The biggest takeaways from the Kauffman Foundation's visit to Pittsburgh

A few weeks ago, FortyX80 welcomed Yas Motoyama, Director of Research and Policy for the Ewing Marion Kauffman Foundation to discuss Pittsburgh’s 40th out of 40 rating for Startup Activity– and most importantly, the next steps we can take to improve it. The standing room-only crowd of leaders, changemakers, supporters, and entrepreneurs represented those who drive and support tech innovation in local firms, organizations, accelerators and incubators, government offices, and universities.

Yas Motoyama from the Kauffman Foundation answers questions from Allegheny County Executive Rich Fitzgerald.

If there was a singular theme to the talk, it was that an entrepreneur does not become successful on his or her own, with most entrepreneurial support coming from the local level. Strong local entrepreneurial ecosystems are necessities of building a strong global ecosystem. Motoyama began his research-backed presentation by echoing the view we’ve been standing behind all along– it’s not important why we’re at the bottom, but it is crucial that we acknowledge how to change it.

Here are the most important takeaways that Pittsburgh can act on to strengthen our entrepreneurial ecosystem. You can also access Motoyama’s slides here [pdf].

Discover what the local system is actually like

We may think we know the strengths and weaknesses of Pittsburgh, but do we have the entire, complex picture in place? Do we include entrepreneurs who don’t fit the typical mold? Are we judging our ecosystem with a critical eye compared not only to past versions of ourselves, but the benchmark of aspirational cities like Denver and Austin? Pittsburgh’s assets can certainly match or exceed those in these cities.

Taking a fact based view of what the Pittsburgh system is actually like is the important first step in improving it. A list of guided questions from Motoyama include:

  • Where do entrepreneurs in Pittsburgh go and meet?

    • Ask this instead of what is currently lacking in the ecosystem.

  • What kind of entrepreneurs are they?

    • What industry are they in? What’s their gender? Ethnicity? What stage company are they?

  • What kind of connectivity do support groups provide?

    • Do support groups help link the stages together?

  • Is there support for scaling up?

    • Is there a network of peers, mentors, and supporters?

Encourage interconnectivity between stages

Motoyama said that generally speaking, support within each individual entrepreneurial stage (he defined four– inspiration, startups, scale-growth, and large companies) is far more present than help to successfully shepherd entrepreneurs and companies in between each stage.

In Pittsburgh, for example, for the inspiration stage, there’s Startup Weekend; at the startup stage, accelerators like AlphaLab exist. But what exists to help lead startups between stages?

What happens after a Startup Weekend or Demo Day? Who and where is that support? Who is there to foster the cultivation of ideas and facilitate connections? Do you know how to scale and, when you’re ready to scale, do you know how to do it smartly?

Motoyama also warned of incubators likely prolonging the death of sinking companies. It’s important to note that he did distinguish incubators from accelerators, with the latter having a competitive application process and pre-seed investment in return for equity. Incubators  typically cannot offer more than co-working space and sparse support.

Accelerators, on the other hand, can help create a cohort of entrepreneurs and connect them with mentors and experts. As the alumni network grows, the support from like-minded entrepreneurs who’ve been through the process can further bridge the gap between stages.

Foster an accessible network of experienced support

In order for Pittsburgh to be successful, we need the transfer of various types of knowledge and applied learning that comes from the real world and personal connections– not just the technical and business building aspects that many experience via traditional education. Easily accessible pipeline programs and resources are needed that encourage lifelong connections between entrepreneurs of all stages and experienced mentors and organizations. Motoyama emphasized that this goes beyond simple networking and cocktail parties–  to help jumpstart the entrepreneurship of a region, you need seasoned entrepreneurs willing to mentor others and catalytic events focused on action.

He also said one of the biggest struggles in any city is figuring out how to get large anchor companies to interact with startups in a mutually beneficial way. Blind partnerships may end up hindering both the startup itself and the local community, with unfavorable acquihire situations disrupting the flow of talent in a region. Getting large companies involved in the startup ecosystem depends on their culture and strategy, but their experience could be invaluable.

Be patient with the culture of the region

The biggest challenge entrepreneurs in places like Pittsburgh face is the lack of investment capital, but Motoyama says this becomes a catch-22 when startups flee to Silicon Valley. Smaller-city entrepreneurs will leave because they don’t know many other colleagues who are leading startups or any investors, and any money available isn’t from accomplished VCs.

But then investors and other startups won’t see many startups in these smaller cities, so they assume there’s no prospects and a weak community, and they’ll also head to places like the Bay Area, Austin, NYC, or Boston. It takes time to create an environment and culture that encourages entrepreneurship, and while things may not be as black and white as the example above, the Pittsburgh community is well aware of the talent leak, as well as the gap in experienced C-level executives in our region.

Another point to consider is our focus on educating and opening doors for future generations of innovators. It’s been said that kids in the Bay Area go to bed at night dreaming of being the next Mark Zuckerberg– they’re bit by the tech bug early and often. What do kids in Pittsburgh go to sleep dreaming about? How can we further youth entrepreneurship in our region to foster a new generation of entrepreneurs?

 

Local entrepreneurs need to see the success of their contemporaries, and those successes need to be celebrated by the community. By not only supporting the efforts of each entrepreneur’s journey (and keeping a mind towards inclusion), but connecting them with successful organizations and mentors, we can help improve Pittsburgh’s entrepreneurial landscape.

So what do you think of Motoyama's feedback? How do we implement these suggestions?