A reliance on government is one of the classic problems in startup communities that I discussed earlier. We routinely anthropomorphize government and say things like “Our government did X.”
Although it’s easy to fall into the trap of viewing government as an abstract entity, especially given the amount of time and energy it consumes around specific issues, it’s important to always remember that government is a collection of people. Many of them are well intentioned, especially around anything that creates jobs or new tax revenue, but they often have no understanding of what entrepreneurs do or the pressures they face.
However, if you understand a few differences between entrepreneurs and government (and I recognize I’m anthropomorphizing in this case), entrepreneurial leaders can effectively incorporate government into a startup community. Let’s go a little deeper on this topic and explore what government can do to be helpful.
Great entrepreneurs are intensely self-aware. They know exactly what they are bad at and describe it often, as in, “This is what I suck at.” Government leaders rarely talk this way. Entrepreneurs fail often and own it; government leaders rationalize why something didn’t go their way. Entrepreneurs are directly critical of themselves and others and support their viewpoints with data. Government leaders work to “impact public opinion.” It’s a different vocabulary and a profoundly different behavior pattern.
In contrast, government leaders are chronically not self-aware. This is especially true in state and local governments, where the leadership often asserts that something is happening as though they wish it were. The assertions are often about activities in which the causality is completely misunderstood. This is often the case concerning economic development, which is the category that government puts a startup community in.
This is a problem only if the entrepreneurs rely on their state or local government to lead the startup community. Because many of the government leaders, and almost all of the government employees, have never been entrepreneurs, they can’t relate to the dynamics of how entrepreneurship really works. Furthermore, although they can craft wide-ranging plans, do long-term studies, and create extensive white papers, they rarely can act quickly and precisely about a specific initiative.
Entrepreneurs work bottom up and government works top down. When entrepreneurs start a company, they do all of the work. They don’t have resources, staffs, structure, or a framework for what they are going to do. They just go do it. Government is exactly the opposite—there is a well-defined hierarchy, existing infrastructure, staff that persists from one administration to the next, and clear rules of engagement for getting things done.
Once again, we visit the theme of networks versus hierarchy. Entrepreneurs operate in a networked world; government operates in a hierarchical world. When these collide, it can be immensely frustrating to entrepreneurs as they watch government be ponderous, slow, and completely ineffective at handling issues that entrepreneurs could get done in a day. Entrepreneurs have little patience for this, especially when they see obvious decisions get tangled up in politics about other things that make no sense to entrepreneurs and have nothing to do with the issue at hand.
The solution for startup communities is to simply create a parallel universe of activity. Government is going to do whatever it is going to do around startups, entrepreneurship, and economic development. Some of this will be helpful; much will be a waste of energy. Entrepreneurs should engage in government-related things they believe will be valuable and that they find stimulating. However, they should not rely on any particular outcome from these activities or from the government in general. Instead, they need to create their own, durable set of activities for the startup community. Optimally, these activities will be bottom up and engage anyone in the community who is interested in participating.
Entrepreneurs often focus on the micro, that is, specific things that need to get done or will have impact. In contrast, government focuses on the macro. When I talk to leaders in government, they use words like global, macroeconomic, policy, innovation, and economic development. These are not words that entrepreneurs use; entrepreneurs talk about lean, startup, product, and people.
Several years ago I was giving a talk about the Boulder startup community to a cross-section of Boulder business and local government people. During the Q&A section, a woman I knew got up and said, “What do you think ecodevos should be doing to help?” I stood, stunned for a moment because I didn’t know what ecodevos were. All I could think of was “Whip It” from the punk rock band Devo, and I had to restrain myself from blurting out “Whip It, Whip It Good.” When I realized she was talking about her role, which was economic development for the city of Boulder, I said, “First, stop calling yourself an ecodevo since I’m certain there’s not a single entrepreneur in the room who has any idea what that means.” I then went on to make a few simple suggestions about how, as a feeder, the Boulder economic development people could be helpful, but the moment was defining for me since the language was so fundamentally different.
Every quarter I see reports in the local newspaper about things like increased/decreased amount of VC activity in the quarter, the number of patents granted as an indicator of innovation activity, and monthly changes in unemployment. Our governor makes an annual state of the state address in which he focuses on the changes in the state’s economic output. The business newspapers report annual earnings, change in stock prices, and total compensation of executives in the same way they report box scores in the sports section. Almost all of this information is irrelevant to a set of entrepreneurial leaders on a long-term journey to create a sustainable startup community.
Entrepreneurs are hard wired to take action; government leaders focus on creating policy. Once again, there is a fundamental disconnect in language that can simultaneously consume an enormous amount of energy and make entrepreneurial leaders insanely frustrated.
I’ve been in numerous meetings with government leaders and their staffers talking about a particular issue relevant to entrepreneurship. In these meetings, I talk directly to the government leader, who engages charismatically and thoughtfully about the issue. Sometimes these conversations are robust and detailed; often they are 15-minute-long collections of talking points interspersed with niceties. After the government leader drops off the call or leaves the room, the real discussion with the staffers begin. Policy question after policy question gets asked. “How will this impact that?” “Why would this person over here, who clearly has a different agenda, support this?” “Could we add this language into what you are saying so there’s a compromise?” “I’m not sure we can take this position because we need the support of so and so on something else.”
In many cases, these conversations lead nowhere. In situations in which you have a strong, thoughtful leader like the current Colorado Senators Udall and Bennett, or a previously successful entrepreneur in Congress like Jared Polis, you end up with substance around entrepreneurship policy that can translate into action. Often, however, you just end up bogged down in the morass of additional policy talk in which no action can or will be taken.
This is especially true in state and local government. The length of time it takes to work through the policy discussion is often completely at odds with the urgency entrepreneurs feel. Recognizing the difference is sanity preserving for entrepreneurs and gives them a chance, should they decide to engage in the policy discussion, of actually having some impact. It is crucial to understand that this impact will only come over a long period of time.
Impact is a key word for all entrepreneurs. In a networked system, you want to have impact; in a hierarchy, such as government, you want to have control. Sure, many government people talk about their desire to have a positive impact, but they do this through having control. Entrepreneurs, on the other hand, are really only interested in impact and, if something doesn’t matter, or doesn’t work, they move on to the next thing.
It’s impossible to control a startup community. This is the final, and possibly most important, reason government shouldn’t play a leadership role. The natural tendency of government is always to control, that is, to set up hierarchy and bureaucracy that controls and sustains a particular structure. A startup community is a rapidly evolving, ever-changing thing. It doesn’t need a long-term structure; that will emerge from the continually evolving activities of the entrepreneurial leaders. It doesn’t need a hierarchy because it runs on a network model. Most importantly, it doesn’t need any bureaucracy because this just slows down progress and the necessary and continual change that has to happen over a long period of time.