Startup Ecosystems, Mice and Unicorns

Ok, fellow citizens of this mythical place called Startup Land. Let’s talk about ecosystems.

We understand that none of us are likely to solve this problem alone. We know intuitively that it’s not just about the code, no matter how much that part of it has captured the conversation. A whole lot of different roles are needed in a community to bring any new tech businesses at all out of the world of imagination.

We need to gather a lot of resources when we know that… oh… 90… 95% of what we plant is going to die before becoming mature. We need baby companies. And for those we need incubators and accelerators and funding and mentors. To feed into them we need lots of people who are good with technology, but we also need people who are good at all the other things that make something a business rather than just a sweet piece of code on Github. We also need meet-ups and meetings and coffee corners and co-working spaces and a whole lot of people talking about what the heck we’re doing, since for the most part, we’re staggering around on an ice rink in the dark trying to find purchase long enough to gain momentum and get to the edge.

Thus arises the idea of an ecosystem. Clearly none of us are going to raise these fragile baby companies into Unicorns by Sheer Force of Will.

But within that statement lies a problem.

We seem to be down to a single model for growth: Seed funding… Angels (phew)! VC… Million dollar rounds!!! GROW GROW GROW!!! IPO! GET BIGGEST BY NEXT TUESDAY OR YOU’RE GONNA DIE!!!

This is not how things work in a real ecosystem.

The world is not full of microbes and apex predators, with everything in between vying to become the next apex predator. (Predatory Unicorns… smh. What is this world coming to?)

Ecosystems do have pioneer species that get into disrupted land and grow fast, but they aren’t the ones that get big or live long lives, unless they are invasive and nothing can resist them. In most places, the big species are the ones that take a very long time indeed to grow… whales, sequoias, elephants… (I will note as an aside that there also isn’t only one of each of those things.)

An ecosystem supports a wide range of different species, and although nature is pretty red in tooth and claw, there isn’t an underlying assumption that all the animals only exist to find and support a handful of bears.

Take that forest, for example. It has small fast growing (annual) plants, and large slow-growing (perennial) plants, and several trophic layers of animals between the tiny fast-reproducing mayflies and mice and the huge slow-reproducing mega herbivores and apex predators. There are also funguses and bacteria, not to mention nematodes and slime molds and things we haven’t even identified yet.

All of those things work not just in competition, but in harmony. Energy flows back and forth through the system; it isn’t concentrated in one central location leaving the rest of the organisms to fight over smaller and smaller fractions of the resources.

A forest is an ecosystem. A grassland is an ecosystem. A pond is an ecosystem.

A giant field of kudzu is not an ecosystem, no matter how efficiently it is turning air and sunlight into leaves.

On the right kind of grassland, there might be rhinos (the true unicorn!)* next to zebras, next to gazelles. Some of them are solitary and some of them run in herds. Some of them eat low on the ground, some eat trees, some eat mushrooms, some eat one another.

But nobody ever comes along to say, “Hey… good zebra-ing there, if you work really hard at it maybe we can make you into a lion one of these days!” Or worse, “Well, giraffe, you did get very tall, but I’m afraid you’re going to miss your target for horn growth and we won’t be able to support you any longer.”

A Garden Metaphor Instead

I know when I’ve beaten a metaphor nigh-unto-death, so I’m going to abandon the ecosystem for the moment.

Let us take a sidestep to consider gardening, which, I will argue, is more like what we are doing. There are too many external drivers in the system for any stable system to evolve without a long time to grow. Boston, Waterloo, and the various pods sprouting up along the west coast: they might reasonably be considered ecosystems. They planted their seeds 20–50 years ago, and they have matured. But any of us who are starting out without a culture of technological entrepreneurship are working from a flawed and inefficient model.

“Inefficient?” I hear you gasp. “Doesn’t she know that this ‘inefficient’ model has changed the world???” Yes. But it has done so by externalizing a lot of its costs. That is to say, crashing around like a bull in a china shop and then blaming the china for being in the way and getting broken. (Not to mention complaining about it. Don’t these people understand progress?) When you start adding those costs back in, it doesn’t look so hot.

First off, let me say that if I planted a bunch of seeds and was so bad at tending them that only 1–2% gave me any yield, I would be a pretty fucking awful gardener. I would apologize to my plants, not blame them for their lacklustre performance. It is my job to make sure that the soil is properly prepared, that there is adequate water and air circulation.

And we’re not talking about seeds here, we’re talking about things that run on human life energy. So maybe we could come up with a better search strategy than funding 100 companies with a few hundred people in total and then letting them burn themselves out in some sort of caffeine-fuelled workaholic cage match.

How many good ideas are dying before they get started because they could only ever only support small or medium sized companies? Because they fill only a niche market and are going to continue to fill only a niche market, but their founders are pursuing funding instead of revenue? How many founders have been steered away from filling a niche they understand towards something they aren’t as good at, that perhaps their mentors understand instead?

(Hint: a pivot keeps one foot on the ground. If you are in a completely different problem space at the end, it was more of a complete leap sideways. Please send cat videos.)

We need a culture that honours different sizes of companies, different paces of growth, and provides services to different groups of people. We need not to kill companies for failing to hit absurd levels of growth when they might have done perfectly well as a bootstrapped company with 10 employees and 15,000 customers.

Let me go back to the plant analogy, because I’m not done with that yet. If you drive seedlings to grow too fast, with the wrong inputs, they wind up “leggy” and weak. Floppy stems, not enough leaf. They fall over, turn yellow and die. If you give a bean plant too much nitrogen, it will get nice and leafy and look great, but you won’t get beans off it. You need to know what kind of plant you’re working with, and you need a whole variety of different plants, either to get a good garden going, or to develop a complete ecosystem. You need to allow for and encourage synergies, flows of energy, and co-operation, not just competition and eating one another.

We need better measures of success than the financial equivalent of biomass accumulation. (You know what else grows really fast? Locusts.)

We Don’t All Need Exits.

The world is not made up of billionaires and losers.

We don’t all need $50M houses and hot and cold running servants. We don’t need ever-increasing levels of complex and difficult to obtain restaurant meals, or tickets in the front row to every event. We don’t all need to (can’t) be number one.

We do all need to pay our housing, food, education, and family expenses. We need a little left over so that we don’t go stark raving mad or die of stress. We all need to sleep and get some exercise. Even task runners and home cleaners and phone answerers need those things. (Yes, I’m looking at you, San Francisco.)

The last decade has been a serious gold-rush, claim-staking, wild-west moment in time, but that is inherently unsustainable, and the costs are enormous. These kinds of growth rates rapidly consume everything in sight. If we (as an industry) redirect all the energies of young companies towards unicorn competitions, none of those other problems are going to be solved. In fact, these “disruptions” tend to make the other problems worse: Till a field and kill off the mature ecosystem, and you’ve cleared the way for kudzu. Do it again and again, and you’re depleting the soil as well.

If what you want is an ecosystem, this is not the way to go about it.

Back to the businesses and the founders… each of us needs to find a niche that fits us: our skills, our interests, our passions, our problems, our experiences. We need to figure out how to solve all of the problems, not just the ones that the investors understand, and not just the ones that result in exponential growth. (Also, not just the ones that have technical solutions.) We need clean water and sustainable sources of energy. Relevant, useful, and accessible education and amusing diversions. Food and music. Bread and roses.

We need founders who are dreaming big, and founders who are happy to build small. Youthful and mature. Risky and rock-steady. Tech-wizards and compassionate healers. And, if we’re going to grow ecosystems, we need stories and roadmaps about how to do all these things successfully, not one single story which collapses all non-unicorn outcomes into the category of “Failure.”

“*” Quick rhino lesson: The one-horned rhino lives on the Indian subcontinent, and would not be hanging out with zebras and gazelles. Those are creatures that live on the African savannah with the two-horned rhinos. All types of rhinos are critically endangered, so this is a quick shout-out to rhino conservation efforts: also drastically underfunded given the scale of the problem. (Go look over there. And give them some money. I did.)