The Episode in 60 Seconds
Everybody knows that Brad Feld "wrote the book" on start-ups. But what does he have to say to growth-stage companies or mature companies?
Brad takes us into the stories of companies he helped start that have grown and learned tough lessons along the way.
The core of the interview explores:
- The call to always experiment and innovate. What tasks to keep doing so that you can keep learning.
- How to build communities with other businesses. You can't scale your company alone.
Brad Feld has been an early stage investor and entrepreneur since 1987. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of Techstars. A writer and speaker on venture capital investing and entrepreneurship, Brad has written a number of books as part of the Startup Revolution series, and writes the blogs Feld Thoughts and Venture Deals. Brad holds Bachelor of Science and Master of Science degrees in Management Science from MIT. An art collector and long-distance runner, he has completed 25 marathons as part of his mission to finish a marathon in each of the 50 U.S. states. He lives in Boulder, Colorado.
John urges Brad to reflect on his career and contributions with this question, "If you were to sum up what others should know about you in a paragraph, what do you want others to know about you?" (2:04 and following)
Your company is an endless series of small experiments. - Brad Feld
We explore other questions including:
- How does a CMO of an established or growth-stage company learn from a successful startup in 2020?
- What has hindsight taught you about coaching and leading other companies? What was one thing you concept you got wrong in the first edition Venture Deals?
- What did you learn from your work with Uber?
- How does a company change when stagnant? How do you keep growing, or more importantly, scale (or scale again)?
- How would you advice a marketing leader to play an active role in growth?
Regularly learn from the things that fail. - Brad Feld
I think the best marketing leaders spend much more time with customers around the selling process and the product process than they do internally with their teams. - Brad Feld
Brad's Latest Book: The Startup Community Way
Many cities fail to nurture startup communities because governments, large corporations and universities are not effectively collaborating with entrepreneurs or with each other.
A critical disconnect remains between the entrepreneurial mindset and those of many other organizations who wish to engage with and support entrepreneurship. There are structural reasons for this, but these obstacles can be overcome with appropriate focus, specific behaviors, and sustained practice.
An explanatory guide for startup communities, The Startup Community Way is rooted in the theory of complex systems. The book establishes the systemic properties of entrepreneurial ecosystems and reveals why their complex nature leads people to make predictable mistakes. As complex systems, value creation occurs in startup communities primarily through the interaction of the parts - the people, organizations, resources, and conditions involved - not the parts themselves. This continual process of bottom-up interactions unfolds autonomously, producing value in novel and unexpected ways. Through these complex, emergent processes, the whole becomes greater and substantially different than what the parts alone could produce.
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Mark Whitlock (00:00): When I say terms like “seed round” and “Series A” and “Series B,” what do you think about? Today on studio CMO, we’re going to be talking to the guy who literally wrote the book about funding companies, but we’re not just going to be talking to him about startups. We’re going to be talking to him about how those startups mature and how growth stage companies can learn from startups. That’s today on studio CMO,
Mark Whitlock (00:43): Welcome to Studio CMO. My name is Mark Whitlock and you’re at the place where we have real-life conversations about the challenges and issues that marketing executives face the most. I’m proud to be sitting beside our host today, John Farkas.
John Farkas (00:59): Hello everybody.
Mark Whitlock (00:59): My fellow cohost Angus Nelson is here today as well.
Angus Nelson (01:03): Hello.
Mark Whitlock (01:03): Yes, always with the music. Thank you very much. And so Angus, we have a special guest that some in our company are quite excited to have on board.
Angus Nelson (01:15):He’s a cofounder of the Foundry group and has been an early stage investor and entrepreneur since 1987, Brad previously co-founded Mobius Venture Capital and Techstars. And prior to that, he founded intensity ventures. He was the early investor in harmonics, Zynga, MakerBot, and Fitbit, a writer and speaker on venture capital investing in entrepreneurship. He has written a number of books, uh, as part of the startup revolution series and writes the blogs, “Feld Thoughts,” and “Venture Deals.” He’s an art collector and long distance runner. He has completed 25 marathons as part of his mission to finish a marathon in each of 50 States. He lives in Boulder, Colorado, please welcome to the Studio CMO show and Brad Feld. Welcome.
Brad Feld (02:04):I can do that. Not as well as Angus
Angus Nelson (02:07): Love. Love it. Delighted to be here.
John Farkas (02:10):Brad, we’re grateful to have you. And, uh, so as Angus, you know, I was gonna see if he could do that all in one breath, but no, he couldn’t. And that kind of leads into my first question. So, you know, we could spend a week’s worth of shows on your biography, but if you were to kind of sum up Brad Feld in a paragraph that would help us into your essence, who you are, what you stand for, what you’re adding to the canon. Uh, how would you, how would you sum that up? Uh, a couple of notes, no pro no big question.
Brad Feld (02:45): How would you describe your life in 47 words? My whole professional life has been around, uh, entrepreneurship and starting things, uh, both as a founder of companies as an angel investor and as a venture investor, uh, I have approached it from, uh, the angle of continuous learning, uh, because personally I'm incredibly intrinsically motivated by learning. I learned a while ago that learning and teaching were two sides of the same coin. And as I was getting older, that I needed to incorporate teaching into it versus just learning. And it turns out that when you start trying to come up with ideas and teach people and mentor people and help people, you learn a lot from that. And so there's a very powerful feedback loop for that. That's at my core. And then I've approached my business philosophy. It has become a hashtag now because Techstars made it a hashtag and a book I wrote in 2012, I had a very short section titled "Give Before You Get", it was in the first edition of startup communities. And it's now been #givefirst.
Brad Feld (03:56): And I would say, this is my philosophy of life. I'm willing to put energy into a system without defining it transactionally upfront. It's not altruism. I expect to get something back, but I don't know when, from whom over what time period and what consideration or what magnitude. And generally my view is that if most people or many people operated most of the time from a give first perspective, many, many, many more things would grow and develop and evolve much faster. And, you know, that's a fundamental thesis now for startup communities and how an organization like Techstars has been built. But it's also how I try to comport myself as a human
John Farkas (04:38): That's wonderful Brad, and certainly, uh, an appropriate message for where we are today in, in a highly contentious world. That's for sure. So as I look at your backdrop, you know, knowing that you have been in this and have seen the revolution that technology has yielded, especially over the last decade and in our context, how marketing or taking ideas to market or bringing ideas forward has transitioned over the last decade. How would you describe that? What kind of changes have you seen in the essence of what marketing is and affords over the last decade?
Brad Feld (05:17): I probably even take a back further than the last decade, cause I don't think it's that tightly bounded. I think it's been a combination of a continuous change over a period of time, along with some really meaningful phase shifts. When I was running my first company, uh, that I started in 1987, uh, which was a software company. There was a very traditional approach to marketing and that traditional approach to marketing was very well defined by, you know, people like, and then firms like McKenna, the whole notion of how companies that grew up in the enterprise software world, like Oracle and Sybase and Computer Associates, and even Microsoft tended to have a very similar set of marketing tactics and ways of articulating their products, which I would describe as extremely product centric marketing, as that expanded into the internet. I started, uh, one of the very first application service providers, which was the precursor to Software as a Service, it's a company called Interline.
Brad Feld (06:19): And it was extremely successful for a while. It had a peak market cap of, I went public, had a peak market cap of about $3 billion back when a peak market cap of $3 billion was a big number. Uh, but then went bankrupt went bankrupt in 2002 after the bursting of the internet bubble, right. There was a whole conversation in that timeframe about "feeds and speeds" and sort of, you know, the technical better. And, you know, if you remember, for example, WordPerfect versus Microsoft Word, like the long charts check boxes, better, worse green, red, it was very product and function oriented. I think the emergence of the internet as a medium for not just communication, but also for marketing was really a big phase shift in all of that, because it shifted from the idea that you could put out assertions about what you did.
Brad Feld (07:10): And there was no way to really interact with those assertions to all of a sudden where anyone could start to comment on and engage with the assertions in a public way. And so you started to have the shift from traditional product marketing to more what today might be called content marketing, but it was still marketing around the product. And that really shifted again, coming out of the financial crisis to what I think today is where most marketing lands, especially with regard to business, which is around thought leadership and the idea of companies trying to position themselves through the content that they not just generate, but also the communities they build around being thought leaders in a particular category that doesn't necessarily not include information about their products and how the products work, but it really builds much, much broader than simply the message of I have a better product. You should buy the better product.
Angus Nelson (08:13): I would love to jump in there a little bit too, because I'm like, I've heard like the brands that build a manifesto, they create some kind of a, a belonging that it's not just a product, but it's actually either a philosophy or it's a why it's a cause it's something bigger. In your experience with some of the companies have you worked with have, what are some of the success points around building some things along those lines?
Brad Feld (08:36): Well, I think he used an important word, which is why, you know, why do you exist? Why are you the best in the world at what you do? When we invest as a VC firm and entrepreneurs, we're looking for entrepreneurs who are put on this planet to work on the business they're creating. And we like to say, we want, want people who are obsessed, not passionate. It's easy to be passionate. If easy to fake passion, it's really hard to fake obsession. And if you're not doing the thing you were put on planet earth to do, it's not sustainable over a long period of time at the intensity level that it needs to be, uh, for one to really be successful at it or for it to be a fulfilling experience. Um, so I think the why is key. And in some ways this is the shift away from the what so many companies, when they talked about their businesses focused so much on the what.
Brad Feld (09:31): And, you know, I remember Microsoft in the nineties, they were a close partner of my first, I was, my first company was a Microsoft solution provider. I should say, Microsoft is close partner of mine together. Huge. We were a tiny, um, they were an important partner to us because we built our software using Microsoft tools and Microsoft products. And they helped us find new customers and they built a community around this. And you know, Microsoft very early on embraced this notion of solution selling versus selling a product, make no mistake. They sold a product. That's what they sold and they sold boxes of software, but they approached it in a much broader way in terms of helping people understand why they should use Microsoft products. And, Oh, by the way, the why for them was often not correlated with reality because there are often better technical solutions in Microsoft products at a particular moment in time.
Brad Feld (10:22): Um, but Microsoft, just to use them as an example, had this obsession about iterating on those products and making those products, foundational parts of technology, strengths and weaknesses with that. Like you can a lot of criticism about the effectiveness over time, but that was, that was again around that word Why. The other word that I think is important in the context of companies is how I think that's going to be more important than ever post-COVID, whatever post-COVID means. I believe that the world, I wrote a post this morning, my blog, I believe that we will not have a new normal, uh, nor do I believe we will have a normal, we are not going back to the world that we had prior to COVID. There is so much dislocation in so many parts of our society. And there are so many things that can be re-evaluated many things which are structurally broken and have been for a long time or that are done because we think we need to do them as a society, but they don't really work in the context of our current world.
Brad Feld (11:29): That coming back to this notion of how, uh, is important. You know, how is it approximation for your value system? There's a entrepreneur who runs a company called LRN, Doug Seedman, who's written a wonderful book about this, this notion of how it's probably six or seven years old, but I think it comes back to an individual, um, but also a company, right? How does the company think of itself? How does the company represent itself? It's one thing to say, we care about pick topic of the day. We care about diversity. It's a whole nother thing to do more than have checkbox activity around diversity. So that you can say, we sort of did that.
John Farkas (12:10): How does it work itself out in your DNA?
Brad Feld (12:13): That's right. That's right. And many, many dimensions of that. But I think again, we have a moment in time as a society to refocus energy on that. And I think for businesses, especially that sell to other businesses, extracting dollars from other companies is not a particularly successful strategy. Right? It's what you do if you sell something to other companies, but if that's your way of thinking, which by the way, a lot, I think a lot of companies still operate from the perspective of, okay, our job here is to extract some rent. What can we get? We provide a solution. That's not very good,
Mark Whitlock (12:53): Great insights. How does that work out? Especially going back to your first point of give first. So that's right in the same stream, how would you suggest that a company that's bringing itself to market that is trying to frame itself and help people understand why and how, how do you approach that?
Brad Feld (13:12): Let me give you an example, a tangible example to explain it. And I'll use a company. We were a very early investor and it came out of the third Techstars program in Boulder in 2009. Uh, and then Foundry Group that Vermont part of was, was an early investor in it. It's kind of called Sendgrid and SendGrid is a company that's now owned by Twilio, which also has a very similar kind of story and cultural trajectory. Um, SendGrid was started by three founders, uh, led by a guy named Isaac and Isaac's, uh, was, was a technical founder. And his view was that there must be a way, a better way as somebody who wrote software all the time to deal with email notifications. And that was 2009. And all of a sudden, you know, email notifications are becoming a big part of the infrastructure of how web and mobile works, but coding it up each time is a pain in the ass.
Brad Feld (14:10): It's a whole category of products. It's email marketing. In fact, I was an investor in one of the very first ones, a company called email publishing that ended up ultimately being about by DoubleClick. Wow. But email marketing and email notifications were totally different things. And Isaac came up with a way to build a piece of software to do this notification at roughly about a hundredth, the cost of a traditional model. And which meant you could send a hundred times the same number of messages for the same cost. In addition, he came up with a way to do it using an API rather than somebody having to use some other systems. So from the beginning, his view was I'm a software developer. I know a whole bunch of other software developers instead of them having to write a bunch of code and constantly maintain that code and deal with all this stuff.
Brad Feld (14:54): And then as they scale up, have to deal with it. If they just do a call to my API, I'll do all the work. And so, you know, he essentially created a category that became known as transactional email, and it has a bunch of other pieces in it, including email deliverability and on and on interestingly, early on every company in that first Techstars class, all 10 of those companies, you SendGrid, they all said, we all have to need this for our product. We'll just use this product. It's cheap. It's super easy to use. I can get started with it for free. If my company goes somewhere, I'll have to pay them some money. If my company goes nowhere, it was free. And so SendGrid as a company, very early on built a community around software developers built a team of developer evangelists didn't really have a sales organization at the beginning, but instead had a customer care organization.
Brad Feld (15:46): And we're very, very focused on building that community of developers. And as those developers move from company to company, of course, one of the very first thing they do is start using SendGrid again. And they tell all their friends about SendGrid. And as some of those companies started to get bigger, one of their very early customers for example, was Uber. Um, you know, their business would grow with the growth of, of those other companies from the beginning, uh, SendGrid was much more focused on building the community of customers than they were of monetizing people's email transactions, or, you know, some phrasiology like that. And today, you know, if you think of a classic B2B freemium type model, it's the typical one where there's zero cost, no friction to get started. You can get started literally in minutes. And when you're developing your app well, before you've built something, you're already a customer, but you're not paying anything.
Brad Feld (16:46): So you sort of have no downside. I mentioned Twilio, right? Twilio is a very valuable company now, very similar approach, but around voice. And this notion that there was this whole voice infrastructure that existed, including VOIP on the internet, and there's a whole telefony infrastructure, but it was miserable to deal with. And the companies that were the dominant companies, providing technology and that infrastructure were hard to deal with. And you had to deal with a direct sales person. You have to sign a contract and you, versus this situation where it's like, you know what, we're just going to get a whole bunch of people who, who are developers, who start using our product and we'll build our product based on what the community is telling us they need. So those would be examples. I can give many more of, of that. But today, if you look at the very fast growing B2B technology companies, the vast majority of them have some characteristic that looks like this. They're not focused on monetizing a thing. They're not focused on selling a thing to their customer. They're providing a particular type of value, and they want the value to grow with the usage either customer, but they want to make it very easy for those customers to engage with them.
John Farkas (18:01): That's a great segue into where I was hoping we could get to you are intimately long time familiar with the, uh, early stage company and what that looks like in our world. And I know that as I, as I'm thinking about this year, as I'm thinking about, uh, the, the anatomy of early stage companies, which is inherently agile, has to be in, in our world. Now the ability to, to, to change with the evolving landscape, what would you say if we're talking to a CMO of an established or growth stage company, you know, what, what should they be learning from early stage companies right now?
Brad Feld (18:42): Well, it's fun that you used the word agile. I was a seed investor in a company called Rally Software, which, uh, ended up going public. And it was bought by Computer Associates after they went public. And they were the first company to really commercialize agile software development tools. So it's interesting to have agile be in the mainstream. They were, uh, starting 2004 and another CEO who is now running a new company called Bolster. His previous company was called Return Path that I was on the board of at Bloomberg. At some point, took the phrase agile and applied it to his whole company. And he said, this is no longer a soccer game. This is a whole company problem. We want all aspects of our company to behave in an agile way. Now it's easier said than done. You know, the company I think was about 400 people at the time that he said that.
Brad Feld (19:28): But the dynamics that are important is to recognize that at the very early stages, your company is an endless series of small experiments. If you've read Eric Reese's book, The Lean Startup, if you subscribe to ideas around lean startup, which I do the idea is you want to try a bunch of experiments. The ones that fail, many of them will fail. The ones that do you want to learn from those experiments and then run another experiment. The ones that work you want to do more of it. And you want to keep doing that as your, and find things at work, and then continue to amplify the things that work, but regularly learn from the things that fail as part of this agile development of whatever you're doing, or continuous development. If you want to use the word that Eric and, and Steve Blank, who really came up with the original idea around consumer driven product development, uh, use.
Brad Feld (20:19): Now the interesting challenge is companies get bigger and scale is it becomes much, much harder to run experiments for a couple of reasons. One is the stuff that you're doing that works. It's harder to change it. It's harder to experiment with it because you're afraid you're going to break it, or you do break it. And then everybody gets really nervous about it. The next is the new experiments that are small often get ignored because they're so small relative to the big thing that you're doing. And the challenge is if you don't continually run small experiments, somebody else will find one of those small experiments that you should have found, and that'll create a new, competitive threat for your business as they start to scale up. And so as companies get bigger and bigger, they tend to stagnate sort of in the context of that new innovation, not always, I mean, there's plenty of high growth businesses, especially technology businesses that continue to have long runs, but you see these moments of that happening in companies.
Brad Feld (21:23): And it doesn't always correspond with a slowdown in growth that might take a year or two before it manifests itself. Uh, but what happens is that there's a slow down in new development, new product development. There's a slow down in new innovation. And if you're a customer, you start to feel it and see it. As a user of those products, you notice it. And the reason it takes a little while to manifest itself on the company side is because as a customer, you might put up with her for awhile. And then at some point you're like, you know what, no more. And one of the challenges, I think for a lot of B2B SaaS companies, specifically in sort of the zone of, I don't know, 10 million to 50 million where companies generally get stuck and all of a sudden their growth rates decline a lot. And it's often a function of, of leadership, especially around product and customer, not around something else is because that leadership doesn't know how to invest in getting to the next level.
Brad Feld (22:27): And for the companies that blast through that level, it's either because they've created something that has such incredible pull characteristics on the demand side, you know, where customers are ripping it out of your hands, or they have a leadership team that knows how to keep scaling and continue to run these experiments and extend the product set without becoming distracted, or do incremental acquisitions that allow your machinery and your customer set now to take something that previously was a couple of million dollars and turn it into something that's 20 to $50 million in and of itself growing really quickly. So, you know, I would say that's kind of, I think the magic from my frame of reference is never losing sight of the idea of the value of continuing to experiment, be comfortable failing because you're looking for the thing that works, not just with the product and all aspects of what you're doing as a business.
John Farkas (23:20): So how would you advise a marketing leader to play an active role in that process? 'Cause marketing is an important integration layer, right? I mean, they've got feet in both sides of the equation, in some sense, understanding what's going on with the product and keeping tabs on what the market is asking for. How do you see that role?
Brad Feld (23:42): I think the best marketing leaders spend much more time with customers around the selling process and the product process than they do internally with their teams. So I think if you think of it on a spectrum, you have some marketing leaders that spend most of their time internally with their team and managing their team and doing a bunch of stuff and touching, you know, they, and they spend time laterally with the VP of sales or the VP of product. And at the CEO, the best ones are spending time with customers, understanding what customers and the sales interface looks like and what the customer's responding positively to and negatively to. And the same thing with the product side of the equation, what the users of the products are responding positively to and negatively to. And then bringing that back into the evolution of how they talk and describe the product.
Brad Feld (24:36): I find a lot of marketing leaders end up, uh, and, uh, we use the word brand earlier. I remember when the word brand replaced the word company, and I don't know which large marketing agency decided that brand was a better word than company C what I did there. Um, but I do remember, you know, I don't know, seven, eight years ago where all of a sudden the conversation shifted from company to brand. I think of the number of times where a company has brought in a new head of marketing, CMO, whatever the title is. And within 12 months they have new colors, new logos, new image, a new tagline, it's new, this new that, and, you know, to do that is a huge amount of work and energy, but it kind of feels wasted at the beginning, especially before that leader has spent real time, really immersing herself in the product, in the sales effort, in the company, in the customer.
Brad Feld (25:32): And so that's where I would put the energy, you know, for me, I like, uh, especially for, for younger companies and for faster growing companies, I like to say messy is good. You know, if you're, if, if there isn't some messiness on the margins of things, you're not moving fast enough. So, you know, the idea that you've got to get everything perfect and that you've got to get it done well, and then it has to be reckless. Like there's a lot of tax to a fast growing company of that versus the ability to move quickly. It's not the Facebook "move fast and break things." That's not what I'm saying. I don't like, I've never liked that tagline personally because it sort of gets rid of any personal responsibility for anything that's going
John Farkas (26:14): Well, it's the understanding that change and movement is not going to be all buttoned up. Right.
Brad Feld (26:20): You're not thinking it right every time. Yeah. In fact, you're probably going to get it wrong more often than you're going to get it right. If you do lots of small experiments, if you do one really big experiment, you better get it. Right.
John Farkas (26:33): Yeah. You ought not bet the farm. Do you have a good example of a company that you're familiar with? Brad, that's done a great job in fostering that kind of environment.
Brad Feld (26:43): Well, I referred to Rally earlier. I think that they were extraordinary at it because they lived their values linked up directly to the methodology and the philosophy of agile across the whole company. Um, so, uh, I had a recent experience with a bunch of the team from Rally, right? They were bought a number of years ago and many of the Rally people have gone on to the next thing, Tim Miller and Ryan Martins, who are the cofounders. Tim was CEO. Ryan was CTO are still very close friends. I'll just give an example of how that plays out. So in Colorado at the beginning of the COVID crisis on March 11th is the day I I anchor on was the first day I really realized I was, I had awareness that COVID was going to be a really big crisis. I was already hearing about it and nervous about it, but that's the day I woke up and I'm like, yep, I'm not leaving my house for a while.
Brad Feld (27:35): And a couple things happened that week that I was involved in. And that weekend Jared Polis, who's our governor, who was a very successful entrepreneur, multiple companies, including BlueMountainArts.com, which Excite bought for about $800 million and then Provide Commerce, which went public and then got bought by Liberty media for about $500 million. Uh, Jared said, I, I have a great state infrastructure for getting stuff done, but we have a crisis and there's not enough entrepreneurial thinking, you know, within what we've got, we need to get some entrepreneur sort of around the table to just help us as all this stuff is coming at us. And we can't process through it. Um, you know, we, we have a state to run, we have a crisis going on. We have all kinds of things that we got to get done. We got all kinds of people that are trying to figure out what to do, but there's some stuff we're just not going to be able to figure out what the machinery of government help.
Brad Feld (28:23): And so, um, I ended up getting involved in two separate, uh, efforts, uh, one that was, um, uh, more health-related we call it the "innovation response team."" And one that was economic related that was called the council on economic stabilization and growth." The rally team created a sub team as part of the innovation response team called "citizen software engineer." And we put together a team of about 150 people, about a hundred of them were on the CSE team that at the very beginning of the COVID crisis, we're writing a bunch of software to deal with all the data to try to understand what was actually going on around publicly available data for social distancing, all the testing data that was getting generated, which is really in very messy shape. And just trying to get systems in place that the state could ultimately if useful takeover to help manage the crisis.
Brad Feld (29:20): A number of those are still used within the state of Colorado and became institutionalized. Uh, but we also built a team around PPE procurement, a team around testing, and it wasn't that we were going to solve PPE procurement or testing. It was that we were doing a bunch of stuff that the state just wasn't going to have resources to focus on. If you remember the ventilator thing at the beginning of, of COVID in Colorado at the beginning, you know, we thought we needed a thousand ventilators and we thought we needed 3000 ventilators. And then there was a point where Jared actually was, uh, you know, at one of his press conferences is we may be as many as 10,000 ventilators. I like to refer to this as peak ventilator. Um, you know, a week later, uh, you know, the federal government decided we are going to be the ventilator king of the country.
Brad Feld (30:05): And now we have lots of ventilators and, you know, whether we realize it or not, we may need them all again, based on people's behavior right now. But, um, it ended up that we, you know, we didn't need, but, uh, any ventilators in Colorado because we're able to manage things with the lockdown. However, we had a team of people that spent two weeks instead of the government running around, trying to procure ventilators. You know, we went around and spent the time doing that. The other side of that, that emerged was an organization called Energize Colorado, uh, which has energizecolorado.com. And we created a nonprofit of Coloradans helping Coloradans that were in businesses of 500 people or less. So we realized that a lot of the things that we had done with entrepreneurship around startup communities and especially in the Front Range of Colorado, but also in rural Colorado, around building startup communities, uh, we could apply to any business with less than 500 people.
Brad Feld (30:58): So it didn't matter whether they're local business, minority owned women led businesses, a business in rural Colorado, a high tech growth company didn't matter. Nonprofits also fit in this category and we used the same sort of approaches. So in both of these two cases, I think Energize Colorado today is about 250 people. In three months, we created these two startups of volunteers that scaled very quickly and I've had meaningful impact on what's going on. Come back to what we said five minutes ago. Like they just ran experiments. There's a lot of stuff that we were doing that we don't do any more like the, literally the mantra each we had to stand up every morning for about two months for each organization. And, you know, the comments were, what are we doing today? And what are we stopping doing today? We're constantly looking for things that weren't working or that we're trying to do something, you know, when the day that we realized that we didn't need any more ventilators, we stopped the effort versus, you know, Hey, we've got these ventilators lined up. We should just follow through and make sure we buy some it's like, no we're done. We don't need it.
Brad Feld (31:59): So that type of dynamic, I give those examples, right? That's built into the DNA of the people at rally at the people that spun up the citizen software engineering team at the people that weren't involved at the beginning of Energize Colorado. And if you can get that kind of DNA injected in what you're doing, where you're constantly focusing on what the needs of your constituent is, you can call it your customer. What is their need? What are we doing to accomplish and fulfill that need easy that's management theory. Number one, you have to do these experiments to try and figure out if you're actually meeting their needs. And when you're not, you need to learn and adjust.
Mark Whitlock (32:40): You've just given a good couple of examples of what startup communities look like.
John Farkas (32:43): I was going to say he very deftly carefully engineered the conversation right into his hand.
Brad Feld (32:52): Meet Brad, the book salesman.
Mark Whitlock (32:54): Have you seen any problems with more established companies getting involved in communities or, or have you tapped into what may be making them reticent to do so?
Brad Feld (33:12): Oh, and when I wrote the book in 2012, Startup Communities book, I didn't do a particularly good job of a couple of things. One of them was I didn't focus on how corporations could actively engage with the startup community in an effective way. So I had a very short section on it, but it wasn't very useful. The other thing I got wrong in that book, as I separated the world into two categories, start community two categories, leaders, and feeders and uh, leaders. Uh, cause I said, start communities have to be led by entrepreneurs. Everybody else is a feeder. Uh, what I did wrong was I didn't say, and they're both extremely important. I get it, but people lost it. I wasn't creating a one up one down relationship between leaders and feeders. I was just trying to separate this notion of, if you don't have a critical mass of entrepreneurs leading your startup community, it's not going to go anywhere.
Brad Feld (34:05): But if you can get a critical mass of them, leading things will start to move. And if everybody else that's a feeder is focused on helping, uh, the entrepreneurs move the startup community forward, grow and develop it. Good things will happen. I didn't do that as well as I could've. So in, in, in the second edition of Startup Communities and also in the Startup Community Way, I introduced a third category. I call instigator and leaders and instigators are people and feeders are organizations, eaters have to be entrepreneurs or entrepreneurs are leaders. People who are playing leadership roles in the startup community, but are not entrepreneurs are instigators. So I gave voice to all of the people who work for the university, but help with the startup community or work with local government and help with the startup community or work for a large corporation, whose job is to engage with the startup community or have started their own nonprofit to try to help with the startup community.
Brad Feld (35:05): And those instigators play the same kind of leadership roles, uh, as the entrepreneurs. And then all of the organizations are feeders. And this is important because uh, organizations tend to work, uh, in a hierarchy, certainly university network, large corporations, government, whereas startups and entrepreneurs generally, and startup community specifically function in a network. Um, the way you increase your power in a hierarchy is either you subscribed to the norms of the hierarchy. You do your job really well and you get promoted or you underlie, undermine your boss. Uh, she gets fired and then you get promoted. Those are the two ways to make progress in a hierarchy. Primarily in a network we've not been trained with, you know, social networks to think that the more people we're connected to, the more powerful we are in a network, not true. Uh, it's actually the number of people you're connected to times the value of the information that flows across those connections.
Brad Feld (36:11): So if you're connected to a huge number of people, but nothing of value flows across those connections, you're worthless for the network, right? Because you're connected to only a few people and a huge amount of value flows across those connections. You're still pretty worthless to the network. And interestingly, again, your node gets bigger. Your power increases the connections times, the value of the information. This is why organizations can't be the leaders is because their natural state built into the word is to try to organize and try to create some structure around this thing. That's just a messy network.
Brad Feld (36:56): You don't want a present membership of the startup community. However, you do want the person in big company who's in your city. Who's responsible for helping with startups or innovation, which by the way, most large companies in 2020 have teams of people now that do that. You want them to be leaders in your startup community. So you want the individuals to play this instigator role, all get connected back into their company. And so in the newer books, I've given a lot more, plenty of other thoughts around this, but a lot more form and substance around what large companies can do. And by the way, much of this came from my experience with Techstars. Techstars now has a 50 accelerators around the world and about two thirds of them are with corporate partners. And they've got about 80 active corporate partners in a product that they have called Pathfinder, which is large corporations that want to be part of the Techstars network and have access to startups and engage with these startups.
Brad Feld (37:54): And also have their innovation teams engage across all of these different geographies and networks. So what Techstars has tried to do is not be exclusive, but the opposite to try to be inclusive, you're a corporation and you want to get engaged with startups anywhere in the world or everywhere in the world. This is not the only vehicle for it, but this is another vehicle for you to get connected into those networks. And that network model really underlies the efficacy of how sort of things work. I mean, you think about Nashville and your local community. Think about the startup community. You go across company boundaries, endlessly. I got to believe in every single thing you do in and around the startup community. It's not, Oh, you worked for that company. I'm not talking to you. I'm not part of your startup community. You're in some other startup community. You might be in some other company, you might have competitive vectors, but when you're talking about Nashville and trying to develop and build Nashville, you all are on the same team for that.
John Farkas (38:52): Yeah, absolutely. How would you describe or distill the benefit the feeders get from active participation in it?
Brad Feld (39:01): Let's start with the beginning is that if you're an, remember the feeders are the organization, so it could be companies, it could be the university, it could be government, it could be nonprofits by the way, investors VCs are feeders, right? The VC firms, individuals in the VC firms like me could be an instigator. Now I play a leadership role in the startup community. And yeah, you can categorize me as an entrepreneur because I co founded Techstars a bunch of other companies. So whatever, but, but fundamentally, most investors, uh, uh, are, are, are not the leaders, but they play a leadership role or they can't play. So for starters, all of these feeders, it is a very powerful tool to engage people that work for you by giving them access and involvement with the startup community and having them be part of it. I think some companies used to be worried or people will leave us and they'll go work for startups.
Brad Feld (39:56): Now. I mean, a lot of people don't want to do that. They want to be in the large company, but they do want to have the experience of engaging with all of this innovation going on in their community. Second, if you want your community to be healthy longterm. And I think most large corporations in a, in a city want their city to be healthy longterm. I strongly believe that you have to have a very, very healthy innovation economy. You have to have a continuous stream of new companies being created and new companies, some succeeding, some failing, but people learning, developing experience and wealth, uh, and resources in your city, by the way, in the same way that philanthropically for a city to thrive, you need an arts community and you need a sports community and you need all of these things that are part of the fabric of our communities today.
Brad Feld (40:50): If you want to be a healthy growing community, next is that most companies are constantly trying to be more innovative, at least in 2020. I hear that phrase from large corporations all the time. The university equivalent is we want to be a better fill in the blank type of university. And it used to be research university. When I was, if that was the primary thing. Now, I think you hear the word entrepreneurship a lot with universities. Look, you can be better at it. Only trying to say in a positive way, if you want to be better at it, don't be insular. If all you do is do stuff inside, you're not going to get better at it. You're just running your same internal over and over again. Oh, you okay? You recruited somebody new and now you stuck them inside your thing. And within a year, you know, they become part of your thing versus they've made change within your thing. The fastest and best way to be more innovative or to introduce new ideas is to go horizontally across that network. Um, and the benefits are to the institution company, university government, the benefits are to the individuals who participate and they get to play leadership roles and have more power and influence, uh, in this innovative segment of your city or your startup community. And as they have more power and influence that reflects well on your institution, whether you're a university or your city government, or you're a large company.
John Farkas (42:17): Yeah. I think that the idea, and as I think about the marketing leader and great pieces of advice, it's contained in what you just said, do whatever you can to not be insular because the moment you get kind of stuck in your own highly subjective universe is the moment you become least valuable to your universe. Because for marketing executives, if you're stuck in your thing, you're going to lose touch in a hurry. You're going to, you're going to lose touch with the market. You're going to lose touch with what the evolving landscape is and that early stage companies, that innovative universe that exists out there in your community that is surfing the edge and uncovering new stones contains a wealth of knowledge and perspective and freshness that you would do well to hold onto and to run after, because that's going to be where you bring the most value to your organization.
Mark Whitlock (43:15): Brad, thank you so much for being a part of Studio CMO today.
Brad Feld (43:18): You are welcome.
Mark Whitlock (43:21): We feel like you’re a part of our community here and our listeners are a great community and a great resource to each other. So when you come to studio, cmo.com, join our community, subscribe to our podcast, get the information as quickly as you possibly can to find out about more great guests who were coming down the pike here on studio CMO. And when you come to studio cmo.com/brad Feld, you’ll be able to look for a number of his resources. We’ll connect out to the book, uh, that we’ve been talking about today, the startup community way, as well as his past books, uh, startup communities. And of course his landmark book venture deals. And you’ll also be able to look at some of the accelerators and Techstars. And some of the other things that Brad is, is deeply involved in. We’re also going to connect you to some resources from golden spirals website early in the podcast, Brad mentioned content marketing and the importance of it. We have a brand new strategy guide to help you build content marketing into what you’re doing at your B2B tech company. That’s available at no cost. So come to studiocmo.com/bradfeld, and you’ll find all of those resources available. And we always encourage you to always remember.
Angus Nelson (44:33): understand your buyer’s problems.
Mark Whitlock (44:35): and lead out of that empathetic understanding.
John Farkas (44:38): and make your buyer the hero.
Mark Whitlock (44:41): See you next time on Studio CMO.