Cotton Candy Milk: What I Learned About Helping Startups While In Kansas City

One of the first things I ever heard about when I got into helping startups and running business incubators was the Kauffman Foundation.

Over the years, I’ve developed a lot of respect for Kauffman. Their research, advocacy, and leadership in the area of entrepreneurship is second-to-none.

So when I received a special invitation to attend their inaugural E-SHIP Summit in Kansas City, it felt like a “Golden Ticket” into the magical place I had always admired from a distance.

We also weren’t given a lot of details in advance, which led to a sense of mystery about the event.

We knew that we would be talking about building our entrepreneurial ecosystems. We were promised something very unconventional.

But the brand of Kauffman alone was enough to get me to go.

Now, just over a week after returning from the trip, all I can say is “Wow.”

Kauffman managed to provide more value and meaningful discussion on this topic in 2 and 1/2 days than every other economic development / entrepreneurship conference I have attended in the last 7 years… COMBINED.

5 ways the E-SHIP Summit was a unique experience…

  1. The people. There weren’t just economic developers. About 450 people from 48 states and 10 countries attended. Among them were mayors, city council members, federal workers, reporters, economic developers (yes), people from academia, private sector accelerator and incubator managers, service providers (like attorneys), and even ENTREPRENEURS! A summit about entrepreneurship which actually included entrepreneurs! That sounds like it should be a given, but most conferences miss this little part about including the people they are trying to help.

2. The conversation. Most conferences involve going room-to-room and having people talk to you while you slowly zone-out in your chair. The E-SHIP Summit, while it included a few great speakers (one presenter, from the Buckminster Fuller Institute, totally blew my mind), was made-up of about 90% interactive conversations in small group settings. The ValueWeb did an outstanding job facilitating.

3. The diversity. Most of the conferences I attend are made-up of mainly old white dudes. Kauffman was very intentional about bringing diversity to this event. Almost half of the crowd was female (49% I believe the number was), over a quarter of attendees were minority (I think around 30%), and age diversity was excellent as well. For once, I wasn’t the only person in the room under the age of 50 who cared about these things. That felt good.

4. The vibe. The event had its own DJs spinning vinyl records, mood lighting, roof-top BBQs, people writing poetry for us, street performers, a photographer who captured our stories, cotton candy-flavored milk (you read that right), artists drawing pictures on the walls as we came-up with ideas, and flavored kettle corn. At one point my wife called and asked how it was going. It was near the end of the event and someone was playing an electric harp while the audience snapped their fingers and hummed. She didn’t quite understand the scene I was describing, but it was so cool! In coming-up with solutions to the challenges we face as communities, being in this “creative flow state” was exactly what we needed. We had to get out of our mental boxes to make progress on these things, and we did.

5. The outcome. I leave a lot of conferences saying to myself, “OK, we had a lot of discussion, I met some new people… but what did we accomplish?” We were told within minutes of starting the E-SHIP Summit that like a startup, “real designers ship product”. In other words, we were actually going to begin solving problems, making stuff together, and shipping it out for other ecosystem builders to use. In the end, I’ll admit, not every question was answered and not every problem was solved. But I felt we had made significant progress in the right direction and had actually created a meaningful set of early prototype solutions.

Top 3 things the Summit re-affirmed for me…

  1. The old economic development model is dead. Business attraction and retention, while of some value in communities, are not producing the economic outcomes they used to. Entrepreneurship, more than ever, is where it’s at.

2. Change is gonna take a while, but we have to stop talking and start doing. I believe it was first in Brad Feld’s book Startup Communities where I read that this is all a long-term play. Building an ecosystem can take 20 years. It doesn’t happen overnight. But in order for it to happen at all, we have to develop a “bias towards action” in the words of people at Kauffman. We’ve got to get our hands dirty and begin trying different things in our communities, some of which may very well fail. As ecosystem builders, we’ve got to get out of the risk-avoidance and self-justification mindset and develop the traits of the entrepreneurs we’re trying to serve. We have to play and experiment.

3. Government is still a major barrier for startups. This was a reoccurring theme in my breakout groups. Government hinders startups way more than it helps. I noticed attendees had different ideas on what to do about this. Some suggested that as ecosystem builders we simply forget the government and move-on without them. Others noted that government would always be around and that we had to find a way to work together. One of the most interesting ideas I heard was that entrepreneurs needed to “infiltrate” government. In other words, we need more people in government who either were or (better yet I think) ARE entrepreneurs themselves. Only then could we truly switch government from being a hierarchical, rule-driven pyramid into an entity which is more open, collaborative, and quite frankly “gets s*&t done.” I was REALLY inspired by one attendee I met from North Carolina who was BOTH a young tech entrepreneur AND his city’s Mayor.

Top 3 things the Summit taught me…

  1. Our primary job now is to create connections and culture in communities, eliminating formal structures and hierarchies. Before the summit began, we were given a bus tour around the KC startup ecosystem. One of the places we stopped was the Startup Village, a once purely residential community turned neighborhood incubator. Houses are lived-in by groups of entrepreneurs (hackers/coders/whatever word you want to use) for months at a time before they graduate into their own spaces. There was no denying that the project’s success was due in large part to this being the first neighborhood to receive Google Fiber. But there was something else there making it work, which my fellow tour attendees tried to dig-into with our questions. I noticed many of the questions our group asked were “structurally-minded” questions. For example, “How do you decide which tech startup companies to let-in, what are the criteria?” and “How do you measure the progress they’re making and get rid of the ‘bad’ apples?” Our tour guide, a tech entrepreneur himself who owned one of the houses, simply said “we don’t” to many of the questions. It’s was all open-structure, self-regulated, self-sustaining. Whereas most of us are treating our ecosystems like fish tanks, what we were seeing here was a man-made coral reef. There was no government involvement in the project, and it was entirely private sector driven. If I could have cloned one thing from KC, the Startup Village would have been it.

2. Diversity is not just a buzzword, it’s an absolute must. The summit brought to light for me some *really* disturbing statistics about the lack of diversity in entrepreneurship. I knew it was a problem, but wow…

“Women are half as likely as men to own businesses. Minorities own half as many businesses as non-minorities. And minority-owned businesses start smaller and stay smaller.”
— Kauffman E-SHIP Summit Playbook

As startup communities, we have to get much more intentional about incorporating diversity into everything we do. On this topic, many attendees made the point that it can be difficult and take time to build trust with these under-served groups. But it all starts with inviting them to the table and making them feel welcome.

3. Metrics are changing in a major way.

Traditional economic development metrics are ultimately about measuring three things:

Jobs, jobs, jobs.

But companies are now scaling faster with fewer people. Kauffman used the example of Kodak vs. Facebook, both technology giants in their respective eras.

In 1962, Kodak employed 75,000 people. In 2013, when Facebook hit the same revenue scale, it employed only 6,300 people.
— Kauffman E-SHIP Summit Playbook

On top of that, we’re seeing more in the way of solopreneurs — entrepreneurs who start companies which don’t employ anyone other than themselves. Still, they’re creating economic wealth for themselves and their communities. But these people wouldn’t matter in a traditional “jobs report.” As the playbook concisely puts it…

“People are the new companies.”
“Entrepreneurship is not just about building companies. It’s about giving individuals the means to take charge of their economic destinies.”
— Kauffman E-SHIP Summit Playbook

So the challenge becomes: what are the new metrics for the new economy?

If we’re not measuring jobs, what do we measure to show the growth of our startup ecosystems?

Related to that question, on my mind, was “Even if we come-up with a new set of metrics, how do we then shift the local and national political discussion off of job creation?”

One of the most interesting breakout groups I worked in tried to address this question of metrics — and we developed some early-stage ideas for new benchmarks. More to come on that in the future…

In the end, I think the cotton candy milk we had between one of the breakout sessions might symbolize this summit best.

Cotton candy flavored milk alongside cucumber shooters. Innovative pairing.

Cotton candy milk is a weird idea, but it turns-out it’s delicious.

The E-SHIP Summit was pretty weird, but it was exactly what ecosystem builders needed.

Entrepreneurs are weird too, by the way.

But we have to help them.

Because entrepreneurs are the ones driving this weird new economy.

Ryan Lilly is an innovator, speaker, and writer on entrepreneurship and economic development. He is a VP for a Chamber/ED organization and manages an incubator in Florida. For more info on Ryan and to hear his latest talks visit www.RyanLilly.com