Congrats to the Pittsburgh startup community. Oh, and stop congratulating yourself.
Pittsburgh is simply better than it ever was before. Period.
When I look around I see lots of exciting companies: Diamond Kinetics, The Resumator, NoWait, SolePower, CEAgent, Panther Learning, Wellbridge Health, and many others. I can’t remember a time in my 30 years of being here – and not – when Pittsburgh has been so vibrant.
Why? I believe we have learned from our successes and our failures. I also believe we have more people trying than ever before. And finally we have more support infrastructure than ever before. Innovation Works under Rich Lunak with support from veterans like Frank Demmler, is simply better than any other incarnation of the program. It’s simply doing great work, making all the right moves to get funding to the right people and efforts. Their sister company, AlphaLab, run by Jim Jen, is also stellar. It’s regularly recognized as one of the best accelerators in the country. IdeaFoundry with Mike Matesic at the head, has been a part of identifying and growing some of Pittsburgh startup successes like Wombat, NanoVision, DeepLocal, BitArmor (sold to TrustWave) and many others. We have the Pittsburgh Venture Capital Associaton (PVCA) run by the tireless Kelly Szejko. We have Catherine Mott and BlueTree Allied Angels, an amazing group of local high net worth individuals focused on angel funding of local startups. We have the best version of the Pittsburgh Technology Council under the leadership of Audrey Russo, and I say that with all respect to Tim Parks and Bill Westberg. We have RustBuilt and Startup Weekends thanks to Kit Mueller. We have Thrill Mill and Thrival thanks to Bobby Zappala. We have Entrepreneurial Thursdays with Jim Harter and Jessica Lee. And last but not least, we have Carnegie Mellon and Pitt, and yes, other universities, that contribute to the ecosystem, turning out great ideas, with great people – both researchers and students – that can build great companies. I could go on. It’s so much better than it was 30 years ago – heck, it’s better than it was 10 years ago! We’re lucky. Were getting a lot of things right. And it shows. We should be proud of what we have accomplished. And don’t forget our ‘Most Livable’ plaudits that come every so often. All this and clean air, too.
Now what can we do better? Lots. So much it may even look overwhelming. And this – finally – is the point of this post. We have a LONG way to go. I am all for stopping, pausing, and celebrating what we have accomplished. We should. But we also need to realize we have not ‘arrived’ – we have much to improve.
1.) Funding. We have a lousy funding environment. We have a handful – probably 4 – venture capital firms, most that have less than $100M to put to work. And despite the building of angel networks like Keiretsu Forum and BlueTree, we don’t have enough ‘dry powder’ locally to get things funded. Here’s an example. I started Malcovery in December and in January I had a convertible note for $2M. 60 days. And less than a year later I had $3M more. No institutional investors, all high net worth individuals. I doubt that could happen in Pittsburgh, that much or that rapidly (company is based in Birmingham AL with some operations in Pittsburgh). Yet we need to have that happen. We need more sources of investment at all levels in Pittsburgh. We can’t simply have folks go from AlphaLab, to IW, to BlueTree and/or a VC. There has to be more paths to getting funded and more funding sources. Why? Were missing too many opportunities and not taking enough chances.
2.) CMU only. CMU is a unique and precious jewel in Pittsburgh. We’re lucky it’s here. It’s regularly recognized for its startup and entrepreneurial activities and successes, as it should be. But like funding, we can’t simply wait for the next 22-year old to graduate with a cool idea as the source of next generation companies in Pittsburgh. Let’s start by recognizing we have other about 39 others just in the Pittsburgh area. The other 38 may not have the capabilities that CMU does, but they shouldn’t be ignored either. Where I work, Pitt, had 9 startups in 2012 and 6 in 2013. Matter of fact, since 1996, Pitt has spun out over 104 startups; that’s 5 per year.
3.) No Talent Thoughts. We tell ourselves that we don’t have the talent here to build a successful company. What’s worse we tell folks from outside the region that and they repeat it. I have heard from venture capital firms that they ‘have heard’ there is no talent in Pittsburgh. Recently we have turned our venom on sales, marketing and other ‘go-to-market’ talent, telling ourselves we don’t have that. It’s sad. I have watched many talented, smart and experienced individuals leave Pittsburgh because of this. They have gone on to run successful companies in other cities. Clearly, when they moved, they became smart. I can assure you, having managed talent and having worked for companies in Boston, Cupertino, Reston, NYC, London, Chicago and many other places, we have the talent. We need to tell ourselves we do, and start believing it. The talent is here. Let’s hire it.
4.) Respecting Failure. We love winners in Pittsburgh. And we hate losers. And we chase our losers out of town. Don’t fail in Pittsburgh. You get one chance and if you fail, you’re done. What lesson does that teach? Don’t take a risk. It’s a small town; people will talk. And you will have to go if you fail. Let’s see: 75% of all startups fail. The rest may have some success. Only about 2% win big. So if you want to take a risk in Pittsburgh, you better be a part of that 2%. We need to change that attitude. No one wants to fail. Oh, and even past success doesn’t guarantee future success. And we need more people taking risks. And rewarding them all. That means not chasing the ‘losers’ out but keeping them around and giving them a second, and third chance. If not, we will continue to lose as a region.
5.) Bigger. More. The reality is that we have many small startups that are growing. But it has been years – if ever – that we have had a continuum of companies at different sizes. We have mastered the sub-$5M company. We don’t have enough of the $5M to $25M. We don’t have enough of the $25M to $100M. And we clearly don’t have enough of the +$100M. We need more at all sizes,. And bigger. And once these companies get acquired we need to keep the people here, and encourage the entrepreneurial folks in these companies to take more risks, not leave the region.
So yes, lets be proud of Pittsburgh. We have accomplished a lot. We are better than we have ever been before. And we have so much further to go to be what we want.