West vs Midwest Round II

PREAMBLE

Last week, I was on a panel at The Combine – 2010 called Go West: Former Midwesterners that have moved to the Silicon Valley share their stories. I was one of four people discussing our personal stories and it set off a firestorm on Twitter and went Cat 4 when Doug Karr posted his reactions when he recapped the Combine 2010 here.

All these feelings were entirely justified given the shallow nature of the format, which is ripe for cheeky sound-bites, but insufficient for really shedding light on something that deserves more than 10 minutes of casual chatting per person.  Doug Karr has been super gracious in giving me the opportunity to dive into this discussion to give my perspective – not about what went down at the Combine – but to re-frame it from a debate between West vs Midwest (with me in the role of Drago) to one that provides more depth around entrepreneurship here in San Francisco and in the Midwest (in my case Bloomington, IN).

I think there are lessons, based on legitimate criticisms, that can provide opportunities in this for all of us regardless of what side we’re on.  After-all, isn’t this one of the key pillars of entrepreneurship?

Shared Experiences Shape Our Community and Culture

Community out West and in the Midwest are both equally important in both locations, but there is an apples to oranges comparison when it comes to the dynamics of their make-up.  My story fits in with many out here: the move out West is an active metaphor that has a rich and intense history in the development of our country.  Unlike Lewis and Clark, no one today is paddling upstream, fighting grizzly bears and negotiating passage with warring Indians Native Americans, but like them, we all share a similar sense of encounter – encounters with people, landscapes and with our own self and limitations as we took risks leaving our comforts of home and moved West.  Not many of us are from here, but we build our community off of these common experiences beyond those of traditions such as language, socio-economic class, color and hating Kanye West.

In the Midwest, community is one of strongest and most enviable traits of any culture in the world.  People in the Midwest value having each other’s back, being overly hospitable (unless you’re at an Ohio St – Mich football game), and always getting the job done with as little fanfare as possible (If Indiana University ever puts names on the backs of their jerseys, I wouldn’t be surprised if Bloomington turns into a pile of smoldering limestone).  This sense of community is so powerful, it would be an act of insanity to leave it all behind to move to a place where you can pay $1,700-a-month to live in a shoebox on top of an active fault-line.

So, both communities have very strong bonds, but the values and experiences that create those bonds produce some advantages and disadvantages in entrepreneurship.  In the short-term, Indiana is currently at a disadvantage.

Risk and Reward

In the highly underrated My Name is Nobody, the protagonist “Nobody” (played by Terrance Hill) takes a couple bullets through his cowboy hat from Legendary gunslinger Jack Beauregard (played by Henry Fonda), to prove to his cred to him.   The dialog they exchange brilliant:

• Jack: Tell me, what’s your game?
• Nobody: When I was a kid, I used to pretend I was Jack Beauregard.
• Jack: …and now that you’re all growed up?
• Nobody: I’m more cautious.  But sometimes running a little risk, can bring rewards, ya know.
• Jack: If the risk is little, the reward is little.

The biggest difference that I point to in the cultures between the West and the Midwest lie squarely in this axiom.  In the last 2 years of getting involved in the web and tech communities in Indy and Bloomington, I can say with certainty, this is the singular biggest issue Indiana has in becoming the next Boulder or the next Silicon Valley.  This does not mean that no one is taking risks, or that there aren’t any meaningful developments happening in Indiana.  But, what it does mean, is that one key component of building a successful tech community hasn’t quite bought into the big risk concept yet.

The crucial position in any tech business is a technical co-founder or lead developer (duh).  The demand for these types of people far outweighs their supply, and this is true in San Francisco as well.  The main difference in Indiana, is that a disporportionate number of people with the technical skills to build a web product have responded to this supply and demand inequality by setting up “dev shops” that “outsource” technical development.  This requires non-technical entrepreneurs to dole out all their hard earned capital they’ve raised and/or equity to pay someone who doesn’t have skin in the game.  I’ve spoken with numerous developers from Indy and Bloomington who were making amazing salaries who also think they are entrepreneurs because they solve start-up problems.  But they really aren’t.  You aren’t an entrepreneur until you give up your cushion, throw your hat in with everyone else and sacrifice until you’ve created something that creates value and makes money.  If you file a W-2 every year, you aren’t an entrepreneur.

Douglas Karr and many others have done an amazing job at establishing Indy as a Marketing Tech hotspot.  That is awesome.  However, other founders that are looking to build the next Facebook/Google/etc, need some serious engineering talent.  It is here, but it isn’t being allocated properly and the incentives are not aligned.  I know numerous non-technical entrepreneurs in Indiana that desperately need dev talent and can’t get it unless they pay cash or give up equity that won’t stay in the tent once it is issued.  So, Indiana is still losing these extremely talented entrepreneurs to San Francisco and the Valley because that conundrum just doesn’t exist in disproportionate numbers out here.  I’m not saying that you “can’t succeed unless you move West.”  What I am saying is that it has been way too difficult for non-technical founders to find technical co-founders they need to compete with start-ups and companies out West that don’t have the same issue.

Good news for Indiana, though.  Things are starting to move, slowly, and I don’t think that this is going to be a problem in the long-run.  How long?  I don’t know, but if I were an entrepreneur in Indiana who doesn’t want to move West, I’d be beating this horse until it is reduced to a pile of molecules.