Yesterday I shared my opinion that professional & personal relationships – not jobs – are the key to student retention in Philadelphia.
Today, I want to address the notion that a lack of investment capital is a retention issue that needs to be fixed in Philadelphia.
Fact is, people are right. The funding ecosystem
sucks can be challenging. But I don’t want it fixed.
Instead, I’d like to propose that the weak funding pool is actually one of our greatest assets in terms of portraying an attitude that will attract more of the doers that this city is known for.
I’m admittedly a bit biased in addressing this point, since I have a fairly vocal bias towards bootstrapping. I’m not alone in this stance; one of the most commonly cited proponents in the startup community are the guys from 37signals, with an entire series of profiles sharing the stories of $1MM+ companies that are bootstrapped and profitable. DHH has said it eloquently during his “Unlearn your MBA” talk at Stanford University:
When you’re spending other peoples’ money, you care much less about said money. When you’re spending your own money, you care very, very deeply about this.
So to reframe this discussion, I want to make it clear that I’m not against taking outside capital. Indy Hall took on a $30,000 personal loan to grow Indy Hall in 2009, and more recently have raised over $100,000 in equity to date towards the Indy Hall house construction project. In both cases, the funding can be viewed as growth capital.
But let me be clear – I’ve turned down easy money, too. You haven’t lived until somebody offers to write a check for $1MM and you say, “no thank you”. But in that moment, if you can remember what your true goal is, you’ll often realize that the person whose money you’re being offered isn’t there to accomplish the same goal as you and the “no” becomes much, much easier to live with than the alternative.
In every case where money was turned down, it was the result of introspection, and the realization the money wasn’t holding us back from executing the next logical step in our plan, and we should push forward until we were absolutely sure it was the limiting factor.
What I’m bothered by is the notion that the lack of of venture and angel capital is limiting the potential of Philadelphia’s early stage business community.
Plain and simple, that’s a lazy, bullshit excuse, and this city deserves a better attitude towards creating great things that people want.
And then I read articles like this one, about DreamIt Ventures partnering with Ben Franklin Technology Partners to offer post-DreamIt grads a fast-track to fund-matching investment. While a fairly creative solution – it’s a fund match up to $30k under the assumption that an angel leads the investment – we need to acknowledge that this is an unsustainable extrinsic motivator designed to keep talent that DreamIt has been unable to retain after the program.
I smell a mismatch of the intentions and execution to the realities of the offering.
If there’s a known lack of funding in the region, I’m unclear on how putting a small company that’s unable to support itself on financial life support is going to do anything other than keep a leash on that companies for another few months, only to lose them again.
Why are we trying to provide resources we don’t have to companies that think they need it when they can get it elsewhere?
Why not let them go elsewhere to get it?
Why aren’t we putting resources into improving the likelihood of keeping a company that doesn’t need angel money to survive?
Don’t worry Philly, you’re not the only city with this problem. You’re not that special. In fact, it’s got nothing to do with cities, or tech communities, or startups. This pattern isn’t unique to regional funding pools, the founders seeking, or the institutions providing them.
This pattern happens to people as freelancers, as they find themselves with a difficult or needy client who doesn’t pay full rate. They hold themselves back by feeling bad and continuing to support a needy client who “can’t afford to pay this month” rather than cutting that client loose to make room for the clients who know how to win.
This patterns to software product companies. A free-account customers whines whines whines about how terrible things are, meanwhile they have other customers happy and paying. Growth is stunted when the company gives attention to the people who won’t ever pay regardless of how satisfied they are, instead of working with the customers who happily swipe a credit card every month.
The empty can rattles the loudest.
This old proverb recently shared to me by a friend and mentor, Weblinc co-founder Darren Hill says it best. Most people in Philadelphia don’t know about Weblinc, though it employs over 60 people and delivers a world-class e-commerce product that powers companies around the world. If you are active in the tech community, you probably know about Darren and his siblings’ other very successful business: National Mechanics.
My point is – both of Darren’s businesses are contributing far more to the technology and business ecosystem in Philadelphia than most of the “clanky cans” that we hear about in the news, and yet, very few people who consider themselves industry insiders even know they exist.
So before we point to a “lack of funding” as the issue that’s driving businesses we could have out of Philadelphia, why don’t we take a harder look at the existing successful companies we already have and see what they’re doing to make it.
A weak funding ecosystem aren’t holding anybody back. The could-be entrepreneurs who think they need funding in order to get started are. I’d rather they continue to leave when they feel Philadelphia is holding them back.
Like the needy client, the bitchy freemium customer, or any other empty can – I don’t want to be going out of our way to incentivize them to come to Philadelphia, or for that matter keep them here.
Instead, I’d like to see more efforts put into supporting the businesses and organizations who already have proven their will to live against the odds, and their ability to do so without begging.
That’s the type of attitude I’m continuing to find throughout the city and support. That’s the type of attitude that MY city deserves to be known for.