The Missing Piece
There is a puzzle in Austin which remains unsolved regarding why Austin hasn’t seen more big and consistent breakout successes in the tech startup ecosystem. I have identified the missing piece of the puzzle and you may not like the answer.
If you follow the writings regarding the Austin ecosystem you’ve probably read debates about the absence of capital. Some founders argue that Austin lacks seed capital, most participants agree that there is a lack of later stage capital. Researchers, investors, and founders each come to varying conclusions about whether capital is a cause of an absence of the proverbial unicorn. Capital is not the missing piece of the puzzle in Austin.
Midas touch investors and local funds have all argued that there is an absence of founders pursuing really big ideas. There are the occasional founders pursuing big huge moonshots, it is uncommon but it does exist. An absence of obvious moonshots isn’t necessarily a problem though, because nobody can predict what company will be a big hit. Founders pursuing big ideas are not the missing piece of the puzzle in Austin.
Some people have argued that Austin lacks motivation to pursue big economic outcomes. It is true that in Austin it is historically more likely that successful companies will sell early rather than pursue the big IPO. Aside from Dell, Austin has yet to see a big multi billion dollar success. Aside from Bazaarvoice I can’t think of the last public company that Austin birthed, but there are some very good companies being built here and many of them are pursuing big outcomes. Good companies are not the missing piece of the puzzle in Austin.
Brad Feld argues that community is the cornerstone of success for an ecosystem. Community is definitely not missing in Austin either. Austin startups, investors, and founders all connect in this relatively small community. They cheer each other and pat each other on the back. They play beer pong for prizes. The print t-shirts. They show up at happy hours, they show up at demo days, they connect on social media and over coffee. Community is not the missing piece of the puzzle in Austin.
Capital, founders, companies, and community all exist in Austin. So what is the missing piece then?
The missing piece is murmuration.
It’s ok if you need to pause to look up the definition of murmuration. Here is a good video example of murmuration. Watch it. It is breathtakingly beautiful.
Like the starlings, each Austin investor, founder, company, and community event is an independent organism. Unlike the starlings we in Austin rarely work together in a coordinated fashion.
In Austin, each of these organisms is doing its own “weird” dance with very little awareness of the others. There are small groups in Austin that may work together collectively, but not in a coordinated manner. A large company may have a critical failure and there may be a startup here in Austin that solves it, yet the search for a solution almost always begins nationwide on Google.
There are amazing people who are giving of themselves and working towards a better outcome. This is not an indictment of intent but rather an observation about execution. There are not enough people working towards the collective betterment of the ecosystem in a coordinated manner.
Failing to work together in a collective manner does not mean that the participants aren’t all wonderful people with the best of intentions. Take for example the nouveau riche. It’s not uncommon for those who have become wealthy to immediately start a foundation or a non-profit in pursuit of the solution of a noble cause. As Dan Graham accurately wrote however, there are already too many non-profits. You would be far better off supporting an existing (local) non-profit than starting a new one.
Similarly, one action the participants in the ecosystem could take to begin this murmuration would be to buy and recommend local companies. When it comes to beer, music, and tacos we pride ourselves on buying our local products. When it comes to technology and the startup ecosystem we do not.
Most investing is local, most hiring is local, but very little buying is local. At my own company for example, we have had less success selling locally in Austin than we have had selling to companies in New York, San Francisco, Australia, Germany, Sweden, and even China!
As a simple example of the difference, take these two queries: How to host a company blog vs How to host a company blog in Austin
One search yields a nationwide comparison of various blogging platforms. The other shows me who in my community can help me solve this problem. When we seek out restaurants, we don’t search for “Best French Restaurant” because we know that you’d have to go to Paris to get that. Instead we search locally.
Better search queries are not the problem, they are simply an example of a local-first mindset around certain categories versus others. Those examples highlight the different ways that we think about who we want to do business with.
I am personally guilty of this. I didn’t buy my car insurance through the Zebra. I don’t host my corporate site on WP Engine. I don’t do my hiring through Indeed. I don’t empower my employees with YouEarnedIt. Similarly not one of those companies uses Meta SaaS. We all make lots of choices about the products that we use at our company and rarely is the local connection a part of the decision process.
Other startup ecosystems do in fact make a concerted and coordinated effort to support each other in more than just words. In those ecosystems they become each other’s first customers (often at a deep discount). They push the boards of companies where they have influence to give priority to local companies when a deal is in front of them. They take risks for eachother. They use political capital to help each other profit.
They do these things because they know that if you succeed, you will in turn help others in the same way. Hand in hand pulling each other towards success. Those who came before helping those who come next to reach the next rung of the ladder. Those who came before become investors, advisors, mentors, board members, and most importantly, customers.
In other ecosystems the big companies help the smaller local companies. The smaller local companies help the local startups. They get a hand up and they pay it forward. In most ecosystems the investors are the ones building those bridges.
In Austin there are very few bridges.
We can do better. We have to do better. We must murmurate.
