Building an Entrepreneurial Ecosystem: Lessons from Omaha

Building an Entrepreneurial Ecosystem Lessons from Omaha© Copyright Tom Chapman, 2011. All rights reserved.

[Full Draft 5]

By Tom ChapmanDirector of Entrepreneurship & InnovationGreater Omaha Chamber of [email protected]@tchap623

Edited by Amanda StyronCommunity BuilderSEED [email protected]@mandastyron

Share your thoughts on this paper online at: http://www.slideshare.net/seedhere/building-an-entrepreneurial-ecosystem-lessons-from-omaha-draft-4

An abridged version of this paper is available. Download and discuss it at: http://www.slideshare.net/seedhere/building-an-entrepreneurial-ecosystem-lessons-from-omaha-draft-5

SummaryTom Chapman is working to build a stronger entrepreneurial ecosystem in Omaha and across the Silicon Prairie (an area Chapman roughly defines as covering Minneapolis to Oklahoma City from north to south and Nebraska to Chicago east to west, though there is not a generally agreed upon definition) from his position as director of entrepreneurship and innovation at the Greater Omaha Chamber of Commerce. In this paper Tom lays out the three major steps of his methodology for supporting entrepreneurs (knowing and being honest about the area’s strengths; helping players connect; and building stronger teams) and then dissects five core elements of entrepreneurial ecosystems (human capital; financial capital; deal flow and other metrics; a knowledgeable community; and infrastructure) and four things communities should not do.

Tom’s people-centric approach to building the ecosystem is focused on understanding the ecosystem’s strengths, taking action to support its health, focusing on building better startup teams and connecting players appropriately. He sees the role of economic development organizations as connectors who can help develop a clearer understanding of the current startup landscape, convene conversations among players, spread information and success stories, support transparency and lead helpful government policy initiatives. His approach is infused with humility and honesty.

Building an Entrepreneurial Ecosystem: Lessons from Omaha© Copyright Tom Chapman, 2011. All rights reserved. 1

mailto:[email protected]




http://www.slideshare.net/seedhere/building-an-entrepreneurial-ecosystem-lessons-from-omaha-draft-4








PrefaceIn my work for the Greater Omaha Chamber of Commerce, I get asked a lot of questions about how to create an innovation and entrepreneurial ecosystem. First, I don’t know that I have the answer, so let me start by saying that I don’t think we in Omaha have accomplished this feat…yet. With that proviso, I will lay out the basics of our strategy for you. A couple of things that shape me perspective, approach and this paper that you should know up front:

● Omaha and Lincoln are essentially the same place for my work. I treat everything in Nebraska and Iowa within 100 miles of Omaha as my working canvas. Ecosystems do not stop at political or artificial boundaries. If someone comes to Omaha to see a collaborator, then they are a part of our ecosystem.

● I work for a Chamber of Commerce which happens to be a good location for my work here, but I do not think that it is in many locations around the country. In all honesty, working for a Chamber can also be a hindrance to my work. Many do not take me or my efforts seriously because of who I work for.

● I have a tremendous amount of freedom to try things and fail in my job – thus, I am not required to produce $100 million in VC by 2012 or else, so as you read this paper, recognize that I am not always telling

you about my failed attempts. I do try to include some learnings, but it would be awful if I included all of my dumb mistakes. You will have to make some of these on your own.

● I do not work alone. In fact, in many ways, I am a smaller part of the ecosystem machine than some other key players – funders, customers, media folks (like Silicon Prairie News), entrepreneurs and local innovators. Most of my job is to not get in the way but help facilitate better interaction – be a catalyst, not an owner.

● My perspective is highly biased by what I have worked on in Omaha. Numerous parties have had unseen impacts and untold success. Finding these stories is oen illuminating for me, and oen this illumination happens well aer I thought I “understood.” It has been important for me to be willing to change my view and adjust my insight. e hardest part of my job is to accept that my impact is really only part of the effort – many things “cause” success. My role requires sharing the success with the “many mothers and fathers” and taking the blame by myself for all bad things.

● We all know about the star cities when it comes to this work, and I try


to look at the success stories of Silicon Valley, Israel, Austin, etc. in context. Don’t try to replicate today’s programs – look at what happened just before and during their emergence. It is not particularly difficult to find information on these times, but it requires a lens to be placed on that period of time specifically.

Step 1. Know Your Strengths, Not-Strengths & WeaknessesNot every place is built to be Austin where a large university and seat of government is located. Not every place is built to be Boston where there are tens of very high quality universities. With that in mind we try to look at Omaha for Omaha.

Omaha’s StrengthsFirst, Omaha has many very large companies – more than 20 billion-dollar enterprises - and a wealthy community with numerous millionaires and billionaires.

Strengths come in clusters and Omaha’s economy has depth in insurance, financial services, logistics, defense, operations and architecture/engineering/construction/design. Omaha is home to Offutt Air Force Base which is the home to USSTRATCOM. ese are some strengths from an economic development perspective, but what about entrepreneurship and innovation? e apparent strengths for one purpose are not always the strengths for others.

In general, startups tend to happen in places where there exists human capital capable of thinking and executing on a strategy to serve a customer that they understand and for which they can iterate solutions. at’s a vague way of saying: we need to look for clusters of companies in certain spaces that are growing and innovating.

Insurance is one that exists in Omaha – and may ultimately spin out a number of companies due to the changes in multiple insurance laws over the last decade – but it has had stagnant innovation and growth for many decades. Contrast that with payment systems where technology continues to evolve and new companies continue to spring up to respond to these various opportunities. Vendorin, LoDo Soware, FTNi, Transactions Ole, ED3H have all developed payment systems innovations in the area in the last four years.

Clusters are one area of strength, but culture, people and companies matter also. For example, Blue Cross/Blue Shield of Nebraska is a strength because they have worked with at least three start-ups in the last 24 months, have started a couple of companies and have invested in a venture fund. at’s a company that is starting to plug in and be a real strength for the developing ecosystem particularly with regards to Healthcare IT. Moreover, there is a developing cluster around Healthcare IT associated with NeHII and some new ventures. However, Omaha does not have a Cerner-type company that


has a deep knowledge and workforce associated with these types of projects, so at best, Omaha may develop some additional capacity and grow steadily, but it is unlikely to sky-rocket because sky-rocketing would require almost 100% workforce recruitment.

Omaha’s Not-Strengthsere is a collection of things that appear to be strengths that are not. Usually these are strengths in other areas that people naturally assume are strengths across the board or in areas that they do not naturally fit. For example, if Warren Buffett is a strong investor, then he must be a leading voice on venture capital in the community. He is not. I call these areas of mis-perception ‘not-strengths.’ ese are definitely not weaknesses, but don’t be caught in the cul-de-sac of not-strengths.

One good example of a not-strength for most places is their local universities. Oen when I discuss entrepreneurship and innovation, the first reference to people is the universities – these are the places where innovation and start-ups happen. Much of this thought process is probably tied to the success of MIT in Boston and Stanford in Silicon Valley, but the reality for us when we look at the data is that the universities in Nebraska do not drive the amount and types of innovation that they could.

I honestly think that the universities ultimately will drive innovation, but I think that we are still overcoming years of

workforce development strategies rather than leadership, innovation and excellence training. For example in 2008, I visited the Peter Kiewit Institute (an IT and engineering college in Omaha) and talked with their premier students, the Scott Scholars. We met with approximately 100 students – bought them pizza and soda and did a little talk about innovation and entrepreneurship. We started the talk and asked the question – how many of you would like to be an entrepreneur. One person tentatively raised their hand. At PKI, students are programmed to want safety and comfortable jobs at Union Pacific where they are a cog in a machine. eir jobs are not unimportant, but they don’t yield a strong natural inclination to look for entrepreneurial opportunities. Moreover, within the jobs at Union Pacific, the worker is not necessarily prepared in other ways for leadership and management because they are learning job tasks rather than teamwork, how to challenge themselves, and how to succeed outside of clear parameters. us, there is a double effect that both the university and our large companies don’t start or spin out companies.


INDUSTRY STRENGTHS NOT STRENGTHS WEAKNESSESPayment Systems Medical Research Nano-FabricationBuilt Landscape Technologies Advanced MaterialsRisk Analytics Logistics PEOPLE STRENGTHS NOT STRENGTHS WEAKNESSES

Bill Fisher Warren BuffettNot a long list, but not publishable

Mark Hasebroock Malcolm X Doug Nielsen Jeff Slobotski Steve Kiene INSTITUTIONS STRENGTHS NOT STRENGHS WEAKNESSESOffutt AFB University of Nebraska Berkshire HathawayACI OPPD Blue Cross/Blue Shield NE Gallup CULTURE STRENGTHS NOT STRENGTHS WEAKNESSESAccessibility Public Policy Risk TakingMomentum Institutional CapitalSilicon Prairie News Silos


Omaha’s WeaknessesMore than simply identifying not-strengths, it also helps to identify weaknesses. ere are at least three key weaknesses in our ecosystem:

● e states are large geographically and not particularly diverse or densely populated

● e states’ institutions and institutional investors have not invested in early-stage risk capital and do not appear to have the expertise or will to do so in the near future

● e region’s leadership has a traditional viewpoint that limits certain types of activities including horizontal structures, collaborative arrangements with small companies, and the ability to discuss regional and community issues in an open dialogue

ese are ongoing process and orientation problems, not shortterm problems. ere are obviously other ones that are shorter term, but these problems provide longterm challenges that need to change for the community (or will change because of the community) to excel.

Knowing Your Own StrengthOne key learning that I have had is that seeing transition and watching things evolve does not necessarily make it very easy to explain. For example, clearly there has been a shi in the value placed on entrepreneurship in Omaha, but why this happened and clear

evidence of that shi is not easy to illustrate to an audience from a totally different set of circumstances. In short, doing a serious and honest inventory of your own strengths, not-strengths and weaknesses is necessary but may not provide the necessary materials to see the end game or even know how the hallmarks of the end game will appear.

Try to see the world as it is and not as you would like it to be. Also, focus on the world of entrepreneurship and innovation. Obviously, Warren Buffett is an incredibly important man and has done wonderful things in Omaha, but I would not place him as an important or particularly relevant person in a conversation regarding entrepreneurship and innovation in this community. Other billionaires, such as Walter Scott, Howard Hawks and Joe Ricketts, are more important regarding this conversation.

Also, if one of your partners or organizations shows up on your list as a weakness or not-strength, I would recommend an open dialogue to check your facts and knowledge, but also a willingness to share this information openly. Why? If for example, I punted on discussing the University of Nebraska system as a not-strength, then the entity does not receive relevant feedback and pressure to improve. Moreover, they have a much bigger brand in my community than the Chamber – certainly in this conversation – and yet, with entrepreneurs they have limited credibility right now. at is bad and


it’s particularly bad if the university does not know it. is does not mean that you should sit down and tell your partners who are part of the challenges or who are not-strengths that they are in the way., but occasionally, you do need to openly discuss the realities of situations.

Also do not stand pat and simply punt on your weaknesses. When I wrote the first dra of this paper, I stated that one weakness was the State of Nebraska did not have meaningful legislation that incentivized and aligned with building an entrepreneurial ecosystem. is was a primary learning in 2008 and 2009, and I have talked and written about it frequently.1 is spring, the State of Nebraska changed its laws by adding:

● An angel tax credit that is one of the better ones in the country

● An SBIR Phase 0 plan similar to Kentucky’s very successful program

● An SBIR Phase I match, a proven SBIR incentive program that both attracts and organicly grows SBIR grant companies

● A prototyping fund that offers non-dilutive grants to start-ups

● A commercialization fund that provides matching funds for efforts to commercialize technologies

● A mechanism to receive funds for companies that partner with the university to do certain types of commercial research

is total package places Nebraska towards the front of U.S. states regarding written legislation, but it remains in the not-strength category because it has not yet been implemented. I fully expect that within five years, Nebraska will be able to move public policy into the strength category, but it’s a process. Don’t forget to improve these process type things as you work on immediate programs and events.

2. Get as many people on the bus as you can and leaveDon’t try to get everyone and don’t wait - just go with as many people as you can reasonably get to board.

You don’t have to own or build the bus. In fact, I would try to find a couple of busses that already have people in them. For example, within your community there are probably some developing clusters of high-


1 See Silicon Prairie News for my series of ar3cles on Nebraska Governor Dave Heineman’s “Talent and Innova3on Ini3a3ve” (hCp://www.siliconprairienews.com/2011/02/special-‐series-‐talent-‐and-‐innova3on-‐ini3a3ve-‐internship-‐bill)

growth startups that are already forming or have formed. Find them and ask them how you can help.

To find ways to help, talk with startups. Almost every startup conversation I have begins with funding – I need X millions of dollars or a grant to do Y. e key to this conversation is to transition into a discussion about why they need the funding and what they will do with it. Usually within this transition, your opportunity to help will be revealed. Do this one-on-one and in small groups,2 otherwise, groupthink takes over and the group does not get clear of the desire for money or the desire for appreciation from peers.

By the way, one key observation is that as the people within the entrepreneurial community become better networked, the conversations about money become much more sophisticated. is is probably a good indicator of evolution in a non-measurable way.

Getting the Right People OnboardOne big thing that we have spent a lot of time doing is connecting. is is a natural extension of the Chamber of Commerce in Omaha, but it is surprising how little we as a Chamber knew (and still know) about the startup landscape in our community. ere are a couple of key connectivity groups:

● Customers: people or companies that will buy goods or services from a new startup

● Collaborators: people or companies that will help a new startup as a service provider, professional, mentor or tester

● Funders: people or companies that will provide cash

● Peers: people that will share best practices and learnings from a peer perspective

From 1998-2006, entrepreneurs in Omaha were thrown into groups with small businesses. ese groups simply did not provide the necessary information, networking or customer exposure necessary for the entrepreneurs to “stay engaged” as a class – not just as individuals. us, one of the key things that needed to happen in Omaha was to help these entrepreneurs emerge from their labs, closets and garages to find others who were struggling with many of the same issues.

Convening ConversationsWe started by breaking down the ecosystem’s needs and creating separate networking groups:

● Cornstalks and its ilk for high-growth entrepreneurs only. We intentionally try to keep this a word-of-mouth type


2 I have not been par3cularly adept at transi3oning a group of more than four or five regarding these issues – so I am not sure if that is instruc3onal or just a failure on my part. As a general piece of advice, do what works for you – even if it is not what I recommend or what works for me.

group. When we have a meeting, we typically have about 20 people there and our Twitter stream typically has about 40 mentions for a good night. us, followers of entrepreneurs (who oen are entrepreneurs or would like to be) tend to find us through Twitter, word-of-mouth or similar means. Out of the blue, monthly I typically find about five new interested parties. We also use Silicon Prairie News as our sole means of communicating meeting times, dates and locations. e key thing is that we could easily fill a room with 75 people by extending the invite, but in doing so, we dilute the value for the 20 (and probably more like five) entrepreneurs that choose to attend.

● Growth Initiative Group (the “GIG”) is a group for people championing innovation within established companies. In this group, we have CFOs and line employees. In truth, we have not found the right mix yet or the right marketing strategy. In general, the group listens to best practices from another company about how they work with internal projects, new ventures or intellectual property commercialization. is group has a ton of potential within Omaha, but we have not quite put our finger on how to organize it.

● Investors Group is made up of five or six investor groups in the area. Basically, these are quarterly meetings that are facilitated by the Chamber. e agenda of these meetings is usually pretty straight forward: who are you and what are you working on. We have identified the ten or so most active groups or people in the region, and we invite them to attend these meetings. ese are not particularly formal and do not include outside invitations or an open dialogue regarding their existence.

We established these types of gatherings (and others with similar activities) in the three buckets – high-growth entrepreneurs, corporate innovation champions, and investors – for a reason and with great care. ere was not a group of high-growth entrepreneurs in 2007 that really had the buy-in of other entrepreneurs. ere were groups that claimed this authority without having key constituencies represented, so establishing common understandings and expectations amongst the peer groups was item #1 for our thought process. We try to keep in mind a conversation that I’ve heard repeatedly (something akin to Adam Nielsen’s discussion with Sarah Lacy in the summer of 2008): “I do business with these guys because they are my friends. We were friends first and that makes it easier for me to be honest and tell them what I can do to help.”


ese conversations are hard to have in a forum where only 10-20% of the audience understands the criticality of the discussion. Having a meeting with the entrepreneurs without either a loud small business dominate discussion about sales taxes or a harem of attorneys, accountants and bankers lusting aer a new sale keeps the focus on high-growth needs, such as funding, workforce, finding beta customers, or a technical/business founder or person, etc.

From a purely practical perspective, it was surprising how many entrepreneurs did not know of other entrepreneurs in their space. Same could be said for angels. Ironically, our thought was that the industrial silos within the community were causing a lack of spin-outs because there was limited cross-fertilization between big companies – limiting innovation. However, the bigger impact is that angels and entrepreneurs from industries and genealogical trees did not know (and sometimes did not know of ) each other. us, one of the best impacts of our various meetings is a significant improvement in the depth and range of the networks in Omaha in the entrepreneurial ecosystem. is was our intent, but we did not predict the impact correctly. However, we try to adjust our efforts and programming to better facilitate these types of changes in course.

In the last three months, the pools of separated individuals have begun clamoring for joint programming, so we will start merging some of our efforts to provide forums for the two groups to come together and discuss things. One example of this program is our demonstration night, which is basically a chance for regional companies to demonstrate their latest released technologies. At the first event in March of this year, we had ten companies present. Since then, three of our companies have received direct inquiries from investors that were in the audience, and at least one of the companies looks like it will receive risk capital from an investor based on this event.

One key thing to remember: don’t make these people/companies become members in your organization or some other pay-to-play event. In general, if this is a membership effort, then you are already on a route to failure. If you do a good job, they will eventually pay to play.

3. Study the elements of a sustainable entrepreneurial ecosystem e five basic elements of our ecosystem are human capital, financial capital, deal flow and other metrics, knowledgeable community and infrastructure. In general, there are


numerous articles written about social or business ecosystems - all of these involve classifications regarding the types of things that are most relevant. Our understanding of our ecosystem is really premised on both this theoretical learning and on observation.3

Ecosystem Elements: Human Capital With most startups there are a few people that literally make “the thing” happen. I could write a whole paper on this itself, but let me start with a couple of premises. First, serial entrepreneurs are really important. Second, larege companies can be genealogical trees that breed other interesting businesses. ird, building better teams should be the number one priority.

First, within the human capital world, serial entrepreneurs are gold. Find them and love them. Your community probably does not have very many people who have started a business that is worth more than $50 million and a second business that is also a commercial success.

ree examples from Omaha:

• Bruce Hoberman started a record store in the 1970s. He realized that there was an opportunity to make media – rather than just to sell music - so he built a multi-million

dollar business around the production of media. He is also the current CEO of Proxibid, a multi-million dollar auction site.

• Doug Nielsen, Mark Hasebroock and Julie Mahloch started gi-certificates.com, Netshops (now “Hayneedle”) and each has started other ventures independently and with others.

• Bill Fisher bought and grew a little soware company called “ACI” into a billion dollar enterprise, he has cofounded other entities including Sojern. Mr. Fisher writes a blog on Silicon Prairie News and currently is the lead manager of a firm called Treetop Ventures where he invests and builds investment pools for entrepreneurs. ere are probably 20-50 of these people in Omaha that have really built multiple high growth businesses and executed across industries to accomplish significant business growth.

Serial entrepreneurs are critical because they typically have the ability to fill many of a startup teams critical roles - leader, technical lead, sales lead, finance person, legal person and administrative/operations lead. Very few


3 Three authors that we have studied are – Michael Porter – par3cularly his ar3cle called “Clusters and the New Economies of Compe33on” (and others like it that he has wriCen) -‐hCp://www.wellbeingcluster.at/magazin/00/ar3kel/28775/doc/d/porterstudie.pdf?ok=j , Daniel Isenberg’s “How to Start an Entrepreneurial Revolu3on (aCached), and urban economists such as Richard Florida.

http://www.wellbeingcluster.at/magazin/00/artikel/28775/doc/d/porterstudie.pdf?ok=j














































people can do this and moreover, very few people have documentably and successfully done this.

Gallup consistently references the 10 trillion dollar growth of the US economy from the late 1970s to 2000 as being caused by approximately 1000 people. Basically this is the class of serial entrepreneurs in the country – 1000 people plus some one hit superstarts (Bill Gates, as an example), so understand that this is a select group and treat them like your economic development strategy is built around them.4

Second, I use the term genealogical trees to describe a company that will plant seeds for new companies. In Omaha, the company that has produced the most seeds recently is ACI - not one of our billion dollar enterprises (although it once was). ACI was one of the original companies that worked on ATM and banking soware systems. is company grew to be huge under the aforementioned Fisher. However, in the last five years, roughly five companies – including Sojern, FTNi and Lodo Soware – have grown from the progeny of the ACI tree. If you look back over the years, ACI has produced the personnel and talent behind numerous start-up companies. Moreover, Omaha’s most dynamic startup space – payment systems – links back directly to ACI through people at other companies or

investors. Look for companies that produce interesting, entrepreneurial people that want to start things.

It may even be better if you can find a company that is willing to put money to work in intrapreneurial or entrepreneurial efforts. A local example is NelNet and Cost Effective Technologies. is example is too recent for me to really understand well enough to know its impact and its potential – more on this in future papers.

Companies in Omaha do not naturally collaborate across industries. My premise is that if they did, more spin outs and opportunities would arise. is is the premise behind the “GIG”. However, one thing that ACI clearly documents is that companies that lay-off people regularly and shi their strategy to move to new opportunities do seem more likely to spin out startups. is may be a need by the new entrepreneur to leverage existing expertise, but it appears that these companies also recruit specific types of people that are more likely to start their own thing.

In my own experience, Enron was constantly spinning out new companies either intrapreneurially, in their accounting records,5 or through displacing smart people that were ambitious. In fact, almost every new technology that has been successfully


4 Maybe it should be.

5 Ha, ha!

deployed into the electricity space in the last decade has a direct tie back to Enron in some form. I am not suggesting that you want to push for an Enron in your community, but the key is to develop a dynamic idea-generating place with ambitious people willing to take some risk to execute a hard idea. is describes ACI and a couple of other Omaha companies, but frankly not very many of our largest enterprises.

ird, the building better core teams is critically important. If you read around, you will see many articles and publications about the entrepreneurship efforts of communities, cities, countries or towns and their failures. My general take is that most communities think that the failure of the entrepreneur is the failure to write a good business plan or understand business. I heartily disagree. From my experience, most companies fail for one of three reasons (which are all human capital related):

● e founding individual cannot build a team that can execute on the construction of their technology and sell it.

● e core team does not listen to customers well – thus they cannot adjust to their market and to their best customers to provide truly useful products or services – preferring to build what they want and expecting others to show up to buy “it” aer “it” is built.

● Founding entrepreneurs struggle to give up control to gain wealth. Giving up control may be giving up equity for the ability to scale, but usually it is about design, development, implement, etc. Instead the founder wants to stay micro-engaged in less important aspects of the business when finding customers and building a better strategy for market entry are the needs of the day.

us, most companies do not fail due to a lack of capital – they under-perform possibility or they move - but they rarely fail for that reason. Most companies do not fail because their technology was “too early” – they fail because customers did not want what they were selling. Most companies don’t fail because they don’t have an incubator in which to grow – they fail because they can’t build a team that has the capability to build, sell and grow with just a few people. And thus, most efforts at building an ecosystem that focus on these things also fail. I believe that to succeed an ecosystem needs better entrepreneurial and founding teams, not just help writing business plans or learning more skills, but with key people inserted in key roles and focusing on those roles. e six key roles are:

1. Leader – someone who makes the hard call and is the de facto “person in charge”


2. Technical lead – someone who can build the “it” or manage the team building the “it”

3. Business development lead – someone who can listen and understand customers as well as listen and understand the abilities of the company – both current and future customers and company.

4. Good6 finance person – this might be a CFO or a hired gun (on contract)

5. A good legal/regulatory person – this person’s job is really to keep the company out of trouble and to establish strong contractual and documentation (IP protection) expectations within the company (sually this is a hired law firm (with a lead advisor) that can provide formation, contract and IP legal advice)

6. An administrative/operations person – this person’s job is to keep the company on track, paying bills, managing HR issues, etc. (two key things for this person are to get billing and customer service right)

So, if you focus on teams and people, then it is easy to see why I say that human capital is

the most difficult part of the equation and the most important to get right.

We have worked with Gallup for about three years to help make our startup teams more effective by understanding their strengths and weaknesses as groups. In working with many companies that have not succeeded to their possibility, we have found that the weakness is almost always a team weakness. Oen it is not even a lack of skill within the team, but an understanding of how best to deploy their talent within their company. For example, many companies cannot pivot to serve customers because they do not listen to them effectively in their sales or marketing efforts. Push marketing does not oen work sustainably – adjustment and adaptability is key.

e Gallup program is premised on a couple of key ideas:

● Establishing mission, vision and values – many startups don’t know what their purpose is and what they are intending to accomplish (and how).

● Understand the strengths of the team – a high percentage of startups that I work with actually have all technical or all business people without any of the other mixed in. Moreover, even within technical people there are


6 The defini3on of good is someone that has worked with a start-‐up in your space before and has the necessary past experience to provide insight and protec3on before they are “needed”. A company can stretch with industry but not with experience from my point of view.

architects, programmers and visionaries. We look to position those people differently and give them the roles and responsibilities where they can succeed.

● Orient the team toward goals – having clear metrics with measurable outcomes for startups is really critical.

Two important and really hard exercises we use are to layout a milestone map (i.e. over the next three months, we will roll XYZ out and here’s how we will do it) and build a basic P&L/Income Statement. Both require the ability to take known data today and project the ability to execute into the future. For example, entrepreneurs are oen overly-ambitious on product development timelines that cause their income projections to massively fail. Here is an example:

Simple Mi les tone Map to Prototype

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Basic Architecture of Site Find Two Developers Hire Two Developers Begin Marketing E f f o r t s t o B e t a Customer Prototype Launch 1.0 Sell First Product Cost ModelRevenue (ea unit costs $400) $400.00 $400.00Expenses Developer Salaries $1,346.15 $1,346.15 $1,346.15 $1,346.15 $1,346.15 $1,346.15 $1,346.15 $9,423.08

Net-

$9,023.08

Where are the weaknesses in this plan?

● First, what if development is slow and it takes 10 weeks instead of 6?

● Second, what if you cannot find a good beta customer?

● ird, what if you don’t sell your first product for $400, but $200.

● Fourth…

In other words, the central issue is that you can overplan your startup and under deliver simply by focusing too much and too little on


the plan. Companies that focus too much on the plan spend their time worrying about cost models with no sales and development cycles in the minutiae. Companies that focus too little do not see the connections between development, customers and revenue. Oen businesses can fake their way through it by looking at peer-level information and simply replicating their pricing model, sales expectations, etc. In the high growth space, this ability is limited. us, helping companies find mentors, models, peers, collaborators, etc. that provide the needed information to keep this balance is critical. From a programmatic basis, SCORE7 does a good job in certain industries, (so do technical advisors at universities) but what is critical for a Chamber or a community organization, is to understand these strengths and weaknesses and connect appropriately. Frankly, when there is not really good help available, we tell the company that they may not be able to find really good help locally - we do not recommend bad help simply because it is easy or what you can find.

Lastly, if teams do a good job of getting the right people on the boat and find a good advisory board, many of these service provider issues simply go away because the necessary advice is already built into the system. If, for example, a company hires a really good startup sales person who has marketed and sold a lot of products in a

certain industry, this person will be able to best set up a model for sales into the future and should be considered a strategic advisor and asset by the team. In most instances, chambers of commerce and similar companies simply cannot offer this type of tangible help – that’s why we are connectors in most instances in Omaha.

Ecosystem Elements: Mentors & ModelsOne critical aspect of the human capital component of an ecosystem is the need to fully engage mentors and models into the efforts.

ere are four forms of mentoring:

● One on one● One on many● Many on one● Many on many

Most efforts of mentoring focus on the first type of model. ere are really good examples from around the country of this working successfully. Frankly, most of these examples are better than our success in Omaha, so I’ll let you find that information elsewhere.

e Gallup efforts - and most of those executed by investors - tend to be the second type, which border between coaching and mentoring. For example, Gallup has 25 mentors working with 130 companies. us,


7 From the SCORE website (hCp://www.score.org/): SCORE is a nonprofit associa3on dedicated to educa3ng entrpreneurs and helping small businesses start, grow and succeed na3onwide.

each mentor has approximately five companies to which they are providing leadership coaching and strategic advice regarding certain concepts.

We have begun looking for a way to provide venture mentoring. MIT started a program about fieen years ago called the MIT Venture Mentoring Service. is program has a great reputation and has been successfully deployed in St. Louis. I strongly believe in this program but have not found a good way to deploy it in Omaha, yet.

In my experience, eight companies are the capacity of most individual investors whether as part of a fund or as individuals. For example, a fund with $100 million to invest or $1 billion with three partners will typically have no more than 24 investments and usually a lot fewer, like 15. is is why many funds end up having to invest so much money in individual investments because they have limited “coaching” capacity and thus need their coaches to be taking bigger investments.

Finally, many-on-many mentoring really takes place in forums like TechStars or Y-Combinator where the real value is the ability to be coached individually by many different mentors/coaches who are also providing advice to many other companies. is sort of program creates lots of network opportunities and allows the best strategic advisor to advise multiple companies without being tied to any longterm. ere is clear

value here, particularly with ad hoc sessions and the ability to push multiple advisors on the same difficult problems. Omaha is strongly considering a program of this nature, but we have not really deployed it yet. If I were starting an incubator, this is the type of program that I would try to facilitate – minimizing the focus on buildings and accomodations and focusing on peer-to-peer and many-to-many mentoring opportunities.

Ecosystem Elements: Financial Capital e core concepts to building financial markets are transparency, liquidity and governance – not sheer size of funds.

Does Size Matter? Most cities get caught up in “bigger is better” when it comes to capital. In some ways, this is probably true for an area like Silicon Valley or Austin. In those cities, capacity for activity is very high and talent populations will move to the area for opportunity. In most other cities, the key is to sustainably build the capacity for capital up to a certain level that can be continued indefinitely. In Omaha, that area in the near-term (the next ten years) is probably between $50-100 million of investment in local deals per year. In some years, you’ll have really big fundings and lots of outside investment and in others there will be none or less. For example, Nebraska has had anywhere from 0-$150+ million invested per year over the last decade. However, the median is around $4 million. e really big years were tied to individual events – not a host of companies receiving moderate money. In the investment


market, you want to have these home run investments, but you need to create a pipeline of $1-10 million dollar investments. Our goal is to build a system that creates 20-30 investible deals per year for the next five years with the idea that this is sustainable and can increase as capacity (people, in our case) expands to fill the opportunities created.

Transparency is the ability to clearly see the companies, terms and agreements that are being executed in a market. is does not mean that every angel investment needs to be public or worse - publicly regulated. Instead, the key is that the involved community should be able to generally piece together a set of common expectations for deals in the ecosystm at any given time. For example, if one law firm provides 90% of the legal advice to startup teams in the area that have had successful deals, the market at some level should reflect this information.

Working with Enron, I saw in the energy sector that most engineers want to provide lots of useless information to investors, while most investors want to keep key transaction terms secret (length and term of contracts for example). However, an energy market – like a startup ecosystem - needs some understanding of what is happening in the “spot” market to be sustainable. In the case of entrepreneurial deals, the spot market is the current market for deals in a region. At surface level, you know your market is relatively transparent if the answers to

questions like the following are generally known among ecosystem players:

● How much is an investor willing to value and pay for a company?

● What are the terms and conditions associated with this payment?

● How quickly can an investor exit a position?

Going deeper, here is an incomplete list of critical things that should be roughly understood for some percentage of deals in the ecosystem:

● Key parties: Who is part of the funded team? Who are the funders? Who were the key agents or advisors?

● Key terms: What was the valuation? How much money was raised?

● Intellectual Property Rights: Were they transferred, retained or split?

● Key marketing terms: Is this a new joint venture, partnership or business contract?

● Key contractual terms: Who is paying for what

● Expectations of parties: is is always somewhat opaque, but an example would be exit timeline and plan (3 yrs, IPO)

Everyone knowing each of these things for every deal should not be expected or even encouraged. e goal is to provide transparency over time to others operating in the market regarding each of these things so


that they can plug-in reasonable expectations when the time arises for their own deals.

Are there exceptions? Absolutely. Most venture deals in Omaha today are probably and should be exceptions to having lots of these terms understood, but Omaha is big enough that angels and angel-ready deals should be relatively close on many of these items with only partial knowledge from aggregating information across numerous deals.

Transparency is important because it provides angels with protection from bad deals and sets expectations regarding their participation and contract terms. On the startup side, transparency helps first-time entrepreneurs know when they are “eligible” to talk to investors about a term sheet. A napkin plan is not enough for most people to get funding. However, in a community without transparency, entrepreneurs may think that this is all it takes because they heard a story about this happening to someone somewhere else.

Transparency builds context so everyone knows the common rules.8 Certain parties help share this information:

1. First, service professionals work on both sides of alternating deals. us, an accountant or lawyer may advise the selling client or the buying client,

and so, they can adequately help share information. However, it is critical that entrepreneurs find service professionals with these experiences to leverage that information, whether formally or in opportunities via many-to-many mentoring sessions.

2. Second, media outlets should report information in this space. ere are organizations that regularly publish venture capital fundings, and entities like Silicon Prairie News locally publish funding information from the Silicon Prairie region.

3. ird, chambers of commerce can color this information via networks of all parties involved. For example, I might know non-public terms and conditions from multiple deals and be able to highlight to someone preparing for a deal some things that they should expect. One example is that in Omaha the startup usually pays for the deal’s legal fees. Another example may be that Investor X is really hard to work with aer the deal is done because they are very focused on hitting accounting and revenue milestones. Neither of these are impediments to a good deal because everyone wants to have success and expectations can be shared effectively


8 Amanda Styron wrote this in her notes on the first drad of this paper. I unabashedly took it directly from those notes.

by third parties. Moreover, reasonable post-deal expectations and awareness of other deal terms usually make the terms and conditions seem less onerous during the contract discussion.

Liquidity is the ability for an investor to exit a position quickly. In this context, quickly may mean a couple of months or a couple of weeks, but most investors invest to eventually sell their stake to someone else – the founder, another investor, a roll up or a large corporation.

e ability to get clear of a deal allows investors to invest in multiple deals and to leverage their cash more effectively against debt or other financial vehicles. For example, if investor A knows that he can make five investments and exit each within a year regardless of position – then that person can use the same five million dollars multiple times if better deals arise. However, in the situation where the person fears the ability to become liquid, they may wait much longer to invest and stay in positions beyond their comfort zone because they know they are losing access to act on other opportunities.

A good example of this problem is a local investor bought stakes in a company, helped it grow about 50% year on year for three years and then could not sell his position to another investor. e company was still a good investment and was much stronger for the angel’s three-year investment, but nobody

was interested. at angel sat on the company and eventually was forced to accept a less than perfect corporate exit. He made money but he had to wait for 18 months to clear his position. at means that the region lost out because that person did not invest that money for an additional 18 months and he became disillusioned with his ability to execute a positive exit quickly, so now that person invests in a smaller variety of things and in other regions. is is a rational decision by the investor, but not necessarily good for the region.

Two key ways that the Chamber helps liquidity are to:

1. Host quarterly meetings of investorsBy hosting regular investor meetings, the Chamber has seen that collaboration has increased. Surprisingly, many of the key investors in Omaha had never met each other until the Chamber put them in the same room together and put a context around the ecosystem and the individual group’s activities.

2. Provide regular connections for entrepreneurs to investorse Chamber regularly introduces entrepreneurs to investors. By helping investors build a better pipeline of deals, many are more willing to take on an increased number of deals because they are confident that the best deals will find them. is means


that they can and do deploy more capital into the market.

Unfortunately, one weakness in the Omaha market is the exit liquidity. ree private equity funds raised approximately $450 million in Q2 2011 with the purpose of helping businesses grow and expand aer they have good EBITDA’s9 and have $10-100 million in revenue. is may ultimately help exit liquidity, but it is too early to predict the actual outcomes.

One thing that is certainly happening is more private equity money is being put into smaller companies from the region than five years ago. Associations, like the Association for Corporate Growth (ACG: Nebraska), have helped these groups network and possibly increase liquidity, but good data on this is still limited. My simple answer is ad hoc examples of success are apparent in Omaha, but good factual data to provide an action plan to another community is still not there regarding improving exit velocity.

Finally, governance is critical. We look at formal and informal governance as important ways to guide consistent deal structures and maintain transparency for the ecosystem.

Formal governance requires the corporate structure, terms of agreements and other components be compliant with local and

federal law. For example, the SEC requires certain deals to file Reg. 504, Form D for certain types of filings. is is a federal governance structure for deals, and it provides a public information vehicle for other later deals as well.10

In general, a couple of critical federal things for any community to take into account are accreditation of investors, filing guidelines at the federal level and research information publicly available via federal grants. Each of these have components of governance and information that manifest important types of data for a community to both formally acknowledge and to informally digest and discern. For example, recent regulatory changes regarding the SBIR program may have positive or negative impacts on your community, but either way, they need to be communicated to your entrepreneurs.

Regarding micro-governance of the deal, the ultimate goal for the United States should be to provide a relatively similar playing field to all parties whether they are in Silicon Valley or Moncks Corner, South Carolina. Silicon Valley has a very robust environment that has sorted through the balancing issues associated with good contracts for entrepreneurs and investors in a much more complicated and robust way than most other areas, so migrating Omaha’s contractual rules


9 Earnings Before Interest, Taxes, Deprecia3on and Amor3za3on (EBITDA)

10 Also, I’d recommend looking at hCp://www.formds.org to get a handle on how many and what type of companies are filing SEC documents from your community.

http://www.formds.org














towards Silicon Valley’s existing rules is ultimately probably going to be both necessary and good.

An example from Omaha is that currently most entrepreneurs pay for the legal fees when they receive an investment. In Silicon Valley, the investor pays. ink about that for a minute and why it is important. Most equity Series A investments have legal fees of $10-50k, so if you are to receive a $1 million round, the up front cost is 1-5% of the total equity infusion, and your cost is not tranched in the way that some capital infusions are.11 is can be a burden to entrepreneurs raising capital at appropriate times and levels.

One of the best examples of a place that has grown an entrepreneurial community quickly is Israel. As a country, they have encouraged people to be creative and innovative, and as a government, they have strongly facilitated that through policy and programs. How does your state and community do? Align your policy efforts to key hurdles and assets within your community. SBIR is important to Omaha because - as I will explain in the next section on deal flow and metrics - for the type of city that we are, we are actually really good at SBIR grant production. We have a major US military installation in the area and thus,

SBIR should be part of our portfolio. Align your policy to these types of needs.

ere is also informal governance. Informal governance is making sure that everyone can see bad actors and bad actions. ese participants are punished. For example, in Omaha there is an investment group that has a very bad reputation. If this group is involved, much of the smart money simply will not participate in the round regardless of the company, team or technology. us, this informal governance has a direct impact on both of the above criteria – transparency and liquidity.

Regarding the role of the Chamber, our role is to be as aware of deals as we can be. We act to create transparency in the market by letting other companies know of information that is relevant to their terms. is is tricky because I and others on staff sometimes sign non-disclosure agreements12. It is also tricky because we need to build trust within all of the participants that we will not try to inflate our power or the terms of transactions. Two things that I am consistently thinking about are:

1. Is this knowledge that is only being shared with me or does the “market”


11 Simplis3cally, the untranched cost is a problem because it means that an entrepreneur may receive four tranches of $250,000 at certain milestones – but the $50,000 legal fee will come due immediately. Thus, the first tranche is almost 20% legal fees – not useable cash for the startup.

12 When signed, we abide strictly by these. However, usually I am able to convince companies that a connec3ng en3ty is preCy limited if they can’t share key things about a company.

already know this information through another channel?

2. Have I heard this same information about someone or a specific type of deal before?

If either of them suggests that the information is not exclusive or proprietary, I may share the information in general ways such as, “word on the street is that entrepreneurs are paying for the legal part of these types of deals – is that what you are hearing?”. Also, when possible, I try to get express permission from parties to share this type of information with other deals. One investor that I know said that it was fine as long as it was not a deal that he was in active negotiation with at the time.

e Chamber’s other role, as mentioned earlier, is to help funders find each other and to build transparency and informal governance through familiarity and trust. You can’t force this. You have to wait until the various key parties start reaching out to you. I have found that four years in, funders are starting to want to talk to me. In years one and two, I had to wait months to get on key people’s calendars.

Other Chambers have asked me if they should help organize an angel group. My simple answer is that we have not, but we have discussed it at a high level and have not acted…yet. I am not sure if a Chamber-organized angel group would work well. I have heard of it happening, but I am skeptical

that I (or most Chamber executives that I know) have the ability to execute the necessary diligence and process-building to do an excellent job of running an angel group.

Ecosystem Elements: Deal Flow & Other MetricsIn our current state, Omaha does not have enough deal flow for it to be a relevant metric, but, we strongly believe that you need to identify some key measurements that if moved positively will help you determine if you are making progress. In Omaha, we measure a lot of things including SBIR grants, SBIR monetary awards, university research, Inc 5000 companies, Form D filings, dollars invested on Form Ds, new technology companies mentioned on Silicon Prairie News, SBA loans, etc.

In general, this is one of the hardest areas for me to predict what would be good measurements for a region. We have taken the approach that we will measure lots of little things and aggregate that data into an “algorithm” that measures them. We tested this algorithm to see if it worked. Basically we took 24 cities and said Boston and Silicon Valley should be high and some others should be low. What we found looked about right. Omaha was about 16th out of 24 communities when we started measuring the relevant data. Omaha has moved into the second tier at around 11th or 12th since we started measuring.


People have asked if I will share this information. I will not. is is not because it is particularly secretive, secure or confidential. e biggest issue is that the process of constructing the information is almost as valuable for developing the way you should be thinking and the companies that you should be noticing as the actual outcome of the data. For example, when I started, I really thought that our Fortune 1000 companies produced a significant number of the new startups in the area. is is factually wrong for Omaha. is may not be factually wrong for where you live. You need to see the data and work through identifying the right metrics for your area to understand your comparative strength/weakness.

Here are some other things that I have noticed from our data collection about Omaha and other places that I could never have seen by just looking at numbers without thinking about what to collect. Omaha was comparatively weak on SBA 7(a) loans and comparatively strong on SBIR loans. If you look at media for these things, this is not what you read. You read the opposite. Here’s why that press is wrong: Omaha, itself, gets far fewer loans than cities like Madison, Wisconsin. In fact, in a peer group in 2007 (the last time I counted and analyzed all of the 7(a) data for this particular group of peers) Omaha was 12th out of 13 on a per capita basis for SBA loans, but Omaha’s SBA comparison group in national terms is not measured per capita as is generally many

cities from the Midwest that are smaller. Regarding SBIR, Omaha does not have a major research university, so it probably should not produce as many SBIR companies as some other cities that do – like Madison, Wisconsin. Interestingly, Omaha crushes comparable cities without a research university on SBIR grants and dollars. For example, Omaha had 10 times more than Des Moines. Even though Omaha is bigger than Des Moines, this is still relevant information. e state of Iowa and both Ames and Iowa City do well on a per capita basis against Omaha and Nebraska, but the point is the process to discover this information revealed more than the simple data could.

Figure out what you think that you should count. Be creative and conventional. Use things that everyone uses and some stuff that no one else uses. [One thing that I would not personally do again (but did do) is count patents. Many publications will list this information as a means to show how innovative a place is. I found the data to be only loosely correlated to outcomes. Basically, if you could separate out the ridiculous patents and the shelving patents, then it might be useful, but I was unable to do this in a time efficient or effective manner.] It is not particularly difficult to count stuff and then build a weighting method. I would be happy to help you build these things but I won’t just give you ours – even as a template. I believe that if I give it away, it both undervalues the tool and


undervalues the process to build the tool. Basically, then you won’t get anything from the transaction.

Ecosystem Elements: A Knowledgeable CommunityBuilding a knowledgeable community is a long term process. is is probably the one pillar on which I was most vague when we started and on which I still struggle to give really tangible advice.

Here’s my story: I was standing in line at Starbucks in central Omaha, and I overheard the conversation between two youngish women (mid-30s), well dressed in velour track suits and articulate regarding their lives. I was not really eavesdropping, but one of them said “venture capital” and of course in my world, that’s like sounding a storm siren - it got my attention. She said that her husband was starting a business, and he was seeking venture capital. She talked about the business for a bit and then revealed that it was a new restaurant. Restaurants do not receive “venture capital,” and certainly not in Omaha, Nebraska.

In a place like Austin or Silicon Valley, the community has enough intersection points with high-growth enterprises to understand some basic foundational information that is not currently the norm in Omaha. Our community does not have a commonly understood vocabulary regarding entrepreneurship and high-growth companies. For Omaha to grow into

something more, this needs to change, but it is not something that will change based on a single program or message from a chamber of commerce. It’s a constancy thing - keeping relevant messages in front of people and educating a little bit at a time. For example, recently at a meeting of our economic development partnership, I gave a 10 minute presentation in which I talked about many of things that I have stated in this paper, and then I also mentioned three pieces of new information. I defined the difference between a “quick pitch,” an “investor pitch” and a “demonstration.” In entrepreneurship parlance, these mean different things but in Omaha most people make no distinction. Over time, raising this level of conversation is important to building an ecosystem that sustains beyond me and beyond key people.

However, the biggest single impact entity of the effort to build a knowledgeble commuity so far in Omaha is Silicon Prairie News (http://www.siliconprairienews.com). eir unifying place for information and efforts to sustain a ongoing conversation is incredibly important and valuable. I probably cannot do it justice other than to point at a couple of key components:

● First, I mentioned three serial entrepreneurs earlier. Very few people in Omaha probably could even name these people, and yet within the following of SPN, everyone has at least heard their stories and


http://www.siliconprairienews.com














appreciates why they are relevant, important and models of behavior.

● Two, the Chamber’s membership in Omaha is not made up of entrepreneurs. SPN allows the Chamber and other organizations to spread relevant messages outside of normal channels so that it does not get “picked up” by parasitic companies.

In Omaha, other entities have existed to help entrepreneurs but they have been overrun with lawyers, accountants and pretend entrepreneurs. Real entrepreneurs did not want to pay to play and did not have any real incentive to participate. SPN is an authentic asynchronous way to stay engaged, and virtually every entrepreneur that I work with knows about it now. My advice is not to start an SPN in your city - it’s to find an SPN waiting to happen in your city. In most places with technology, somebody is writing a great tech blog that could “blow up” with consistent, free exposure from a Chamber and similar organizations. We’ve tried to help SPN at every turn and they, in turn, have been very kind in not portraying us as stiff suits who do not know anything.

Ecosystem Elements: InfrastructureFinally, infrastructure is really important. ere is probably nothing more infuriating to my personal philosophy regarding

entrepreneurship and innovation than someone that opens a meeting about ecosystems with a discussion about sites or pipes - this may be a new tech park, incubator, broadband system, whatever. ese things are simply irrelevant in most cases. If you think that you have an exception, I am happy to chat about this but know of my disdain for this topic. It is not that I think that they are not relevant, they are. It is like the focus in baseball on saves or batting average. ese are not bad measurements, but they do not measure a useful category of things based on new, better analytics. A better measurement for batting efficiency is on-base percentage or on-base percentage plus slugging percentage (OPS).13 In the same way, a better way to think about entrepreneurship and innovation is to focus the conversation on teams and human capital.

Infrastructure is about building events, media connections, joint recruitment platforms, idea collaboration, etc. If your core asset is people, then your core infrastructure needs to be people-centric. As an example, one key component of Omaha’s entrepreneurial ecosystem infrastructure is Jeff Slobotski, cofounder of Silicon Prairie News. Jeff is perhaps the most gied serial networker with whom I have worked. He can “create” conversations with key people, follows up


13 If you have no idea what I am talking about, even if you do not like sports or baseball, you should read “Moneyball” by Michael Lewis. There is new and consistently revealing data available that people simply don’t use because they rely on conven3onal wisdom. This conven3onal wisdom is oden provably wrong. It is a great book.

and builds bridges. is helps explain why an event like “Big Omaha” works, but it also explains how many of you found me. He uses many tools better than other people and uses his in-person time with people very effectively.

Here’s three more questions to ask about infrastructure.

● Where are your entrepreneurs? We were asked this question about Omaha’s entrepreneurs and had no answer five years ago. By we, I mean we, the community, not just we the Chamber. Today there are lots of events (maybe too many) that get a variety of people together at very little cost, around the city. ere are quick pitches, pitches, demonstrations, meetups, tweet-ups, networking coffees, startup drinks, barcamps, startup weekends, hackathons, etc. Literally, none of this was going on in a significant way five years ago. Today, the core group of “believers” is probably in the range of 200-500 very active participants, and thousands more participate in some capacity.

● What is your relevant region’s policies towards entrepreneurship?

● How well does your region tell the entrepreneur’s story? Recently, I was at an event where a local serial entrepreneur was

introduced. Nobody knew who he was. is person was responsible for about $100 million of investment in the community and more than 800 jobs, and yet because there was never a giant new building or a cool event, people just did not register his importance to the local economy. Tell your entrepreneur’s story in traditional and non-traditional media. Be consistent and not just when you have nothing better to talk about. Find your SPN – it can be a place where models and mentors can emerge. In addition, pick some winners and talk them up and then talk them up some more. Make sure that everyone knows who the model entrepreneurs and startups are in your area. Remember the people in line at Starbucks should all know who these companies are and what they do.

What Not to DoI have four things that you as a community should not do:

● Don’t let negative comments about entrepreneurs persist in the community. When I first started, one of the complaints or “accusations” that I heard was that entrepreneurs did not live here because they were not committed to anything, that they were greedy, that they were bad in some way. e sentiment was, we


don’t want ‘those people’ here. is is simply ridiculous. ere are virtually no cities (Washington DC and Canberra might be counter-examples) that were built without entrepreneurs and private enterprises driving the development.

● Don’t try to pick winners. If you are a service provider (like an economic development organization but different from a service professional like an IP lawyer), don’t try to judge technologies - be technology agnostic. Do not attempt to pick winners early in the process based on technology. Very few startups succeed with their initial prototype and strategy – that is one primary reason that team development is the critical thing – but it doesn’t mean they won’t be successful.

● Don’t be too focused on any one story or metric. In other words, don’t focus on SBIRs as the only thing that matters. ere is literally not a single thing that could possibly be the one metric or exclusive directional measure. is is too dense an ecosystem to really understand that way.

● Don’t follow the lead of places like Silicon Valley or Boston. ese are unique places that have a long unique history. For example, if your city is not home to Stanford University or MIT, then you probably will need a less university-centric program of work. Moreover, programs being implemented at these places right now are not necessarily great programs for your community right now. Focus on the the needs of your community and study the reasons for program in other places. If your community does not have those same issues, then you should think strongly about using other programs.

Conclusion

Finally, aer you have done everything else written in this paper, ask yourself am I the right person/group to execute on this effort? e answer may not be a problem of desire but a problem of ability or execution. Find the best fit for the effort. My two words of advice to people that get to the end of this paper and still ask me what to do are: “be humble.”14 ere should be no embarrassment in understanding that someone else should lead the effort or that


14 [I do not intend to go par3cularly “Zen” at the end of this paper. But, I would offer the one piece of inspira3onal

literature that I tend to think about when we have success or failure. Archbishop Oscar Romero wrote a poem/

prayer called “We are builders”. This is a must read for me before you start or con3nue your efforts effort. ]

you can only do a little bit. In fact, if you don’t realize how hard this is to do by the end of this paper, then re-read it. I have reported a lot of stuff here, but only did some of it personally. And, on some of the most critical

things that have happened in Omaha – key fundings, key company creations, SPN, expanded user groups, etc. - I had virtually no impact.

About the AuthorTom Chapman is the Director of Entrepreneurship and Innovation for the Greater Omaha Chamber of Commerce. He is passionate about helping economic ecosystems (particularly in the Silicon Prairie) flourish. He has worked with hundreds of new ventures, many very large companies seeking innovation advice, and a host of funders looking for deals. Chapman writes a series called “Innovation Chamber” for Silicon Prairie News and has a background in energy having worked at both Enron and American Electric Power in Houston, Texas and Columbus, Ohio. He holds degrees from Creighton University and the University of Nebraska–Lincoln, owns two businesses, practices law and is working on a startup of his own.


Documents

Building an Entrepreneurial Ecosystem: Lessons from Omaha