The Times They Are A-Changin’

Don't criticize what you can't understand
Your sons and your daughters are beyond your command
Your old road is rapidly agin'
Please get out of the new one if you can't lend your hand
For the times, they are a-changin'

- Bob Dylan

 

I’ve been thinking about startup ecosystems a lot recently. Specifically, about how ecosystems around the world have been evolving, adapting and reconfiguring themselves post-Covid.

Over the past decade, I’ve been privileged to have traveled to dozens of startup ecosystems around the world. I’ve worked with founders from Kitchener to Kobe, from Cambridge to Cairo, and from Muscat to Montreal. The past few years have been a wild ride for founders everywhere, as we reemerged from a global pandemic into an unprecedented roller-coaster of macroeconomics. And although the emergence of AI stands poised to remake countless facets of our economy, startup ecosystems seem to (finally) be settling into a new normal.

But in many places, that new normal looks a lot different from the old one.

A few months ago, Boris Wertz of Version One Ventures made the following observation:

 
 

His message: outside of San Francisco and New York, startup ecosystems have become more fragmented and disconnected. Founders are more siloed, reducing opportunities for the types of innovation that come through widespread idea-sharing and serendipity. And he’s not wrong. In fact, Boris’ post directly led to the launch of Vancouver Founders Day.

But there’s a subtlety to his observation — and similar observations that have been made by ecosystem leaders around the world. The use of the word “rebuild”:

“It is time to rebuild those communities.”

Now, I’m not suggesting that this was Boris’ intention, but in many startup ecosystems around the world, the “old guard” is pushing to rebuild the community exactly as it used to be. Many leaders of startup generations passed are insistent that we must rebuild the institutions that were fundamental to the success of their communities pre-pandemic in order for their ecosystems to thrive.

From startup hubs to local conferences to incubators and accelerators — and even parties — tech leaders and governments around the world have poured considerable resources into restoring the institutions that historically played central roles in their ecosystems. In some cases, these efforts have paid off. In Edinburgh, the startup hub Codebase quickly reestablished itself as the center of the city’s startup scene. Today, Codebase is thriving to a degree even greater than it had pre-pandemic. So much so that the Scottish government awarded it £42 million to roll out similar programs across the country (besting bids from international brands like Techstars).

 

Not many startup hubs have a world famous castle next door

 

But Codebase’s post-pandemic success is the exception, not the rule.

Many of the efforts to relaunch local startup institutions have, bluntly, fallen flat. Startup hubs reopened only to find that companies weren’t interested in returning. Locally-famous incubators and accelerators relaunched to great fanfare, but founders didn’t apply. Conferences that everyone in the ecosystem had on their calendars struggled to attract attendees.

So what is happening? I think two dynamics are at play:

  1. An effective 5-year gap has left young founders with no memories of, attachment to, or nostalgia for the local institutions that played critical roles in the success of prior generations of startups.

  2. The social and societal changes that occurred during and after the pandemic have left a lasting impact on how founders operate and on how they engage with their local ecosystems.

On the first point, the vast majority of startups around the world have returned to some form of in-person or hybrid working — so they’re definitely not avoiding startup hubs and coworking spaces. Nor are they steering clear of incubators and accelerators (Exhibit A: YC). And they’re absolutely getting together for conferences and unconferences and parties and meetups. It’s just that founders aren’t necessarily gravitating to the same startup hubs, accelerators, conferences or parties that prior generations were drawn to.

And if you step back and think about it, this shouldn’t come as a shock to anyone who attended high school.

 

Back in my day,…

 

On the second point, we’re only just now starting to grasp the full scope of the societal changes that have resulted from the pandemic. But it’s clear that in some very fundamental ways, the world has become smaller. One example that I’ve observed is that in many smaller ecosystems, founders no longer limit their search for peers to their local community.

On the west coast, we’re seeing the emergence of a significant north-south startup corridor between Vancouver and San Francisco. There has always been a healthy economic flow between these two cities, but never before when it came to early-stage founders. Today, Vancouver-based founders increasingly travel to SF for inspiration, feedback and funding (even well before they’ve incorporated a company — something that was unheard of pre-Covid). But founder travel is also increasing in the other direction. Canadian founders based in the Bay Area are heading north with more regularity to connect with their peers and, in some cases, establish remote operations in Vancouver.

 

2 / 6 panelists on this “YC Founder Panel” at Vancouver Founder Day flew up from SF to participate

 

Notably, this increased “external” connectivity by founders isn’t coming at the expense of their engagement with their local ecosystems. Post-Covid, founders in smaller startup ecosystems continue to engage with their local peers, but are supplementing those connections with more frequent contact with founders in other ecosystems (both in-person and online). Which explains why so many of the “old guard” institutions no longer resonate with founders — many of those institutions were designed to be all-encompassing entities for their local ecosystems.

Ecosystem leaders around the world would do well to pay attention to how the next generation of founders is operating, even (especially) if it’s starkly different from how they did. They old way isn’t coming back. The question is: how long will it take for us old guys to accept it.

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