The midwest is a wonderful place to live. We have a great quality of life, a lot of smart people, and a low cost of living. As such, the midwest is a great place to create a startup.
In fact, it might be too good.
There are a lot of good startups in the midwest. Many entrepreneurs are ekeing out a nice living but don’t seem to have much of a desire to do a lot more. I attended an “un-conference” in Kansas City last week that featured many new media industrialists from the region. All were proud of their accomplishments, as they should be, but there was a common thread I found troubling.
So few sought to change the world . . . or create the next Google. So few hoped to garner ANY venture capital funding. When asked a panel of Start-up entrepreneurs, “What would you do with 100 million dollars?,” no one offered a response.
In fact, one respondent in the audience voiced an almost “anti-hero” sentiment that to achieve multi-million dollar status is to practically sell-out one’s ideals. Astonishingly, altruism seems to be the primary motivator of todays technical founders, well ahead of money, which is probably near the bottom of the values held dear, along with voting republican or coding static HTML.
Are all the big dreamers on either coast? Why is it that its typical for those in Silicon Valley to dream big and hope for owning Lamborghinis and dating supermodels, while those in the donut hole of the U.S. just hope to pay the rent? Can’t we hope to add value to the lives of those traversing the Web AND walk around with pockets full of “phat lewt?”
Have we relegated our dreams to sitting at the kids table of the biggest venture capital opportunity of our lives? Or worse yet, are we the lap dogs of the Internet, seeking to live off the table scraps of what life seeks to offer us?
If we REALLY seek to create a silicon prairie in the middle of this country, we need to be more than we are. We need to demand more . . . of ourselves and each other.
Wake up.
November 4th, 2008 at 8:23 am
Well, done you. I’m all for having my cake and eating it too. Gotta love the frosting!
November 4th, 2008 at 8:31 am
Interesting take on the proceedings. I admit to being a little surprised by the responses as well, but I came away with a different sense of things.
The “Midwest Founders” seemed to be more socially aware and willing to help others selflessly. Instead of greed and self-involvement (which we were raised on in the 80’s) I got a sense of a “greater good” agenda from this crop of young innovators.
History runs in cycles and right now were socially regurgitating the 60’s. We’ll come out of it and greed will be good once again. For now, I’m happy to be idealistic.
November 4th, 2008 at 8:32 am
Wow Banky. This is a bit of a slap in the face, but these are fair and sobering points. I am doing several things, bootstrapping them with a partner in Pakistan, and have stoically wanted to forego venture capital for what I thought were good reasons.
But I honestly think one reason for not wanting to go the direction of funding, outside accountability, etc. is intimidation. When you look at both sides of the coast, their network includes more vc folks, and more people “in that system” to get information from, contacts to, etc. We don’t have that here (or at least I don’t.) I barely even know anyone here – I am a Texas transplant who is very much out of my element at the moment. I wouldn’t begin to know where to start in terms of seeking capital, though I am sitting on an idea that I think is very good (not Twitterface, but something else) and I don’t know how I will achieve it without funding.
This is quite an eye-opener. I’m not sure if I should thank you or smack you! LOL!!!!
November 4th, 2008 at 8:41 am
Very thoughtful and obviously relevant comments. I appreciate the fact that you pointed out the big flaw that seems to dog many midwestern companies today, even large ones–no one really wants to chance the world, and if they do, it seems like you have to live with their insufferable egos as well. The perfect combination (if I had my druthers) are those who wish to conquer the world and be altruistic, unassuming and even (gosh darn it) nice…..
November 4th, 2008 at 8:50 am
I don’t see the lack of desire for funding or the lack of desire to have “phat lewt” as a problem, myself.
I think the Midwest prides itself on being level-headed and (for the most part) free of the excesses that plague the larger cities on the coasts. I don’t need a Lamborghini. I don’t want to date a supermodel. I don’t need or even want to own a mansion with a pool and an elevator. I’m not looking to be the next guest on MTV’s “Cribs.”
My goal in this is to own a business that helps other businesses succeed and allows other people to make a comfortable living, while also fostering good relationships with their customers/members/whatever. I want non-profit organizations to be able to spread their messages efficiently so they can fight for their causes effectively. I want to be part of something that makes companies and organizations more accountable to the public, and that’s what social media for business is all about.
Of course making money is part of it. I want a stable income, so that I can have my own home and raise my kids comfortably, without having to worry about how I’m going to put food on the table after rent is taken care of and all the bills are paid. I want to be able to set my own schedule and know that, when I need time off for the eventual husband and kids, I can take it without worrying about a paycheck. I want to be comfortable.
But having a big room full of money and doing the backstroke through a sea of bills à la Scrooge McDuck isn’t my focus.
And I think that’s okay.
November 4th, 2008 at 9:01 am
If you know where to find VC money in the midwest you be sure to tell us. I went that route a couple startups ago to no avail. Now I, like other startups in the midwest, are trying to bootstrap. I guarantee there is not one of us that doesn’t want to be the next Google. In fact my hero is Bill Gates.
One thing we do have in the midwest is a sense of reality. I would love to sell my company to Google for $100 million – who wouldn’t? But a more realistic dream is to build an outstanding and very profitable company. 37Signals epitomizes the dream of a midwest entrepreneur. They aren’t worth $100M (yet) but they bootstrapped themselves while staying realistic while embracing their own values. That’s midwest style. Staying Real and Thinking Real.
November 4th, 2008 at 9:18 am
Christina, you seem very content with where you’re at and for that I commend you. No doubt you’re adding value and my criticism isn’t aimed at those who seek to add value where they can and eke out a modest living. My argument is that this region seems devoid of the “make it big” mentality. And I wonder if its because we have relegated ourselves to the back of the proverbial bus rather than sit in the front seat where we belong.
Andy wrote, “I would love to sell my company to Google for $100 million – who wouldn’t?” Well I would love to win the lottery too, but you can’t win if you don’t play. And its the players that seem missing from this equation.
November 4th, 2008 at 9:23 am
Being a midwesterner, I’m inclined to suggest that you picked up on our humbleness. That, combined with the fact that more people took the opportunity to network and learn than beat on their chest. There were outstanding ideas and talents shared and to insinuate that there isn’t any motivation behind it to change the world might be a little off base.
I think what you observed was just a culture difference between the Midwest and the Coasts, not a difference in desire.
November 4th, 2008 at 9:37 am
@Banky we’re just playing a different game that’s all. I’m playing to build a company – not flip one. If I do build a successful company and Google knocks on my door – lucky me!
@Julie is very correct. It’s a cultural difference not a difference of desire. Like I said – the midwest is about Thinking Real.
The dreams you speak of are completely subjective and unrealistic. I can hope and dream that I’ll play in the NBA and it will never happen. I can hope and dream that I’m the next Bill Gates but it will never happen. I can hope and dream that I build the next kickass company in Des Moines and I got a damn fine chance at it . I don’t need a ferrari to prove that. I’m fine driving my Honda around Des Moines and doing what I love everyday. That is what we do in the Midwest. It’s not about being content, it’s about being realistic with your dreams and with your business.
I have the same desire as anyone in Silicon Valley but I have different goals. What’s wrong with that?
November 4th, 2008 at 9:41 am
I also wanted to note that @Tom hit home a great point. We’re more about the collective advancement of the midwest entrepreneur culture than we are about personal gains. We have values that supercede living the fast life with ridiculous cars, hookers, and blow.
November 4th, 2008 at 9:52 am
What I observed is more akin to what I’ve seen in other meetings in the midwest. It almost feels like we don’t think we can do it–I mean forget about the phat lewt, supermodels and lambourghinis for a moment–I’m just talking about having a significant, positive, impact on the world of business. I don’t think it is coincidence that not many larger companies are headquartered here. The ones I’ve been involved with who have had leaders with modest goals have also achieved modest success or worse, destroyed their companies. I think that is a different kind of conceit and/or arrogance and not necessarily a good thing–the perception that being “realistic” is somehow better.
Just my two cents. And for the record, I grew up right here in the Midwest.
November 4th, 2008 at 10:04 am
For starters, I’ll point out that I was the one from the crowd who voiced the “anti-hero” sentiment.
After that back-and-forth panel at the end of the day, I furthered this discussion with several other people. I would venture to say that no entrepreneur in the Midwest has any less desire to succeed than entrepreneurs in other parts of the country (or on the coasts), but we do have a different set of values and ways of thinking.
Maybe it’s because we’re young (something Tom hit on) or because we’re from Des Moines (with a population of 500,000), but our group just doesn’t see the need to run a fast-paced, high-end lifestyle like some others do. We are completely happy driving our mid-range vehicles and settling down in a nice neighborhood where we can raise a family. If anything, saying we all need Lamborghinis and supermodel wives to be happy seems a bit shallow on your part. Maybe those are your values and dreams, but they don’t necessarily coincide with ours.
Because we live in an affordable area (and one of the top places to live according to X), we don’t need millions upon millions of dollars to be successful. Sure it would be nice, but what do you really do with all of that money?
On the point of accepting VC, it’s something that will be different in every situation. As others mentioned above, there are companies who have done fine running things out of their own pockets and not having to succumb to the demands of a board or VC group holding the purse strings.
Also, what rule was written that says all companies must take/want VC funding? Part of why I think Midwest crews are opposed to it is because we see such an overabundance and misuse of such funding in the Valley. For example, does Metaplace, a site that allows users to create their own virtual worlds, really need $9 million? Part of the dotcom bubble burst, IMO, was that too much money was flowing with not enough return or direction. When a company with little to no income all of a sudden is awash with $10+ million, some questionable things are bound to happen.
All this being said, I think Highlight Midwest was a great event in that it highlighted the innovative projects and products coming out of the Midwest from smart startups. Most are bootstrapping their way to stardom whether that be to become the next Google or just to help area businesses become better at what they do.
The only problem I see with Midwest startups is that there aren’t enough of them yet.
November 4th, 2008 at 10:06 am
Trust me, I see a lot of Midwestern entrepreneurs out there scrounging for tens of millions of dollars. As Andy noted however, there are absolutely no Midwestern VCs looking to hand out tens of millions of dollars (at least not in Iowa). I have first hand knowledge of what Midwestern VCs want in return for their investment. Anyone with kind of cash flow could just as easily get a bank loan, and not have to give up half their company.
The people you met at Highlight Midwest were entrepreneurs put off by Midwestern venture capitalists and yet still succeeding on their own. Granted I have never sat in on a West Coast VC meeting, but I would posit mentioning that you need lots of money due to your Lamborghini and supermodel jones is probably not the tagline you want to use as your hook.
I am not saying you are wrong; I am just saying I have never seen it. I have never seen unicorns and fairies either, but if you walked into my office with one of each, I would certainly thank you for making Christmas shopping for my daughter that much easier. Similarly, if you have the inside track on multi-million dollar funding, just let me know. I have a lot of clients with big ideas on how to spend it.
November 4th, 2008 at 10:06 am
Andy,
Thanks for all the comments. You seem to have your heart and mind in a very warm and nice place. I’m not judging you or your values. You should do what makes you happy and fulfilled.
My question is this, are we settling or reaching higher? I’m inclined to think we’re doing both, but I wonder if we stopped clawing because maybe we didn’t dream big enough. If I’m a member of a five person team and we dream to build a $250,000 dollar a year company, what happens when we fall short versus seeking to build a multi-million dollar a year company? In which scenario could you provide for your family better? And bootstrapping? Even if your values are completely altruistic, you could use that money to reach an even larger footprint.
And Julie, thanks for your comment as well. I’m trying to be a better listener. This is all part of the process.
November 4th, 2008 at 10:13 am
Interesting discussion. I also was at the un-conference and was very appreciative towards all the startups that were there, mostly because I am in their shoes and understand what it takes to attempt to build a startup here in the Midwest.
To your point about all big dreamers being on the East Coast. I almost fell out of my seat when I saw that. Not only is it completely false, but almost laughable. I have had many phone calls with huge advertising agencies over the last few weeks that are in New York (and in California). They ask where I am located, and I say “Des Moines, Iowa” to which the replies have been- “Great, you are away from all the B.S.”
Finding a great small website that is grown from the seeds and not the VC phat cash is something some larger corps like to see. Atleast I am finding that to be the case with my site.
Great discussion, you bring up some great points about the pit-falls of being in the Midwest. In my opinion if you have a great product, keep pushing what you have and the value will come to you.
November 4th, 2008 at 10:16 am
If I had a 100 million dollars I’d invest in soclalradar, smartypig, and to create a “digg”-like business for nonprofits and consumers to connect via micro giving. I’d brand it givingreturns and use silicon prairie news to get the word out. I’d keep the money in the midwest because people work harder, care more about social causes, and ultimately will result in a greater ROI. Do you have a 100 million because I’m ready!
November 4th, 2008 at 10:27 am
Just so no one is guessing-I was on the other end of the back and forth exchange, in case you hadn’t guessed.
November 4th, 2008 at 10:28 am
I think Andy and Mike hit the nail on the head.
We ARE reaching for the stars here in the Midwest. The difference is that our stars are in a different galaxy from the ones you’ve described. I don’t think that success can always be measured in dollars. I think that, for many of us, success will come in knowing that we are making a difference in the world of social media and new technology. If that comes along with a nice fat check, awesome. If it doesn’t, well, we’ll just be content with a job well done and a safe, comfortable place to raise our families.
November 4th, 2008 at 10:31 am
Mike wrote,
“saying we all need Lamborghinis and supermodel wives to be happy seems a bit shallow on your part.”
I don’t think that’s a fair characterization of my argument.
Thanks for posting your thoughts. Perhaps, the quality of life and cost of living is so great that we don’t need the type of money needed in silicon valley to survive.
But I’ll quote from the Silverzippo who wrote:
“I don’t think it is coincidence that not many larger companies are headquartered here. The ones I’ve been involved with who have had leaders with modest goals have also achieved modest success or worse, destroyed their companies. I think that is a different kind of conceit and/or arrogance and not necessarily a good thing–the perception that being “realistic” is somehow better.”
That comment made me think about my favorite quote from Dostoevksy and it rings true to my arguement:
“It was not only that I could not become spiteful, I did not know how to become anything; neither spiteful nor kind, neither a rascal nor an honest man, neither a hero nor an insect. Now, I am living out my life in my corner, taunting myself with the spiteful and useless consolation that an intelligent man cannot become anything seriously, and it is only the fool who becomes anything.”
November 4th, 2008 at 10:32 am
Banky, I think this question is very valid: “Are we settling or reaching higher?”
Three men come to mind when I read the “anti-high-lifestyle” comments: Gary Vaynerchuk, Phillip Merrick & Guy Kawasaki. All of these men definitely work to make lots of money. In turn, their efforts support who knows how many other companies, employees, charities and personal interests like sports teams who they support. If you make more, you can do more with it, for your family, your neighborhood, city, etc. And just because you drive a fancy car, or sit in box seats, or sport a watch that costs more than some of us make in a month doesn’t mean you are a rootin-tootin-snortin, womanizing playa! Maybe you just like nice things. If you have the money (as in cash you earned, not spending other people’s investments frivolously) then I don’t see why you shouldn’t live like you want to, surrounded by the things that make you happy.
Admittedly, I am from Texas, where “showy” is the way many people live, whether it’s driving a Hummer around Dallas, sporting a fur coat in Houston when it’s not even that cold, wearing huge hair & rhinestones to some charity gala, or wearing a belt buckle big as a face on your giant ranch filled with cows and things. I don’t think what Banky questions means a lack of interest in basic, decent values. This question resonated for me – because I DO want to do and reach for more, but I limit myself not just in business but in other ways.
This has turned into a really interesting conversation with different viewpoints, so thanks for this, Banky! The most important question for me now is, what do WE as the midwest collective, or I, individually, do about it?
November 4th, 2008 at 1:42 pm
My reason against VC is creative control. I want it to stay completely in the hands of the founders. I also am greedy, and when my company succeeds, I want to keep all the money for the people who put their heart and soul into it. Not give it to some VC who is removed from the project. I hate the idea of VCs getting richer and richer off my work and ideas.
Also, I don’t want to be bought out by Google. I would love for Google to WANT to buy us out, though. If they did, it would mean we are doing something right. However, if we are doing something right, why sell out? Why not keep doing things right, getting bigger, stronger, and better?
Lastly, I don’t want to have a large company. Large companies are inherently ‘Corporate’ (even google). I hate the corporate world, why would I want to add to it?
November 4th, 2008 at 2:59 pm
Banky,
Love the conversation. Having an exchange like this can only help move the needle. I generally agree with your premise… if you aim too high you may miss, but hopefully you’ll still hit quite a bit higher than if you had aimed low in the first place.
I felt that there was a real altruistic feel to most of the responses at the unconference – but reminding people to look up and out of their niche is not a bad thing.
I generally disagree that “big companies” are automatically “corporate” and thereby have the symptoms that we usually associate with the “corporate world”. It comes down to whether or not they allow their culture to fall into that stereptype. It also depends on how you define a “big company”. I aspire to have a “big company” when you consider revenues – not workforce…
Peace,
jonno
November 6th, 2008 at 12:56 am
[...] Vince, meet Michael. Michael, Vince… [...]
November 6th, 2008 at 3:30 pm
My two cents on this. If you are want to make it big and you want it now you don’t wait to build a foundation to support your upcoming $100MM idea. You move fast and sometimes that means taking a risk and moving to where the money is.
The group at highlight midwest did not represent all start ups in the midwest but it did bring together a group of people looking to make change, grow a larger community and build out the foundation for future ideas and big thinkers.
I have big dreams but more importantly I have big dreams for my children and my children’s children. I’m investing my time and energy in the future.
November 13th, 2008 at 11:03 pm
Low and behold…Gary Vee has some insight to share on this topic in a round about way…check it out…http://www.viddler.com/explore/garyvaynerchuk/videos/57/