Milwaukee Has Startup Ecosystem Elements, Awaits Chain Reaction

4/29/14

Obviously the startup communities on the coasts are different than those in “flyover country” (as it is often referred to). I’d like to comment on some of the differences between two startup communities I am familiar with: Boston and Milwaukee.

While I grew up in Milwaukee, I left after high school to go to MIT in Boston. I moved to San Diego after graduation, where I launched my first startup (a small PC consulting company), but moved back to Boston after two years. I remained there for the next three decades.

In Boston, I started three companies and worked at three other startups. I participated in the Internet Boom and suffered with the Dot-com Bubble (and crash). I co-founded one of the first entrepreneur gatherings in the area and interacted primarily with people in the entrepreneurial community. I spent the bulk of my “on the road” time in the Bay Area selling to other startups (like Cisco in the early days).

Two years ago I returned to Milwaukee and started a software company doing predictive analytics. I have become familiar with the startup scene here on the “Middle Coast” (Lake Michigan is a pretty big lake), and I want to share what I think makes a self-sustaining startup community, in light of what is blossoming in Milwaukee.

Startup community elements

Here are the elements I believe are necessary to have a self-sustaining startup community that will grow and be successful:

—Entrepreneurs: Most people think of entrepreneurs as people who enjoy (or are willing to) take risks. The word “entrepreneur” derives from the French word meaning “to undertake.” I have found that most entrepreneurs are people who are willing to “undertake” building a company because they see doing something they control themselves as less risky than just doing it for someone else.

Entrepreneurs are obviously the core fuel cell for a startup community. Taking a class does not make an entrepreneur. Funding a person with an idea does not make an entrepreneur. Being an entrepreneur is something that is built in.

—Startup companies: Taking that leap, quitting the full-time job, dipping into your savings, and finally launching the entity that is the startup company is the wrapper around the entrepreneur that will facilitate everything else. It is fine to dabble in your basement on your off hours when not at your day job, but it isn’t a real venture until you leap out of the plane with a bed sheet instead of a parachute.

—Customers: Without customers, a startup is just an idea that is fun to play with. For startup companies to survive, they must be able to solve a problem that people and/or companies have—and are willing to pay money to have fixed.

—Investors: Investors are not necessary for every startup, but they are necessary for a larger startup community to survive. Investors take financial risk in the hopes that the success of the company will provide benefits with a value in excess of the investment (financial value for most, but sometimes strategic value in the case of an investing customer).

—Talent: A startup can’t grow without a talent pool to draw employees from. Few startups can scale revenues without scaling people. The new employees need to be able to solve the customer problems and be willing to join a company that is not as stable as an established firm.

—Schools: Schools (primarily colleges and universities, but also high schools) are the factories that produce many of the ideas and much of the talent needed by the startup communities. They are necessary for developing the skills needed to perform the work the startups and customers will do.

—Environment: All of the startup activity needs a fertile environment to operate in. Locally, this means being a place people want to live in, having the ability to commute easily, having access to vendors like lawyers, accountants, and bankers, having office space available at “startup prices,” having access to an airport, and more.

It is not enough to just have these individual elements. They need to interact in a series of feedback loops that produce a sort of chain reaction that keeps the community thriving and growing.

Like the proverbial “chicken and egg” problem, having the elements doesn’t … Next Page »

Art Mellor is CEO of Zero Locus, a Milwaukee startup creating predictive analytics software for large data sets using probabilistic graphical models. Follow @

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