I’ve just returned home to Atlanta from spending a week in Silicon Valley at a program called Founder Institute. Basically FI is a bootcamp for founders of mostly tech startups. We were a pretty diverse group of companies. One wants to put servers in space, one wants to help golfers establish handicaps and another seeks to help equipment rental companies join the mobile revolution. Some had raised $3 million in funding, others were doing hundreds of thousands of dollars a month in revenue while the majority were like me and running on past savings or paychecks. We were also a pretty diverse group of people with participants coming from around the world. In addition from the US, attendees came from Croatia, Australia, the Netherlands, Canada, Columbia, Vietnam and Puerto Rico. Finally, we were of a variety of ages as well, ranging from early 20’s to mid 50’s… weighing more heavily to the latter.
While I didn’t come away with an investment, I came away with some great insights. The first is something I’d been told before but never really got. Success in Silicon Valley – at least as it relates to raising angel and venture capital – is very much driven by relationships. It’s your network… investors want to get to know you… want to trust you… know that you’re resilient, creative and of course, smart. And it’s more than just a cup of coffee… although that’s where it often starts. Investors usually want to know that they are not alone and that you’ve got other investors in your network. And the key to your network is, unsurprisingly… you! As such, investors are often open to making introductions, but you’ve got to sell yourself because if you’re going to create a spectacular startup, if you’re going to make them lots of money, you’re likely going to need a lot of help in the form of employees, partners and other investors… and it’s up to you to engage and inspire them.
Another of the insights I came away with was that if you fail in Silicon Valley, that doesn’t mean you’re sunk. On the contrary. It appears to be the case that if you’ve failed, that’s almost a badge to be worn as you storm into your next endeavor having learned some lessons from your previous bruising. For every Facebook that pretty much gets it right from the beginning are dozens more like Twitter that took a circuitous route to success through failure. Failure is the fertilizer that nourishes and spurs creativity, which in can and often does blossom into success.
Finally, in Silicon Valley they love to think big. Big success followed by big exits are what investors live for. If you’re interested in starting a restaurant or building a business that will do a couple million dollars a year in revenue, good luck, but Silicon Valley investors are not likely going to help you do so… although they might become customers. They want businesses that have the potential to do $50 or $500 million a year in revenue so they can have exits that number in the eight or nine or ten figures. Since investors lose money on 9 out of 10 investments they make, they need to be able to earn enough back from one big exit to cover the cost of investing in the other nine and still make a profit. So don’t expect venture capitalists to give you the money to open pool installation business…
At the end of the day, my trip to Silicon Valley and participation in the Founder Institute program made for a great experience. But this wouldn’t be my blog if I didn’t tie that experience into the larger picture.
At a time when the government seems to be doing everything it can to undermine free markets, private property and capitalism in general, it’s good to know that the spark of enterprise still exists. That people feel like they can build something. That investors and entrepreneurs are foolhardy enough to think they can change the world. And willing to take a leap of faith to do so. And not only in the United States, which used to be a bastion of freedom, but in places where you might not expect it, like Vietnam, Croatia and Columbia. The question is however, once the long national nightmare of Barack Obama and his Democrat cleptocracy are finally on the ash-bin of history, can the spark of possibilities that still exists in Silicon Valley find its way back to places like Pittsburgh, Detroit, Chicago and the rest of California, where much of the spirit of opportunity and the American Dream seem to have been replaced by a populist economic fascism seeking to “fundamentally transform the United States”? Sadly, that the cancer of progressivism seems to have infected much of the country despite the fact that the American convergence of free markets and limited government have driven a greater advance in prosperity around the world any system in history. Nonetheless, perhaps the Silicon Valley mindset of unabashed opportunity is the canary in the coal mine that suggests the American Dream may still be alive, despite even the tech crowd’s distinctly liberal, big government leanings. Only time will tell.