The entire world has caught Startup Fever.
In cities and neighborhoods, states and provinces, and across entire countries, massive resources are pouring into efforts to support the creation and growth of startup companies. The word “startup” is appended to nearly anything, lending a patina of immediate goodness.
The mania for Startup [Anything] might be easy to ridicule, but there is good reason for Startup Fever. Young, technology-based firms that seek growth and scale are important drivers of jobs, productivity, innovation, and economic growth. By many accountings, they’re the main driver. Any region would be foolish not to try to foster a supportive startup ecosystem. Yet we continue to see the economic rewards from Startup Fever flow to only a small handful of places. Despite ever-increasing attempts to help startups in more places, many of those places aren’t seeing the economic benefits.
So, is Startup Fever the key to long-term economic development? Do we know how to help startups? Do we know how ecosystems grow or stagnate? (These questions will be the subject of a forthcoming book, Startup Fever, from us.)
Unfortunately, as with any mania, snake-oil purveyors have identified an opportunity to make a quick buck by selling wrongheaded approaches to cities and countries. “Just follow this simple blueprint,” they whisper, “and you’ll have a blossoming entrepreneurial ecosystem in no time.”
I categorize these approaches as fallacies of ecosystem development: the monoculture fallacy and the kitchen-sink fallacy (also known as the “more of everything problem” as described by my friend Ian Hathaway). We’ll explore these fallacies in subsequent work but my guess is that several of you are familiar with these even without additional detail.
At Startup Genome (a business study that was supported by NCET), we try to identify the actual underlying dynamics—the code or genome—of how startup ecosystems actually develop and what actions can be taken to support their growth. We try to answer the foregoing questions, and they helped frame a research project we conducted with the generous support of the Kauffman Foundation. To make headway on these, we jointly selected six U.S. metropolitan areas that are not in the top 40 most populous and which have been faring less well economically than the country as a whole. (For this, we used data from the fantastic Economic Innovation Group.) The chosen metros were:
- Albuquerque, NM
- Fresno, CA
- Hartford, CT
- New Orleans, LA
- Reno, NV
- Springfield, MA