Andrew Yang et al: Startups, Cities, and Innovation

The ideas are flowing fast, as is the money. Young (and old) the world over are increasingly drawn to entrepreneurship, and inventive tech solutions are emerging everywhere. Is “Silicon Valley” a spirit rather than a place? What makes a city attractive for company incubation? Is this energy likely to continue, or will cities like Detroit have trouble sustaining it? Will the successful companies of the future stay put or move elsewhere?
Kirkpatrick: So for our final session, you know, we’ve been hearing today a lot about cities and we’ve been hearing a lot about startups, and they do have a lot to do with each other, so we’re going to directly address that in this last session, and particularly how cities like Las Vegas and Detroit are making concrete efforts that are quite differentiated from what’s happening elsewhere, to really take that integration and use it to boost both parties.
So Andrew Keen, the inimitable, will moderate this session, and please, Andrew, bring your panelists out.
Keen: So, I hope we’ll bring everything together. Let’s start, you might introduce yourselves, and then just tell me one thing you’ve learned today.
Yang: Hello all, I’m Andrew Yang, I’m the founder and CEO of Venture for America. We’re a national non-profit organization that recruits top college graduates from around the country to work at startups here in Detroit, among other places. One of the things I learned today is that there are large shifts going on in the economy and society right now, and there are a bunch of institutions that need to adapt to it, and then there are other organizations that are just springing up from the ground to address those needs, and hopefully that those two sets of organizations can come together, somehow in the next day.
Linkner: Hi, good afternoon. I’m Josh Linkner, I’m the CEO and Managing Director of Detroit Venture Partners. Quick background is I’ve been an entrepreneur myself four times—started, built and sold four tech companies—and also the author of two books on innovation and creativity. And one thing I would say, not necessarily learned, but really reinforced today, is the need for continuous change. I mean, for any of us to say that we’ve cracked the code to success or what we’re doing is going to work indefinitely is obviously a futile approach, and I think the idea of continuously reinventing ourselves, our organizations, and our community is the only real recipe for long-term and sustainable success.
Yang: I read Josh’s second book, it was very good.
Keen: So I wanted to introduce Jill, but before, maybe we’ve got this, you know, Clay Christensen has this whole theory of the innovator’s dilemma, of any company being a prisoner of its own innovation, we might develop that theory for cities, that every city also—and certainly that would include Silicon Valley and Detroit—has its own innovation dilemma, that once it gets ahead, it gets behind.
Andy said that the future, all of our futures, is Detroit, so Jill, you’re from Detroit. Is that fair? What do you do, and is Detroit in all of our futures?
Ford: All roads lead to Detroit. So I am new here. I came here from the San Francisco Bay Area, and I am the Special Advisor to Mayor Mike Duggin, helping to figure out how we can revitalize the economy here through entrepreneurship. I’m very excited about all the different supports that we can provide for innovation and entrepreneurship in Detroit, and one of the things that really stood out today is the value that comes from just bringing people together and having a conversation about great ideas, and then taking the actions to actually bring these things to life. And I love that we’re making a lot of these things happen in Detroit.
Keen: So what did you learn today?
Ford: That’s what I learned today, really, understanding the value of bringing people together and having those kinds of conversations.
Keen: You didn’t know that before?
Ford: Oh, I think it was a validation, kind of to what Josh was saying. So, I really enjoyed the validation of it. I think there were so many great things individually that I don’t want to just focus on any one particular one. I think the value is really in having those conversations and taking actions on them, and I’m very happy about—
Keen: And did you have a, were you born in Detroit, or you just came here from San Francisco?
Ford: I just came here from San Francisco, so I’m a new person in town.
Keen: And that’s intriguing that they would need to bring in an outsider from San Francisco as their sort of technology advisor.
Ford: Actually I was attracted to Detroit.
Keen: Why?
Ford: I heard about what was going on and I just saw an amazing opportunity here. I saw a set of challenges and a set of the ingredients that really, put together the right way, could create an amazing amount of social impact and revenue impact, and just really change the world, starting from Detroit.
Keen: Andy, is that true of everywhere? You’re from the VegasTechFund, so you’re, I guess in a sense, the equivalent to Josh in Las Vegas. Is every city full of potential or does every city have its own unique potential?
White: Absolutely.
Keen: Well, which?
White: What’s that.
Keen: Which? I mean, it’s—
White: We have the potential in every city, and a common thread throughout many of the conversations today is the understanding that we’re really just talking about building business and growing our communities. And yes, technology is enabling more and more of that, which means the change is accelerating, but this difference between a tech ecosystem or an innovation center or a startup community is a moot point, once it’s everywhere. And that’s where we have the access to the resources. It’s happening. And if it’s not happening in your community, then it’s probably going in the other direction.
Keen: This is the big question to me, and Andrew brings it up in his book, are these innovation communities zero-sum games? In other words, for Detroit to win or Pittsburgh to win, does it mean that, you know, Charlottesville or New Orleans have to lose, or can we all win? Is this really as—as David’s first thing—is this really the American Dream, which was about everybody winning, which, it isn’t a zero-sum game?
Yang: Well, certainly on the innovation front, every region has its own distinct advantages and strengths that they can build on. So there’s a company—I live in New York City, and New York City startups tend to revolve around finance and media, like, FinTech and AdTech or fashion, or something else that New York’s really strong at. If you go to Baltimore it becomes health, biotech, cybertech. Here in Detroit, it’s a whole different set of strengths.
Keen: For example? What would those be, Josh? The particular strengths here?
Linkner: Well, I mean, we have a lot of things going on. In our case, we’re finding tech companies, there’s obviously advanced manufacturing, there’s alternative energy, there’s a number of things. But to your earlier question, I don’t think it’s a zero-sum game. In the old economy it was. If I sold a bottle of water to you, you give me a dollar, I hand you this bottle of water, I’m out one bottle of water, and you’re out one dollar. On the other hand, if I create a piece of art, which is the equivalent of innovation—or a new company out of nowhere—and I sell you my painting, you know, I’ve created something out of my head. I’m not out of anything, and we both win in that sense.
Keen: But there is only a limited amount of venture money, and as Andrew says in his book, talent, I mean, it can’t be everywhere, right?
Linkner: Totally disagree. Totally disagree. I mean, there are talented people here in Detroit, way more than people think. And I’m sure there are in Charlottesville and other places. I think it’s harnessing them and creating an environment that’s supportive and helps probe the artistic sense of entrepreneurs to get them going, providing a safe environment and giving them the resources they need, but I don’t think there’s a shortage of ideas and talent.
Yang: Since you’re citing my book, I just want to make sure.
The theme of Venture for America and my book is about what Josh is saying, which is trying to activate more of our talent, and I’m certainly driven by this certainty that there’s so much underutilized human intellectual capital out there. And I was in a corporate law firm in New York, which is like a temple to the squandering of intellectual capital.
So if we can just unlock more of that energy and creativity, then the sky’s the limit.
Keen: Jill, what has to happen in Detroit? What do we have to—what are you in the business of unlocking, and how do you do it? What’s the key, using the unlocking metaphor?
Ford: Well, I think there are different locks and different keys that we have to bring in. I really appreciated Josh’s comment about really the level of cross-collaboration that can bring great assets to Detroit, and then also help the other cities outside of Detroit to see the great assets that we have coming from Detroit. And so having that kind of interactive traffic and cross-pollination that’s happening across cities, and giving us the opportunity to really have cross-collaborative partnerships, so that we can take advantage of how small the world is becoming, is an essential part of the success.
Keen: Give me an example of one of those partnerships with another city. How does that work?
Ford: Well, you can even think just distribution partnerships. So you can have a company that is based in one place but has customers globally, and so that kind of interaction then extends beyond just a closed system and really allows us to take advantage of all of the possibilities that we have in the world right now.
Keen: Andy, what advice would you give this mostly Detroit audience of entrepreneurs about the Vegas experience?
White: So we have some similar paths. I think the timing’s off a bit, and then of course we have a different set of resources to take advantage of, but the key is to identify those resources and to work together to redefine what it means to be a part of that community. Detroit has the unique distinction of having been the former, in whatever type of latter you’re looking at. This was the place. You can look all around you at the amazing buildings and the museums and the university and everything that’s here—this was where it was all happening, and there are other places where that’s now happening. It’s going to happen again, and it’s going to happen much more rapidly.
Very few cities are going to have an opportunity to create an industry that will survive for over a century, and we have to plan for that. You’re looking at 20, maybe 30 years that you’ll have in any one sector, and it will be the surrounding sectors and the next thing that will continue to drive that. And it’s going to accelerate faster than any of us can imagine. So the sooner we realize that we don’t know that, and that’s okay, and that the most important thing we can do is to prioritize learning over trying to execute on some answer we think we have, then those are the communities that will be able to really accelerate this change in the future.
Keen: So yours is a sort of theory of permanent destruction and reinvention, and the cycles are becoming shorter and shorter, is that—you all agree with that?
Yang: Yes.
Keen: So Jill, entrepreneurs don’t really need to worry about this, but city people do. What do you need to do? I mean, can you shore this thing up? Is it education? Is it bringing talent in? How do you try and guarantee that the next cycle will be 50 years versus 10?
Ford: I think that there’s a role for each party to play in this, and no one party really does it by itself. A lot of this really comes from the amazing talent that we have in the people here. I mean, if you look at who is actually going out and starting the businesses and doing the investing and connecting and creating global customer bases—this is happening from the people who are living in Detroit, and who are coming to Detroit. And so we want to invest in those people, invest in a whole variety of ways, to really enable—and as Josh was saying—really accelerate and activate the folks that we have here. And then also to make sure that we’re providing the right attractions for people to realize the opportunities that are here in Detroit, and to come and be a part of our community.
Linkner: Andrew you said two words I want to flip around, if I may. So you said, how can we make a cycle 50 years instead of 10 and how can we guarantee something for the future? I’d say we shouldn’t do either of those things, personally. First of all, there are no guarantees, and I think we fell victim to the fact that while we were guaranteed a great future—we’re the automotive capital of the world—and that sense of entitlement was one of the main factors that hurt us. So I think we need to build a culture and a community that isn’t about guarantees. We’re constantly adapting and changing, and there’s no way our plan that we craft today will hold for 50 years. Secondly, instead of trying to take our cycle from 10 to 50, we should be thinking how do we take the cycle from 10 to 1? So we should get into the habit of adapting and changing and evolving at record speed, because that’s what happening on the global stage, and if we start to think that, “Hey, let’s build something that’s going to lock it down for 50 years,” we’re going to be in the same mess that we were 10, 15 years ago here in Detroit.
Keen: But you’ve still got to try and make your place successful. I mean, one of the panels today, somebody from Indiegogo was boasting that as a seven-year-old her parents didn’t give her money, they forced her to become entrepreneurial. Is that a beginning? Do we begin in the family? Do we want to make all our kids into entrepreneurs in this sort of entrepreneurial/reputation economy?
Yang: So, I’m something of a new parent. I have a two-year-old.
Keen: Well, I hope you’re giving them money. Are you? They’re out there foraging in the streets of New York.
Yang: I heard Danae’s story and I said, “Wow, that’s incredible, I need to remember that for five years from now.”
Keen: Why?
Yang: Because it’s incredible training that I certainly didn’t get.
Keen: For a seven-year-old?
Yang: I mean, it worked. She’s on the stage, and she’s co-founded an incredible company. I mean, I’d certainly roll the dice on that outcome more than, “Hey, hunker down and do what you’re told and everything’s going to work out.” So I think it’s family, I think it’s education, I think it’s our institutions. Like, we all have to—like Jill’s saying—there are so many pieces to this puzzle that every individual institution has to try and migrate in that general direction in order for us to be able to, as a society and an economy, be able to approach the future in a way that’s—
Keen: Well, you were telling the story backstage—you don’t have to mention names—but this is sort of still a very conservative culture, where parents are putting pressure on their kids to become lawyers or doctors, and you feel that that’s very counterproductive.
Yang: So I read an article a while ago about what did Greek parents want their children to do? They wanted them to become lawyers and doctors, and then when the bottom fell out of that economy, you ended up with a bunch of lawyers without clients and doctors who couldn’t get paid. So it’s not a great way to try and—right now, certainly, the educational culture in this country emphasizes stable paths, professional roots, so it’s law school—which I did—med school, investment banking, management, consulting. And these professional services—like academia, you could throw in there—this professional services layer exists sort of atop growth businesses, and after a business gets to a certain point then you need to hire a lawyer, you need to hire an accountant, you need to hire—and so if you invest talent in building the services layer, you end up having icing without a cake, over time. You end up with like layers and layers of icing, and then you’re like, hey, you know, you’re looking for something that—
Keen: But Josh—you’re a successful entrepreneur. Can that be taught? I mean, were you born as an entrepreneur? Why did you become one?
Linkner: I actually do believe it can be taught. I mean, Andrew and I were talking about this earlier. It’s very difficult to build a company, you know, there’s all these different skills that you need, from finance and insight and people, and all that stuff. But I do believe that the core of it can be taught, in the same way that jazz music can be taught.
So I originally was a jazz musician. That was my first career. And I would argue that jazz musicians are no more creative than the next person, but the culture of a jazz combo facilitates you to take responsible risks. In other words, if we were all playing jazz together, and I played it safe, I’d get laughed off the stage. On the other hand, if I played a wrong note, I’d play it twice more and we’d call it art, and everyone would be happy.
So the culture of a jazz combo facilitates people to take responsible risks, to go for it, to be innovative, to be creative, and that is actually a teachable skill, and it’s identical to the skills that are needed for entrepreneurship.
Keen: Jill, is that what you’d like Detroit to become? A city of entrepreneurs? A city full of—not everyone, of course, can be Josh—but a city of people who are willing to take risks? Is that the goal when you advise the mayor? Do you think that that’s a noble ambition of a city?
Ford: One of the things that I’ve learned since coming to Detroit is that Detroit is already a city of entrepreneurs. There are entrepreneurs of all kinds here. I mean, everything from the person who is selling cheesecakes at her church on Sunday, to the people who are doing tech companies in some of our co-working spaces, to some of the more manufacturing-related businesses. I mean, we have a whole variety, and I think one of the things that—
Keen: But I don’t mean to pick on you here, but is that—is someone who sells cheesecake at a church—they’re not an entrepreneur; entrepreneurs take risks. Isn’t a risk, an entrepreneur is someone who’s—that’s maybe a way of making a little bit of money, but is it—I mean, I don’t know how the rest of you define an entrepreneur—
Linkner: I would say that an entrepreneur doesn’t have to be a tech startup guy in a hoodie. That—
Keen: No, I accept that.
Linkner: But I think as someone who works—
Keen: But you have to take some risk, rather than just selling cheesecake or lemonade on the street.
Linkner: Maybe entrepreneurs are people that change things. They’re provocateurs, they look at things, what can be, instead of just what is. So I think you can be entrepreneurial even if you work at a large company. I don’t think you have to start a company to be an entrepreneur.
Yang: Yeah, I would feel very bad if no one bought my cheesecake and I was sitting at that table. I mean, that’s a risk, isn’t it?
Ford: Exactly. I completely agree and I think that one of the mistakes we could make is if we don’t see entrepreneurship in all of these different kinds of places. Entrepreneurship starts with ideas, it starts with—as you were saying—being willing to take risks, it starts with taking action on these ideas, and so that’s happening in all kinds of different ways, and we embrace that and then start to help people understand how they can really accelerate that. So to go from selling the cheesecake at church to selling the cheesecakes at many churches, to selling them on the web—that’s how businesses start, from an idea and then grow into something that can be—
Keen: And that’s happening in Detroit more than other cities, or is it just a typical city in that sense?
White: Part of the breakdown of education is positive in that way. Can we train you to be an entrepreneur is a wrong question. It’s why do we spend so many resources training people not to be? You don’t look at a two-year-old and go, “Aw, that’s going to be a great worker. I can’t wait until they get into a structured environment where they can start being productive.” They’re invincible. They go out and try everything. That’s the entrepreneurial spirit. And then we take them through this system that then extracts every bit of that to where we get to the point where we’re now adults and we’re not allowed to do those things anymore. And that’s what we’re looking at.
Ford: Right. Also you asked the question of, can entrepreneurship be taught? We have to make sure that we’re not un-teaching it from our young people. We have to make sure that we’re encouraging them to be willing to embrace new ideas and try things, and those are really the seeds that then will become some of our greater businesses.
Keen: What about the people who can’t become entrepreneurs? What happens to them?
Yang: So this may be not on-theme, but I think that most people probably should not try and start their own businesses. I think that doing that is extraordinarily difficult, it is fraught with risk to—
Keen: Even selling the cheesecake?
Yang: Yeah, some people might not be able to handle not having their cheesecake be bought. No, I mean, everyone should sell a cheesecake, clearly, but, but starting a business is not for everyone, so if it’s not for you, to me, that’s totally acceptable. You should not think to yourself, like, “Oh, you know, I’m deficient somehow because I’m not set to start a company.” I think that there are incredible ways to be enterprising within a large organization. There are ways of finding an entrepreneur and supporting him or her in the growth of their enterprise, which every quality entrepreneur, Josh, everyone can speak to this, it’s not one person. It’s always a whole team of people pulling together to help get that enterprise to become EPrize or Zappos or whatever it happens to be.
So if you’re interested in entrepreneurship, try and join a team. I mean, that’s really what we talk about at Venture for America. It’s like, it’s not all the founder story, because if we were all founders, that would be a really bizarre way to try and build an economy, you know what I mean? We’d all be like, hey, you want my thing? I want your thing? It would be crazy.
Keen: Do you agree?
White: Again, I look at the opposite side of it. It’s not what is an entrepreneur so much as what isn’t an entrepreneur. And so to not be one means that you’ve been trained, and you know the answer, and you’re going to execute, and you’re never going to try and find a better way to do it. And so anyone that takes just the littlest amount of effort to try and find a better way, or to look at things in a different light, or improve the process, that’s part of the entrepreneurial spirit, and yes, everyone has that in them and everyone should be utilizing that in what they’re doing. We will all be much better off if that’s happening on a consistent basis.
Linkner: I think if we get back to the definition, is an entrepreneur necessarily a founder of a company? And I think those are really two different things. I mean, I look at the great work Jill is doing, and she’s working in the public sector, but I absolutely think she’s an entrepreneur, because she’s shaking things up here in Detroit and making a real difference and an impact, so to me, entrepreneurship, the act of doing that is something that is very inclusive that all of us, hopefully, are tapping into.
And if we’re not, that’s how regret gets formed. No one wants to look back 30, 40 years from now and say, oh, these are all the risks I didn’t take. This is all the difference I wasn’t able to impact. I think each of us, in our own way, can be entrepreneurial, whether we start a company or not.
Keen: So if we could capture this thing in a bottle, is it about rebelling, not accepting the way things are, challenging.
White: We call it prioritizing learning over being right, and in our education system—
Keen: I don’t understand. What does that mean?
White: We’ve been taught that you study for the test, you get the answer, when you’ve put the correct answer on the paper, then that’s success. And then you get out in the real world and you find out that’s not always success. Success can mean that things have changed and you need to adapt in order to be successful, and that’s what we need to prioritize, is that ability to learn from that and adapt, and make sure we’re applying that to the next scenario.
Keen: I always feel that when we have these kind of panels about innovation and people get round to saying it’s an educational problem, or an educational issue, they’re kind of acknowledging that they don’t have the solution.
White: I don’t think that’s the case.
Keen: The education system is in crisis in this country, but we always seem to be coming back to education.
Yang: So I went to law school, not a very entrepreneurial thing—
Keen: But it is pretty entrepreneurial, isn’t it?
Yang: It is 100% not.
Keen: What does that mean? Why?
Yang: It’s—
Keen: You mean it’s like rote learning?
Yang: I mean, there’s a lot of it. It’s pretty—you’re studying, like, 100-year-old cases. It’s like the opposite of the future.
Keen: So entrepreneurs shouldn’t go to law school?
Yang: I would not recommend it. So I left to start a company. It was my first time really doing anything—I was not the Asian kid selling lemonade or anything like that—to start a company in my mid-20s, crashed and burned, lost investors’ hundreds of thousands, and found entrepreneurship was excruciatingly hard. It was so hard that I could not pull it off.
So then I said, “Okay, how do you get better at this thing?” And the way I got better is I followed someone like Josh around for four years, and started to think a little bit more the way they thought, and then eventually got to a point where I was able to contribute some value, ended up running an education company that was acquired by the Washington Post.
So I have strong feelings about this, because you say, hey, fix education, that will result in entrepreneurship. You learn to be an entrepreneur the way you learn most things, which is you find someone who’s really good at it, and then you become his or her sidekick for X period of time. Some people who are fortunate grow up in that environment, like, if your family runs a business then you get it from that. Some people, like, somewhere might go to some school that teaches them that—though I’ve seen this school—and other people like me just go through the school of hard knocks, then find a more experienced entrepreneur, like Josh—and so what Josh has done here in Detroit is phenomenal. It says Josh is a vet entrepreneur. So he’s like spread his wings, and said, hey, aspiring entrepreneurs, come under my wings, it’s warm, it’s toasty. And that’s what we need.
Keen: So Josh, did you have a model for what you did? Like a Silicon Valley model, or you just made it up like jazz music as you go along?
Linkner: In my case, I was jazz music all along, but I think there’s probably a much more effective way. I mean, I made so many mistakes, scraped up my knees, you know, lost—but you learn it—you’re exactly right, I think it’s on the job learning, and I don’t think it—I mean, there’s a lot of challenges with the educational system, but what can we do now that we’re out of the educational system? I think we’ve got to get into the fight and start going.
Keen: Jill, we had a panel earlier about diversity in the workplace, and the issue of mentorship came up. How important is it in a town like Detroit, that you have a mentor like Josh?
Ford: I think it’s not just important in Detroit. I think mentorship is important globally. As we’ve all talked about, it’s very important to have an opportunity to learn, and sometimes you don’t know what you don’t know, and so being able to find somebody who’s more experienced than you can really help to open your eyes to new possibilities.
Keen: And Josh when someone comes under your warm wing, what do you try and teach them? I mean, when someone follows you around, what do you think they learn from you that they wouldn’t learn from going to university or reading a book about entrepreneurship.
Linkner: First of all, just to be clear, there are lots of paths to entrepreneurship. I’m a bit embarrassed with this whole wing analogy. What I can say, what we do is we provide capital to our entrepreneurs, but we also, we think that capital is one of many ingredients that are necessary for startup success. So we are also coaching, mentoring, I mean—I spend my days not poring over spreadsheets, we’re role-playing an important sales meeting before it happens, or we’re dealing with a tough HR issue together, or we’re figuring out how do we continuously adapt in a radically changing environment. So I think it’s really like Andrew says, being in the trenches more than it is an academic study.
Keen: Jill, how important is it for an event like Techonomy to come to Detroit? Does it sort of confirm what you’re doing, or is it the trigger for innovation?
Ford: I love the idea of having events like Techonomy come to Detroit. I think that anytime we have such a diverse mix of people and ideas and experiences, it just creates fertile ground for innovation.
Keen: Certainly, I think, it’s a very—I mean, I haven’t been here before. It’s a very good decision of David and his team to bring Techonomy here. How, in terms of Las Vegas, what else do you think you can teach Detroit? Or what can you learn from Detroit?
White: Yeah, I think that’s the key. Since this is the way that we’re building business and growing our communities, we all have things to learn from each other. There certain aspects of it that we’ve been successful at, that we’re excited about, that we like to tout. People in other areas look at that and go, wow, that’s amazing that you’ve done that much in short amount of time. But then on the third side, we know all the things that didn’t work with that and all the things we still have to do, so we always underappreciate what we’ve done, even though we talk about it. The others over-appreciate it, because they’re just seeing the end result, and what we need to be doing is really talking about what helped us get there, and how we can evolve that process.
It’s important to have a process and to make sure we can replicate, but then build into that the flexibility, and that’s what we’re seeing here.
Keen: Does size matter?
White: It depends on who you ask.
Keen: Well, let me ask you. The lady who gave us the tour of Detroit yesterday said Detroit was an optimal size, it was bigger—I think, without wishing to misquote, it was big enough to matter but small enough that you could make a difference. Is that right? So, does size matter? Is it the right size? I mean, I’m sure there are people in the audience from smaller towns than Detroit and larger towns, and we’re all trying to figure out the same thing. How to emulate Detroit, how to beat Detroit, how to set up innovation centers, because clearly that’s the future for every city.
Linkner: I think we are an optimal size, frankly. You said big enough to matter and small enough to make a difference. We have the necessary ingredients here. We have talent, we have capital, we have a great airport, I mean—you name it, we’ve got the right ingredients. We have to get out of our shell and be willing to take some more risks than we have in the past, but I think we have real advantages.
Keen: So you haven’t taken enough risks in the past?
Linkner: No.
Keen: You’re still in your shell? You’re not in a shell. You’re under wing.
Linkner: I think, you know, it’s amazing when you watch the cycle. 100 years ago, when we were the Silicon Valley of our country, we took fabulous risks.
Keen: Is that true? Or is that just the cliché, that you were the Silicon Valley of America?
Linkner: Well they were the Detroit of the West Coast, really. We were the source of innovation. This is where people came to build their fortunes, were very entrepreneurial. Then we stopped doing that. We stopped creating, we became very—
Keen: When did you stop? 1930? 1940?
Linkner: Something like that. And we ran the opposite playbook and we suffered greatly. And now we’re once again reconnecting to those entrepreneurial roots and really taking off. But I think it’s important as we look at this transformation—we shouldn’t be replicating what happened in San Francisco or Boston or New York; we need to be authentic to who we are—but the opportunity here is profound, and I really believe that we’re going to be studying this period for decades to come as this incredibly transformative period where entrepreneurship and innovation was rekindled and ultimately made a huge difference.
Keen: Do you mean you have to get to the bottom to be able to come up again? I mean, if Detroit hadn’t had the pretty awful experiences of the last 15 or 20 years, would it have been possible to have the kind of rejuvenation and innovation you’re now experiencing?
White: Possible, yes. Challenging, incredibly. You don’t think in this way when things are going good, and that’s definitely a lesson learned in Vegas, and one of our concerns coming out of this, is we’ve come out of the downturn so rapidly now that we may not have learned all the lessons we need to. And so it’s going to be that much easier to fall back into these old habits that got us right to where we started.
Linkner: Andrew, you said something earlier I just want to touch on. You said about 95% of startups fail, and just real quickly, because I’ve been involved in about 100 startup launches. The two things I see that make startups fail is not lack of vision, it’s lack of execution. It’s just sort of good, old fashioned holding people accountable, marching things down the field, adapting, you know. The hard work of building a business.
And the second reason I think entrepreneurs tend to fail is they say, well this is going to be great because I’m the boss, and I’m going to boss people around and great leaders are servants, they’re not kings, and great leaders job is to serve those around them, whether it’s their customers or their team members. So when you take someone who is thinking of themselves as a servant-leader, combine that with an executionally focused leader, I think the startup statistics look much more favorable.
Keen: So you’re saying 95% don’t really fail?
Linkner: I think definitely not 95% of the people that look at the world that way don’t.
Keen: But are you in the school of failure-is-success school, that it’s good to fail? And Silicon Valley, one of the unique things about Silicon Valley is the more money someone’s made, the more they claim to be a failure. Is this something we should boast about, that failure is a good things? I mean, did you ever fail? You failed as jazz musician, right?
Linkner: I still play from time to time. I failed hundreds and hundreds of times. It depends what you define as failure. I’ve never cratered a company and lost everything, but I think that the people that win the most also fail the most, because they don’t look at failure as this all or nothing binary outcome, they say, “Hey, this particular experiment didn’t work, how can I learn, adapt and grow, and make the next one more effective?”
Keen: My own experience, by the way, is the more you fail, the more you seem to go up in the world.
Linkner: Totally agree.
Keen: That was a joke, but go on.
White: The failure point just means that you waited too long to learn, because if you’re learning along the way, you don’t call it a failure; it was—that’s how you innovate out of it.
Keen: But Jill, for the—we’ve got some young people here, and I know we’ve got some questions—you know, it’s all very well for us to joke about failure, but you know, for a 20-year-old kid, you know, whether or not they’re selling the cheesecake or doing a startup, failure is very, very hard to deal with, isn’t it?
Ford: I think it’s all about your perspective. So as everyone has mentioned here, failure can be a learning opportunity, and for people who see it as such, it wouldn’t be quite a—
Keen: But that’s just sort of an academic—if you’re going through it—
Yang: When my company went under, it felt like the end of the world. I remember looking up at the ceiling, wondering how I was ever going to recover, my net worth was negative $100,000 because I still owed law school debt, and the investors had lost everything. But then at some point, months later, you actually get it back, where you realize—I remember thinking to myself, like, “Okay, what’s really happening here?” And like, if I met someone, they wouldn’t know that my net worth was negative $100,000, unless I was stupid enough to tell them, which I obviously would not. And that no one comes and takes your stuff, you can still go out, the sun’s still shining, like, your family will still spend time with you. So there are things that—I never want to make light of failure, because now I wear a suit and I’m onstage and it’s always ridiculous—it’s ridiculous in that it’s like, oh, it’s easy to talk about, like you said; it’s easy to talk about it after the fact—but I will say that getting through that process makes you a different type of person, where for years afterwards I was like, “Well, worst that could happen is this company could go under, and I’ve dealt with that before, so it can’t be that bad.” And I would say that to myself for literally like six years afterward.
Keen: Well, I hope you’re getting your child to go out to work.
Yang: He’s, yeah. I’m going to hook him up with Zach later, he’s going to learn some coding, so.
Naumann: So my question is—a lot of what I’ve been hearing is—
Keen: Why don’t you introduce yourself, too?
Naumann: Oh yeah, my name is Jason Naumann, with 3D Marketing Solutions, and my question, it relates to something you brought up earlier, Andrew, which has to do with is it a net zero-sum game? I think there’s a limited amount of financial resources. I think it’s great to continue to foster communities of innovation, where people are continuing to push the boundaries and advance technology and advance our society, but does a culture of entrepreneurs require something that goes beyond our current financial system, maybe something more related to Blockchain’s system of exchanging goods or ideas for other goods and ideas? That’s, because for me it seems like there’s only so much money you can get, and as long as we’re continuing to produce things that are going to benefit the corporations, the money is going to keep funneling to the corporations, or being slightly distributed to us for our innovations. Thanks.
Yang: So I run a non-profit, and I’m happy to share that there is a lot of money out there that is not doing anything that awesome. You know what I mean? Like, there are things where, if you can get to the right people—the limitation is not that there’s not enough money in the world, especially with our current Fed Reserve scheme, which is essentially just to hit print and to just let it go. So, you know, I mean I believe in nonmonetary exchanges, we’ve gotten a lot of stuff done through essentially like favors and other things, but I don’t think that a lack of capital is going to be the bottleneck.
Keen: But Josh, you’ve only got a certain amount of money to invest. You’re not limitless. You don’t print your own money, right? So I mean this zero-sum—there is some truth, isn’t there? I mean, it’s not infinite opportunities.
Linkner: I think there’s capital available for entrepreneurs who are great entrepreneurs with great ideas. I really do. Just like there are lots of actors in L.A. and then someone bubbles to the top and someone gets a movie deal. And so I think that it’s hard, it’s competitive, but when I started my companies, there was nowhere near the capital that was available here, and I had plenty of capital availability, because we were scrappy, we went out and figured it out. And I think today more than ever, I think entrepreneur capital is more accessible, and again, competitive, but it’s there when you need it.
Keen: Jill, do you think it’s good to have kind of too much money swirling around the system, or is it good to keep entrepreneurs hungry?
Ford: Well, I’m sure people would ask the question, can you ever have too much money? But I think that there’s—it takes more to succeed in a business than just capital. It takes relationships and people who are going to be behind you, to one of the earlier comments that we had. It takes great ideas and a continuation of those great ideas as you reach different potential inflection points for your business. So I really like that the question spoke about capital, but also spoke about some of the other things that you really need to grow a business, and I do think that the more we have people putting their passion and excitement behind businesses, and their time, that becomes an opportunity for investment.
Keen: Can we keep the questions—I know there’s a few, and it’s always nice to be the last panel because you don’t get into trouble if you go over, but I’m sure people have other things to do—so if you can keep your questions short, and maybe we can ask a few and then we can get the panel to respond.
Mohammed: Mohammed from 242 Solutions. So we’ve had a very interesting experience raising capital in Michigan, which we haven’t actually done—I should say trying to. So we basically pitched to some of the leading venture capital companies and what we’ve been told is that the—if we were to try to raise somewhere else, let’s say San Francisco, New York, somewhere else, that we would have a higher chance of actually raising money. Now most people say, well, hey you guys have generated some cash, you guys have a platform in a relatively short period of time, interesting market, and so that in many cases hasn’t actually resonated to the companies that we’ve pitched here. We did actually pitch DVP, so including DVP. And the answer has been, you know, it’s not—it seems like it’s too risky or too early or something along those lines that’s rooted in some sort of, it’s not as sexy of a market or the market’s not that big, can you really sell this to that many customers.
And so the question is like, is it likely for that to actually be true, that raising money in other places would be easier because other places might be a little less risk-averse?
Keen: Thanks a lot. Let’s give them a couple more questions.
Audience 1: Mine’s more like a comment than a question, per se. This is issue about whether entrepreneurs are born, whether entrepreneurs are made or whether it can be taught, or what have you. I do think there has to be a certain aptitude for entrepreneurship. I can say that with some bona fides, because I’ve been one since 1976, and there’s a point where the rubber meets the road. Like they say, some people are born to greatness, some people have greatness thrust upon them, and some people just stumble into greatness. Entrepreneurship comes about those same ways, in some respects, but there has to be a core attitude, there has to be a core aptitude, and you have to be very, very capable of taking risks. And when I say rubber meets the road, you separate the men from the boys, the women from the girls, when you have to make payroll.
Audience 2: My question has to do with actually something that was brought up during the American Dream session early on, and that has to do with any comments from you guys or ideas about how to bring entrepreneurship and have more people participate in it in communities where that’s not normalized behavior, that’s not an option or a possibility that people are thinking of.
Audience 3: I just really wanted to answer your question from before about is Detroit different, and I think that it is, because there’s a lot of people that, because we didn’t have some of the things—they just asked the question, why don’t we have this? And then followed that up with, okay, I’ll do it. And it’s kind of accidental entrepreneurs, or what I call “doers.” And then my question is so, Josh, you talked about the people that just want to be the boss, and there’s a little bit of sexiness now attached to, “I’m going to be an entrepreneur,” and they just hear that, and they have a great T-shirt idea, or this app, and they want to be that instant millionaire. How can you teach them? I mean, can they be saved from being that kind of person, and kind of actually become a leader-entrepreneur versus a pie-in-the-sky idea?
Keen: And all these questions sort of bring to me the idea of, you know, being an entrepreneur now is a life calling, it’s so meaningful, and you know, rejection is incredibly hard—and one entrepreneur seems to want to know the truth about why he isn’t getting funding. Are VCs telling him the truth, or are they just being polite? So your role is as much sort of spiritual as economic, now. Is that fair? I mean, this is like a church, this is like a movement.
Yang: To springboard on one of Josh’s earlier points, I sometimes joke that being an entrepreneur is like being a professional musician, which is, you should avoid it if you can.
Keen: So, if you can, but there’s a calling? Sometimes you can’t avoid it?
Yang: It is like that. There are times when—so I think in the best case, an entrepreneur wants to solve a problem. They just want to solve that problem real bad, and then they say, “I’m just not going to rest until I solve that problem.” I mean, that’s certainly been something I’ve experienced.
Keen: So it is a temptation for you, just couldn’t avoid?
Linkner: Absolutely. It draws you—if you chase it for the wrong reasons, if you chase it for money, fame, glory, whatever—you very rarely will hit your target. If you’re doing it because that’s your calling and you believe in it, that’s what you were put on Earth to do, then you’re going to have a quick result.
I just want to—I can answer you really fast, your question. It’s hard to find capital anywhere. You’re going to get asked those same questions in Silicon Valley, Boston or New York. Is the market opportunity big enough? Is it scalable? All those things. Average in Silicon Valley, 1 out of 300 pitches gets funded, so I’m not sure that it’s a geographic thing, and maybe either the way it’s being presented or the business model itself—which by the way, maybe you could tweak and adapt, and have a great success—and your question also, how do you do it?
I think earlier what you said about mentorship is great. I think by surrounding yourself with people; maybe you’re not starting yourself but you find other mentors to help in that journey, I think those are skills too that absolutely can be learned.
Keen: Jill, you’re nodding.
Ford: Well, I want to piggyback off the mentorship thing, because there are mentors who are very physical, right near you, but you can also find a sort of virtual mentorship by finding people whose career paths you really admire, and just kind of learn more about what they’ve done and what made them successful and what were some of their failures along the way, and just really be able to learn from—
Keen: Should mentors be really honest, and if someone they don’t think had the real calling—if all they want to do is make money, or they just don’t really have the talent, should you be honest and tell people?
Yang: So this actually relates to the funding question, and I apologize if I made it seem like it was easy to get money, because it’s never easy to get money for profit, non-profit, never—I was just commenting, like, macro. But nine times out of ten, there’s a lot of things you can do that don’t involve money to move the enterprise forward, and that’s like the stuff that is like the stuff that, when you talk about like, hey should I encourage or discourage this person? If the person is the right person, they’re going to move forward regardless of whether or not I encourage or discourage them, you know? So like, and you should try and be honest and see who is going to make it happen, with or without the funding.
Keen: Well, honesty, final word, Andy, you’re looking sad.
White: Why thank you for noticing. So the other question that wasn’t addressed yet is how do you be an entrepreneur in a community that doesn’t focus on that right now? Every community started with entrepreneurship. We started this country by landing in one place, and now we cover the entire, this part of the continent. Every new group that decided to pick up and go somewhere else, that was a group of entrepreneurs. Every person that started a new business. And it’s all shifting. And one of our biggest gaps we have right now is there is still a mental barrier between the traditional investor and entrepreneur, who has built our cities to where they are today, and the tech entrepreneur and the tech investor, and the quicker we can bring those two things together, and decide that this is just about building business, and the better we work together to do that, then that’s what will allow us to accelerate out of it. And that entrepreneurial spirit is at the core of every single community across the country.
Keen: Well, I think this was a great panel, because it didn’t have any simple solutions, no easy answers, but it did reflect the incredible complexity, and I think centrality of this challenge of being an entrepreneur in our innovation economy and Detroit’s fascinating place in it. So I want to thank you guys, fantastic panel.
Kirkpatrick: Thank you to the panel, and I would say that point that Andrew just made—Andy, Andrew, Andrew and Andy, right?—is, that’s what Techonomy is all about, trying to bridge those two worlds, and I think today was a great experiment in that. We continue to experiment, it’s entrepreneurship, three years of running the company, we’re still going.