I attended yesterday’s Hawaii Venture Capital Summit and was excited to see such a huge level of interest from both local entrepreneurs and mainland investors. From my estimates, there were probably 200 people in attendance, which included startups, big businesses, angel investors, institutional investors, and everything in between.
A few key themes surfaced again and again during the morning panel discussion, which consisted of mainland investors from Arsenal Venture Partners, Azure Capital Partners, Epic Ventures, Polaris Venture Partners, Startup Capital Ventures, TEM Capital, and MPM Capital, and continued throughout the afternoon’s presentations by local entrepreneurial success stories, from Henk Rogers to the winning team from Honolulu’s first Startup Weekend.
Here are some of the bigger challenges to Hawaii’s startup community and the related comments from the presenters. We’ll try to tackle each of these individually and in more depth over the next few weeks.
- Hawaii’s “fear of failure” culture must be eliminated. This comment was made dozens of times during the event, but was especially frequent during the VC panel. One noted that the basic venture capital strategy is to invest in 1,000 companies knowing that 997 are going to fail – and they want that to happen! Another told a story about how he failed on a massive scale, losing $48 million, but also having the greatest professional experience of his life. This fear of failure provides a huge disincentive for many entrepreneurs, and not only pressures them to not start something out of fear of a black mark beside their name, it creates an aura of shame around failure rather than viewing it as valuable experience. Some specific comments:
- Chris Stone/Epic Ventures: Failures are OK, but I’m not seeing that attitude from Hawaii. You only need one or two successes to be considered a tech center.
- Tim Dick/Startup Capital: Hawaii’s entrepreneurs need more experience, whether that’s success or failure. Here’s to failure and ambitious ideas!
- Nashat Amir/Polaris: You can’t be successful without pushing the limits. Failure is part of that process and Hawaii needs to be educated on that. Failure is well accepted in San Francisco, Boston, and other “centers of innovation.”
- Bill Green/MPM: Accept that most startups won’t make it very far.
- Kevin Hughes/Sprout: Fail fast, but never stop trying.
- Hawaii needs an incubator to speed innovation, nurture ideas, and connect entrepreneurs. Many of the speakers at the event referenced accelerators and incubators, like Y Combinator, TechStars, and Polaris Ventures’ Dogpatch Labs. During the panel discussion, it was disappointing to hear Tim Dick’s comment that there has been talk of Hawaii-based incubators but they are “still a few years away.” However, it’s great to see that local entrepreneurs aren’t waiting for the establishment to get things moving: TheBoxJelly has started an “entrepreneur in residence” program to bring domain expertise to startups on a recurring basis (similar to what incubators provide), and there’s been a lot of buzz about a potential incubator from Startup Maui / Founder Institute, and even some talk about starting a TechStars-type incubator in Hawaii.
- Hawaii’s entrepreneurs require a robust mentor community. It was great to hear all of the speakers – mainlanders and locals – express a willingness to connect and help. But the reality is that Hawaii lacks a supportive, constructive entrepreneurial support system. One VC commented that Hawaii has no infrastructure for “the care and feeding” of local entrepreneurs, and even Henk Rogers noted that there needs to be more local support for startups. This vacuum is being filled to some extent by the entrepreneurs themselves, but it would be great to see more of a concerted effort by the local business and government communities to provide proactive mentoring. Organizations like HiBEAM, HSDC, and HTDC are available, but seem to lack any focus on early-stage startups and instead focus more on institutional initiatives and services for established companies. Hawaii Angels has a wealth of knowledge and experience within their membership, and would be a great place to start a mentor match-making program.
- Hawaii lacks technical expertise. The perception of Paul Weinstein of Azure Capital is that Hawaii doesn’t have deep technical expertise, and furthermore, he doesn’t see modern technology even being used by local companies. While the latter half of that comment is debatable, I know for a fact that the first half is incorrect. This is obviously a communications issue, and groups like Startup Weekend, Ignite Honolulu, and HI Capacity are doing their best to prove that Hawaii has deep technical know-how. The challenge will be to change that perception outside of the state, and then to start bringing more talent into the state to enhance our technical workforce.
- Focus on Hawaii’s strengths and don’t try to compete with Silicon Valley. Kameahmeah Schools’ VP of Endowment began the day by commenting that Hawaii can’t compete with Silicon Valley, so we must rethink our tactics. That’s a great way to begin framing the conversation: rethinking how an entrepreneurial community should be structured for Hawaii. Our access to successful entrepreneurs may be limited, so bring them here or set up web meetings. Our entrepreneur community is small, so let’s all work together in incubators, at TheBoxJelly, or by having more frequent and varied meetups. The Aloha Spirit permeates everything, so help out, share your knowledge, make a connection, and don’t be afraid of someone stealing your idea. John Trbovich from Arsenal Venture Partners said that “Hawaii will never be Silicon Valley, and you don’t want to be! Capitalize on your competitive advantages.” Our workday overlaps with all half of the world’s, from New York City and São Paulo to Tokyo, Shanghai, and Bangalore. We have a pressing need for more sustainable energy solutions, which has energized a vibrant and growing green energy sector. There is a cross-section of America in the tens of thousands of potential focus group subjects in Waikiki every day. Hawaii is a tourism entrepreneur’s ideal petri dish. Turn our location, economy, natural beauty, culture, and perceived limitations into competitive assets!
Beyond these topics there were plenty of great conversations at yesterday’s event. We’ll tackle each of these five items in depth in a future post, but feel free to add to, disagree with, or otherwise contribute to these items. The worst outcome from this event would be for everyone to agree that something needs to be done, and then forget about it in a few days and go back to the status quo. Maybe it’s time for some new blood and outside ideas, maybe it’s time to shake up the established ways of doing things, or maybe it’s simply time for some minor changes in attitudes and execution.
Whatever it takes, it’s clear that it’s up to us entrepreneurs to make it happen.
Let us know your thoughts.
[author] [author_image timthumb=’on’]http://www.alohastartups.com/wp-content/uploads/2011/08/jason_rushin-head.png[/author_image] [author_info]
Founder of HulaCopter smart-phone app, co-author of Behavioral Analytics for
Dummies and twelve years of technology marketing experience, both with startups and large