Assessing the Dallas/Fort-Worth Startup Ecosystem: Room to Grow… Reflecting on 2013

Startup Ecosystem (ˈekōˌsistəm,ˈēkō-/): A group of people interacting as a system to create new partnerships or temporary organizations that search for repeatable and scalable business models. 

So you want to be a startup entrepreneur? Are all your friends saying, “You’ll have to move to Silicon Valley to do that?” But do you really?  Besides, what makes Silicon Valley, the de facto standard of a tech startup community anyway? What makes it the benchmark region to compare “all things entrepreneurial” against? Can’t you stay here, in Dallas/Fort Worth and build a successful tech startup? It has a strong startup ecosystem too… doesn’t it?

Well, in order to answer this question FAIRLY, we’d need some way to measure the health of the Dallas Startup ecosystem.

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Brad Feld,in his book “Start-up Communities”,  does an excellent job pointing out some of the key traits of a healthy start-up community . According to Feld, strong startup communities have high marks in the following areas: Leadership, Community Intermediaries, Network Density, Government, Talent, Support Services, Community Engagement, Companies that support that engagement and Capital.

So how does Dallas/Fort Worth fare in these areas? Over the next few weeks I will highlight strengths and weaknesses of the DFW Metroplex in each of those areas. But here’s a quick overview of what you can expect.

Leadership [B]

It all begins with Leadership. There is no sickness in the body that we can’t first detect in the head. So the question is, “Who is leading the growth of startup entrepreneurship in the region?” Is it led by “the doers”, the entrepreneurial community. Or is this a mandate from the investor community, or even worse…. some government agency. Are those leaders visible and accessible? More importantly, are they committed to the region? Dallas gets a “B” in the area of leadership.

I’ll explain why in the coming post “Assessing the Dallas/Fort Worth Startup Ecosystem: Room to Grow… Reflecting on Leadership”.

Intermediaries [C]

Intermediaries are advisors and mentors. Are there well respected mentors, advisors and… more importantly… sponsors giving back to the community at all levels and across all demographics? I gave this area a C grade. There are some very well respected people engaged in the Dallas entrepreneurial community. Mark Cuban, was recently quoted as saying entrepreneurship outside Silicon Valley, will dwarf what’s happening in the valley. He went on to suggest that Dallas, Austin, Boston and Raleigh-Durham were “better” for his portfolio.   The C grade was given because the “giving back” doesn’t happen across all sectors and demographics.
Watch for “Assessing the Dallas/Fort Worth Startup Eco-System: Room to Grow… Reflecting on Mentorship” for details.

Network Density [A]

Network density refers to how well the startup founders in the community connect and interact with each other. I think Dallas/Fort Worth is doing rather well in this area. Although the community is relatively small, those that are “doing something” know everyone else that is “doing something”. It’s a small, but tight-knit circle. So the real question is, how does “network density” scale?

I’ll talk about some ideas in ”Assessing the Dallas/Fort Worth Startup Eco-System: Room to Grow… Reflecting on the Network”.

Government [C]

The world generally sees entrepreneurs as a renegade bunch, going against the grain and bucking the system. In some ways that is true.  But to really grow and sustain a healthy entrepreneurial ecosystem, policy makers have to be on board. We have already seen how a municipality can stifle the ecosystem, when the City of Dallas cited “Uber” for operating without the city’s approval. Although they have worked the matter out, it was still a drag on the time, energy and resources of the company. Cities should be making it “easier” to do business and get things done. But because most area city councils and economic development boards don’t understand startup entrepreneurship, that doesn’t happen. On the other hand, innovative partnerships like the “Entrepreneurial Village” with the Dallas Regional Chamber of Commerce are signs of hope. It’s still unclear, however, whether they want to lead, which is a bad idea,  or simply facilitate the process. I have a few ideas that might help….

I’ll share them in “Assessing the Dallas/Fort Worth Startup Eco-System: Room to grow… Techno-Cities”.

Talent [B]

For a startup ecosystem to grow and survive there must be a steady pool of talented people at all levels to support it. Although the region isn’t the home of a Stanford University or U.C. Berkley, the universities in the area do a good job of turning out high quality students. I give the area a grade of B, because of our ability to attract good people. Larger companies in the area are excellent places for developing in-house talent that at some point might find its way into the startup talent pool. Hopefully we can move startup entrepreneur from a fringe lifestyle to an education supported career option.

I’ll talk more about talent and how we can begin to groom the talent pool at a much earlier age in “Assessing the Dallas/Fort Worth Startup Eco-System: Room to Grow… Start Up Talent Hire”.

Support Services [B]

Supporting services is another strength of the region. Startups need legal, accounting, real estate services, etc. that can handle the issues of a startup venture. Startup companies are not simpler, smaller versions of large, well established companies. Support service providers that understand and can guide startup entrepreneurs through the maze of going from idea to a sustainable business is key. There are many startup boutique service providers in the area, but Dallas/Fort Worth has a strong group of larger firms that are open to taking on this “less lucrative” work in lieu of servicing their larger corporate clients.
We’ll talk about this in depth and point out some of those startup friendly service providers in “Assessing the Dallas/Fort Worth Startup Eco-System: Room to Grow… Start Up Service Providers”.

Engagement [A]

Engagement is one of the strongest startup ecosystem health markers for the Dallas/Fort Worth area. We should applaud the number of “Meetups”, startup events and conferences held in the area. The leadership has done a good job of bringing the community together on a weekly basis. The upcoming “Startup  Weekend – Denton” and the recently held “Digital Dallas Summit” are both good examples of engagement. The community should be proud of the momentum that it has generated by hosting engaging activities for the tech startup community. I encourage you to take a look at the Launch DFW Events calendar as a one stop shop for entrepreneurial engagement in Dallas/Fort Worth.

I’ll share more about local activities in “Assessing the Dallas Fort Worth Startup Eco-System: Room to Grow… Get Engaged!”

Companies [A]

Another strong marker for the region is the vast number of large companies that can provide support to the startup entrepreneurial world. Whether it is as a customer base or as a source of research opportunities, the number of large companies in the area make this marker a strong point. We can expect more companies to support startup activities by creating departments and programs to encourage cooperation with high-growth startups.

We will look at some of the venture programs of a few larger companies in the area in “Assessing the Dallas/Fort Worth Startup Eco-System: Room to Grow… Getting Help from the Big Boys”.

Capital [C]

At the end of the day the startup ecosystem must have fuel to make it go. Capital is that fuel. Is there a strong community of Venture Capitalists, angels, seed investors? They must be available, visible and accessible across all sectors of the startup community. This is one of the major areas of opportunity.  It’s understandable that capital in this area would be slow to embrace tech. Texas has a rich history of oil and gas, backed by a wealth of knowledge and financial success in these industries. Over the next decade, however, as some successful technology exits, some of the oil and gas money will move over to the tech arena.

I’ll delve into this a little more in “Assessing the Dallas/Fort Worth Startup Eco-System: Room to Grow… Show Me the Money!”

Attempting to quantify the health of a Startup Eco-System is hard work. In every strong area we can find weakness and in every weak area we can find strengths. Our goal then is to identify a direction of growth in a particular area.  An A grade today does not mean that we have gotten it right. It only means that we are moving in the right direction at a pace that is reasonably acceptable. In areas where we score a C or D, that does not mean we are doomed. It means that the leadership needs to get momentum moving in another direction. I look forward to exploring the Dallas Startup Ecosystem with you over the next few weeks. I encourage and welcome your feedback, whether we agree OR disagree.

GOOD LUCK in 2014 to all the rebels, radicals, misfits and those alike taking on the challenge of changing the world, and Dallas/Fort Worth in particular, one startup at a time.