Since moving to Las Vegas, I haven’t tried to network into the Las Vegas entrepreneurial network at all. I have done a small amount on the edges but frankly have been so busy with other things I haven’t had the time.
Believe it or not, there are some efforts going on in Vegas. UNLV has an entrepreneurial program and Leith Martin has done a good job of trying to network people, and educate students. John Laub has a medical startup and I went to one of their meetings. Some people there wanted to see things happen, and a person who is now Nevada’s Lt. Governor, Stavros Anthony, was there in person. He’s a great guy and obviously wants to see something happen. Milwaukie’s Gener8tor got some government money from the prior administration and opened a program here.
A few weekends ago on a chance meeting, I met Andy Abramson. He moved here from San Diego. We happened to be dining in the same restaurant and the waiter made an introduction! He’s speaking Friday to a group of people trying to build an entrepreneurial ecosystem and I am going to attend to listen to what he has to say. If you aren’t able to participate in person and are curious about the Nevada startup community, you can attend via Zoom.
As a person that helped build the Chicago ecosystem, and frankly, without Hyde Park Angels being founded in April of 2007 it would have been a lot harder to get the dominoes to fall there, I have learned a lot about what it takes to get one to go.
It’s a primordial soup of things. I disagree a bit with Brad Feld who has written extensively on Startup Communities. Brad thinks they are entrepreneur-led. I agree with him somewhat. But, there have to be some other fundamental pieces in place for entrepreneurs to lead.
It goes without saying that a great startup community is an open network. It doesn’t care who you are, or where you came from. It doesn’t matter who you know but it does matter what you can do. Great startup communities are merit-based, not equity-based. When you look at a place like New York City, it historically has been that way. So has the Bay Area. That might be changing today, but so far people tell me it hasn’t.
By the way, despite the terrible public policy in places like NYC and SF, the startup community thrives. Places like Austin, and Miami, are up and coming but they still pale to NYC and SF. Will they rival them? Only time will tell.
There are public policy things that help build a startup community but usually, the more the government stays out of things the better off the community is. Governments need to ensure there are good roads, school choices with great schools, and active police departments that ensure public safety.
The first thing you need to build a startup community is risk capital. This is where I differ from people like Brad Feld. Money is key and access to it is imperative. Without seed-stage risk capital that is easily accessible entrepreneurs can’t get funding for their ideas. To be clear, it’s not just “money”. There is plenty of money in many cities in the United States. However, that money often seeks safe havens, and not very risky startup investments. In many cities, capital chases risk in the form of private equity investments, or commercial real estate investments. The profile of those kinds of investments is very different, almost antithetical, from startup investments.
The second thing a startup community needs is experienced mentors. People who have been through the war before. These can be exited entrepreneurs, but they can also be knowledgeable investors. Exited entrepreneurs offer a different perspective since they have been through the wars of leading teams through the valley of death. Investors offer a different more objective perspective in many areas. Ironically, Tom Churchwell told me that the best VC firms are 60% entrepreneurs/40% investors.
One of the great things that many accelerator efforts in Chicago did was organize mentors. Troy Henikoff and Sam Yagan did the bulk of that via their accelerator that became a piece of Techstars but so did the Coleman Center at Depaul, Polsky Center at UChicago, and the entrepreneurial efforts at Northwestern University. When 1871 started it put mentorship at the top of its list.
The third thing a startup community needs is what you might term a “private safety net”. In Silicon Valley, they call that a parking lot. If your startup fails, you can go into the parking lot and find a new job. Chicago didn’t have that when we started HPA. It’s starting to have that now. Another piece of the startup safety net is a robust enough local corporate community that will hire from failed startups and be okay with people rotating in and out of the company.
Some firms in Chicago were open to hiring startup people that were exiting failed startups. Others were not. Chicago was helped because while the local economy is a financial exchange/trading dominant and led, it is very diverse. Las Vegas’s economy is not as diverse. It’s built on entertainment. Warehousing is moving in. Of course, that could change if Las Vegas is successful at bringing in diversified businesses to build here.
This brings me to the fourth point. The local startup community often needs ready customers outside its backdoor to sell to. The local corporate community can be that customer. One thing I found when learning about the San Francisco/Silicon Valley corporate communities compared to Chicago’s was that local companies were less risk averse in the Bay Area and more likely to try what a startup was selling.
I do not know what Las Vegas is like with regard to any of those points. There is a lot of money in Las Vegas but it doesn’t seem organized to fund startups. It’s heavy into commercial real estate for obvious reasons. The funny thing is the outside impression of Las Vegas is that it is some gambling risky culture but when it comes to money, it’s actually pretty conservative in my experience. CRE is considered a safe investment.
Money that comes to Vegas is often made somewhere else. The capital isn’t in “risk on” mode, but in “capital preservation and growth” mode. That’s a big difference in focus.
There might be mentors in Las Vegas that are retired here. a16z founders Ben Horowitz and Marc Andreessen have homes here and a16z is virtual now but they have made it clear their footprint is still in the Bay Area. Other VCs are here as well. Leith has done yeoman’s work trying to organize mentorship, but it’s hard when you are a one-man operation.
There is potential for Vegas for a lot of reasons. California is moving here, and Nevada has a very good tax environment for startups along with a great airport so founders can easily hop on a plane to sit face-to-face with customers and potential investors. For me, it will be interesting Friday to hear Andy speak about his experiences and to meet some people interested in getting things going in Las Vegas.
Having been in the ecosystem here for over a decade, Vegas has a pretty unique set of circumstances.
We have visitors from all over the world. Most business people come here at least once a year.
Our community, the people who live here, are mostly transplants from other cities around the country. Being born and raised in Las Vegas is like finding a unicorn (I happen to be one!).
Lots of opportunities born out of the diversity of experiences that we have, and I love that you point out that many potential startup mentors are hiding out in the suburbs!
Now the downside... The casinos and hospitality do not attract high level talent. The majority of those they employ are non-technical laborers. Which attracts a ton of low wage earning talent.
Also because casinos are where it's at, the local and state governments know that keeping them happy is priority numero uno, so the entrepreneurs in the system take a back seat.
Luckily we're starting to see signs of that changing from the government level, but even if they were completely on board that's not going to move the needle.
The biggest missing piece in my opinion are home grown successes. We just haven't had many that have started here, scaled here, and exited here. Many started here, especially back in the downtown project era, but almost all of them moved to SF or Austin where they eventually found their success. And an important aside to home grown successes is that they stay and then reinvest into the system via mentoring, networking, and investing.
There are a lot of individual people working on solving all of these issues, too many to name (and I'd hate to forget someone) so I'll list their websites:
https://startupnv.org
https://startup.vegas
https://www.techalley.org
Supporters of the #VegasTech hashtag
I have a lot more thoughts... ha. But really enjoyed your article and it's great to see others noticing our tiny ecosystem for startups here, and the potential it has.
Chicago is indeed a small town! I’m seeing Dan this afternoon will share this with him!