Startup Cities (eBook)

Peter S. Cohan is Lecturer of Strategy at Babson College. He teaches strategy and entrepreneurship to undergraduate and MBA students at Babson College. He is the founding principal of Peter S. Cohan & Associates, a management consulting and venture capital firm. He has completed over 150 growth strategy consulting projects for global technology companies and invested in seven startups —three of which were sold for over $2 billion. Peter has written 12 books and writes columns on entrepreneurship for Forbes, Inc, and The Worcester Telegram & Gazette. Prior to starting his firm, he worked as a case team leader for Harvard Business School professor Michael Porter’s consulting firm and taught at MIT, Stanford, and the University of Hong Kong. Peter earned an MBA from Wharton, did graduate work in computer science at MIT, and holds a BS in Electrical Engineering from Swarthmore College.

Contents 5
About the Author 6
Acknowledgments 7
Introduction 8
PartI: Exploring the Startup Common 13
Chapter 1: What Is the Startup Common? 14
How Wayfair Tapped the Boston Startup Common 19
What Makes The Startup Common Different? 21
Chapter 2: Creating Pillar Companies 26
Takeaways for Startup Common Stakeholders 31
Pillar Company Success and Failure Case Studies 32
Level 0: No Pillars, No Gazelles 32
Success Case Study: Zephyr Workshop Forges Ahead in Worcester with Limited Local Support 32
Introduction 32
Case Scenario 32
Case Analysis 34
Unsuccessful Case Study: Hopkinton’s EMC Squashes a Startup by Suing a Former Executive 35
Introduction 35
Case Scenario 36
Case Analysis 37
Principles 38
Level 1: No Pillars, Some Gazelles 39
Success Case Study: Check Point Software’s IPO Spawns Spinoffs That Go Public 39
Introduction 39
Case Scenario 40
Case Analysis 41
Less Successful Case Study: RedMart Grows Fast, Loses Money, Gets Acquired For Half Its Capital By Deep-Pocketed Alibaba 42
Introduction 42
Case Scenario 42
Case Analysis 44
Principles 45
Level 2: No Pillars, Acquired Gazelles 46
Success Case Study: Cofounder Reinvests Proceeds of Selling Skype Twice in Stockholm Startups 46
Introduction 46
Case Scenario 46
Case Analysis 47
Unsuccessful Case Study: Joost’s Failure Shows the Limits of Zennstrom’s Peer-To-Peer Startup Magic 48
Introduction 48
Case Scenario 48
Case Analysis 49
Principles 49
Level 3: Some Pillars in Niche Markets 50
Success Case Study: Telecom Billionaire Xavier Niel Propels Paris’s Startup Scene 50
Introduction 50
Case Scenario 50
Case Analysis 51
Less Successful Case Study: Boston’s Pillars Produce Mostly Tepid Outcomes 52
Introduction 52
Case Scenario 52
Case Analysis 53
Principles 53
Level 4: Many Pillars in Huge Markets 55
Success Case Study: Alphabet Invests Billions in Startups Through GV, Capital G, and Gradient Ventures 55
Introduction 55
Case Scenario 55
Case Analysis 56
Unsuccessful Case Study: Alphabet Abandons SideCar For Uber, Which Alphabet Later Sues Over Waymo 57
Introduction 57
Case Scenario 57
Case Analysis 59
Principles 59
Are You Doing Enough To Nurture Local Pillar Companies? 61
Conclusion 61
Chapter 3: Launching Startups from Universities 62
Takeaways for Startup Common Stakeholders 63
University Success and Less Successful Case Studies 66
Level 0: No Pillars, No Gazelles 67
Success Case Study: U Mass Medical School Licenses Intellectual Property to Startups Outside of Worcester 67
Introduction 67
Case Scenario 68
Case Analysis 69
Less Successful Case Study: Some Clark University Alumni Build Successful Companies Outside Worcester 69
Introduction 69
Case Scenario 69
Case Analysis 71
Principles 71
Level 1: No Pillars, Some Gazelles 72
Successful Case Study: HEC Helps Students and Alumni to Create Gazelles 72
Introduction 72
Case Scenario 72
Case Analysis 73
Less Successful Case Study: Two Hong Kong Gazelles Become Unicorns without Help from University of Hong Kong 74
Introduction 74
Case Scenario 74
Case Analysis 76
Principles 76
Level 2: No Pillars, Acquired Gazelles 77
Success/Opportunity for Improvement Case Study: KTH Supplies IP and Talent to Some of Sweden’s Gazelles 77
Introduction 77
Case Scenario 77
Case Analysis 79
Principles 80
Level 3: Some Pillars in Niche Markets 80
Success Case: MIT Creates 30,200 Companies with $2.9 Trillion in Revenues 80
Introduction 80
Case Scenario 81
Case Analysis 82
Less Successful Case: Haifa’s Technion Helps Launch 90 Companies 52 Miles Away 82
Introduction 82
Case Scenario 82
Case Analysis 85
Principles 85
Level 4: Many Pillars in Huge Markets 86
Success Case Study: Stanford’s $2.7 Trillion Startup Machine 86
Introduction 86
Case Scenario 86
Case Analysis 87
Failure Case Study: Stanford Enables Enfant Terrible to Crash and Burn Clinkle 88
Introduction 88
Case Scenario 88
Case Analysis 89
Principles 90
Are You Doing Enough To Launch Startups From Local Universities? 91
Conclusion 93
Chapter 4: Deepening the Human Capital Pool 94
Takeaways for Startup Common Stakeholders 96
Human Capital Success and Failure Case Studies 96
Level 0: No Pillars, No Gazelles 97
Success Case Study: Zephyr Workshop Finds Local Talent to Fuel Its Games 97
Introduction 97
Case Scenario 98
Case Analysis 98
Less Successful Case Study: When It Comes to Freight Farms, Boston’s Gain is Worcester’s Loss 98
Introduction 98
Case Scenario 99
Case Analysis 100
Principles 101
Level 1: No Pillars, Some Gazelles 101
Success Case Study: WeLab and Aftership Overcome Hong Kong’s Challenges 101
Introduction 101
Case Scenario 102
Case Analysis 104
Less Successful Case Study: BridgeWay’s Founder Basks in Glory but an Abrupt Change in Strategy Leads to Deep Regret 104
Introduction 104
Case Scenario 105
Case Analysis 107
Principles 107
Level 2: No Pillars, Acquired Gazelles 108
Success Case Study: KTH Supplies Talent to Five Swedish Startups but Will That Be Enough for Them to Scale? 108
Introduction 108
Case Scenario 108
Case Analysis 111
Failure Case Study: Housing Shortage Keeps a German Startup from Relocating to Stockholm 111
Introduction 111
Case Scenario 112
Case Analysis 113
Principles 113
Level 3: Some Pillars in Niche Markets 114
Success Case Study: Boston Startups Find Local Talent to Fuel Their Growth 114
Introduction 114
Case Scenario 114
Case Analysis 116
Less Successful Case Study: Facebook Leaves Cambridge for Silicon Valley 116
Introduction 116
Case Scenario 116
Case Analysis 118
Principles 118
Level 4: Many Pillars in Huge Markets 119
Success Case Study: Beijing ByteDance Technology Pays Up for Top Talent 119
Introduction 119
Case Scenario 119
Case Analysis 120
Failure Case Study: Theranos Overdoses on Silicon Valley Mythology 120
Introduction 120
Case Scenario 121
Case Analysis 122
Principles 122
Are You Doing Enough to Deepen Your Human Capital Pool? 124
Conclusion 124
Chapter 5: Sourcing Investment Capital 125
Takeaways for Startup Common Stakeholders 126
Investment Capital Success and Failure Case Studies Stakeholders 129
Level 0: No Pillars, No Gazelles 130
Success Case Study: HydroGlyde Coatings Raises Government Funds to Reinvent the Condom 130
Introduction 130
Case Scenario 130
Case Analysis 131
Less Successful Case Study: Worcester-Educated Serial Entrepreneur Shuns City for All His Ventures 131
Introduction 131
Case Scenario 132
Case Analysis 133
Principles 134
Level 1: No Pillars, Some Gazelles 134
Success Case Study: Two Hong Kong Gazelles Take Outside Venture Capital to Become Unicorns 134
Introduction 134
Case Scenario 134
Case Analysis 135
Failure Case Study: Paris’s Quick Order Delivery Service Tok Tok Tok Runs Out of Cash 136
Introduction 136
Case Scenario 136
Case Analysis 138
Principles 138
Level 2: No Pillars, Acquired Gazelles 138
Success Case Study: KTH Professor Cofounds 10 Companies That Raise $200 million 138
Introduction 138
Case Scenario 139
Case Analysis 140
Less Successful Case Study: Pre-Revenue Adaptive Simulation Raises Minimal Capital As It Discovers a Business Model 140
Introduction 140
Case Scenario 141
Case Analysis 142
Principles 142
Level 3: Some Pillars in Niche Markets 143
Success Case Study: Boston Startups Find Local Talent to Fuel Their Growth 143
Introduction 143
Case Scenario 143
Case Analysis 144
Unsuccessful Case Study: Last Minute Reservation app GoPapaya Burns Through Cash and Shuts Down 144
Introduction 144
Case Scenario 145
Case Analysis 146
Principles 146
Level 4: Many Pillars in Huge Markets 147
Success Case Study: Zoom Raises $100 million As It Grows at 300% 147
Introduction 147
Case Scenario 147
Case Analysis 149
Failure Case Study: Juicero, a Piñata of Silicon Valley Pretension, Burns Through $120 Million 149
Introduction 149
Case Scenario 149
Case Analysis 151
Principles 151
Are You Doing Enough To Source Local Investment Capital? 152
Conclusion 153
Chapter 6: Building Mentor Networks 154
Strategy 155
Industry Vision 155
Acquisitions and Partnerships 156
Finance 156
Raising Capital 156
Performance Monitoring 156
People 157
Hiring and Firing 157
Culture 157
Organization Structure 158
Product 158
Design 158
Sales and Marketing 159
Operations 159
Supply Chain Management 159
Takeaways for Startup Common Stakeholders 160
Mentor Networks Success and Failure Case Studies 161
Level 0: No Pillars, No Gazelles 162
Success Case Study: StartUp Worcester Offers Space and Mentoring to Local Entrepreneurs 162
Introduction 162
Case Scenario 162
Case Analysis 164
Less Successful Case Study: Worcester-Based Mentor Advises WiGo to Leave Town to Raise Capital in Boston but It Fails Soon Thereafter 164
Introduction 164
Case Scenario 164
Case Analysis 167
Principles 167
Level 1: No Pillars, Some Gazelles 168
Success Case Study: Intelligent Parisian Entrepreneurs Cut Through the Mentor Network Thicket 168
Introduction 168
Case Scenario 168
Case Analysis 169
Less Successful Case Study: Hong Kong Keeps Trying for Local Startup Success and Mentor Networks 170
Introduction 170
Case Scenario 170
Case Analysis 171
Principles 171
Level 2: No Pillars, Acquired Gazelles 172
Success Case Study: Three Stockholm Startups Win Local Mentors 172
Introduction 172
Case Scenario 172
Mano Motion 172
Greenely 173
Shortcut Labs 174
Case Analysis 175
Principles 175
Level 3: Some Pillars in Niche Markets 176
Success Case Study: Boston Founders Pay It Forward Through Mentor Networks 176
Introduction 176
Case Scenario 176
Case Analysis 179
Less Successful Case Study: Israel’s Mentor Networks Remain a Work in Progress 179
Introduction 179
Case Scenario 180
Case Analysis 181
Principles 182
Level 4: Many Pillars in Huge Markets 182
Success Case Study: Silicon Valley Turns an Engineer into a Great Startup CEO 182
Introduction 182
Case Scenario 184
Case Analysis 186
Failure Case Study: Unicorn CEO Decries Lack of Silicon Valley Mentoring and Four Years Later He’s Fired for Sexual Harassment 186
Introduction 186
Case Scenario 186
Case Analysis 188
Principles 188
Are You Doing Enough To Build Local Mentor Networks? 189
Conclusion 189
Chapter 7: Creating Startup-Friendly Shared Values 190
Takeaways for Startup Common Stakeholders 193
Startup Common Values Success and Failure Case Studies 194
Level 0: No Pillars, No Gazelles 195
Success Case Study: Silicon Valley’s Lake Pharma Acquires Worcester Contract Researcher to Expand on East Coast 195
Introduction 195
Case Scenario 196
Case Analysis 199
Less Successful Case Study: WPI Professor’s Health Apps Slowly Make Their Way 199
Introduction 199
Case Scenario 199
Case Analysis 201
Principles 201
Level 1: No Pillars, Some Gazelles 202
Success Case Study: Paris Entrepreneurs Overcome Cultural Challenges 202
Introduction 202
Case Scenario 202
Case Analysis 203
Less Successful Case Study: Hong Kong’s Startup Values Create Conflicting Cross-Currents 204
Introduction 204
Case Scenario 204
Case Analysis 205
Principles 206
Level 2: No Pillars, Acquired Gazelles 207
Success Case Study: Stockholm Becomes Startup Friendly 207
Introduction 207
Case Scenario 207
Case Analysis 208
Less Successful Case Study: Stockholm Gaming Founder Sells Out for $2.5 Billion and Skips Town, Buying a $70 Million Beverly Hills Mansion 209
Introduction 209
Case Scenario 209
Case Analysis 210
Principles 210
Level 3: Some Pillars in Niche Markets 211
Success Case Study: Israel Makes Bigger Bets 211
Introduction 211
Case Scenario 211
Case Analysis 214
Less Successful Case Study: Boston Leaks Talent as It Sticks with What Worked Before 214
Introduction 214
Case Scenario 215
Case Analysis 217
Principles 217
Level 4: Many Pillars in Huge Markets 218
Success Case Study: Emergence Capital Creates $100 Billion in Value 218
Introduction 218
Case Scenario 219
Case Analysis 220
Failure Case Study: Jawbone Shuts Down after 18 Years and $900 Million in Investment 221
Introduction 221
Case Scenario 221
Case Analysis 222
Principles 222
Are You Doing Enough To Nurture Local Startup-Friendly Shared Values? 224
Conclusion 224
PartII: Implications for Cities 225
Chapter 8: Boosting Your Startup Common 226
How to Build Your Startup Common 231
How Cities Apply the Startup Common Building Methodology 234
Chattanooga, Tennessee 234
Case Scenario 235
Case Analysis 236
Santiago, Chile 236
Case Scenario 236
Case Analysis 237
Lessons Learned From Applying the Startup Common Building Methodology 238
Conclusion 242
Appendix A: Notes 243
Introduction 243
Chapter 1: What Is the Startup Common? 244
Chapter 2: Creating Pillar Companies 246
Chapter 4: Deepening the Human Capital Pool 257
Chapter 5: Sourcing Investment Capital 260
Chapter 6: Building Mentor Networks 264
Chapter 7: Creating Startup-Friendly Shared Values 267
Chapter 8: Boosting Your Startup Common 271
Index 273