Johnson Cook

Atlanta tech investor. Entrepreneur.

Johnson Cook - Atlanta tech investor. Entrepreneur.

Stages of Entrepreneurship and Swinging for the Fences

 

Chipper Swining for the FenceAfter SxSW this year a blog post emerged from Austin’s Brett Hurt entitled “The State of Tech Entrepreneurship in Austin.”  I recommend all those in and around tech entrepreneurs to read this post. It’s not just about Austin. It’s about the stages of entrepreneurship, what it means to truly swing for the fences, and the challenges that many cities face (not just Austin) in growing this attitude.

Here are some of quick notes from the post.

  • The best way to bring the Valley mentality to your city is to send your best and brightest to the Valley. It’s an attitude and a way of doing things that can only be learned by being there. These folks will bring it back to your city.
  • There are stages of entrepreneurial businesses:
    • First stage – consulting or services. The most obvious, the easiest to launch. Limited potential to create economic impact on a large scale. Most first stage businesses in Austin (and Atlanta) are 20 people or less.
    • Second stage – a product based business, almost always investor backed. “Second stage businesses are far more valuable than first-stage businesses under almost any scenario. And if you care about creating a lot of jobs and economic ripples as an entrepreneur, you should focus on thinking bigger than the most obvious business opportunity in front of you…”
    • Third stage – a product-based business that has returned it’s investor capital and then some and is in a long-term phase of Growth. In Austin, Dell and Whole Foods are examples of third-stage entrepreneurial companies.  “These entrepreneurs represent the top of Maslow’s hierarchy of needs – self-actualization – and numerous books are written about them.”
  • Hurt is convinced Austin is stuck in a first-stage entrepreneurial mentality. He shares the story of an entrepreneur who pitched him his plan to fund his product company with his successful consulting/services company.  He points out that none of the great product companies that impress us today were started with funds from a services business.   (In Atlanta, however, I have to point out that Mailchimp is exactly that– a great product that came from a few guys who were funding it with their consulting services.)
  • On going for a second stage product based company:   You have more energy in your 30’s than you will in your 40’s… and if you are this age, now is the time to “park” your first-stage ambitions for lifestyle and personal cash-flow  and swing for the fences.   If you miss the window to change gears, you will enter the vicious cycle where you need to sell more consulting business to fund your growing need to pivot to a product business and that will make you even more defocused.

I encourage everyone to read the post by Brett and ponder what this means for your city:

http://lucky7.io/post/the-state-of-tech-entrepreneurship-in-austin

 

 

  • pfreet says:

    What Atlanta needs is a massive accidental success. Like that photo-sharing app with a sephia filter that sold for billion dollars.

    April 18, 2013 at 11:58 am
  • Frank Moyer says:

    Thanks for the great post, Johnson. As we all build the Atlanta startup community, the other critical side to this coin is the investor side. Our investors must encourage our entrepreneurs to swing for the fences. Help make it a home run and don’t just focus on getting to first.

    April 18, 2013 at 1:55 pm
  • Roland Mokuolu says:

    Really insightful post.

    April 18, 2013 at 4:36 pm

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