Nothing good comes out of sitting around, making educated guesses about which city has the potential of becoming the next Silicon Valley. Techstars is the living proof that with a mission-driven approach it’s possible to build lively startup hubs anywhere around the globe. Serial entrepreneur David Cohen founded the startup accelerator in 2006 in his hometown, Boulder, Colorado, with the goal of enhancing the local startup ecosystem. The city, which has a population of 100,000 people, is now home to Google, Microsoft and Twitter offices and provides the headquarters for the accelerator with over 800 portfolio companies worldwide and a collective investment of $2,500,000,000. David truly lives by Techstars’ mantra “give first” and is convinced that entrepreneurs have better chances for success with the support of the their local communities.
We caught up with David during his recent visit to Factory to chat about the recipe for successful startups, celebration of failure and Techstars’ experience in Berlin.
You’ve seen hundreds of companies starting up, failing or succeeding. What patterns do you see in successful startups?
The most important success factor lies within the team: their raw talent, desire to learn and ability to create. Building a startup means creating something from nothing. It’s basically art.
Another important aspect I focus on is the founders’ source of passion. All great entrepreneurs are passionate about what they do, but it’s important to understand why they are passionate about their project. Entrepreneurship should not come from the head, but from the heart. If you’re doing something merely for the profit, it’s probably not going to work out on the long run. Mission and purpose-driven entrepreneurs tend to perform better. The best scenario is if you’re doing that specific thing you’re doing because you’re attached to the problem that your product is destined to solve. My favorite example for this kind of passion-driven entrepreneurship comes from one of our portfolio companies, a healthcare startup called ScriptPad. The idea behind the company is to allow doctors to use iPhones or iPads instead of a piece of paper to bring up patient records and write prescriptions. The founder’s father almost died because of a misinterpreted doctor’s prescription, so his drive for starting the company was to fix that particular problem and prevent such mistakes.
What’s your favorite startup success story?
I think a prerequisite of entrepreneurial success is being bold enough to open up to change and taking advice from others. Take one of our companies, SendGrid, an email delivery and management service currently sending out around 2% of the world’s emails. Coming to Techstars, it became clear that the founders are incredibly technical people and highly respected in their field, but they had no prior business experience. However, they were amazing in bringing people in for management positions. The founding CEO has replaced himself twice with more experienced CEOs and that’s been a huge push for the company’s growth. His ego didn’t stop him, he just wanted to see his company thrive with the help of smart people who know exactly how to run a major business. Now SendGrid is an important part of the Internet’s infrastructure and it’s been amazing to watch how fast it’s grown.
At Techstars you celebrate failure just as much as you celebrate success. What’s your favorite failure story?
My favorite failure story is emblematic for Techstars’ mantra, “give first”. It’s about a company called EventVue that comes from my hometown, Boulder, Colorado. The company raised $1 million after taking part in our accelerator program, but failed fundamentally. The founders were really great people, but the market wasn’t there and they couldn’t figure out the right product. After they failed, the community in Boulder held a wake for the startup. They carried the guys to the streets, cheering: “You did a great job”, “Your next company will be successful”. The investors, who lost money, were also part of the celebration. Instead of saying “You’re a failure”, which in some places is disgraceful, the community embraced their experience and learned from it.
One of EventVue’s founders went on to become a key executive at Gnip, which was later sold to Twitter. This is the reason why Twitter now has an office in our community. Google and Microsoft have offices in Boulder because they bought local startups as well. This is amazing!
You don’t operate in Silicon Valley. Why is that?
We have a small office in the Valley, but we don’t run accelerator programs there. That doesn’t mean that we’re anti-Silicon Valley, but I’d say we’re pro everywhere else. We’re growing a global ecosystem, a network that supports entrepreneurs wherever they want to build their businesses. If the best expert in a particular field happens to live in Berlin, we should be able to leverage that. For us that means expanding more and being present in more places. Besides our US locations, we currently operate in Berlin, London, Tel Aviv and Cape Town. We’d like to see more extension throughout Europe in the next couple of years and are actively looking at cities like Stockholm, Paris or Amsterdam.
How has been your experience in Berlin so far?
When people ask me which part of Europe do I get the most excited about, I always say Berlin. I love the vibe of the city. Look at the level of activity and energy going to entrepreneurship. People want to invest in the local startup community because it’s really creative.
You’re present in London too. What’s your take on Brexit?
We work with local investors to fund the operations of our programs. My initial thought was that we might lose a few investors in the UK, but we haven’t so far. I think people were generally surprised by this decision, the stock markets went down and came back up, but it feels like it’s going take a while until we can judge the long-term implications. To be honest, I don’t expect it to have a major effect in the long run.
In fact Twilio, a company we invested in from our first venture fund, went public on the same day Brexit happened by mere coincidence. I thought “oh, what a terrible sign”, but the company is up by 300% since then.
What would be your advice to young entrepreneurs starting out?
Surround yourself with amazing people. It’s a people game, it’s all about the network that you can put yourself in the middle of. Great ideas die all the time because of lack of access and network. You have to get out of your chair once in while, spend time with people who can make introductions, find the right investors for your business and find the right organizations to do business with. Trust me, it makes a huge difference.
Techstars is my fourth company. Anything that I’ve been successful at has been a major result of being a good networker. It’s all about who you know and beyond that who you are actually getting engaged. The better you are at that, the better your chances are at building something that matters.
What’s the best way for a startup to connect with the Techstars team?
The unique thing about Techstars is that we operate around the world. We run accelerators in 15 different locations, so there’s a good chance to connect with somebody from our network at your local startup hub. To date we have 850 portfolio companies, so if you know one of them, don’t hesitate to ask for an introduction. We also run Startup Weekend in literally every corner of the world. Make sure to check out the next one in your community!