Learning From Boulder

Ouray, Colorado

an excerpt from the upcoming book Hacking The Core

I’m always looking for startup towns that “get it”, that don’t make the same mistakes that most places outside Silicon Valley inevitably do. Boulder is one of the best examples of how to do it right.

After the Gold Rush

I always get a special feeling when I drive into an old Colorado mining town — Telluride, Ouray (above), Steamboat Springs, Durango, Silverton, Dolores, Aspen. There’s something about these little towns that feels a bit like a fantasy, something out of an old Western movie, except the people are much more real, normal, and modern. If you haven’t been to these places, put them on your list.

Nearby mountains are so large and so close they dwarf the manmade town below them; it’s breathtaking. I know there are Old West towns all over the western U.S., but for me there’s something special about Colorado towns. Even the word Colorado sounds very profound to me. I was able to live in Colorado, in Durango, so I got to experience the feel of day-to-day life in one of these places.

In Colorado small towns, you still see people riding horses, hauling burros and hay, even carrying guns. But it’s not like in the movies where they look like they just put a cowboy outfit on to shoot a scene; these people are a bit gritty and worn looking. They like it that way. They wear ill-fitting clothes, are often a bit overweight, and usually have tobacco somewhere on their person or in their mouth.

One of the most difficult things that these little towns have had to do over the past 150 years was survive; in fact most of them didn’t. Their original reason for being — a sudden discovery and ability to extract precious metals from the intimidating mountains — was short lived, maybe ten years or less. Once the rush was over, these overbuilt yet beautiful Victorian towns had to reinvent themselves quickly or die.

About 99 percent of the Colorado towns started in the 1800s didn’t make it, thus the term “ghost town.” The ones that did survive had to hack the core of their city to move forward, which was a delicate and unwelcome process. How do you fundamentally change a beautiful pristine little main street with grand 1800s architecture while still maintaining its charm and time capsule essence? Actually, how do you continuously reinvent these little towns every 20–30 years for 150 years? How do you fund the maintenance and keep people employed?

One option is simply to do nothing, try to keep things the same, become a tourist attraction. Many of the old Colorado towns did this — they became a giant gift shop. Others retrofitted other industries to help their survival — skiing, snowboarding, art colonies, train depots, gambling and colleges. Some have been very successful at reinventing themselves as luxury ski towns and getaways. The best example of this is Aspen, now one of the wealthiest cities in the world, yet it still maintains its Old West charm and old brick buildings.

But what about embracing a futuristic industry like high-tech startups and the Internet and make them the key identity for your little town without ruining it? First of all, is that possible? Is there critical mass or the specialized resources to make this happen? Will the city leaders, often multi-generational scions of their little town, allow it? Finally, and most critical, is there a steady stream of new engineering graduates entering the workforce?

Usually the answer to most the above would be no. It’s a very difficult hack. A wonderful dream that almost every small town in the U.S. now has, but not so easy to pull off.

“Eighty percent of success is showing up.”

- — Woody Allen

VCs In The Mountains

Pearl Street, Downtown Boulder

Until a few years ago, Bolder, Colorado wasn’t talked about much in startup circles. Boulder has actually been creating state-of-the-art technology for decades, but wasn’t thought of as especially entrepreneurial or risky. That changed in the 1990s when software companies started moving there for many reasons.

It still looks like an old Colorado western town, but it is now one of the most talked about startup scenes in the world. Amazing if you think about it. What made it distinguish itself? Boulder is a fascinating case study that will continue to evolve. Let’s try to break it down.

Boulder, Colorado has a population of about 100,000. It’s in the middle of the Rockies, about 25 miles from Denver. Founded in the 1850s along with several hundred other Colorado mining towns, it is the quintessential mining town that survived and thrived. Before it was thought of as a startup town, Boulder had decades of technology and scientific industries in the area.

Today, there are 18 state and national scientific institutes based in Boulder, researching subjects such as astrophysics, weather, astronomy, national standards and telecommunications. They include NIST, NOAA, ESRL, NTIA and many others. With that many brainiacs running around, it’s not your average ski town. All this helped feed the local startup growth, but it doesn’t always work that way.

Boulder has always been well known for its large university, University of Colorado, which created a liberal college town most known for its relaxing lifestyle and intellectual thought. Before marijuana was legal, the university had an annual giant gathering on 4/20 every year, a “smoke out” that attracted over 100,000 people — PhD candidates breaking the law in public. That’s Boulder. Boulder has always had that personality, making it an unlikely place to become “the next Silicon Valley.”

But it has evolved. Boulder’s climb to affluence and sustainability as a tech town started a few decades ago, with some of the large tech industries of the 1980s and 90s that settled there. They had deep roots of technology to build upon, similar to Austin.

But that still doesn’t guarantee success as a startup ecosystem; many others have tried with more resources and failed. Many cities are trying right now with more resources and not succeeding. How did they do it? By being different, original, not trying to copy Silicon Valley.

I’ve been fortunate enough to be involved in several startups that were in Boulder, since the 1990s, in software development tools, 3D imaging and a non-profit for helping the homeless. I’m a big fan of its dichotomy, and I love driving into that town (actually, you don’t drive so much as walk or ride a bike).

Boulder’s extensive science and technology footprint, combined with its forward thinking citizens, made a pretty good petrie dish for startup stardom, but it still wasn’t quite there. Just over ten years ago people barely noticed when a few east coasters started their quest to turn Boulder into a startup rockstar, or “tech-star”.

The Tipping Point

Many cities try to become self-sustaining startup capitals; very few succeed. What most of them lack is the proper amount of innovation, uniqueness. They try to copy other places and create startups based on small ideas. So they don’t attract the smartest money and sophisticated people required to be a real innovation machine.

What made Boulder different was a group of guys from the east who added the final two ingredients to the soup — real venture capital and their own experience in innovative real startups. They figured that they could make Boulder into a real startup town, bring the best resources, leverage existing advantages.

The thought process was led by David Cohen, Brad Feld, Jared Polis and David Brown, who founded The Foundry Group (venture capital) and TechStars in Boulder. Not Denver or Phoenix, but Boulder.

Of the four I’ve only met Brad Feld. When you meet Brad you see instantly he’s not like other people in the VC profession. He thinks and acts and even looks different, a true original. He has a very creative mind, can deconstruct a business almost instantly, and on top of it all, he’s a very nice, humble guy.

Brad and his partners did a few things to increase their chances of doing something no one had done before, which was to turn a town of 100,000 over 1,000 miles from Silicon Valley into a startup mecca. Money, experience, their networks. They made smarter investments, created free coworking spaces. They traded their suits for jeans and ski parkas. And don’t forget TechStars.

Techstars, Harvesting Youth

Techstars is one of the best innovations of the past 20 years in building startup ecosystems. It combined just the right ingredients to create a tsunami of new startup activity. Young developers from all over the world were willing to sleep in their cars if they had to, in order to join Techstars.

Techstars was originally a startup bootcamp for 20-year-olds that combined a little bit of funding with an exclusivity that appealed to young developers. It was prejudiced toward young people and towards developers, and the word spread quickly.

TechStars launched in Boulder in 2006, making a bold statement of independence from Silicon Valley or New York. They weren’t the first startup accelerator. They actually modeled it after Y-Combinator, launched by Paul Graham in Cambridge and Mountain View, California. Using Paul’s formula, they added cash to the mix — the magic ingredient. Cash gamified the process. Participants didn’t really care where it was, and you could do worse than Boulder, Colorado for a summer.

Techstars popularized the modern accelerator which is now morphing into the startup studio. Today, Techstars is in about 50 cities and acquired startup weekend. It has become a ubiquitous system for feeding new entrepreneurs and teaching technical people to be startup CEOs (not robotrons), and do it in Boulder, Colorado.

They say it takes about 15 years of consistent work to grow a startup ecosystem that can be sustained as well as prevail in terms of its imprint on the world map of innovation, (actually that’s a Brad Feld quote). These guys did it in less than ten.

Techstars and the environment around it has launched over several thousand startups in the past few years just in Boulder; their per-capita startup rate must be one of the highest in the world. Many fail or move on to other places but that’s part of the equation.

One of the best things about Boulder is that they don’t try to be Silicon Valley, they never say, “The Next Silicon Valley.”

They’re happy enough to be Colorado, they have their own identity Colorado, Entrepreneurial by Nature.”

What about superstars? Has Techstars created any $ billion market cap companies yet? Not quite, but they have funded several long-term viable niche companies that have been acquired, received more funding, and have helped to reinvest in the Boulder ecosystem.

Boulder is a remarkable place, now more remarkable than ever, and still a bit funky. Their startup efforts are a bit quieter these days, but the long term growth machine is firmly in place; good things will continue to come out of there. They had no particular advantage that a thousand other cities didn’t have, but now they’ve risen to be one of the top 10 or 20 startup towns in the world.

Go visit Boulder. While your there, drop by Techstars and check it out. Go for a hike or bike ride in the Rockies while you’re there. Walk down Pearl Street, you’ll see what I mean.

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