Just like our food choices are said to reflect our values (remember how your mom always told you, ‘you are what you eat’?), the measures we use to define our startup ecosystem’s successes or failures reflects our region’s collective values and goals.
For example, if all we report on is venture capital raised by our startups, then it can be assumed that funding is our primary yardstick for success.
But after observing and interacting with entrepreneurs and startup enthusiasts throughout the Triangle this year, I believe funding, while important, is just one of many things our region values and might even rank lower on the list of measures to track than we might think.
In 2014 alone, I have seen our community rally around the issue of a lack of diversity in the startup community and attempt to reverse the trend through initiatives like SOAR and Triangle Startup Weekend: Women
. I saw local startups and entrepreneurs work to solve real-world problems, while their peers in others states started their business to earn a quick dollar or to create vanity projects.
With all these observations in mind, it’s clear the Triangle is not the “next” Silicon Valley. We’re something different and unique, and we have the opportunity to be a leader in areas that the Valley is not—like building a diverse startup ecosystem. Our story is different than other regions. It is one of grit, determination, revitalization, passion, community, and the honoring of our past while shaping our future. It’s a beautiful story, with many parts yet to be written.
And yet, are our reports and data telling the Triangle’s real story? Can people outside of our region get a true glimpse of what it is like to be an entrepreneur in Raleigh, Durham or Chapel Hill without visiting or living here?
A call for better data and reporting
The narrative of our story is slowly leaking out there, with pieces like the Innovate Raleigh report and American Tobacco’s (our parent organization) new documentary, “Because No One Else Would,” detailing the region’s pioneering past, decline and eventual revitalization. But what about the numbers we track and report, do they show others our grit, passion and community-centered values?
I’m not an expert, nor have I been able to keep up with every piece of data organizations throughout the region release, but based on what I’ve seen thus far, I would say our current method of reporting at best reflects that we’re a region on the rise, and at worst lumps us in with our peers.
But we’re about to start a new year, and what are new years for if we can’t set some resolutions? I won’t ask you to leave your weight loss or self-betterment resolutions in 2014, but what if, in addition to those, we resolved to redefine the measures we report to better reflect our startup ecosystem’s values, strengths, goals and unique spirit in 2015? I may be a data nerd, but I cannot think of many other things that would support and benefit our startups and startup ecosystem more.
What we can learn from the American Underground Report
At this point, I hope I've convinced you we need a new way of reporting our data. But how do we design measures to reflect our community’s grit, passion and values?
There’s a reason why such measures are uncommon—they’re hard to design and even harder to find data to report on. By this point, I’m sure you’ve seen the American Underground’s Annual Report. If you know anything about the American Underground, you likely made a connection between the numbers displayed and visualized with the organization itself or at least one of its three spaces.
Whether you know it or not, that was by design. I recall when I first sat down with the AU team to chat about how to best measure the impact their organization and the teams housed in their spaces had on Raleigh/Durham over this year and, Adam Klein, American Underground’s Chief Strategist, said, “If we capture the impact, essence and values of American Underground in this report, we’ll consider it a success,” (or something more eloquently worded along those lines).
Each measure was designed to directly align with one of American Underground’s core values. Even the ‘fun’ measures were carefully chosen and calculated. For example, the number of pizza slices consumed at the weekly "Helpfest" throughout the year (4,480) shows the members aren’t only fans of pizza, but they’re supporting the local economy and learning from each other and mentors while doing so.
While we may not want to calculate the exact number of pizza slices or cups of coffee all Triangle entrepreneurs and startup employees consume while working, much can be learned from the measures and data the AU team chose to report in their first annual report.
For full disclosure, I helped design the measures and crunched the numbers for the AU report, so my opinions may be a bit biased. To get a second perspective, I emailed Klein last week to get his thoughts on why the AU team chose to design the report and measures the way they did and what lessons the broader startup community could derive from it.
Klein says, “We were seeking a mix of classic startup success measures (i.e. job creation and venture funding raised) but were equally interested in measures that tell the story of the broad, community-wide impact our 180 startups have. So, measuring money spent in downtown Durham and Raleigh, for instance, reinforces a value we have of supporting other small businesses.”
But before we can get to the point of crafting measures, we need to agree on what we value and what we should be measuring. One way to do that would be to define what successful startup ecosystem looks like, from which values—and subsequently measures—can be derived from that vision.
To the question, “What does a healthy, "successful" startup ecosystem look like and how do we define success?”
He also says, “The startup community can't exist on its own or in a bubble.” And that “A healthy startup ecosystem has great collaboration between some larger corporations, quasi-public organizations (think RTP or Chamber of Commerce) and startups.”
For Klein, it ultimately comes back to the community. He says, “I really think success is going to be reflected by the way the startup community impacts our broader economy—is it creating new jobs? What kinds of opportunities are being created and for whom? In other words, a healthy startup ecosystem impacts our entire economy, our schools and institutions that train talent, and our downtowns—and disrupts in a way that makes each of those spheres better than before. That kind of change and success spells long-term growth for a startup ecosystem.”
What to measure
If you're wondering what we should be measuring, then here's my best attempt to break it down. I will not pretend this is a comprehensive list or that it is complete. Thankfully, there are a lot of more talented and experienced people to come up with the perfect list of measures. But just to get the ball rolling, I've got nine suggestions for topics we should consider measuring in 2015.
Each topic could be measured in a variety of ways, and several measures would likely be needed to robustly convey the theme. For all of these, benchmarking ourselves against peer regions (think Chicago, Austin, Boulder, Seattle etc.) would be ideal.
In no particular order, my list:
Jobs—How many are startups creating? What are they? Are they part-time, full-time or contract jobs? Who is getting hired (what’s their education, background, where are they from etc.)? Are there any non-tech jobs (for the non-technical amongst us) in these organizations? Are we creating jobs for all skill levels or just highly trained, highly skilled workers?
Klein points to Shoeboxed as a good example of a company creating a diverse set of jobs in Durham. He says, “I'm not advocating that startups start simply to create jobs, but certainly fast-growing companies hiring at a rapid clip is a good indicator of success. Shoeboxed is a great example of this—it is a technology startup creating jobs for developers and data entry professionals alike, all with differing educational levels.”
Diversity—How many women-owned or led startups do we have? How many minority-owned or led startups do we have? How many women and minorities work for startups, and in what types of positions? Do our businesses represent a diverse set of industries? Do we have a workforce with a diverse enough set of skills to fill the skill gaps that arise?
To this point, Klein says, “I think measures around diversity are very critical to the conversation occurring in the innovation space and Durham and the Triangle have a real opportunity to be a leader and stand out from what's occurred in Silicon Valley.”
Funding—How much funding are our startups receiving (VC, Angel investments, and grants)? What stages are the businesses in when they receive funding? Who is funding our startups, are they NC funds, or from outside NC? Are they angels or VC’s? To be fair, the Council for Economic Development has focused on these measures in its now semi-annual Innovators Report. Starts and Failures—How many companies are starting and how many are closing shop each year? Knowing this will give us a better understanding of our business dynamism rate and how the startups are impacting our local economy (for a recap on business dynamism, see this article).
Wages—What are startups paying their employees? Is it competitive with other peer regions? How do the wages compare with other businesses in NC and other states?
Mentorship/the Pipeline—Are entrepreneurs mentoring aspiring entrepreneurs? Are we ensuring our talent pipeline is flowing? Are there opportunities for aspiring entrepreneurs to interact with experienced entrepreneurs? Are there opportunities for new or aspiring entrepreneurs to work in established companies in the Triangle?
Klein says AU chose to focus on this measure in its report because, “For the American Underground, measuring how many startups are mentoring young entrepreneurs speaks to how the Triangle will eventually become a leader in entrepreneurship. We are an up-and-coming ecosystem but if our founders are already looking to support those coming behind them, we can build mass in a way few other places can.”
Community—Do our entrepreneurs feel connected to each other? Do they feel connected to the business community? Do they feel connected to the community at large? How engaged are the universities, state and local governments, corporations and non-profits in our startup ecosystem?
Innovation—How much money is flowing into R&D from universities and governments? How many patents are approved? How much intellectual capital are we producing?
Infrastructure—How does our infrastructure compare to other startup hubs? Do we have more or fewer support organizations? Is affordable and reliable high-speed broadband available to our both our companies and homes? How do our roads compare to other regions? And how does our tax structure impact startups and entrepreneurs?
Fortunately, we will not have to start from scratch come January 1, 2015. Klein believes we’re on the right track in terms of learning to better report about our startup region, and that the CED has played a crucial role in doing that this year with its Innovators Report (here's the latest).
But there is a need for more reports like it.
“We need more stories circulating in the national press about the great things happening here and robust data to reinforce it,” he says.
Designing adequate measures to tell our unique story will be challenging. Finding the corresponding data will be even more challenging. And using all the data to design a readable, interesting report that does not sit on a virtual (or real) shelf gathering dust each year is a tall order.
But with all the talented, brilliant, passionate people in our region, I would wager it is all possible, and I look forward to seeing what everyone comes up with. I know we’ll be working up our own strategies here at ExitEvent too.
So here’s to 2015, a new year, and a new way of reporting news and data about the Triangle’s special and unique startup ecosystem. Cheers, y’all.