Maybe startup ecosystems are created by companies, not from startups. As in, great startups don’t appear out of thin air.
Unless you are silicon valley, New York or LA, people aren’t moving to your city with no promise of making money. There’s a small percentage of people willing to take a risk hoping to “make it.” For the rest of us, we move places where there are jobs.
That means what attracts people to an area are quality employment opportunities. Whether those are great companies or funded startups, people need to make a salary. But in order to grow a startup community, these companies need to attracting the type of people who might one day start or invest in companies. These need to be the right people.
Some people who work for Facebook go off and start companies like Asana. What happens when someone who works for a bank wants to start their own venture? I’m not sure.
Another benefit of having great companies as the cornerstone of a startup community is that capital comes from individuals from those companies. Scenario: A great company exists with 1000 employees. People move to join the company. It grows. Five years later, the company sells to another. Many employees are left with cash and the founding team now has millions of dollars.
They start angel investing, creating foundations and starting more companies.
That is the fuel that boosts a startup ecosystem. Knowledge and expertise from people who have grown companies and capital to invest in the next generation.
So maybe the conversation needs to shift from startups startups startups to how do we make existing companies amazing so they attract talented people who might one day become founders? Or, how do we make existing companies amazing so that future investors are created? Maybe this is totally off base. It’s a long game, certainly.
In summary, here are the main points:
- Great people are attracted to great companies
- Great companies get acquired, make profit and create future investors and or founders
- Great startups happen as a result from having the right people concentrated in an area