I’m excited and apprehensive about Portland Mayor Sam Adam’s proposals to get the city involved in funding more software startups in Portland.
Excited because I love Portland, and feel limited that there are very few tech companies taking on big problems, and this means there are few seasoned executives and engineers, here in Portland, who have done big things and want to do something that changes the world. I don’t think Portland has great funding for startups, and more funding could create and bring these types of people here.
Apprehensive because I think this is a challenging vision to bring together. It will require contributions from not just people seeking funding, but from mentors, investors and the city at large, a much larger community to speak to than when you just have investors and entrepreneurs.
One of the things I see consistently in the companies I work with is that investors always want to see “progress” before making an investment. It feels like they want to step in after all the risk has been taken. It feels like they want to step in only after you have leveraged your house to build something and are therefore so committed you would do anything to move your startup forward. I read about people who have gone this route and wonder if this is the right way to do it, or simply the way that an investor would like you to do it. There is good reason to try to find a way to lock people in, because there is always another good idea to chase.
Nothing brilliant here, but I don’t particularly like going about it this way. I’ve done it already with my last company and it is not fun.. I could not have been in a regular relationship, nor had kids, and this kind of lifestyle interfered with a bunch of things which are important to me, like exercising, volunteer work. Risking everything seems like an excessive request. And, I know a ton of smart people with families who simply will not take on working for a startup because of that risk. It feels like startups almost have a requirement that you verge on some kind of personal financial implosion in order to prove that you are committed. Or, that you are so young (and without ties) so that financial risk does not matter at that point in your life. Paul Graham says “I wouldn’t advise anyone with a family to start a startup.” This frankly pissed me off.
Given the context Sam Adam’s is proposing, could there be another way? If public money were used for the purpose of investing, could we find another way to invest? One possible opportunity is that a startup could have a different set of goals.
If a regular startup, funded through traditional VCs, does not succeed, the IP assets of that company will typically be lost in bureacracy, never to see the light of day. The investors will have certain plans, the founders will have certain plans, and I assert that everyone will be too angry and upset at the reality of the failure to make rational decisions and compromises.
If a startup were funded through a city government fund, perhaps those assets could be released to the public good after a certain time if other goals are not met. For example, if financial goals of the company were not met by a certain date, the city could elect to open source the assets of the company. If the city chose only startups which fulfilled on a mission which aligned with the goals of the city (say sustainability, or local commerce) then perhaps you could create a situation where everyone wins regardless of the success of the startup.
If the startup hits its financial goals and returns a profit, the city has gained a return on its investment. If the startup fails, the city has developed something in alignment with its goals which can live on, and has people living locally which probably will continue to see it through in a different form. In either case, the investment has garnered tangible and measurable results.
I say this creates a different type of investor, with different motivations. There would not be the same system where investors have to lock people in to force performance, and this would remove the threat of personal bankruptcy or simply a long period of financial insolvency. It would bring quality people back to the startup world, people with families and children in the local area, people committed to making the city better.
I’d love to work in a company like that, in a city like that. Portland could be that city.