I had a chat with a professor who has researched organization theory. We had a great conversation about social networks and their impact on venture capital and entrepreneurship. To demonstrate the power of networks, he does an exercise with his MBA students: He has them write out a professional goal, why it’s important, and what they need help with. They then present it to the rest of the class. The results always blow the students away. They’re able to make significant progress toward their goal by clearly articulating what they want to do, why they want to do it, and what they need help with. Once classmates heard what was needed, they happily helped.

The professor said that many MBA students see asking for help as a weakness. This exercise helps them understand that asking for help is a great use of one’s network. Of course, you can’t just take. The best relationships are bidirectional—you must add value and help when asked.

I love this professor’s exercise and totally agree. People want to support people and things they believe in, but they don’t always know how. By laying it out clearly, you fill that gap and make it easier for them to help. Instead of hearing “Oh, that’s nice; I hope it works out for you,” you may get the intro that changes your trajectory. Never be afraid to ask for help. The downside to not asking someone for help can be orders of magnitude greater than the downside of asking someone for help!

I listened to an investor share his views on what it takes to become a top city for start-ups. He believes the most important characteristic is the ability to create companies that lead in their markets. Cities creating market-leading companies are the best cities for start-ups and start-up ecosystems. His reasoning is that a market-leading company captures most of the value created in its market (70% or more). Cities that create companies that lead markets will see torrential trickle-down effects from having them.

I agree with this investor. You can have a lot of great companies in your city that do well and even exit. That’s a great city and ecosystem to be a founder in. Such success leads to more success, but likely at the pace of a dribble. But if a city creates a market leader, the effect isn’t a dribble. A tsunami of capital, knowledge, relationships, and energy hits the city’s founders. And it doesn’t lead just to more garden-variety success but also to people wanting to recreate and support what they just saw—a market leader enjoying massive success. The rate of change in such a start-up ecosystem is accelerated, the resources and network available to founders are amazing, and people are thinking big.

Markets matter a lot, and founders should take time to think about the market early in their journey. Fast-growing markets with massive potential are the best (even if they’re small now). Cities that want to be top start-up destinations should think about how to create an environment that creates market-leading companies.

The most important part of a city’s start-up ecosystem is the people in the ecosystem: founders, investors, university personnel, service providers, community builders, etc. How they think and the lens they view things through. How freely they share information and relationships with early founders. This all creates the culture of the ecosystem.

How people think and act is heavily influenced by the start-up history of a city. Changing that culture can be a slow process, but it can happen faster with big events (positive or negative). If a company has a big exit, people start to think a little bigger about what’s possible. The reverse can be true if a company creates a massive crater.

Remote work will stick around (in some form or fashion) for the foreseeable future. I suspect that a material number of people left cities where dreaming and thinking big was part of the start-up culture. They’ve seen the impossible happen and witnessed outsize outcomes from those efforts. As they settle into new cities and get acclimated to the start-up ecosystem there, I suspect they’ll add diversity of thought. I’m curious how this will affect the start-up cultures (for better or worse) of cities like Atlanta. Will the mass migration be a big event that has a lasting impact on start-up cultures?

Happy Labor Day!

I hope everyone had a safe and healthy holiday!

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I had a great chat today with someone with a new venture capital fund. In six months, its founders went from inception to raising a $30 million fund. I was curious how they accomplished this in such a short time. I’ve talked with a number of emerging funds managers, and it usually takes eighteen months or more to raise a fund. And first funds are often less than $30 million. I learned that their journey hadn’t started six months ago with the fund idea. Rather, it started a few years ago with a community.

The founders started by creating a nonprofit organization focused on highlighting the contributions of people in their community. They wanted to create a place where ambitious people could connect with others like them and highlight each other’s successes. Their grassroots efforts led to a network of highly successful people in various industries, corporate partners, early entrepreneurs, and a host of other supporters. After a few years, they realized there were high-potential early founders in their community whom they wanted to support.

They created initiatives to support these founders, but they knew funding was key. Instead of sending the early founders to traditional venture capital firms, they decided to raise their own fund. The idea was for capital to meet founders where they already were . . . in their community. Founders don’t have to learn to penetrate the traditional VC network because people in the community who understand the founders write the checks.

I like how these founders built a mission-focused community that also attracted talented founders. I think this is a great example of doing early-stage investing differently. Capital is finding its way to founders outside the purview of traditional venture capital networks. Interestingly, their work caught the attention of established VC firms, which ended up investing in their fund.

Today I had a great chat with three university students. The trio are passionate about an emerging space, and they recognized that other students are too. They rallied other students and founded a club for people interested in this space. This club is now a few hundred students strong. This momentum has forced faculty and administration to take notice. The club is officially recognized by the university, and the administration is looking at ways to develop curriculum to better prepare students to enter this emerging space.

These three students have their fingers squarely on the pulse of an emerging market. They see the potential in it even though the masses haven’t yet recognized the momentum behind this movement.

I loved talking with these students. They’re hustling to make things happen and forcing the powers that be to acknowledge their momentum. These students are likely on to something, and I can’t wait to see the next chapter of their journey. They might not recognize it, but I suspect this trio are entrepreneurs in the making.

Today I attended Georgia Tech’s Create-X demo day at the Fox Theater. Around 80 start-ups in this cohort were working to solve interesting problems. More info on each company here. I always find the early founders at this event to be top-notch, and today was no exception.

One thing I noticed that added value to today’s event was its format. It was an open house: People could move around freely. No sitting at all. No pitches. Each start-up had a booth, and people could visit the booths at their own pace. I really like this format. It allowed visitors to spend more time with the start-ups they were most interested in, and it promoted serendipitous interactions among the visitors. I bumped into several people I hadn’t seen in some time and had some great conversations. And I was able to introduce people who didn’t know each other.

Rahul and team did a great job. I’m glad I attended, and I plan to keep supporting the program!

One of the most impactful things for me as an early founder was connecting with other founders—those who had done what I was trying to do, and those who were still attempting to. Some of those conversations were pivotal. They led to key hires, experience sharing, and idea generation. I had access to these people because I was a member of Entrepreneurs’ Organization—EO, as it’s known.

EO, an elite network of high-quality people, facilitates the free flow of information, connections, and ideas. Member companies pay an annual fee. The impact on members is material. Because certain revenue criteria must be satisfied before admission to EO, though, membership isn’t accessible to all founders. Most early-stage companies are excluded from this high-quality network.

Early-stage founders in Atlanta need more free-flowing information and relationships. Some great groups are trying to fill this void, but I don’t think it’s something a centralized group can tackle. I need to think more about how you solve for this, but this void is one of the missing ingredients in Atlanta’s start-up ecosystem reaching its full potential.

I listened to Sequoia partner Jess Lee share her thoughts (beginning at 12:20 in the recording) on how community can play an important role in entrepreneurial success. She defines community as customers who love the solution so much that they’re willing to talk to peers about it. She views community as the ultimate growth engine for the following reasons:

• $0 customer acquisition cost – When you build a place for people to share their thoughts about something they’re passionate about, they generate word-of-mouth advertising that costs you nothing.
• Feedback – These people are fiercely loyal and will give you candid feedback on what they like and don’t like about your solution. Their feedback is your ear to the ground, helping you find and retain product–market fit.
• Connections – People build relationships within these communities. Among members there’s loyalty and a sense of belonging.
• Underserved users – Even in large organizations, there are often groups of people whose pains aren’t understood and haven’t been solved. Connecting with these underserved users so they don’t feel alone can create loyalty. Solving their pain points further reinforces their loyalty.
• Key elements – The four important elements of a successful community are government, economy, religion (shared ethos), and media.
• Community needs first – The best communities are oriented to the needs of the community, not the needs of the business. Making connections and adding value for users helps build strong communities. The best community builders are customer (user) obsessed.

Jess does a great job of sharing her thoughts on community. I agree with them, and I believe the most successful companies will have a community at the core of their success.

Had a great chat with an investor today. We discussed why some founders struggle when they transition out of big organizations. He shared an observation with me: Employees working at larger companies who don’t have founder friends but want to be a founder tend to focus on working hard at work. They miss the mark on building an outside network—so, when they start their company, they don’t know anyone who can help them.

As I listened to this investor, I thought about my early days as a founder. I quit a job in a big company, only to realize that I didn’t know anybody who was building a company. It felt like I was the lone man on an island. I eventually sought out other early startup founders, we formed a cohort, and my trajectory changed completely.

If you aspire to building a startup, start seeking out people who are building companies or who support people building companies. They will be instrumental in helping you navigate the entrepreneurial journey.