One thing I’m particularly proud of in my career is founding Pledge 1%, an organization that encourages companies to give back to their communities by donating a portion of equity, profit, time, or product to nonprofits in its community. It was bold idea from the beginning and I’m happy to see that more and more companies are taking the pledge (we’re around 20,000 strong now and growing quickly).
Recently, Pledge launched a new initiative, Boardroom Allies, to broaden their network and reach. The Allies program is comprised of an alliance of VCs who have committed to unlocking $5 billion in new philanthropy over the next five years by helping their portfolio companies set aside equity for social impact prior to liquidity events. You can read the full announcement on Business Wire here. What’s particularly exciting about this initiative is the fundraising goal and timeframe. It’s an aggressive approach and I’m both proud and heartened by the resolve of the VCs who have made this commitment. These including my partners, Brad Feld and Ryan McIntyre, as well as many other VCs from around the country and the world. Pledge 1% has outlined their resources, strategy, outcomes in this blog post about Boardroom Allies.
I encourage you to check it out and consider and either becoming a Boardroom Ally or by taking the pledge. It’s easy and a great way to make a lasting impact in your own neighborhood.
The Kauffman Foundation published an article last week that my New Builders co-author, Elizabeth MacBride, and I wrote about the inspiration for writing the book and – related – about how our systems of finance and support need to evolve to meet the needs of today’s entrepreneurs. One of our biggest inspirations and favorite New Builders is Danaris Mazara of Sweet Grace Heavenly Cakes. Sweet Grace was born in 2008, as the Great Recession ripped through the United States, particularly affecting working-class communities like Lawrence, Massachusetts where Danaris lives. She can identify the exact minute the bakery was born. She had $37 in food stamps to her name. “What are you going to do with $37 in food stamps?” Danaris asked herself. Danaris believes in God, and at that moment a divinely inspired thought came into her head: “Make flan.” From that beginning, her business was born.
Based on our research and the conversations we had in the course of writing our book, we believe there are countless potential Denarises out there. We need to find them and support them.
There’s a forgotten history of entrepreneurship in America, which includes many more women and people of color than is generally recognized. And the rates today at which women and people of color are starting businesses have accelerated to the point that, today in America, white men are now the minority of business owners.
The demographic shift is due to the growing diversity of our country, but also reflects some special conditions that make startup life and small business ownership especially appealing to women and people of color. Given the economic needs driving them, we’re seeing a surge in business starts post-pandemic.
Lacking the entwined systems of finance and mentorship that supported past generations of (white, male) entrepreneurs and that still over-index in support of a tiny subset of businesses in the tech world, today’s entrepreneurs face almost insurmountable obstacles. Entrepreneurship in America has been on a slow decline for the past 40 years but very few people in the mainstream notice this trend.
But it is the decline in the broader world of entrepreneurship that is a crack in America’s identity as a land of opportunity and innovation. Innovation doesn’t come soley from white men educated at Ivy League schools. Innovation comes from giving a broad swathe of people the opportunity to create businesses that drive economic growth.
We believe the fastest lever to give people like Danaris the wherewithal to start companies is a well-designed system of finance that provides capital, as well as the emotional and social support entrepreneurs need. According to Kauffman Foundation research, beyond the 1% of startups receiving venture capital financing, only about 17% take any outside financing at all. The key is getting the same level of robust financing to the remaining 83%.
There are four promising directions in finance innovation that would help the vast majority of entrepreneurs who aren’t getting funding. There are many more to consider, but these would be a good starting point.
- Financing at scale. Large technology platforms, like PayPal and Stripe, have the potential to touch many businesses but the rates charged are higher than those found at banks, and they fail to offer the kinds of other support that are arguably even more important to success. If they were to become leaders in the movement to help New Builders, it would have to come about because of a mindset shift among their executives and the largely white men in their networks: that businesses started by women and people of color are not inherently riskier than the companies created by men, and that New Builders are not environmental, social and governance (ESG) investments. And these executives would need to accept their responsibility for creating a more inclusive and equal society.
- Create a new capital class. Empowering more people to see themselves as investors and lenders would unlock more capital at the grassroots level. How could this function in communities and Main Streets in America? It’s not clear yet but we believe there are innovations to be had in enabling more people to invest in startups. If more people think of themselves as investors, they will create demand for new financial products.
- Connecting investors with Main Street. Community loan funds have existed for decades, enabling community-minded institutions and wealthy individuals to put money into funds that in turn provide capital and support for businesses. Are there ways to scale these funds or turn them into an asset class? There are already signs that technology is at work in this space, as a handful of new companies, like Mainvest outside Boston, build platforms that help people who aren’t necessarily wealthy, invest in companies in their communities. The regulations in this space are still onerous, however.
- New Builders helping New Builders. One of the most promising developments coming out of the increased social justice awareness in 2020 has been a focus on getting more capital into the hands of Black and brown innovators in finance. The $100M fund-of-funds partnership between the Kauffman Foundation and Living Cities is one example of this.
The New Builders is in many ways a call for people who now control capital in our country to do what they do best: innovate new financial products to create and serve a new market. We should be asking ourselves how we can adapt to the new generation of people who are starting businesses today.
There are hopeful signs. While the most powerful members of the capital class can seem short-term and indeed are often deeply motivated by profit, they want to be ahead of the game. The future of the economy clearly lies with New Builders, who are more diverse in terms of their background, but just as capable and lofty in their dreams as any generation of entrepreneurs before them. I have faith that we’ll find new and creative ways to help them succeed.
I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional.
I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the US Ambassador to the U.K. and Sweden under President Obama, and was the National Finance Chair for Obama’s 2012 reelection campaign. More importantly, he is an incredibly thoughtful and compelling person. He puts all of these qualities and more into his new book, The Power of Giving Away Power, where he debunks some of the myths of classic management theory and hierarchical thinking in eloquent, humorous, and compelling ways. The book resonated with me deeply. As I thought about various leaders that I’ve known over my career, I realized that many shared the leadership traits that Matthew talks about in the book. I would strongly recommend picking up a copy. Whether you are managing just yourself or thousands of people, everyone will find useful lessons in this breakthrough book.
Nietzsche has so many famous quotes it’s sometimes hard to choose just one (most have heard that which doesn’t kill you makes you stronger although I suppose few realize that it was the German philosopher who first penned it). My favorite, perhaps, is: there are no beautiful surfaces without a terrible depth. I like it in particular because in many ways it describes Nietzsche himself. His writing is often beautiful, but with a depth that sometimes takes time to fully recognize.
In their new book, The Entrepreneur’s Weekly Nietzsche: A Book for Disruptors, Brad Feld and David Jilk pick out some of their favorite Nietzsche quotes and form chapters around business lessons from them. It’s a brilliant construction and one that adds context and meaning to Nietzsche and his writing. You’ll recognize many of the contributors to the book – Reid Hoffman wrote the introduction (I didn’t realize that Reid studied philosophy before turning to technology as a career), and many entrepreneurs contributed chapters (I wrote one as well, in fact).
There are many lessons to be learned from the last year – of the importance of connections to those around us; of how fragile our economy is – especially in certain sectors; about what’s really important. One of the most important to me was the power of slowing down. I’ve always known this – and strove to create space in my life to do it (often failing). But Covid forced it in ways that were unexpected. Especially from this perspective, the timing of The Entrepreneur’s Weekly Nietzsche is perfect. I’ve had a pre-release copy for a few weeks now and it’s how I start my day: quietly contemplating a Nietzsche quote and considering its meaning for my personal and work life. Thank you to Brad and David for this gift.
I hope you’ll consider buying the book and trying a similar routine. Nietzsche isn’t a philosopher to be devoured. Rather, his writing is meant to be contemplated and considered. The Entrepreneur’s Weekly Nietzsche is a wonderful, guided way to do just that.
I’m really excited about an upcoming event that my partners at Foundry have put together that will build upon the discussion we’ve been having around New Builders in some critically important ways. Senator John Hickenlooper and Congressman Joe Neguse will join Denver entrepreneurs Makisha Boothe, Founder of Sistahbiz Global Network and Lorena Cantarovici, Founder and CEO of Maria Empanada Restuarant. We plan to dig deeper into why politicians like to talk about small businesses but rarely enact meaningful policies to help them (and increasingly seem to be favoring policies that support larger businesses at the expense of smaller enterprises).
The event is free and will be held on Tuesday, May 18 at 1pm MTN / 3pm EDT / 12pm PDT. You can register here. And, of course, if you haven’t read the book, it will be a great primer for the event. You can find information on how to pick up a copy here.
I hope you can join us!
We had the opportunity to talk with many great entrepreneurs doing research for our book, The New Builders. I was struck by how thoughtful, determined, and gritty they were. As most readers know, the book focuses on entrepreneurs from a diverse set of backgrounds – people that truly represent the next generation of founders in the United States.
One of the trends that we observe in the book is that the rate of entrepreneurship among older Americans is actually quite high. In fact, across all age groups, the fastest-growing group are entrepreneurs 55 and older. There are a number of interesting reasons for this that we talk about in the book. And we tell the stories of handful of older American entrepreneurs to help highlight these trends. One of my favorites was Fred Sachs who founded and eventually sold a lumber company as well as a commercial door and hardware company. He’s also my wife’s cousin, once removed (that’s her dad’s first cousin)!
Initially, Fred planned on retiring but his hobby of growing wheat on his farm near Alexandria, VA turned into a new venture selling flour to regional bakers. Grapewood Farm now produces a variety of organic small grains and stone ground flour to customers across the Mid-Atlantic region.
We highlight his story and the importance of older Americans in business in a piece in nextavenue that we just released this week. I hope you’ll check it out and see why our nation’s focus on Silicon Valley being the seat of innovation is not entirely on the mark.
It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders. Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a wide ranging discussion about who is actually starting businesses these days and how we can and need to better support them. I hope you can join us for it, Tuesday May 11 at 1pm MTN. You can register here. And, of course, check out the other great Boulder Startup Week events taking place all week.
Also tomorrow – 11am MTN – my TNB co-author Elizabeth MacBride and I will be doing a live feed on Instagram with Camelback Ventures, an accelerator that works with early-stage, underrepresented entrepreneurs with the aim to increase individual and community education, and generational wealth. This is another great example of a support network that’s so critical for the new economy. Follow Camelback to join this event live, ask questions, and participate in this important conversation.
Next Tuesday, May 18, VentureCrush is going to host, Maya Horgan Famodu of Ingressive Capital, Kathryn Finney of Genius Guild as well as several other notable guests from business and venture (and me!). Given the deep diversity of this panel, it will undoubtedly be a fascinating conversation around the future of small business in the US and abroad.
Lastly, Foundry is hosting Elizabeth MacBride and me along with Senator John Hickenlooper, Congressman Joe Neguse and some amazing local New Builders to talk about infrastructure for small business and how government can better support our small business owners (from both a practical and a policy perspective). This event will be held on May 18th at 1pm MTN. I’ll be writing more about this later in the week so keep an eye out for further details.
Uncharted is about to launch applications for their new Economic Inequality Initiative to support teams working on radical ideas to address economic inequality. I have a long history with the Unreasonable Institute (renamed Uncharted in 2017) and the work they’ve been doing around empowering entrepreneurs from many different backgrounds who are working across the globe on some of our world’s most important problems. Since 2010, they have helped an amazing set of entrepreneurs raise over $250 million, created impact in 96 countries, and benefited 37 million lives around the world. Amazing!
Seeing extreme economic inequality as one of the biggest threats to America in the next 30 years, they’re launching their most ambitious program ever. I hope you can help get the word out. I’m really excited to be participating in this program.
The Economic Inequality Initiative focuses on supporting early-stage organizations (both for-profit and non-profit) with the clarity, connections, and capital they need to scale their solution, technology, pilot, or initiative that is addressing extreme economic inequality in the US.
Each participant gets:
- $25,000 unrestricted grant
- Access to world-class mentors
- Financial and Investment Experts to help teams prepare to raise capital. For every $1 that goes to Uncharted, we turn it into $8 of additional capital our portfolio takes on within two years
The Ideal Participant
- Type: Pre-incorporation, nonprofits, for-profits, pilots, partnerships, and policy experiments
- Stage: Completed a pilot or has proof of concept
- Geography: US-focused
I encourage anyone interested in social enterprise to check this out, even if you’re not looking for funding. Unreasonable is doing amazing work and they’re worth paying attention to. You can sign up for notifications and tips here.
With the fate of many small businesses remaining up in the air, after over a year of Covid related restrictions and challenges, my New Builders co-author, Elizabeth MacBride and I just authored a piece for Fortune that talks about the importance of saving America’s more Main Street businesses. We titled it Tech entrepreneurs grab the headlines, but COVID relief should target grass-roots small businesses – I hope you’ll check it out.
The article talks about the importance of small business and tells the story of one New Builder – Carmen Portillo – who is the first certified chocolatier in the state of Arkansas. We tell Carmen’s story in more depth in the book, but the highlights are important to add texture and color to the debate around why small businesses are so important to our economy and to our communities. Small businesses are critically important to our overall economy. Together, small businesses employ nearly half the labor force and generate nearly 40% of annual GDP. They also provide a certain connection to their communities that is both hard to put into words, but impossible to replace. But there is a huge disconnect between today’s entrepreneurs and the largely white men who control our systems of finance (and whose energies focus on high growth companies and hunting unicorns). Some 80% of small businesses don’t receive any formalize form of financing as they get their start (either from venture capital or similar sources, or from a bank).
The Covid crisis put an entirely new angle on what was already a growing problem for America’s Main Street entrepreneurs and we knew it would be important to capture the true impact of the pandemic on our nation’s small businesses. The fast growth promised by tech is mostly an illusion, because it’s narrow. We need a broad-based recovery, not one that only boosts a handful of companies.
I hope you’ll check out the full Fortune article and, if you’d like to learn how we can solve problems facing today’s small businesses, pick up a copy of The New Builders – it’s available tomorrow, May 4th.
A few upcoming events to let you know about. First, we’re taking over the Instagram account for Commonplace Books in Oklahoma City for the entire day today (4/27/21, but the archive will remain there if you’re reading this later). We’ll be live on the account to answer questions about The New Builders and to talk with readers at both 1:00PM and 4:00PM MDT (that’s 2:00PM and 5:00PM in OKC). We’ll be telling the stories and introducing some of the entrepreneurs working in Oklahoma City that we write about in the book. Drop in and join us!
Also, a reminder that tomorrow night, we’re hosting an event with Black Lab Sports that will focus on New Builders working in sports and performance technology. I was just reviewing our plan for the evening – it will be a very interesting discussion. More details through the link above.
Last event to tell you about is one that’s close to home for us – a forum we’re hosting along with the Tattered Cover Bookstore. I’ve been visiting the Tattered Cover since I was a kid, coming to Denver to visit my grandparents each summer. Tattered is an icon of Denver and a wonderful local resource for our community (as so many local bookstores are). I was fortunate to be able to participate in the purchase of Tattered that was led by new CEO Kwame Spearman a few months ago.
Next Friday, May 7th, Tattered will be hosting an online discussion about The New Builders at 6pm MTN. The event will be moderated by Summer Nettles of Greater Purpose Media and will feature some New Builders from the Denver area: Lorena Cantarovici of Maria Empanada, Toti Cavadid of Essencialize, and Mowa Haile of Sky Blue Builders. Maria’s shop was recently visited by Vice President Biden.
The event is mostly focused on this amazing group of business owners as we talk about women and BIPOC business owners and how to better support them. My co-author, Elizabeth, and I will talk briefly at the end about how the themes these entrepreneurs talk about are reflected nationally.
You can register for the event via Eventbrite. We hope you’ll share this with others – it’s going to be a special evening (and those from anywhere in the country – or the world – are welcome to join!)