Startup Moldova Keynote – Building Your Startup Community

By: Dave Parker Uncategorized Comments: No Comments

The following is my script for the Startup Moldova Event in Chisinau, March 14, 2024.

Hi everyone, so great to be here. First, let me fill in a little background on why you should even bother listening to me in the first place…

I’m a 5X Founder who has sold three companies, and closed two, one was a gigantic crater. And 3X VC with just around 200 early-stage investments. I wrote a book called Trajectory: Startup–Ideation to Product/Market Fit in 2021 after leaving Startup Weekend as COO and SVP of Programs. In my last 12 months there, we did 1265 events in 120 Countries and 460 cities with over 72,000 attendees, including here in Chisinau. We sold Startup Weekend to Techstars in 2015.

I’ve been fortunate to visit 46 countries total, 22 for startups and this is my second trip to Moldova, thanks for having me back! In the last three years, since the book has been published, I’ve trained over 1,000 early-stage startup founders.

In MENA alone, I’ve worked with nearly 600 founders in Jordan, Bahrain, Cairo, Abu Dhabi, and Saudi through Flat6 Labs.
And I’ve worked nearly all of the large accelerator programs with the exception of YC.

The one challenge of all of these markets is that none of them are “Silicon Valley.” In fact, there’s nothing like the valley anywhere in the world. I worked there for three years as an Entrepreneur in Residence for Mitsui & Company’s $250M Venture capital’s fund, Mitsui is the third largest company in Japan with nearly $200B in revenue.

That’s one of the challenges, we all compare ourselves to the valley – but they started in the 1970s. And Moldova, Tunisia, and Seattle didn’t!

So, what can we learn from the early days of Silicon Valley and other healthy ecosystems? Here’s the list of the five factors to a Successful Startup Ecosystem – this was data from Google for Startups written into a white paper by the Startup Weekend team.

Talent, that’s you and the developers in this nearby markets that have the skills (or can learn the skills) to round out your team. The good news is that talent is more mobile than ever and even if you can’t find the marketing leader for your product locally, you can likely find them through a staff augmentation company or a services like Fiverr.
1. Why do CS grads matter? For every engineer hired at a startup there are three support staff hired as companies mature. And in the broader market, that grows to 7:1 over time.

Density – often this is a place or series of places, coworking hub or university location with a cluster of startups. There’s comradery and encouragement being in proximity. Working in isolation isn’t good – non-competitive relationships are important to grow a community over time. Your coffee culture here is a match for Seattle, so we have that in common!

Culture – one thing about the valley… if you haven’t failed yet, you haven’t tried. But the farther you get away from the West Coast, the more difficult it is culturally to “accept failure” as a part of taking the risk of starting a new business, especially if you’re building a new tech firm and a product that has never been done before. Failures will happen.

Capital access – this is a challenge in nearly every market in the world.
- Angel investors are few and far between. They aren’t used to leading rounds of funding, so you will need to simplify the investment documents to make it easy for them to invest.
- Venture investors – again, we never have enough in the market to make this an easy process – but capital, like talent are more mobile than ever.
  - Keep in mind, you’ll need traction and some proof before you get capital. I’d encourage you to build out your growth plan that’s not dependent on capital – here’s what I mean:
    - Build out the plan based on what you know. Bootstrap, go find customer revenue. Traction is an important proof point for emerging markets.
Regulatory Environment – this one might be a little touchy, but here goes. This isn’t a comparison to the US by the way. The regulatory/government need to support the startup community
- Take friction out of the process – paper isn’t required
- Be bold in some of these changes and startups will move where it’s easier to do business
- If you want any feedback on policy issues, feel free to ask, I’ve seen a lot of them

So, what’s changed since we wrote the original report?

People and capital are more portable than ever, thanks to a pandemic!
Teams don’t require an office and the cost of launching a new startup
Cloud services has dropped by 80 or 90% compared to buying your own servers. This means ideas that could never have been profitable before can get to market today and make money.

Keep in mind I’m talking about high growth startups – vs. local businesses – they disproportionality create jobs, wherever they are. But they aren’t small or neighborhood businesses. That’s not a statement of “good or bad” a local business that hires friends and family members can still be a great business, but it’s not going to create a unicorn startup.

The average startup investment is 7-10 years before an exit or meaningful return. So if we invest in you, we’ll be with you a long time.

A quick side bar here: What is Product/Market Fit – I wrote a book about it, but let me define PMF for you.

Traffic – by itself this can be a vanity metric. Increasing traffic by month.
Leads – your call to action needs to convert traffic to leads.
Customer Count – if you’re pre-product, this one will take a while, but customer count should trend up with improving conversion metrics over time
Annual Contract Value (ACV) or increasing revenue – specifically true when your product gets better and you can increase pricing
Time to Close – decreasing overtime – on the consumer side, transaction volume should increase in speed. For enterprise, it’s the time from proposal to closing.

PMF isn’t a mystery, it’s just math. When these come together it’s the “miracle of compound interest”

Let’s talk community

As you build the Startup Community, remember it isn’t owned by anyone… but it is an interesting family, with some crazy uncles thrown in. Most of us as founders are slightly dilutional, or we wouldn’t even attempt to build a company where 90+% fail. And just <5% of this audience is completely dilutional (and won’t listen to anyone), you may have a picture of someone in your head at this moment.

<PAUSE>

Here are some of the groups within the ecosystem:

The Builders, thanks Olga and team, will be creating and promoting events, like this one. Some will be great, some won’t be. Some may even grow tired over time. It’s about making connections, stick with it, don’t be a critic, choose to take away some learning from every event that will help your business grow.
Sponsors and Services provider firms that are here to support the startups – without sponsors, there won’t be free pizza at an event – Thanks to our sponsors! They invest early, and way before most founders will make them any money.
Then there’s the “hangers on” the people that are trying to make money off the founders. Watch out for these people… if they offer a short cut, run away. They never contribute to the community they just take from the community. In a blog post several years ago I called them leaches… I still feel that way, though I’ve moderated my language somewhat.
Wannapreneurs – people that think running a startup will be fun, but never get out of their head with their one perfect idea!
The Founders, you. The people with both the ideas as well as the motivation to take the leap and execute on the ideas. You sit at the core of the ecosystem.
- Create great customer value.
- Build a great business – that cash flows or you can exit
- Then focus on giving back to the community – you can support the community while you build the company, just like the upcoming panelists

What’ the difference between supporting and building a community?

As you build your startup, you’re going to be and should be completely committed to getting to Product/Market Fit. If you don’t, you’ll have a non-profit. Focus on that milestone first. Be part of the community, support what’s going on and don’t live in isolation!
Community builders (before their first startup) are usually helping to support the community with events and programs. They usually migrate over time to Startup Founders, co-founders, or early employees.
Champions are those that come back to a community after exit and support via mentorship, investment and time.

I don’t want you to burn yourself out trying to both build your startup and community at the same time!

Building a community is a long game. We’re talking decades, not years. Five years ago, we started a post-accelartor program in Seattle called the WTIA Cohort Program. The WTIA is the Washington Technology Industry Association. I asked the CEO, Michael Schutzler and the team to sponsors our efforts.

By the way, I met Michael 25 years ago on a plane coming back from Silicon Valley where we were both pitching our startups to valley VCs– just to reinforce the point earlier on the funding challenges in every market. I didn’t get any funding from the Valley, and neither did he. I found some of my funding in New York, a five our flight away from home.

That long game was reinforced recently when Techstars announced they were closing the Seattle program down after 12 years. Why, you may ask? They are concentrating their efforts on markets with more active venture capital. I understand the business decision, however, their original team had a #GiveFirst ethos and cared about the community – it’s why they purchased Startup Weekend in 2015. That ethos is now packed away in moving boxes.

When we proposed this new program, I asked that we look at the success over the next 10 years, but not before. Our primary objectives were two fold:

Help the founders navigate the ecosystem in six months not 18 months. For many startups this is the difference between success and failure. The six months of programming helps them be recognized as “Venture Ready” and introduces them to investors, service providers and others in the community.

Which gets us to the second objective, we wanted to create our own “paypal mafia.” If you’re not familiar with the PayPal Mafia reference, it goes back to Peter Theil, Elon Musk, and Reed Hoffman (LinkedIn), and Sara Imbach the one woman on the team. At the time where they all worked together at PayPal. Because they knew each other and as they spun up new startups they co-invested in each other. That now applies to a growing list of alumni from Uber, AirBnB and others … That’s what makes the Valley so compelling, the fly wheel effect of founders reinvesting.

But the investments happened because of the relationship. We’re trying to manufacture that relationship through the cohort, though we know it will take over a decade. Without the relationship and community connections, founders will just buy a house somewhere else and take their cash with them!

Let’s face it, if you don’t feel connected to the community or don’t see where the community contributed to you company, you’ll not likely to stay and give back. That’s why we have brain drain.

We’re now five years in and served over 250 founders (without cost or equity) who have raised over $300M.

I’m feeling good about the trajectory over the first five years – Looking forward to the next five. It’s a community program you could replicate. Did I mention, it’s free to the founders (they don’t have any $$ yet anyway).

Your values aren’t just something that you put on your website. It’s what you live every day. For me, I believe:

Entrepreneurship can change the world and create opportunities where none have ever existed. The idea always comes before the change – you are the one with the idea, you are the one that can make the change! Geography is secondary to you.
Empowering founders to be bold, take (measured) risks, and remember that every idea is crazy, the moment before it’s not!
Meritocracies are great for the people in power – we need to extend our reach to bring people with us – across genders, races, and all borders – not just physical borders
Never stop learning, have a growth mindset – if you’re not curious, you’re done. In the words of Ted Lasso, be curious, not judgemental!
It’s about community – no one succeeds on their own. You have a team, you have a community. Be the type of person that changes the world for the people you meet!

To close, at my home in Seattle, I’m fortunate to live in a neighborhood that is surrounded by ~140 Hectares of sustainable forest land. When I get home, my community will be replanting an area of trees from a recent harvest. These trees are at peak harvest in 70-80 years. That’s 10x the average time it takes a startup to get to an exit! Building a community today, doesn’t mean you’ll see the results this quarter, or this year. Those trees we are planting will be harvested long after I’m gone.

You need to plant with a long-term view – thank you for letting me be part of your Entrepreneur Journey!

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