The Generosity Flywheel: A Key Driver in Arizona’s Startup Community

Beth Cochran
Apr 30 · 6 min read

By Brandon Clarke (brandon clarke)

The flywheel is an incredibly efficient and effective technology with a remarkable ability to store and release energy. Its beauty lies in its ability to retain a great deal of kinetic energy and redistribute it back to the engine. And though it needs a lot of force to get it started, it also needs a lot of force to make it stop — which, as it turns out, is not unlike the growth and vitality of the Valley’s startup and innovation community.

I think it’s safe to say that our flywheel is spinning and only gaining momentum — and that’s thanks, in large part, to the spirit of generosity that is very much alive in this town. There is an undeniable linkage between performance and generosity, and over the last several years, Phoenix’s flywheel has been building up a tremendous amount of kinetic energy and momentum, which has been dependent on three things: its velocity, how much friction it encounters, and its mass.

Picking up speed, and then…

Velocity of the flywheel increases when force is added to the areas that have the biggest impact. And one force that has delivered a powerful impact is generosity.

Generosity comes in all forms — the giving of time, expertise, knowledge, being open and vulnerable about hard lessons learned, making connections, and the list goes on. Often, it’s these acts of generosity that build up our community more than any amount of capital could provide — especially as local and global startups prepare for less active funding and market dynamics due to COVID-19.

“You give but little when you give of your possessions. It is when you give of yourself that you truly give.”

~ Kahlil Gibran

Of course, we need the talent and capital investments to support growth, but in the years since Mario Martinez and I launched StartupAZ Foundation, I’m constantly reminded that it’s the collaborative spirit and camaraderie that has truly underpinned the strength of the Valley’s startup ecosystem. As StartupAZ enters its fifth year now under the leadership of a dedicated board of directors, including Jacky Alling, Ji Mi Choi, Brad Jannenga, Jim Prendergast, Gregg Scoresby, Brenda Schmidt, and Sarah Strunk, along with the invaluable guidance of our chairman, Tom Curzon, the organization looks to redouble efforts towards strengthening the Valley’s economic resilience rooted in high-growth startups in an effort to lessen impact the impending economic downturn.

Eliminating friction while leaning on each other

Equally as important as adding force to the areas that will deliver the biggest impact, is eliminating friction. And we see countless examples of this time and time again across our startup community.

A pre-COVID-19 example of this was Jamie Baxter, co-founder and CEO of Qwick, standing before the Arizona House of Representatives to rally for House Bill 2409, which would keep the Angel Investment Tax Credit program going. Though his company was beyond the stage to continue to benefit from it going forward, he recognized the friction its disappearance would cause for other local cash-strapped startups, and ultimately our community at large. And now, the preservation of this important tax credit is needed more than ever.

More recently, I’ve seen this spirit of generosity demonstrated among StartupAZ’s Founders in Residence (FIR) and members of StartupAZ Collective. The COVID-19 crisis and ensuing market impact is hitting seed and series A stage startups especially hard. While these fledgling companies adapt to a (hopefully short-term) new normal, they are faced with new challenges that feel insurmountable and have leaned on each other like never before. Whether it’s Ryan Quinn or Hamid Shojaee initiating impromptu virtual check-in sessions to exchange remote team strategies or SBA/CARES Act resources, or the sharing of LinkedIn profiles of employees that have been let go to preserve cash burn in hopes of finding them a soft landing. I have been incredibly proud to see our founder’s rally for each other these last several years but more acutely, these last few weeks.

Whether they realize it or not, the FIRs and founders in the Collective, are actively removing friction from our community’s flywheel. Every time they share a best practice, a lesson learned or make a connection — they’re helping eliminate a barrier to a fellow founder’s growth.

Other recent examples of generosity among our entrepreneurs in the time of COVID include Justin Gray, CEO of LeadMD, kickstarting the AZ Local Impact Fund with $50,000 in partnership with InvestSW and StartupAZ, Jenny Poon’s guide for to help small businesses withstand the current economic crisis, CRADL, partnering with LittleTaller and ConstellatePHX to launch a school meal delivery program, and countless others. Current times call for a community-wide bias for action and the community is stepping up.

Adding mass to the wheel

Arizona’s flywheel is continually growing thanks to generous acts at the macro and micro levels. Just within the Collective alone, every new cohort spins out a fresh new crop of founders who then become advisors and mentors to those who are coming up through the ranks behind them.

Many of them, like Jacob Findlay, CEO and founder of Fullbay, join the FIR network, giving generously of their time, even though they’re still in the trenches building their companies. As they progress to new stages, they’re turning around and showing others how they survived the previous stage.

Brenda Schmidt, Jim Prendergast and Gregg Scoresby, each started in the FIR network, but recently deepened their commitment by joining the StartupAZ Foundation board. And there are countless founders across the Valley who are giving generously of their time as advisors and mentors, making introductions to investors, and sometimes just simply taking a phone call or invitation to grab coffee. Though they may not recognize it, these small acts are huge symbols of generosity that directly contribute mass to our flywheel.

The Power of the Pledge

StartupAZ’s Generosity Pledge has been the bedrock of our mission and a tool for early-stage startups to give back by helping them establish a set of core values rooted in generosity that resonate with the company’s founders, employees, advisors, investors, and customers. To date, nearly two dozen local startups have pledged time, product, and equity back to their community with founders like Chris Ronzio, co-founder and CEO of Trainual, and Jamie Baxter of Qwick already making financial contributions through their Generosity Pledge.

Brad Jannenga, founding StartupAZ board member, co-founder of WebPT, and founder and Executive Chairman of Chassi said it best:

“In a rapidly changing world, companies that prevail will be the ones not solely concerned with their profit at any cost. Chassi’s pledge was driven out of a sense of responsibility to the ecosystem at large and in an effort to demonstrate the generosity and civic-minded nature we would like to see in others.”

Building our moment of inertia

Over the years, we’ve been adding a tremendous amount of mass to our flywheel through convening events like PHX Startup Week, Startup Grind, 1Million Cups, and House of Genius; the efforts of organizations like the Arizona State University E+I, Coplex, Greater Phoenix Economic Council, Partnership for Economic Innovation, Arizona Commerce Authority, Center for Entrepreneurship and Innovation, SEED SPOT, InvestSW, and others; the gathering of entrepreneurs at places like Galvanize, Gangplank, The Department, Co+Hoots, and GCU’s Innovation Center; and the countless generous acts that fly below the radar like mentor hours, local podcasts that tell the stories of our Valley startups, and the connections made and resources shared on the #yesphx Slack channel.

It’s all combining to maintain and amplify a thriving ecosystem — especially in this tumultuous time. We see this on a more micro scale just with the performance of Collective startups. Last year, under the guidance of our Director of Venture Development, Christie Kerner, we had the largest turnout of startup CEO’s join and out performed expectations with new hires and capital raised. In 2019, these ventures grew the employee count from 344 to 523 and grew revenues by an average of 123%. Sure, 2020 projections are more or less obsolete for many of the companies, but their accountability to each other and to their communities will help them persevere and continue to thrive.

It’s a challenging time, but we have to keep this flywheel going and continue to remove the friction that kills its velocity. The more we invest in the spirit of generosity among our entrepreneurial community, the harder this wheel will be to stop resulting in a quicker recovery to our economy.

Raising The Bar

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