Not everything here on End of Work….we’re looking to get out of this mess we are in as both individuals and as a nation.
So we’re starting to see that the frustration with the current way things are is now leading to the rejection of the Old Ways and we begin to search for the new. This article in the Atlantic is one of several that are starting to point the way. Now, I’m as sure about how much these changes will come from any one geographic region, as this writer is stressing the South, but let me give you a nice quote from it I really liked.
Most places, he says, might as well be sprayed with “startupicide.” Startupicide is what damps down and repels startups and those who would build them. “I could see the average town was like a roach motel for startup ambitions,” he writes. “Smart, ambitious people went in, but no startups came out.”
Startups are fragile things by their very nature — few succeed even under the best of circumstances. What makes Silicon Valley and a very few other places different, he noted, was that their culture contained an antidote to Startupicide — such places embrace an ethos that encourages rather than crushes startups and the broader mentality from which they grow. “The problem is not that most towns kill startups. It’s that death is the default for startups, and most towns don’t save them,” Graham notes. “Instead of thinking of most places as being sprayed with startupicide, it’s more accurate to think of startups as all being poisoned, and a few places being sprayed with the antidote.”
Jane Jacobs identified almost exactly the same dynamic when I asked her some years ago why only a handful of places pioneer innovations and unleash the creativity of their residents, while most are content to sputter along, stagnate, and even die. “Each and every community,” she told me, “is filled with lots and lots of creative and innovative people.” The trouble is with a small core of people she dubbed “Squelchers,” who are instinctively opposed to doing anything new or different. Unfortunately, these people are often a town’s business and political leaders. You’ve probably seen them in action; maybe you’ve even bumped up against them yourself.
Only a handful of places are endowed not only with a great research university, but a culture that tolerates and actively encourages risk-taking. Most places prefer to play it safe. But doing more of the same is hardly an option when your prospects are as bleak as they are for so many cities these days. The economic crisis has brought us to a great tipping point, what I have elsewhere termed a Great Reset — an epoch when creative destruction spreads from technologies and industries to society, culture, and geography at large; when new business models, new institutional systems, and new geographic clusters of innovation and risk-taking come to the fore. A Great Reset is one of those rare occasions when “Squelchers” and their old squelching ways are transcended, when more and more people and places can get access to the antidote to startupicide.
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Despite what the die-hard Squelchers might want you to believe, the Start-Up Nation is growing. Part of this growth pattern is borne of necessity. With the economy in tatters and government all but broke, there’s little choice but to go out and build something for yourself with your colleagues, fellow-travellers, and friends. Startups are much less capital-intensive than they once were. Partly because of the better tools we have at our disposal (the Internet, advanced software, etc.), partly because we live in a more modular economy that allows critical functions, from manufacturing and distribution to design and marketing, to be subcontracted out. Some of it is because others have done it, and we’ve seen what they can do. And a lot of it is from a cultural revolution: the fading of an old dream that saw a good job, a big house, and a big car as the goals by which success was measured, and the emergence of a new one that sees the challenge of building something novel and unique as the key to true fulfillment.
I’m working on a piece related to this that I’ll have up shortly.
The End of Work 
I’m working on a piece related to this that I’ll have up shortly.
All ears . . .
I think that Graham, perhaps unconsciously, is mis-stating something. Not only does every place have lots (relative to size, of course) of creative people who are willing to take risks, they are also starting businesses all the time. Just not the kinds of businesses he is apparently thinking of.
Don’t believe it? Think for a moment of how many new restaurants get started in town every year. Most of those, as everybody knows, fail within a year or two. But as soon as one goes, another pops up to take its place. Starting a business is not as foreign to most places as he seems to think.
Rather, what I think Graham is looking for is start-ups which have the potential to grow enormously and generate either new technology or lots of new economic activity. The cultural inhibitor he talks about is not for change, per se, but for changes that are new in kind — a restaurant, even if it is offering a kind of food not previously available, is not a new kind of business. It’s just a new example of an existing kind.**
Why is that important? Because it demonstrates something that he is groping for: that there is entrepenurial talent available everywhere. So that’s not the critical resource that is letting some places florish (or holding some places back, if you prefer). Nor is the problem a culture which punishes failure — after all, most restaurants fail, but nobody faults the guys who started it. Rather, it is a culture which is preceived as punishing failure at some new kind of business.
Which brings us around to what is different now. I suspect it is precisely the Internet. Why? Because the biggest constraint (other than the cultural one) to a new business prospering is a market limitation. You can only market to people who can get to your product, or to whom you can sell and ship your product. If you have never been involved in a medium-size or larger business (i.e. one with more than one location), let me assure you that whatever fraction of the business activity and expense you think is devoted to sales and marketing — it’s probably a lot bigger.
But with the Internet, some guy sitting in his living room in outer Podunk can find and sell to people all over the world. His web site (especially if it is well designed) will let people searching for what he does/makes find him. Even if they are half way around the world, Google or some other search engine will show him. And he doesn’t even have to devote a lot of effort to keeping it going.
Further, while sales calls over telephone are sometimes useful, to close a deal you probably need to get face to face and actually show the customer what your product can do. Previously, that meant paying someone to physically go to the customer (including not only his transport and living expenses, but also his time while traveling). Now, you can set up a web-based presentation to bring you virtually face to face, and to show someone in real time how the product works and what it can do for him. It’s a huge cost saver.
And to address the cultural issue Graham raises, it has one other plus. Unless they happen to be looking for your product, the people in your town will likely remain blissfully ignorant of what you are doing. The “Squelchers” is a community are also the people least likely to be out casually surfing the web, so they won’t know unless you deliberately tell them.
At some point, you may need or want venture capital to grow your new business. But it is also possible (although some people watching Silicon valley don’t appear to realize it) to grow organically initially. I’m working for a start-up which has been going for a decade, and never taken any capital beyond the founder and her immediate family. We didn’t grow super fast. But today we have customers from the US to Australia to South Africa to Brazil to India. And people come onto our website every day from places we have barely heard of (I have a pretty good knowledge of geography, but I sometimes have to consult an atlas to find them) — certainly places we have never come close to specifically trying to sell to. And venture capitalists are increasingly willing to look at investing in businesses which are not in proximity. The only constraint is figuring out who to do business with.
In sum, I’m not convinced that geographic hubs are really critical any more. It is important to find the groups (either virtual or at conferences) where the people you want to sell to frequently hang out. But those are proliferating today. A geographic hub is only important if you are physically making things — because you have to get people physically to the construction site, and it helps to have suppliers of the kinds of inputs you need handy. But in lots of cases you are going to contract out construction anyway, and design doesn’t require sitting in the same room. I’ve sat in on design meetings with our CEO (2-3 hours drive away) and our CTO (on the far side of the country), and things went just swimmingly.
So what is the remaining value of hubs? Brainstorming, before the business is even a glimmer. The causal chance meeting, whether over coffee at the corner or in the corridors at a conference, with someone who turns out to have similar interests. And you get to chatting and an idea bubbles up. If you are in a hub, the odds of that kind of meeting go up. But if you are already inspired, you can look for and find people to work with that you never actually get close enough to shake hands with.
** I admit that I’m looking at this thru the lens of American culture. I know that there are also places where the local culture does not really accept people doing something new at all — defining “new” as something different than your father did. Hence the unhappiness with “cultural imperialism” — it isn’t really the music or dress that irritates, it’s the attitude towards things which are new and different.
Those places are changing, too — to the fury of those most wedded to tradition. Which is why they generate significant numbers of fanatics who are willing to attack to rest of the world for daring to force/allow their culture to change. (Muslim fundamentalists get the most media attention. But Christian and Jewish fiundamentalists exhibit the same attitudes. As do those whose conservatism is not even nominally based on religion.)
The best “hub” I ever knew for making connections and starting up new ventures was the coed jacuzzi at a funky little Village health club.
Wow, I did get wound up, didn’t I? Sorry about that.
wj, you need never apologize for such excellent remarks! Brava! I’m sort of mid-way between you and he about the importance of geographic hubs… it may still have meaning to have a lot of “his kind” of business all in one physical location, just to share talent. Ann Arbor programmers have been what I’ll call, “incestuous” going back and forth between 5-6 companies. Silicon Valley is the capital of this behavior!
That sort of mobility between firms in the software industry is, I suspect, one of the major things in Graham’s mind. And it certainly made a big difference in the early years of Silicon Valley (and other high tech hubs). But now…?
If I want a programmer, I can used LinkedIn to advertise the position. On put it up one any of the dedicated job-posting sites. Especially because I don’t care where the programmer lives; just whether she can do the job. Or, if it’s a one-shot deal, I can get a rent-a-coder on-line; again, location is not only not an issue, I may well have no idea where he lives — not even what part of the globe.
People will still be able to change jobs freely, they just aren’t limited to jobs near where they happen to live. (An important consideration, when a lot of people are effectively locked in to the house they currently live in. If you don’t have to move to “where the jobs are” you have a lot more options — and so do the businesses which would like to hire you.
It’s a big mental adjustment for would-be employees. And arguably an even bigger adjustment for managers. The security blanket of being able to walk over ans see what (if anything) someone is doing disappears. Which means that “management by objective” (a management fad which was much more exercised in theory than in reality) suddenly is a necessity.
It also, as a result, suggests that salaries will become much more common, as opposed to hourly pay. If you are focused on results, you don’t necessarily care whether the guy spend 8 hours a day for a week to get it done, or did it in 2 hours per day. All you care about is that it got done by the deadline. (OK, if you need it ASAP, you may value the guy who can do it in less time. But only because you can get it in less elapsed time. The fact that he di or did not pull an all-nighter to get it done is irrelevant to you as a manager.)
Lest I go overboard here, let me agree that physical proximity does</em. make a difference for some things. One of the things that holds teams together (whether at work or otherwise) is the casual interactions that are not visibly related to the job at hand. Call them "water-cooler conversations."
Some years ago, I was working for a company which had its data center in Phoenix (I'm in the San Francisco area). I found it very valuable to travel down there every 3-4 months, just to "hang out" with the computer Operations staff. They would point out things which were not really worth phoning or e-mailing about, just because I was standing right there. And, because we got to know each other, cooperation the rest of the time was much better.
In fact, it was such a plus, that my management put some effort to getting the guys on my team who were actually based in Phoenix (less than 10 yards from the door to Operations, actually) to spend time in there as well. To no avail — sometimes, just being physically close by is not enough to overcome social and cultural barriers.
That opportunity for casual conversations is also one of the reasons that people still physically go to conferences. It's just so much easier to have an undirected conversation. And, unlike merely living nearby, you are in a group which shares the relevant interest. Much easier to find the people you might want to talk to if they aren't buried in a city of hundreds of thousands.
I have just one word for you: jacuzzi.
“People soup,” I used to call it. I can’t tell you how many lasting friendships and projects started up in there. It was like the mythical tide pool struck by lightning where a few organic molecules first assembled into life.
I think there are two fallacies, which afflict somewhat different parts of the population.
First, there are those who cannot (yet) see that an enormous number of things which used to be done in person no longer need to be. This is, actually, something that has been happening gradually, since at least the early days of the Sears & Roebuck mail-order catalogues. But it has moved much more rapidly in the last decade or so.
Second, there are those who think that electronic communciations can completely substitute for in-person communications. Sorry, people aren’t built like that. There are still some social interactions (and work almost always involves at least some social interactions) which just don’t work at a distance.
The challenge for any company today is to figure out just where the limits now are. It’s going to take a while, of course. But businesses managed to adapt to the telephone, which arguably was an even bigger disruptive technology. (Pity that the generation which made that adjustment isn’t still around to offer advice. But then, it would doubtless be ignored, in favor of learning the hard way. Every generation seems to have a fondness for the “this time is different” fallacy.)