Monetery: Growing the Midwest startup ecosystem

Monetery Notes from Des Moines-based illustrator Nathan T Wright during Monetery, an event Tuesday in Des Moines focused on building value in the Midwest.

Monetery was an event Tuesday afternoon that focused on starting companies in the Midwest and how a diverse, inclusive startup ecosystem can positively impact a community.

And that no matter where you are, you can build a successful company.

More than 250 people attended the three-hour panel discussion Tuesday at the Des Moines Social Club in downtown Des Moines. Brian Waller, President of the Technology Association of Iowa, was the emcee for Monetery.

The panelists were:

The moderators were:

  • Debi Durham – Director of the Iowa Economic Development Authority
  • Lynn Hicks – Des Moines Register Opinion/Engagement Editor
  • Danny Schreiber – Founding Editor of Silicon Prairie News/Zapier

Dwolla—the Des Moines-based FinTech company—organized the event.

All ticket sales were donated to Pi515, a Des Moines-based nonprofit that works with refugee students in Central Iowa on computer programming skills. Monetery raised more than $3,800.

During the first of three discussions, Feld announced his charity—Anchor Point Foundation—would also donate $5,000 to Pi515.

“Linking your words and your actions,” Feld said. “I think that’s one of the biggest challenges right now in the system. Lots of conversation, now there are starting to be people doing things, but it’s a small percentage of the overall system. Think about what your words and think about the specific actions you can take to match them.”

After the event, James Armstead said he thought hearing perspectives from people based outside of Iowa was very beneficial.

“All the panels gave more direct, useful information instead of these big generic inspirational thoughts that you see at conferences like this,” Armstead said. “You actually got useful tidbits from investors, what they look for, how they want emails. That is information you don’t typically get.”

Megan Vollstedt, director of the AgriTech Accelerator, said the perspectives were valuable from the point of building a startup community.

“This seemed like a lot of implementable action,” Vollstedt. “A lot of that can be taken back to what we’re doing and what organizations and startups are doing.”

Steven Brockshus, founder of Terva.Ag, said Iowa has a lot of first-time founders and hearing from experienced venture capitalists was helpful.

“It’s great to get people who have seen lots of founders go through things,” Brockshus said. “You don’t know what you don’t know, so you think something has to be a certain way or you’ve got a mold to fit. There are general things that you can do to be successful but it was great to hear the anecdotal stories on how someone else did it.”

Some of the panel discussion is below and has been edited for conciseness:

What are some attributes of successful start communities?

Feld:  In the book Startup Communities which I wrote in 2012, I named four principles that I believed were critical to a successful startup community. Today they feel fairly obvious which is the goal at least from the perspective I had at the time of what we were putting forward.

Interestingly in 2012, they were reasonably controversial and not at all obvious. Those four principles of the Boulder Thesis are:

  • Startup community has to be led by entrepreneurs All the non-entrepreneurial entities-feeder organizations—those are just as important as the leaders and individuals in those organizations could play leadership roles. But you had to have a critical mass of entrepreneurs playing a leadership role to create a durable startup community.
  • You have to have a long-term view, I like to describe that long-term view at least 20 years. This idea of always looking far in front of you.
  • Be inclusive of anyone who wants to engage at any level.
  • Have activities and events happening all the time. You want to a super-saturation of this verses the single thing that happens each month. You want so much stuff going on that you can’t be involved in all of it.

My view today is every major city with at least 100,000 people in it needs to have a vibrant startup community to be successful as a city long term. It’s not the only thing a city needs, but it’s an element of what the city needs.

Martin Lauchengco: One of the things that you said Brad and that I love, but is difficult to put in practice is a sharing mindset. That’s something I’ve noticed that was a big difference when I was up at Microsoft and in the Seattle tech community, versus Silicon Valley was how avidly everyone shares. There are a lot of cultures in larger companies who are very private.

I think one of the things that makes startup communities successful and really makes a community vibrant, is that open sharing of ideas and not think of it as a competitive threat to me. The more sharing and more of that mindset, the more quickly communities can develop.

Are there any barriers to being in the Midwest? For example, access to capital?

Lesa Mitchell: If you find a good team and the team is ready, meaning all the right parts are there, then it’s easily fundable and you can get money from anywhere. I just don’t think it’s a problem anymore.

Assuming all the right ingredients are there I think they are absolutely fundable. And Brad has been saying this for years, venture will go where great entrepreneurs are located. The bigger problem that I see in my own backyard (Kansas City) is a tech talent problem.

Albert Wenger: I think it’s not just tech talent, you want a product manager with a lot of experience or a marketer with a lot of experience. It used to be you need everyone in one office but I just don’t think that is true anymore. You can have people in different places.

That’s a high-class problem because it means you are growing and you need those type of people, but you have to figure out how to do it.

Molly McCartin: We have 28 companies based in what we consider the Midwest and what we’ve found is that it’s evolved in the last five years. Our companies when they go to fundraise, our CEO and founders are expected to camp out in the Bay Area because that’s where a lot of the money is, and that’s just a reality of the business.

Being mindful of that and understanding that piece helps you grow and helps you make sure you are at a point when you go to raise that Series B or Series C that you have the metrics that are required and you are at the level that they expect so they pay attention to you.

Having that context is helpful. But from a recruiting standpoint, it’s a double edge sword. Because in Silicon Valley, you have more talent around you but it is a competitive market. Finding that first hire in the Midwest may be trickier but they will stay with you and feel loyal to your business. If you are thoughtful about your approach to recruiting, have relationships with the universities around you, those are important things to cultivate. There are ways to get good talent.

Chris Moody: You can’t discount the fact that you have to do meaningful work to draw talent no matter where you are.

You have to figure out how to market both your company and your community.

What traits are you looking for in an operator of an early-stage startup

Martina: Growth mindset, just constantly taking all the inputs, adjusting, trying experiments, being bold and not assuming you have the answer. Be unafraid to try stuff and learn.

Chris: Passion is huge and infectious, if you are super passionate about your business then we are likely to get passionate about it over time. Be intellectually curious, you are going to have to learn a lot, even if it’s your third time building a business. And being humble, building a company is a humbling experience and if you are not a naturally humble person, you might not be set up for success.

Albert: Persistence

Molly: Grit is how I think of it.

For those considering turning to an investor, talk about the expectation that by taking investment there’s an expected rate of growth…

Chris: I would start even more basic than that. Understand that when you go to raise money, there’s a lot of expectations and a real decision point that often gets overlooked which is, should you raise money?

Taking money from people like us comes with a lot of baggage. Because someday, this company is not going to be your company. It’s either going to be a publically traded company or you sell it to somebody else. And for many people who are really passionate about building something that they want to do forever, it can be a great lifestyle business but isn’t a great venture-backed business. You are going to have a board, people telling you what you should do. Maybe you don’t want that.

Molly: One thing to add is, is this a big market? Are you building a product that has potential to grow in a very large market? If you are building a product for a very specific thing, it may not make sense for a venture-backed company. That doesn’t mean that product won’t be great, but framing that market perspective is important.

How can Midwest pitches improve?

Martina: Well I would like to say, I’d like to see more pitches from the Midwest. And be very metrics driven and show that customer traction. For us, it doesn’t matter if it’s a consumer business or B2B, customer traction is everything ot us.

Albert: Reach out, not enough people feel they can reach out to coastal based investors. And maybe they don’t know how to do it. We get a ton of emails but there’s a huge difference if that first sentence is completely generic or if somebody spent the ten minutes required to write non-generic sentences.

Just reach out more to coastal-based investors but do it the right way.

Molly: I see a lot of Midwest pitches and in the Midwest, people are a bit more humble. But if you think you have to be at a certain place with your product to show it to investors, the reality is you don’t. You need a strong product idea and reasons why you think there will be market fit and show what you’ve done.

It’s much more product driven, so taking that focus opens a lot more doors and write those nongeneric emails to investors.

Chris: Know who you are pitching.