Building Entrepreneurial Communities: Lessons From 'Big Omaha'

05/23/2011 10:40 am ET | Updated Jul 23, 2011

Lots of attention, research and many-a blog post are devoted to the question, "How do you build a successful startup?" Indeed, this is one of a number of questions (and answers) we are pursuing at the Kauffman Foundation, where I work.

Just as important, and likely a fundamental component of the answer to the above, is the question "How do you develop an entrepreneurial community?" Rigorous network analyses and research are being performed to provide insight in this area, but sometimes a cup of joe and some experience help too.

A few weeks ago the Kauffman Foundation sponsored Big Omaha, a popular annual conference on innovation and entrepreneurship. I hosted a breakfast bright and early one morning for a number of the speakers from around the country along with local entrepreneurs and business leaders to have an informal discussion on entrepreneurial community building.

One of the first topics to surface was risk. Risk and failure sound a bit cliché in startup-land of late. Interestingly, no one was of the opinion that we need more founders willing to take risks. In fact, most founders are risk-averse. Founders actually manage risk to their advantage and mitigate it. And risk plays an important role in building entrepreneurial communities. As Micah Baldwin wisely pointed out, these communities seem to hit a tipping point when the population at large (i.e., employees) is ready to take a risk. When people who work for startups are willing to accept (even thrive on?) the fact that they may need to update their resumes and start interviewing again in six months, that's an indicator of a community that understands and supports startup. The next concentric circle in an entrepreneurial community beyond employees is partners and vendors. Service providers -- from accountants to lawyers to bankers to real estate professionals -- need to redevelop their engagement protocol and risk profiles to build terms "doable" by startups.

The absurdly overused phrase "build the next Silicon Valley" came up in the discussion as coffee was being poured. That's not to say the Valley community doesn't have important components that contribute to the area's entrepreneurial achievements, but many communities think to be successful they must replicate to a T consumer web applications and chips. The reality is, says Steve Kiene, no one is going to beat the Valley at its own game. So, communities need to focus on advantages -- on building what founders, employees, capital and customers know and need. Steve is optimizing what he sees as advantages and pouring the foundation of a strong enterprise software development hub through Nebraska Global. Mark Suster also touches on this point in a recent post that challenges communities to consider "what local assets do you have that load dice in your favor...while not limiting innovations to local themes?" Pair clarity of advantage with what Suster calls "patron companies" who pour off new specialized talent and also provide the "opportunity for company-defining partnerships" (bigCos utilizing startups as vendors), and you've got a powerful mix.

Tier-two (not-yet-entrepreneurial) communities often get caught up within their borders. The politics of running and growing businesses will always have a local bent. Increasingly though, Marc Ecko noted during our meal, the success of your business is a global issue of serving customers and clients largely unrestricted by geography. Steve Blank believes "the real test of a cluster is when people from outside the area start coming to work and invest there." Local assets and ecosystems are important, but appropriate porosity to the outside world must be achieved.

Regardless of the maturity of the entrepreneurial DNA within a community, startups absolutely must be in the news. And that news must be mainstream. And that news must be consistent. The goal is ubiquity. In the startup hubs around the country, new company and entrepreneurial news dominate headlines. As Tom Chapman, director of Innovation and Entrepreneurship for the Greater Omaha Chamber of Commerce, put it, the media must make a conscious decision to intentionally cover startups -- not just when the Huskers lose.

Outlets such as Startup Digest are working to jumpstart this local coverage and curation, but success will come when the hometown paper (yes, paper) has a dedicated column and journalists commit to coverage across all mediums. Every region needs its news and its champions -- the groups and organizations committed to bubbling up the stories of accomplishment and failure and bringing the vocabulary of startup, funding and growth into every regional/community vernacular. Entrepreneurship must be top of mind.

And it's not just founders', funders' and media's responsibility to foster entrepreneurial communities. The opportunity must be shared by all. On a recent trip to Ann Arbor and the University of Michigan, Steve Blank noted that "no one seems to own the problem" of filling the community gaps. The entrepreneur actor is critical to the theater of American economics. It is a job creator and a translational engine of human capital into innovation for society. However, rhetoric and posturing won't turn the tide. Gordon Whitten wound things up at breakfast with an interesting story. He was hiring someone at Sojern -- a company well backed with coastal venture capital -- and he went to the local university seeking the very best accounting student. Eager to maintain talent in the region and begin a beneficial cycle, his team had this top-notch student dive in with QuickBooks - until they realized the student had no idea what QuickBooks was. Theory absent practice sets up higher education as a non-factor. The opportunity to build entrepreneurial communities needs to be taken on by universities, big companies, media, funders and even government.

Big Omaha and its namesake city are prime examples of a community consciously changing itself. The team at Silicon Prairie News, the universities, big companies, the media, the government and the workforce are working to build a culture. I believe all of the national speakers attending the conference agree: communities around the country can take notes from Omaha. The city is a model for developing a community that is critical to the success of new companies.