The Value of Ecosystem Connectedness

Ecosystem Connectedness Drives an Ecosystem’s Success

At a packed Sacramento coworking space on a hot August night in 2016, D.J. Stephan, the successful co-founder of Sacramento startup Skylope, was asked to share his thoughts on the local startup community.

“We gotta connect the fabric of our community. That should be our competitive advantage. We should be able to go to one meetup like this and be so plugged in that we have all the resources we need to be successful. That’s our competitive advantage. We need to embrace that as a community, help each other out. Continue to leverage that! Continue to make those connections!”

That concept of connection, “connecting the fabric our community,” resonated strongly with me then and it still does. But the concept isn’t just inspiring and motivational. The idea of connectedness as a strong factor in startup and ecosystem success also has support from experts and research.

Global Startup Ecosystem Report 2018

In the latest Global Startup Ecosystem Report the authors devote an entire section to Local Connectedness.

“Local Connectedness — especially relationships with other founders — is strongly associated with higher startup performance. Just as importantly, not being locally connected is strongly associated with lower startup performance.”

They go on further to say:

“A healthy Sense of Community fostered by founders helping each other is highly correlated with overall ecosystem performance.”

In their analysis, Local Connectedness comprises four sub-factors:

• Sense of Community
• Local Relationships
• Collisions
• Density

A couple more of their insights are worth pointing out for Ecosystem Builders:

• Work inclusively, connect everyone, including experts and investors. Local Connectedness acts as a multiplier, increasing access to local resources, knowledge, and global connections.
• Invest explicitly in building a strong Sense of Community. When founders help each other and receive help from investors and experts on an informal basis, overall ecosystem performance is enhanced.

The Rainforest: The Secret to Building the Next Silicon Valley

In The Rainforest: The Secret to Building the Next Silicon Valley, authors Victor Hwang and Greg Horowitt, explore the success of startup ecosystems like Silicon Valley and outline their theory on how to replicate it and explain the nature of “innovation ecosystems.” The authors argue that the ability of people to connect to each other is critical to the vibrancy of an ecosystem, citing that social barriers create transaction costs which depletes energy from the system.

“Bridging social distances extracts a significant cost on young businesses, and it drags down the vibrancy of the whole system. Society has an incentive to help people bridge social distances, so they can communicate, collaborate, and build commercial enterprises. Institutions that can help entrepreneurs make those connections can lower their transaction costs and promote greater innovation throughout the system.”

The Kauffman Foundation’s Entrepreneurial Ecosystem Building Playbook

The Kauffman Foundation has put together an ecosystem-building playbook to help communities cultivate thriving entrepreneurial ecosystems. The playbook outlines key elements of a thriving entrepreneurial ecosystem. At least two of these directly relate to connections.

• Individuals and institutions that champion entrepreneurship and the ecosystem (Champions & Conveners)
• Intersections that facilitate the interaction of people, ideas, and resources

Champions and Conveners

“Champions and conveners promote entrepreneurs, organize the ecosystem and build awareness. They advocate for local entrepreneurs and their companies, bring them together in collaboration, challenge them to grow and push everyone forward. They are the catalysts, connectors, cheerleaders, co-creators and changemakers.”

Intersections

“Collisions between people, ideas and resources often allow entrepreneurs to find missing pieces of the puzzles they are trying to solve. Ecosystems must “engineer serendipity” between disparate elements of the network by creating intersections where such collisions can happen.

Intersections may be institutions, such as coworking spaces, research parks or coffee shops that are regularly frequented by entrepreneurs and their supporters. Or they may be events, such as pitch competitions, conferences or meetups.”

Though the value of engineering connections in the ecosystem is often overlooked, ecosystem experts and startup founders alike agree that connections are critically important to the success of a startup ecosystem. It’s also very rewarding to create opportunities for serendipitous connections. Seeing the results of connections made at events we’ve organized or just out in the trenches of the startup community is gratifying. It’s always gratifying to hear about positive results from connecting people to each other and to resources.

As I stood there listening to D.J.’s remarks that night I knew immediately that I needed to adopt it as StartupSac’s mission statement. That mission statement has since evolved but the connecting component is still an integral part of it:

“To accelerate Sacramento’s startup and innovation ecosystem by informing, educating, empowering, and connecting its startup founders and innovators.”

Connecting the Fabric of the Ecosystem Builder Community

Having met numerous ecosystem builders from other cities across the US, I’ve discovered that many of us put enormous effort into connecting the players in our ecosystems. We know firsthand the power and value of ecosystem connectedness in our startup communities. But what about the power and value of connecting the ecosystem of ecosystem builders? Surely we can apply what we know about connecting our local entrepreneurial ecosystem to ourselves, to eat our own dog food as it were. Let’s leverage the power of connections to learn from each other, share best practices, and strengthen our field. Let’s connect the fabric of the ecosystem builder community! By building and connecting networks of ecosystem builders we can be more effective, innovative, and increase the overall performance ecosystem builders and the emerging field of ecosystem building.