I don’t know what got into the water, but AOL Travel and PC Magazine both have pieces that include Indy Hall this week.
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.
Retention is a big problem everywhere, and here in Philadelphia it’s no exception.
Here’s a few patterns I hear talked about quite a bit.
- “Students leave after graduation.”
- “Talent leaves to work for better companies.”
- “Companies leave for better talent.”
- “Companies leave for easier access to funding.”
I’m going focus on the first one today.
“Students Leave After Graduation”
It’s easy to blame the universities. It’s easy to blame the companies. It’s easy to blame the government.
But it’s hard to make a change to the landscape that has an impact on something as big as over 50% of the students leaving after graduation. While the rate has improved in the last 8 years (down from over 70% in 2004), there’s still a lot of room for improvement.
I have the advantage of being someone who thinks about this problem, and still being relatively close to the age of a recent graduate. I have some insight into what they care about. And while “is there a good-paying job” is extremely important, not having to build out a network of friends, colleagues, and mentors after having spent 2-4+ years of university is just as much – if not slightly more – of a motivator.
So what if, instead of pointing fingers at the universities and the companies and the government, we built between them. What if, before students graduated, we guided them out of their classrooms and into the city, encouraging them to complete their academic work outside of the walls of the academic institution.
In speaking with students and academic leadership alike about Indy Hall, the story that seems to resonate the most with them is thinking of Indy Hall as a library. A place where you can go and research, do work, find inspiration, hustle, and collaborate. The only difference is that the knowledge isn’t being stored in shelves full of books, but instead, in the brains of people working in the careers that students aspire to have for themselves.
Among the problems with college internships that I’ve seen is that is it’s viewed as a transaction between a student and a company. It’s impersonal. People don’t have loyalty to a company like they have loyalty to a person who’s shown them attention.
If we can create a more organic mentorship path to the exceptional local professionals in Philadelphia – not companies, but the individuals – for students before they graduate, we’ll keep more students after graduation. Good mentors will help them interact not just in the professional capacity, but help them experience Philadelphia as a whole. The relationships can self-select based on interest, rather than “opportunity”.
Building a relationship with a mentor before the transaction of them being your employer can be wildly empowering.
And of course, a good mentor is going to help guide and prepare their young Skywalker to be able to find their path to post-graduate success – however they define it for themselves, in terms of joining a company, or going out on their own.
There’s a secondary effect of approaching things this way: students on this mentorship path will become a part of the effort to retain their friends, as well as inspire under/upper-classmen (and women) around them.
We’ve already seen the positive results of a process like this at Indy Hall, both in terms of our members, but also our interns and office managers.
The ripple effects of this approach helps ensure that the initial effort is sustainable, and is likely to take on a life of its own.
It’s also independent of “political” agendas – if we abstract away companies and their motives by focusing on the individuals and THEIR motives, the relationships are natural and human.
We avoid it being about someone being self-employed, starting a company, or getting a job.
Instead, I want to put the focus is on bringing people who could love Philadelphia together with people who already do.
Over the next year, we’re going to prototype this interaction at Indy Hall via a program based on these principals called “Indy Study Hall”. Students will be able to use Indy Hall as a home-base for “getting work done”, just like our members do. Some adjustments will be made to the experience to make it more conducive to students’ lifestyles, but we’ll also be baking in the opportunities for interaction with members who have the interest in becoming a mentor.
We’ve already proven that our “trusted relationships before transaction” works. And we know that it’s not so unique as to be an anomaly. Now we just need to get this practice it in the hands of students before the business world has an opportunity to teach them the bad-habit alternative.
When asked “how” to approach a problem they perceive as challenging, I often ask back: “why?”
Why are you solving this problem in the first place?
If someone knows the answer to “why”, then they almost always already know the answer to how and are really just looking for affirmation or a sanity check.
If someone don’t know the answer to “why” yet, I point them down that path and ask them to return when they have an idea.
In both cases, I’m asking the seeker to look into themselves for the answer. It’s transformative.
We spend most of our lives reacting.
Somebody says something, we respond with the first thing that comes to mind.
Somebody does something, we do the first thing that comes to mind.
Somebody writes something, we comment the first thing that comes to mind.
It’s not that our reactions are wrong, it’s that they’re reactions. They’re not fully formed thoughts or actions or statements, run through the filters of critical thought and reason. And most of the time, they’re shared in a way that’s only going to elicit more reactions, rather than more critical thinking and reasoning.
The next time you’re about to react, stop. Pause.
Take a deep breath.
Count to three.
Do this ten times.
And see how your reaction changes.
I’ve noticed an increase in interest in systems like “swipe card entry” for coworking spaces, both from the perspective of security and automated billing. In a recent thread on the coworking google group, I mused:
If we’ve learned anything from history, people just loved punching their timecards in factories. 😉 Even as we approach 150 active members, Indy Hall can’t be the only place that values a human interaction as the foundation of a transaction. Who else is actively avoiding swipe card systems and looking to introduce efficiency in other ways?
Which has me realizing, perhaps I should share a couple of the alternative systems we’ve devised that have streamlined our days, and why we’ve prioritized them.
First and foremost, we’re an active community and making decisions for the community requires clarity – we approach this by investing time in coming up with core values, a set of ideas and ideals that we value above all, and every decision gets run through them. This means that we can make consistent decisions, and quick decisions, and even help others make the most effective decisions for themselves.
That’s actually automation step #1:
1. Make Others Autonomous
If you’re spending your days showing people how to do things, or worse, doing things for them, you’re missing out on one of the most unique aspects of coworking: it’s DIY! That’s not to say that the space manager isn’t there to help – but rather than answer an inquiry with “What can I do for you?”, answer, “How can I help you get ______ done?”.
Working to training members to be autonomous, and make decisions and judgements that benefit the entire community pays off many-fold, especially the earlier you start. As you grow, existing members will lead by example, and new members will be inspired to “JFDI” themselves.
2. Automate the Amenities
I’ve said it many times before and I’m not the only one, but “stuff” is the most common distraction & timesink in coworking space operations. Apart from minimizing the amenities, automate them!
Look at the things you’re buying often – paper and cleaning supplies, coffee, snacks, etc. and find a way to automate their delivery. In the US, Amazon Prime is worth every penny. For $79 annually, you get free 2-day shipping and $3.99 per item next day shipping (for emergencies). On just about everything you could possibly want for your office. Better, Amazon offers the ability to “subscribe” to many household items, so you can get them delivered at a regular interval.
The amount of time this saves in thinking and even going to the store is able to be returned to humanizing transactions with the people who matter the most – your members.
That’s really the key.
“People first” is one of our most important values. While it places a burdon on business systems of a coworking space, prioritizing the ones that allow you to keep a “human touch” around the necessary transactional elements of a coworking space keeps it from becoming “just another place to work”.
Looking around for the other daily tasks that don’t result in an interaction with your members are the places to start looking for automation.
What else have you automated so you can spend more time interacting with your members?
“…because if you flunk that part, the deal’s not happening no matter what conditions are offered.”
And by “that part”, they mean being interested in the human relationship with your business prospect as much or more than the transaction.
As it should be.
I’ve got a very short list of people who’ve inspired me in ways that even I haven’t fully grasped yet. In that list is Evan Williams, co-founder of Blogger & Twitter.
I’m pretty sure that the first post of Ev’s I ever read was when he founded Obvious Corp in late 2006. I remember reading this post and thinking “I’m not alone.” That seems like an arrogant thing to say, comparing myself to the co-founder and CEO-to-be of Twitter, but remember this was in 2006. Twitter in 2006 was very different that Twitter in 2010. Ev had already sold Blogger to Google and was independently wealthy, but that’s not what I admired.
A few things about Ev have always struck me. He’s careful with his words, or at least seems to be from a distance. That deliberateness is interesting to me. His candidness in his observations of the world around him. An odd sense of self-awareness that seemed otherwise missing from most of the business leaders I’d been exposed to.
There’s a few excerpts from that first post that I’d read that have resonated with me for a very long time.
I’m very excited to announce something that I’ve wanted to do forever.
You can feel the giddiness of that sentence. I know that feeling now for myself.
The Obvious model goes something like this:
- Build things cheaply and rapidly by keeping teams small and self-organized.
- Leverage technology, know-how, and infrastructure across products (but brand them separately, so they’re focused and easy to understand)
- Use the aggregate attention and user base of the network to gain traction for new services faster than they could gain awareness independently
As services mature, the goal is to get them to profitability with advertising and/or subscriptions, so they can add to the network (and fund more building).When justified by growth, resource needs, and desire of the team, we will spin off growing properties to form their own entities (with outside investment). It’s not that we’re against investors and acquisitions. That model works great for some things—especially once the idea is proven. But we’re also not an incubator, with the goal of hatching companies from everything we build. Some things are perfectly worthwhile but don’t need to be a company.
You can find bits and pieces of this in almost every project I’ve worked on. Advertising model aside (since I know now how difficult and unrealistic that can be for most companies), the idea of building things out-of-silos and giving them the ability to spin off is at the core of Indy Hall. Indy Hall isn’t about Indy Hall, but about the things Indy Hall has enabled. And even some of those things that Indy Hall has enabled have enabled things of their own.
Recursion. It’s a helluva drug.
Lastly, for me, I just wanted to create a company that would be as much fun and as fulfilling as possible. Fun in work to me means a lot of freedom, and ton of creativity, working with people I respect and like, and pursuing ideas that are just crazy enough to work. I don’t want to have to worry about getting buy-in from executives or a board, raising money, worrying about investor’s perceptions, or cashing out.
At SXSW a couple of years ago, a friend asked me, “Alex, what’s your end game?” My response was almost a direct pull from this excerpt, again probably without realizing it. My goal in life is to work on things that I think are awesome with people that I think are awesome. Whatever it takes to get to that point is worth it.
If the first quarter of 2011 is any indication, Ev’s final point in his post from 2006 is a perfect representation of how I’m feeling right now.
It may be stupid. It may be naive. It may be selfish and undisciplined. And, frankly, it may not work. All I know is I’m more excited about work than I’ve been in a long time. And from excitement and bold moves, great things often happen.
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