If it’s popular, it’s wrong

Everyone wants to “do” a startup. Few want to build a business.

Everyone talks about Silicon Valley. Few want to build their own community.

Everyone talks about making some money on the side. Few want to find an hour in their day to get started.

This is true of fitness, friendships and almost every other aspect of our lives.

It’s easier to talk about doing something than actually putting in the work to make it happen.

In my case, it’s popular thinking that I should be spending all my time in Silicon Valley and hanging out with people that are already working on the next thing. When I think about it, that would probably be the easier thing to do.

Instead, I choose to drive to smaller cities and live there for a week at a time. I choose to meet as many entrepreneurs and community leaders as I can. I choose to do these things because no one else does them regularly. And that’s why it’s important.

 

West Texas isn’t the wilderness

I’m convinced that Lubbock is Texas’ best kept secret.

I hate to admit this: When Anthony Presley first asked us to bring the tech tour to Lubbock, I had to find it on a map first — I had never heard of it. Up until then, I always thought of Austin, San Antonio, Dallas or Houston when I thought about entrepreneurial ecosystems in Texas.

We spent a week getting to know the entrepreneurs, the President of Texas Tech and over 250 other smart people throughout the community. And we found a city with nearly 250,000 people, a University with nearly 30,000 undergrads and a whole lot of money looking for deals. And tacos — really good tacos.

As with every other stop on the tech tour, we ask other investors and founders to join us. One of those investors is Ed Pizzarello (www.pizzainmotion.com) — he’s joined us in more than half of the cities we’ve visited over the past year and he asked to share some of his thoughts on Lubbock.

Take it away, Ed…

***

I really should stop being surprised when we show up in small towns and find successful companies.  And yet, as we head home from Lubbock I’m again impressed with the companies we discovered.

The very first session I walked into upon arriving was a group of students from Texas Tech who all had ideas for a company of their own.  Some were more fully-formed than others, with detailed business plans.  Interestingly, they were evenly divided between “hardware” and software.  I’m using the term hardware to define pretty much anything that’s not software or SaaS.

In fact, the highlight of that group was a young man with a completely new take on nail polish.  Without getting into all the details (some of it he’s keeping quiet until launch), it’s a very novel idea that I’ll be curious to see how much traction it gains.  This young man really did his homework, conducting almost 4,000 surveys with women on campus.  An innovative solution to being without an umbrella was another idea students were excited to present to us .  There’s plenty of promise amongst the entrepreneurs in the student body at Texas Tech.

What Else Did We See?

We met with a student who’s developing an app to connect restaurants with excess food to hungry customers.  Cheap Eats (www.cheapeatsapp.com) is rolling out with brute force in the Lubbock area right now.  When a restaurant has excess inventory they can offer it via a flash sale model to nearby customers.  Hungry college students are a key demographic here.  Their business model is to charge restaurants only when they’re able to sell excess inventory.

There’s a similar model in Europe (Too Good To Go) where restaurants put together mystery boxes of food for a heavily discounted price. 

If you’re in Texas, oil and gas is always on people’s minds.  We spent 20 minutes one evening at dinner discussing the practice of selling your home but maintaining the mineral rights to the land.  Fascinating.  Amplisine Labs is a robust Texas-based startup with experience in oil and gas. They’re automating parts of the exploration and drilling process to save money and increase safety.  Their core product, SitePro (www.sitepro.com), continues to see sizable increases in revenue.

Truno was another interesting team conquering the problem of automating grocery stores.  They’re past “start-up”, with over 9,000 grocery stores as clients and millions of dollars in revenue. But, there’s another 30,000+ grocery stores for them to conquer, and then that whole C-store market.  Truno touches virtually every element of a grocery store when they roll out a product, from the cash registers to the cameras that track which aisles customers spend the most time in.  In short, they’re a fast-growing company who impacts you every time you go to the grocery store. 

It Wouldn’t Be Texas Without Great Steak

I took a detour from the full group to sit with Tate From Raider Red Meats (www.raiderredmeats.com).  I love what they’re doing, and not just because I love a great steak.  They’re employing students at Texas Tech to source and sell steak, bacon, sausage and more.  These products are all sourced by the students who are part of the program.  Many of them go on to work in the meat industry after graduation.  They run a store on campus.  They also offer gift boxes and subscription packs for sale.  What a smart way to teach students about commerce while pursuing their degree.  I love real-world applications of knowledge in school.

Probably the most interesting company we ran into was Hand Held Nitrous (www.handheldnitrous.com).  They sell, wait for it, hand held nitrous oxide inhalers.  Nitrous Oxide (laughing gas) plays a key role in the dentist office for many folks, including my kids.  Why not extend that to our pets as well?  The man behind the idea, Mark, is trying to make inroads into both the medical and veterinary space.  This company is a great example of investors helping push an idea forward.  Paul pushed Mark on being confident in rolling out the product to veterinary offices.  When I think about how many startups I see focused on our pets, I can’t help but think there’s a winner here.

West Texas Isn’t The Wilderness

Let’s face it, you’re not likely to wander into Lubbock from a neighboring town.  It’s bigger than you think, but still a “small town feel”.  You might expect the ideas coming out of Lubbock to be geared towards agriculture and oil/gas.  Some are, but many more are helping solve problems you see in your hometown. 

It’s just another example of how great ideas can start anywhere, not just Silicon Valley and New York.  I wouldn’t be surprised if we made an investment in a Lubbock start-up.  With plenty of community support, these guys are going places.

Consider the alternative

Everywhere we go, we meet people that are quick to explain all the hardships that come with starting and growing a business.

My initial response is always the same: “The alternative is that you could be working at a 9-to-5, sitting in a cubicle, doing work you don’t love, hoping your job doesn’t disappear and wondering when it’ll all be over. So, what was your question exactly?”

Doing your own thing is hard, I get it. But the alternative is boredom or worse.

Entrepreneurship is about sales

Entrepreneurship doesn’t always mean swinging for the fences.

Entrepreneurship doesn’t always mean learning how to code.

Entrepreneurship doesn’t always mean quitting your job.

Entrepreneurship is about selling one thing to one person you don’t know. And then repeating it.

It can be an idea. It can be a service. It can be a product. It can be anything.

Entrepreneurship is about sales.

Three signs of a healthy entrepreneurial ecosystem

If you want to predict the future economic growth of any city, look at what resources are available for aspiring entrepreneurs and businesses with less than five employees.

A coworking space is a good sign. Most early stage startups and small businesses don’t need their own space. Most don’t need to be signing multi-year leases either.

A code school is a good sign. Because giving adults a pathway into technology is a good thing.

A weekly set of events open to the public is a good sign. Whether it’s a One Million Cups event, a monthly happy hour at the local coworking space or something else entirely — bringing like-minded people together on a regular basis is a good thing.

As the cost to start new companies continues to decline, cities — especially across the Midwest — should be constantly rethinking what their local entrepreneurs really need at the earliest stage of their company.

We need a better measuring stick

It surprises me to see so many cities — especially across the Midwest — still trying to lure large, existing companies to come open new offices. As if we’re still in the pre-Internet era of depending on huge factories or large offices to create the majority of our jobs.

But I get why they do it.

In the past, it was easy to measure the economic impact of a company by how many people it employed, how much money it made or how many square feet of physical space it occupied.

Then the internet came along.

The internet enabled people to make things that you couldn’t physically touch.

The internet enabled people to sell things to people anywhere on the planet.

The internet enabled companies to earn more revenue with fewer employees.

The internet enabled companies to grow as big as their global addressable market.

The internet enabled companies to do all of this from anywhere.

That’s why we can’t measure the economic impact of today’s tech-enabled companies — especially in smaller cities — using yesterday’s measuring stick.

Friction matters (and so do batteries)

I slept in this morning. Accidentally.

See, we’ve packed everything up to hit the road. We’re heading West to kick of the 2017 tech tour.

That means we’ve also packed up our Amazon Echo and Dot. Which we use every morning as an alarm.

So, we decided to use our iPhone as an alarm clock instead.

The problem: we didn’t pay attention to the phone’s battery level and it died overnight.

Anyway, I’m not trying to bore you with my inability to wake up at a reasonable time on a weekday. Messing around with my Echo and my iPhone got me thinking.

Amazon’s Alexa is so much easier to use than Apple’s Siri. Ultimately, it comes down to one thing: I don’t have to pause when I use Alexa.

For a moment, let’s put aside technical differences (Amazon’s devices are plugged into the wall while Apple’s devices are usually running on battery power) and privacy concerns (Amazon’s devices are always listening while Apple’s devices require a verbal prompt).

Here’s what the actual experience sounds like:

“Alexa, how’s the weather?”

VS

“Hey Siri. [PAUSE… and wait for the prompt] How’s the weather?”

That pause makes all the difference: I use Alexa multiple times a day (we have one at home and in the Airstream) and I might use Siri once a month (usually when I’m wearing gloves and dreading the cold).

My point is that friction matters, especially when you’re doing anything in the consumer space.

Also, keep your phone charged up. Especially when you’re depending on it.

How to unlock more capital across the Midwest

“How do we unlock more capital across the Midwest?”

That, it turned out, was the main question Steve Case asked as I shared my experience of visiting 42 cities last year.

I shot a couple ideas off the hip but decided to take the weekend to really think it through.

If you’re reading this, you already know that not every company needs to raise venture capital. The vast majority of successful — large and small — businesses have never taken an investor’s money.

And, even though it seems like early stage capital is easier than ever to raise, one visit to anywhere outside of Silicon Valley, NYC or any other large city will quickly open your eyes to the fact that there are venture-scale businesses popping up everywhere else.

Not everyone wants to be in — or visit — Silicon Valley. And no, the big coastal VCs are not going to go hang out in the Midwest regularly.

So, here are a couple of things we need to do if we’re going to unlock capital through the Midwest:

Force more collisions. It’s not enough to just visit tech hubs, we need to force more collisions. In order to make that happen, we need to be pulling other entrepreneurs, investors and community leaders to visit their peers in other cities. Midwestern community leaders need to think bigger. And, if you’re interested in joining us — for free — as we visit other cities this year, just fill this form out to join us on tour and I’ll send you an email about once a month with all the information you need.

Make more investments. The most surprising part of my 2016 tour was that there was at least one venture-scale investment opportunity in at least 3/4 of all the cities I visited. The local investors either didn’t see it or didn’t have enough cash to support it and the coastal investors almost always thought the opportunity was too small. If we’re going to unlock capital across the Midwest, it starts by incentivizing Midwestern GPs to raise funds that are more aligned (read: small) with Midwestern startups.

And not just in venture-scale companies. People building “lifestyle” businesses get unnecessarily written off as being too small. That’s terrible. We met at least a hundred companies this year that were doing between $20K-$100K per month that didn’t want to go the venture route but that would have gladly taken $100K (or more) if it was structured a little differently. If we’re going to unlock more capital across the Midwest, it starts by helping more successful entrepreneurs get to the next level — even if it means they’re not going to return 10X on our fund (though they may still return 5X on our capital). We’re going to make more of these kinds of investments in 2017.

Educate more LPs. It’s not hard to see that there is a ton of money sitting on the sidelines all over the country. It’s not that they won’t invest in small funds or startups, it’s just that they don’t know that it’s an option. I’m going to do even more investor education workshops on every stop of the 2017 tour and Steve, if you’re reading this, I hope you’ll consider doing the same during your next Rise of the Rest tour.

Mindset is everything

Everywhere we go, people complain about how hard it is to start something.

They complain that all the money is in Silicon Valley.

They make excuses about all the time they don’t have available.

Are. You. Kidding. Me.

Starting a company is the easiest part of the process. In fact, it’s never been easier.

Here’s the thing that Silicon Valley has over you, your city and your community: it’s the mindset.

People in Silicon Valley don’t talk about doing something, they build a prototype. They talk to people. They iterate.

If you get to spend any time in Silicon Valley, you’ll quickly notice that there’s an incredible sense of urgency. (For better or for worse.)

They’re not smarter, richer or more connected than you. They just make things. Quickly.

Instead of worrying about how hard it is to start something, turn your attention to how hard it is to get past the stages you’ll need to conquer

  • At $1 of revenue, you change from a startup into a business.
  • At $1,000/mo of revenue, you’ve got a side hustle on your hands. THIS IS GOOD.
  • At $10,000/mo of revenue, you’re a solopreneur and you’re probably ready to leave your day job (if you haven’t already).
  • At $100,000/mo of revenue, you’re on your way to going big. GO YOU.

I’m not saying it’s going to be easy but you’re not doing yourself any favors complaining about local investors or anything else you think is slowing you down.

The only thing between you and your success is you.

An Indian, a Southerner and a Labrador hop in an Airstream (again)

I know, that title doesn’t make much sense.

Driving 26,141 miles in less than nine months didn’t make sense.

Moving into an Airstream and living in 42 cities for a week at a time didn’t make sense.

Shaking hands with over 20,000 entrepreneurs didn’t make sense.

Sitting down for 1:1 office hours with over 1,200 startups didn’t make sense.

The tech tour didn’t make sense on paper but it was the right thing to do. And that’s why we’re doing it again in 2017.

Here’s the initial list of stops (fill this form out if you’d like us to stop in your city this year):

  • Lubbock, TX (Jan 29- Feb 3, 2017)
  • Myrtle Beach, SC (Feb 21-23, 2017)
  • Greenville, SC (Mar 7-9, 2017)
  • Phoenix, AZ (Mar 21-23, 2017)
  • Sioux Falls, SD (Apr 23-28, 2017)
  • Des Moines, IA (May 2017)
  • Kansas City, MO (May 2017)
  • Grand Junction, CO (June 2017)
  • Missoula, MT (June 2017)
  • Lincoln, NE (June 2017)
  • Knoxville, TN (Sept 2017)
  • Lafayette, IN (Sept 26-28, 2017)
  • Rochester, NY (Oct 2017)
  • Albuquerque, NM (Oct 2017)

This slideshow requires JavaScript.

We learned a lot through the 2016 tour so we’re doing a couple things differently in 2017:

  • We’re going to make the events at each stop much more accessible and useful for all kinds of entrepreneurs. Not everyone wants to raise money. Not everyone wants to build a billion dollar company. And that’s ok — the more people we can get to attend one or more of the tour-related events, the more people that know about entrepreneurship locally and regionally.
  • We’re bringing more people with us to join office hours, do more workshops and add more content to our keynotes. The goal is to create even more collisions and give the local community more perspectives than just my own. We’re going to bring more investors, more entrepreneurs and other community builders from around the country.
  • We’re bringing a 2-3 person video crew with us to all 2017 stops. The goal is to capture content constantly. We’ll turn that into daily vlogs while we’re on the ground, roll that up into a longer weekly summary video and create 30-60 second snippets that we’ll drip out to our audience for weeks after we leave town. We want to tell the story of entrepreneurship across the continent — think more Anthony Bourdain and less Gary Vaynerchuk. 🙂

If you’re interested in helping us help more entrepreneurs, investors and community leaders, here’s what you can do:

  • Invite us to your city. Fill out the form, we’ll hop on a quick call and see how we can make it happen.
  • Join us on the tour. Fill out the form, I’ll email you ~once a month with upcoming opportunities and we’ll all have some fun together.

If you see us on the road, say hi!