Continuing the discussion on ‘starting a business in Iowa’
Members of the Iowa entrepreneurial community conversed in July at the Silicon Prairie News Des Moines Meetup. Our hope: those conversations continue. Photo by Danny Schreiber.
Last month, the Des Moines Register ran an article titled "Why is it so hard to start a business in Iowa?" in which the writer, Lynn Hicks (far left, photo from twitter.com), asked several entrepreneurs and community members, "What can state or local officials do to help startups and create an innovative culture?"
In the article, four main ideas were discussed. Things like, "create one stop resource centers," "continue, promote what works" and "provide incentives for investors." In several conversations following the article, it felt like some things were missing. Ben Milne (near left, photo courtesy of Milne) addressed many of them in a guest post we published July 18, "Starting a business in Iowa … isn’t hard".
I wrote the following not to try and put together an exhaustive list, but rather to provide a context for identifying what else can be done — by the government or anyone else — to improve the entrepreneurial climate here in Iowa. Also, I want to see this conversation continue to be at a forefront in the community.
As for context, it seems to make sense to start with a framework. At Silicon Prairie News, we categorize things of this nature by the Six Tenets of an Entrepreneurial Ecosystem, as derived from a post by tech writer Sarah Lacy on her personal blog.
Those tenets are:
- Culture of risk taking
- Wild, almost naive ambition
- Access to capital
- Big companies techies can spin off from
- Vibrant social scene
As I see it, the majority of the ideas proposed in the article from the Register fall under the access to capital tenet so that has been covered. While it may very well be the single greatest way for the government to impact the entrepreneurial ecosystem in Iowa, let's take look at the other five:
Culture of risk taking
Two points in the Register article speak to this. Tim Putnam, of the John Pappajohn Entrepreneurial Center at North Iowa Area Community College, brings up starting early on educating people to be entrepreneurs. He mentions fifth-grade and high school specifically, and I'm not sure when the right age is, but the greater message needs to be that starting a business is a viable and desirable career. Too often the most innovative minds in Iowa head straight into "corporate America" after graduation from college. Corporate jobs are obviously important, too, but not the place that we expect to see grassroots innovation.
In my experience, it seems like young people in Iowa get married, have kids and buy houses much sooner than in innovation centers like Silicon Valley and Boston. Those major life undertakings make a corporate job, with its perceived stability and benefits package, seem like a more advantageous undertaking than your own startup.
Mike Colwell (left, photo from twitter.com), of the Business Innovation Zone, spoke to this point in the Register article. "If government can solve the vexing health care issue ... if [would-be entrepreneurs] had an affordable source of health insurance, older, experienced people might ditch their corporate jobs and start businesses."
Colwell's point doesn’t totally turn Iowa, with its strong history of agricultural, finance and insurance ventures, into a culture with a high tolerance for risk, it's a fair start — particularly from the perspective of what the government can do.
Vibrant social scene
Next up is the idea of having a vibrant social scene, which is something that we at Silicon Prairie News have been working on in Des Moines and across the region. The idea here is that Iowa needs the type of "scene" where those unscripted serendipitous moments can happen. Where someone with an idea for a startup can run into a developer who is interested in the same space. Where a startup with a strong business model can get access to angel investors and venture capitalists over coffee and drinks. And, frankly, where it's just a desirable place to live. Leann Jacobson from the Technology Association of Iowa, who facilitates TechBrew and other events for this purpose, started down this path in the Register article, with her suggestion that the state invest in “quality of life."
Facilitating investment and activity in Des Moines’ core is certainly something that the state can do and has done to support this tenet. Take, for instance, the Iowa Department of Economic Development’s networking fund that provides "financial assistance to support networking events" that bring people from various parts of the ecosystem to one place (Update: After publishing this post, it was pointed out in the comments that this fund was cut from the State's budget as of July 1, 2011). That has gone to defray the costs of bringing impactful events like Startup Weekend (a 54-hour idea-to-launch intensive for startup companies) to downtown two times in recent years.
Startup Weekend Des Moines has been a beneficiary of the IDED's networking fund, one example of state investment and activity in Des Moines' core. Photo by Geoff Wood.
On to the tenets that didn’t get addressed. First up is universities. Iowa has two public research universities, and both have technology transfer processes in place to spin technologies out in the commercial space. While those are important to the ecosystem, equally important are the "dorm-room innovations" that come from having highly motivated people in close proximity. Look recently to Facebook-app company Hatchlings or a few years back to Chegg. Both were student innovations at Iowa State. The former has been so successful that its founder left school to focus on his business full-time, and the latter was valued last year at $130 million.
What can the state of Iowa do to encourage this type of innovation? Do we even want it to? Presumably, one of the goals of the state university system is to graduate its students even if it comes at the cost of deterring them from executing on business ideas they conceive of during their college years.
Big companies techies can spin off from
Next is the idea that we need big companies techies can spin off from. Our big companies here in Des Moines are places like Wells Fargo, Iowa Health, Principal, Mercy Medical, and Nationwide/Allied. These are the top five employers in the area according to numbers released by The Greater Des Moines Partnership in March. They represent three industries: financial, insurance and healthcare, none-of-which are known to produce lots of "spin off" companies. As you move further down the list, you can see we do have some – groups like Pioneer Hi-Bred in the agricultural sector of Meredith in publishing – that do seem like the type of companies that could fit the bill.
So, I ask again what can our State do to improve upon this tenet? I’m sure every state’s economic development agency is courting the Facebooks, Amazons and Googles of the world to move operations in. That's something Iowa has done successfully in recent years, boasting new datacenter projects from both Microsoft and Google. A more interesting thought may be around what the state can do to help grow our startup and middle-tier technology firms to the point that they start to "spin off" new companies.
Wild, Almost Naive Ambition
Wild, almost naive ambition is the final tenet and the one that is always hardest to quantify. In my opinion, this speaks simply to an innate and collective belief that not only can you start a business here, but that it will be successful. I believe the government can best help instill this belief by supporting the ideas offered here, as well as the ones in Hicks' article and the ones in Milne's guest post. That’s really the crux of it. As Iowans who care about entrepreneurship and innovation, we can best support it by continuing the conversation. I’m glad that Hicks and the Des Moines Register started it and hopefully this post provided a framework for looking at it more robustly. It's up to all of us to keep it going.
So, what do you think the state or local officials (in Iowa or elsewhere in the region) do to help startups or create an innovative culture? Continue the conversation in the comment section below, or share your thoughts by emailing email@example.com or firstname.lastname@example.org.