The King of Queens

 Drew Angerer/Getty Images

Drew Angerer/Getty Images

Well, it’s official. The Amazon HQ2 sweepstakes is finally over and the winner(s) are New York City, Washington, DC, and Amazon itself of course (in reverse order). I offer my congratulations to both cities—this is a BIG win for both. Kudos to Amazon too—it couldn’t have chosen two better locations. And finally, I suppose some tip of the cap is in order to Jeff Bezos—the new King of Queens.

I’m not going to rehash all of the details or offer up my own punditry on the whole thing. I will say that I was surprised to see that D.C. (or rather, Arlington, Virginia) only had to cough up a half a billion in incentives, which when compared to the Foxconn fiasco in Wisconsin, is chump change (New York paid $1.5 billion). I’m against these giveaways in general and I’m especially against them here—Amazon is

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I recently had the pleasure of meeting Nicolas Colin. I’ve been an admirer of his writing in the past, and we had a delightful conversation at one of my favorite breakfast spots in London. For those of you who don’t know, Nicolas is a co-founder of The Family, an early-stage investment firm started in Paris and now operating in London and Berlin.

He is also the author a new book Hedge: A Greater Safety Net for the Entrepreneurial Age, which I’m happy to have completed just this week.

Hedge hits three important notes for me: it is meticulously researched (527 references! 😍), very well-written, and has a point of view that stands out from the others. Nicholas has a broad intellectual range, and his mastery of many topics spanning technology, economics, politics, history, and culture is on full display throughout the book—not to mention an impressive native-like

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New Evidence on Fostering Productive Startup Communities

Last week, Endeavor Insight (the research arm of Endeavor Global) teamed up with the Bill & Melinda Gates Foundation to publish a new report on fostering productive startup communities. The report was authored by Rhett Morris and Lili Török of Endeavor, and I think it is one of the best pieces of empirical work I've ever seen on startup communities.

Why such a strong endorsement? Because it presents some much-needed, rigorous empirical evidence that supports two of the most important principles for building startup communities—networks over hierarchies and entrepreneur-lead. At present, the evidence-base is thin, due to the fact that there are no shortcuts to doing this work well—it requires painstaking, on-the-ground data collection, which is expensive and time-consuming. Thankfully, Endeavor has done the work in two cities so that we can all learn from it.

The research takes a case study approach, studying in extensive detail the startup

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Solving Canada’s startup dilemma

(with Richard Florida)

Canada, we increasingly hear, is becoming a global leader in high-tech innovation and entrepreneurship. Report after report has ranked Toronto, Waterloo and Vancouver among the world’s most up-and-coming tech hubs. Toronto placed fourth in a ranking of North American tech talent this past summer, behind only the San Francisco Bay Area, Seattle and Washington, and in 2017 its metro area added more tech jobs than those other three city-regions combined.

All of that is true, but the broader trends provide little reason for complacency. Indeed, our detailed analysis of more than 100,000 startup investments around the world paints a more sobering picture. Canada and its leading cities have seen a substantial rise in their venture capital investments. But both the country and its urban centres have lost ground to global competitors, even as the United States’ position in global start-ups has faltered.

Overall, Canada ranks Continue reading "Solving Canada’s startup dilemma"

Thoughts on the New Jersey Innovation Evergreen Fund

(with Brad Feld)

On October 1st, New Jersey Governor Philip Murphy announced a $500 million plan to increase venture capital investment in the state. The move is motivated by New Jersey’s decline (relative to other states) in venture capital investment the last decade, and his belief that an expansion of publicly-subsidized venture capital pools will help turn things around.

The plan calls for the establishment of an evergreen fund (with no fixed time horizon), whereby the state will co-invest with venture firms that put money into New Jersey startups. Half of the $500 million will come from corporations through an auction of tax credits (sold at a discount and subsidized by public funds), and the rest would come from the co-investments made by venture capital firms. The state’s portion of net returns would be reinvested into the fund for future use.

Information on the plan is still sparse and Continue reading "Thoughts on the New Jersey Innovation Evergreen Fund"

Early-Stage Valuation Multiples Are Coming Way Down. What Does it Mean?

Earlier this year, I wrote about the declining number of early-stage venture deals and in the number of startups entering the venture-backed pipeline in the United States. As I think about the overall health of American entrepreneurship, this development raises some questions. Is the early-stage decline driven by factors on the supply-side (investors) or the demand-side (startups)? Or is it both? Does it reflect an overheated market simply returning to normal, or are other factors at play? As one example, is this evidence of winner-take-all markets, whereby fewer startups get funded, but those that do raise ever more capital? Is it something else? Is it all of these things? And, should this concern us?

These are thorny issues that are really hard to answer. I've been asking some really smart people—from founders to investors to academics—what they think, and there doesn’t seem to be a straightforward explanation for the

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Platform Giants and Venture-Backed Startups

UPDATE: A quick note of clarity, since many readers are misinterpreting (ie, not fully reading) the analysis done here. The ideological nature of the topic means that people on both sides are being heated and, well, ideological. I urge people to note the Conclusions, where I talk at length about the intentional narrowness of this study and the many important questions remaining. My main objective was to call into question a report that says the major tech giants have no impact on venture capital markets, and using data to quickly demonstrate why that’s wrong. I’m making no statements about broader impacts—such as the movement of VC into adjacent areas or non-tech portions of VC, nor the impact of tech giant dominance on innovation. I note these issues clearly in the conclusion.

A friend recently pointed me to a July study by Oliver Wyman titled Assessing the Impact of Big Tech

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Can the U.S. Keep Its High-Tech Edge?

(This article originally published in the Wall Street Journal Editorial page)

(with Richard Florida)

While recent headlines have blared about the Trump administration’s multi-front trade war with Canadian dairy farmers, Chinese manufacturers and the European Union’s steel, aluminum and automotive industries, a much larger economic threat has gone virtually unnoticed. The high-tech startups that have provided the U.S. with a powerful edge in fields such as computers, software, mobile devices, biotech, the internet and an array of digital platforms now face rapidly increasing pressures from foreign competition.

This looming crisis of American innovation could undermine the nation’s long-running global advantage in bringing to market the next new technology, the next new industry, the next big thing. It may well be the gravest challenge yet to America’s century-plus hold on global economic hegemony.

For decades, the U.S. held a near monopoly on high-tech startups. From advanced aeronautics to

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Rise of the Global Startup City

Today I have a major new study out for the Center for American Entrepreneurship, called Rise of the Global Startup City: The New Map of Entrepreneurship and Venture Capital. The report is the culmination of months of work that my co-author, Richard Florida, and I have been toiling away at, and we are really happy to be sharing it today.

What’s new here? We aggregated venture deals and capital invested across more than 300 metropolitan areas that span 60 countries, tabulating levels of activity and changes over time, beginning with the period before the financial crisis (2005-07), the period just after (2010-12), and ending with the most recent period (2015-17). We also break down activity by stages: Pre-VC (angel + seed), Early-Stage VC, Later-Stage VC, and something we call Mega Deals (those above $500M).

To our knowledge, our work on the distribution and dynamics of global venture capital

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Startup Communities Revisited

Writing a book is a very hard thing. It's one of the hardest things I've done professionally. It is the nonlinearity of the process that makes it so difficult and the sheer perseverance that's required. It's remarkable to see how different the content is today compared with where it was on day one.

Part of the process means writing a lot of words that no one will ever see. I have written literally tens of thousands of words—several complete chapters even—that will never see the light of day. I was going through one of those today and decided I will publish it here. It is a brief summary of Brad's book Startup Communities: Building an Entrepreneurial Ecosystem in Your City, meant to be a refresher for those familiar with the material and to quickly get newcomers up to speed. I also added layers of my own context, data Continue reading "Startup Communities Revisited"

Startups Move to The Bay Area for Good Reason, but That Advantage May Be Waning

We've heard it in startup communities everywhere—while it's become increasingly likely for high-potential companies to get started most anywhere, the best ones often leave for Silicon Valley. One of the most commonly-cited reasons is that Valley investors require companies to move. That may be true, but perhaps it's for a much bigger reason—because doing so is beneficial for these companies. But, what do the data say?

Jorge Guzman of Columbia University attempted to answer this question in a research paper published in May: Go West Young Firm: The Value of Entrepreneurial Migration for Startups and Their Founders. He analyzed migration patterns of high-potential companies across the United States and honed-in on those moving to the Bay Area in particular. To make the process more manageable, he looked only at companies incorporated in Delaware—though representing about 4 percent of all firms, they account for half of all publicly listed businesses, over

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The Follow-On Funnel

Two weeks ago, I published a study for the Center for American Entrepreneurship titled America's Rising Startup Communities. The study looked at the growth and geography of venture capital first financings across U.S. metropolitan areas between 2009 and 2017. Rather than rehash all of the findings here, I encourage readers to take a look at it before reading on. Go ahead, I'll wait. Or, if you want a shortcut, here's a Twitter thread I posted that will catch you up to speed quickly.

One of the biggest questions that's come out of that work is: "what's happening beyond first financings?" That's a good question, because after

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The New York Yankees and Startup Communities

Startup communities are examples of complex adaptive systems. This means many things for understanding and influencing their behavior, but today I want to focus on two concepts: non-linearity (the sum is greater than the parts) and synergistic integration (interaction between the parts matters a lot). To make my point, I’ll draw on an example from my favorite sport.

The New York Yankees won four World Series titles in five seasons between 1996 and 2000, following a drought of 18 years. With this newfound success came a big television deal, a higher revenue stream, and much more money on the field. After winning four championships with the team they had, the Yankees tried to buy additional titles through a collection of All-Stars.

The result? No World Series titles and a steadily declining regular season winning percentage during the next eight seasons. What happened?


The demise of the 2000’s Yankees can be Continue reading "The New York Yankees and Startup Communities"

The North Star

In the last couple of weeks, the subject of Canada as a rising startup and tech hub has been seemingly everywhere in my news feed:

Introverts and Networking

I'm somewhat of an introvert. I didn't know that for a very long time. It surprises most people I know when I say that because they find me to be engaging and social. But, introverts are not necessarily anti-social. Rather, introverts are energized by solitude and drained by crowds. Extroverts are the opposite. I'm at my best in small groups—anything above six to ten or so brings out the introvert in me. This is less true in social settings; more so in professional ones.

Last week I was at a conference—the type of environment my introverted self really likes to come out. It was an excellent conference and the people I met are amazing. But, big conferences can wear me down, and the productivity guilt and self-doubt associated with not wanting to be a power networker starts to creep in.

I'm not a power networker and I'm ready to own that. Continue reading "Introverts and Networking"

The More of Everything Problem

We expect too much of new buildings, and too little of ourselves.
— Jane Jacobs, The Death and Life of Great American Cities

Last week, the European Investment Fund—the small business investment arm of the European Union—announced a new $2.6 billion fund-of-funds to support venture capital deployment in the continent. The EIF is already the most active LP in European venture funds by a long shot. Two additional leading European LPs are also government-backed—the British Business Bank and the European Regional Development Fund.

That got me to thinking: is this the best way to stimulate startup activity in the EU? Is a lack of venture capital the biggest constraint facing European startups right now? If so, is this the right way to go about it? How else could that money have been used? What is the opportunity cost?

This move may be a perfectly good one. Continue reading "The More of Everything Problem"

Where the really big venture deals are

I'm currently doing some research that will detail global venture capital flows. My co-author and I are observing some very large deals in the last few years that skew the overall numbers. These deals are emanating from two places—China and the United States. Interestingly, a relatively small number of companies seem to be driving overall venture capital investment in China, whereas the same is not true of the US.

I thought it was worth sharing some of that information here.

To do that, I'll first demonstrate information on the 50 largest venture capital deals globally for each year between 2007 and 2017. The first chart here, shows the increasing average size of the largest deals.


The average size among the 50 largest venture capital deals globally was $109 million in 2007. It steadily increased until 2013, when things really took off—average deal sizes among the Top 50 in 2016 and

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The Nobel Prize in Startup Communities

As many of you know, I’m currently working with Brad Feld on a sequel to his 2012 paradigm-shifting book Startup Communities: Building an Entrepreneurial Ecosystem in Your City. Last week, I wrote about behavior and mindset in a startup community, and think one of the points we’re making—about cooperation and playing positive sum games—is worth sharing here.

Not only do cooperative strategies in startup communities make intuitive sense, but there is also a fair amount of supporting evidence. In fact, a Nobel Prize was awarded for ideas that support the central thesis behind startup communities.

Elinor Ostrom, an American political economist, was awarded the 2009 Nobel Prize in Economic Sciences for her work on cooperation and collective action. She challenged the notion that in the absence of a central governing authority, shared resources will be under-developed and over-utilized. Conventional thinking at the time was that our selfish human nature Continue reading "The Nobel Prize in Startup Communities"

Silicon Valley is Not Over

A New York Times article published yesterday declares that “Silicon Valley is Over.” It does so by citing a few anecdotes of Silicon Valley investors fantasizing of living in “cute” Midwest cities with more reasonable house prices, and a several-month trend of more people leaving the Bay Area than moving in.

This follows a recent Wired article declaring that “Everyone Hates Silicon Valley,” in which the author tries to make the case that people everywhere are focused on how terrible Silicon Valley culture has become and are using that to contrast with their own tech and startup communities.

While this does make for attention-grabbing journalism, I worry that it sets unrealistic expectations in other parts of the country. Silicon Valley is not over—not even close. And when you suggest that it is, you are implying that a Silicon Valley downfall will be a big win for Continue reading "Silicon Valley is Not Over"

Will Generation Z save our country and the economy?

I have been impressed by the students of Stoneman Douglas High School in Parkland, Florida, who in the wake of tragedy, are elevating the discussion on the embarrassment that is our national gun policy. On the one hand, I am proud of them for stepping up and filling this void in leadership. On the other hand, I'm sad that our public officials are saddling children with yet another burden to carry. This is a remarkable group of young people, and it's thrilling to see it unfold.

In this morning's Axios AM newsletter, which I read everyday, there is a summary of an interesting exchange between David Brooks of the New York Times, and Mike Allen and Jim VandeHei of Axios on the subject of Generation Z (generally, the group of people born between the late-1990s and as late as five years ago). It gave me hope about where this generation Continue reading "Will Generation Z save our country and the economy?"