In the world of startup community building, it’s easy to see how that old saying from Eric Hoffer could apply: “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.” This arc is particularly relevant in maturing entrepreneurial ecosystems. I mean, isn’t the goal to build a mature, thriving ecosystem?
In the early days, startup communities are movements. Passionate people gather around a common cause, excited by the possibility of creating something new and impactful. These movements are grassroots and driven by founders who crave support, mentorship, and an environment that empowers risk-taking. The energy is contagious, and there’s little need for formal organizations or big programs. Just people helping people, fueled by a shared mission to support each other in meaningful ways.
But as these communities grow, so do the opportunities to “formalize” them. Well-meaning stakeholders see potential in structuring support, creating entrepreneurial service organizations (ESOs) like accelerators, incubators, and government & university initiatives. They build frameworks, secure funding, and create programs that promise to support founders in super-organized ways. They do an audit to uncover what is missing – as compared to their peers. At this stage, the community starts to feel more like a business. And to make matters worse, ESOs may be required by their funders to prove their worth by developing KPIs, establishing formal processes, and creating services that show well—but are also increasingly driven by the possibility of misguided metrics and unrealistic expectations.
Like the natural lifecycle of a product, the community starts a natural next phase: degeneration. As ESOs grow, they often develop incentives that can diverge from the actual needs of entrepreneurs. With larger budgets, more staff, and goals centered around sustaining the organization rather than supporting founders, the focus shifts subtly yet significantly. Meetings become less about helping founders build & grow and more about maintaining and expanding the organization itself. Before long, these ESOs are bigger and more influential than the entrepreneurs they were designed to serve. Instead of fostering founders’ needs, the ecosystem inadvertently becomes a “racket”—a term Hoffer uses to describe an organization that’s more about self-preservation.
This is a warning, not a condemnation. Maturing ecosystems need ESOs and their well-structured programs. But it’s critical they stay grounded to the original mission. The best way to do that? Stay founder-centric. ESOs should actively and consistently seek feedback from the founders they serve and remain vigilant about whether their programs genuinely align with those founders’ needs.
I saw this firsthand when I sat on the board of an ESO. When hiring a new Executive Director, we made part of their incentive plan meeting with founders. They got a +1 for every founder and a -1 for every stakeholder and the sum needed to be +20 for the month. You get the idea.
Ultimately, a thriving entrepreneurial ecosystem should continually check itself to stay true to its movements’ roots.
With focus on founder outcomes rather than organizational metrics, ESOs can avoid the drift into a racket, and keep the movement alive by remembering that ESOs exist to serve founders—not the other way around.