Sustaining Start-Ups: How the Local Business Structure Impacts Growing Companies

February 14, 2009

Here are some thoughts on the Nobody Told Me posting on Lance’s Force of Good Blog (that Lance posted regarding Mike Schinkel’s Startup Atlanta #OnStage event).

I believe that the best part of all of this is the number of conversations that have started and continued (see Scott posting on The Answer is Blowing in the Wind).  Some may say/think that all of this chatter is keeping us from getting ‘real work’ done, but I would not agree.

Whether you’re a Fortune 1000 company or a couple of guys in a garage, or basement or down at Ignition Alley – the business of business is relationships. Those relationships do not happen in a vacuum. They happen when like minded people meet, dialog, and connect (find a common interest or purpose).

With the exception of a few people, groups and organizations, I have found that Atlanta’s technology and startup communities are not very well connected – not as well connected as they could/should be.  And I am not alone in that opinion.
Last year Dan Breznitz presented the results of his study the ‘communal roots of entrepreneurial-technological growth’.  The study showed that the leaders (board members and C-level/SPV exces) of the Atlanta’s technology companies are not well connected.  The leaders had few, if any, significant business, personal, fraternal relationships with leaders in other organizations.  And this included local ‘technology’ law firms/lawyers and venture/angle capital firms.
The key premise of the study/presentation (and much of the questions and discussions) was that ‘unless a local high-technology industry develops rich multiple, locally centered social networks (which embed companies in the region) [technology] cluster development will stagnate’.  Furthermore, those factors are more important to the development and growth of technology clusters than ‘factor availability’ such as the supply of highly educated labor, availability of capital, infrastructures and environment.
You may not completely agree with the conclusions of Dan’s work, but his premise and argumentation were compelling.

I do agree with the observations that have been made by Lance, Paul and others that we need to focus on “things like creating products, getting customers, and building companies” and on “the nuts and bolts of building startups”.
However, when we have our sleeves rolled up, our heads down and are burning the midnight oil we need to bear in mind that the success of our endeavors depends as much on the wise cultivation and utilization of our personal and business relationship as it does on our own creativity, ingenuity and industriousness.