color of their skin might be important culturally, but it has never been less relevant.
We simply can’t define these people by any traditional demographic. They relentlessly pursue their individual agendas, and in so doing break the mold of how business is done. These are The New Entrepreneurs, and they are here to teach us something if we let them.
Introducing The New Entrepreneurs
Many people are already writing about the ways in which business is moving into Open Source, Zero-priced, Social-based conventions that didn’t even exist a few years ago. Even more commentary is being added about GenY and their front row seats. Ironically, the term “front row seats” formerly implied a passive role in a spectator sport. Crowdsourcing (which I’ll define in a moment) changes this entirely, and puts spectator-participants square into the middle of the game…when they want to be.
As for me, I’m 38. That’s definitely not Gen-Y but I am absolutely an entrepreneur, so my personal pronouns are going to change throughout this commentary. How very New-Entrepreneurish of me. I know the conventional rules and use them as a tool to forward my progress, but I’m more than willing to discard them when they no longer serve me.
So what’s my point? It is this: a perfect storm is brewing. I’m going to describe each element so you can see what they look like in their natural states, but nobody has ever seen them all coalesce before. Twenty-first century alchemy is happening right in front of your eyes, and we can’t possibly know what’s going to happen. But it’s gonna be a thrilling experiment so get your tickets early!
Here are the Ingredients
7 Continents worth of Broadband and mobile:
Less than a decade ago, visionaries talked about “The Digital Home” (talking refrigerators and all) as the way of the future. That didn’t exactly pan out, but something even more remarkable is occurring.
First, the wide deployment of broadband provided an onramp to the digital age for millions (billions?) of people worldwide, while simultaneously driving online costs down near zero. Thomas Friedman outlines this perfectly in his book The World is Flat so I’m not going to discuss it much more here, except to say that you can’t join the party if you haven’t read the book. So go get it. Now.
Next, mobile took over. High-speed mobile networks and smart phones in particular are bridging the gap between the “onlines” and “offlines.” This is especially relevant at a global level. The world no longer questions “Are you online?” but instead assumes that you already are. We are wired. Actually, we’ll have to throw that expression out now because 4G networks and metropolitan Wi-Fi are quickly making wires a thing of the past. The point is, new entrepreneurs are always on.
A Liberal Splash of Open Source/Crowdsourcing:
Wikipedia changed everything. The massive online “encyclopedia” is one of our best examples of user-generated content. On the top level we can look at Wikipedia’s dominance and begin to understand the power of online communities. But there’s something much deeper and much more significant going on here.
Open source is changing the world by pushing competitors out of the market (how excited do you think Microsoft is about Open Office?) while bringing tons of new contributors and users into the market. If you want to disrupt an existing market, there’s no better way to do so than by giving away competitive products for free. Oh wait, there actually is a better way: make your competitive product free and better. WordPress does exactly this: their massive developer community seems to collaborate with hive mind: all of the pieces somehow fit together in a relentlessly effective version of evolution that perfectly illustrates the world of The New Entrepreneur.
Fortunately, this works both ways. Smart companies are figuring out how to harness free labor via user contributions that add value to their product or service. The classic example of crowdsourcing of course is Amazon.com. Their reader reviews are a smash hit, a main reason why people come to their site and buy product (for now).
Lots of Zero-Price
So how much do Wikipedia and WordPress cost? Absolutely nothing. Zero. Sure, there are indirectly associated costs spread around somewhere, but not to you.
This notion is absolutely radical, but what’s even more remarkable is how quickly Gen-Y has adapted. Barely five years ago we heard major pragmatic arguments about “who owns” data and the real cost of Free. Those voices are gone now (or at least stuffed in a closet somewhere), and we are using our energy not to figure out “if we should” give it away, but how we can give it away.
This too is the new entrepreneur’s reality: our competition will soon give away for free what we have spent time, effort and money to develop. If we can’t compete on the Free playing field, we’d better pick a different sport. If you don’t understand this yet just read Chris Anderson’s Free – The Future of a Radical Price (and take notes, you’ll need them).
Several Large Social-based Conventions
All that time you spent on Facebook really paid off when you launched your first business, didn’t it? I wonder what mom and dad would think of that? Did they have any idea that the Social Networking you were doing in high school and college could ever amount to something tangible? Did they have any idea that you were building a list (aka: a following), the critical first ingredient for any business?
Paradoxically, New Entrepreneurs understand that it is far easier to profit from existing under-served niches than it would be to develop an entirely new market. It’s not that we’re afraid of a big challenge; heck we want to change the world. But we understand that financial independence comes first. We’re not going to spend our whole lives working for one big meaningful something that never pays off. Instead, we’ll build lots of little successes that will buffer us from our inevitable failures. We build platforms, not businesses. I’ll expand on this later when I describe ambidextrous organizations.
For now, think of social-based conventions this way: your ability to succeed in the new economy is in direct proportion to the size and quality of your network. If you have been helpful then people are going to want to help you in return. If you have commented on someone’s blog (in meaningful ways), shared video tips, or given her something for nothing in any way (think out of the box here) then she will reciprocate by helping spread the word about you when the time is right.
A Massive Heaping of Distribution
There is another side of social networks (and their brethren) that we haven’t talked about yet. Let’s say you are starting a new business. You’ve got your product, service and message ready to go. Congratulations. Now, what are you going to do with it? Sit back and wait for people to walk into your store, so you can tell them all about it? I don’t think so.
Today’s Internet makes it incredibly easy and affordable to spread the word. Even better, it is simple to find the right people and the right places. The old economy used to have a term called “shotgun” marketing that applied to widespread distribution methods such as television, radio and newspapers. Today, no self-respecting entrepreneur would be caught dead advertising there. Why? Because we understand segmentation. We target our messages. We don’t want everybody knowing about us, we cater exclusively to the people who matter.
And we’re really good at re-purposing content. Our interviews become podcasts, which people find through iTunes. Our podcasts become blogs and search engine optimized press releases. We build videos around these same concepts then deliver teleclasses and web conferences, which get archived online. We no longer reinvent the wheel. Instead, we build systems.
Automation Tools, Ripe and Ready
What makes our systems work? Automation. We use virtual help desks, auto-responders, fulfillment agents…anything that eliminates distraction and keeps us focused on what we do best. Marcus Buckingham nailed this concept in his book Now Discover Your Strengths.
In the old economy, you were supposed to get straight A’s. The New Entrepreneur has the courage to take a “C” in chemistry if he can build a new application that solves problems and makes him money. He is far more pragmatic and realistic about the world around him, and he realizes his own limitations. He doesn’t want to be good at everything. He wants to Ace one thing, and find other people who can help with the rest.
Outsourcing, Off-Shoring and In-sourcing, Seasoned to Taste
WordPress makes it free for me to build a website, right? But the actual cost of free isn’t worth it to me in this case. I’m not going to build that many websites, and I don’t enjoy back-end development. But with online communities like Elance, Guru and crowdSPRING I can find lots of qualified freelancers who will do the work very well in a fraction of the time that it would take me. This is about opportunity cost.
New entrepreneurs redefine the way that teams work. You can be anyone, anywhere, speaking any language (with the help of Google’s translation tools) and still get the job done well. We build virtual teams, and we are loose but extremely loyal. In fact, we like to help our competitors because we have started businesses with them in the past, or might in the future.
We are remarkably non-attached to “the company line” and don’t see outsourcing or off-shoring as unpatriotic. We see it as a business reality, and we’re ok with that because we like giving non-traditional partners an opportunity. Besides, we are pioneers. Not too many people can innovate the way we do, so we aren’t afraid of being replaced. We don’t fear evolution.
One Business Model, Diced Into Many Experiments
Some companies innovate with intention, only to realize that their new ideas are constrained politically, physically, logistically or philosophically by the parent organization. This is where many New Entrepreneurs grow legs and walk out the door to start our own thing. But if the company is smart and well lead, they encourage a new division to emerge.
This can look like a spin-off, but there is a major difference; executives from both the parent company and the new ambidextrous organization remain financially and politically co-dependent. This encourages, in effect, a ‘cooperative one-way street’: the new organization is able to ‘borrow’ intellectual property and other important resources from the parent company, while maintaining the autonomy required to choose their own location, staff, culture, etc.
It’s about acceleration. By taking the ‘good old stuff’ and leaving behind the ‘bad old stuff’ the new entity emerges more quickly and successfully. IBM did this several times as they transitioned from Mainframe to micro computing, again from micro computing to desktop computing, and also with service and software businesses. I believe that this model is finding its way into early stage entrepreneurship. It is ready to mutate into something young and more resilient than its predecessor.
Recently, the CEO of a Social Analytics company I had been consulting with mentioned a side project his team has been working on. Perhaps expecting to be criticized for that, he preemptively told me that he knew they should be exclusively focused on ensuring the progression of their core platform. I respectfully disagreed, explained how his sounds like an ambidextrous approach, and asserted that they should keep doing this kind of thing so long as it fits within their scope. If an idea comes along that falls outside of their focus area then they will need to determine whether it really should be a spin-off, with its own dedicated corporate structure.
As I stated previously, New Entrepreneurs build systems. I wasn’t just talking about distribution systems or operational manuals. I’m talking here about entire companies firmly rooted in experimentation as a business model. We know we are going to fail at some things, but we also know that we need to constantly evolve. “Good enough” no longer lasts very long. So we build portfolios of products and services and cultivate their offspring. We become serial (or even better, parallel) entrepreneurs.
Now it’s About Conscious design
So where do we go from here? Jason’s question, which promoted this overview, was about changing startup culture and the way we view young talent. I think there’s a practical way to approach this.
We should create a new kind of forum. Reflective of Dart Boston and Boston World Partnership’s Strategy Sessions team, this organization would be created specifically for the purpose of evaluating and supporting New Entrepreneurship. It would consist of panelists who are experts in the areas described above (mobile, open-source, distribution, new media, etc.) and would be available exclusively to early stage ventures that represent a significant departure from business-as-usual.
Most importantly, we shouldn’t wait for traditional companies to welcome us with open arms. They don’t get it, yet. Instead, I encourage New Entrepreneurs to build our own value propositions.
We should be documenting in real-time these fundamental shifts into Open Source, Zero-priced, Social based conventions that didn’t even exist a few years ago. This crowd is right on the edge of it, so we should do everything possible to position ourselves as an authority in new business models. Then, with objective evidence and experts on our side we can knock on the doors of those “old fashioned: companies, and see if they want us to help.
The wonderful thing about a community such as ours is that there are tons of smart people who can pick up this kind of thread and propose new ideas for development and distribution. So what do you say? Want to make it happen? Tell us your ideas and let’s get the party started!
