If startup communities are a critical element of a regional economy then we should be putting resources behind developing that startup community. But where to start asks economic development folks, local and regional government leaders, investors and founders? One ponders if there is one thing they can do well to guarantee positive movement. “How about we select one company and we all pour resources, networks and capital into them in order to get our big startup community exit”!
Research shows the positive effect that an exited high-growth company has on a regional startup ecosystem. But there is a trap in the seemingly obvious conclusion to draw from that research.
“All we need is to put all our energies into creating a high-growth company and its logical impending acquisition or IPO”.
Warning! Warning! Warning!
The flaw in this logic is the implied thought that an outcome can be engineered. Stop and think for 1 minute. If you could engineer an outcome like a company exit, don’t you think there would be hundreds every year? Do you think that this concept is novel? Don’t you think that investors would be pulling out every tool to generate these exits on behalf of their investors?
Do not confuse clearly observable outcomes with the critical inputs of a complex system.
You are looking for a causal relationship when none exists. This is the fallacy of the engineered exit. This is the mistaken assumption that startups, startup communities and their desired outcomes can be engineered just like making a cup of coffee or sending a rocket to the moon.
The best we can hope for is to build the conditions where a great founder with a great idea that is executed well (with multiple shifts or pivots) over a 8-12 year period with a little bit of luck all come together to form something special. That is how exits happen and the nature of complex systems.