This is the final post in a series documenting this fall's Rise of the Rest tour, an initiative launched by AOL founder Steve Case and his firm Revolution. The rise of the rest tour works to create a more evenly dispersed innovation economy by supporting entrepreneurs in cities undervalued and underinvested by traditional venture capital. Follow these links to see posts from Baltimore, Philadelphia, Buffalo, and Manchester.
"And when there are enough outsiders together in one place, a mystic osmosis takes place and you're inside"
The Stand, Stephen King
The final day of this fall's "Rise of the Rest" tour led us to visit Portland, Maine--a beautiful town with a great history, and a startup ecosystem that is just beginning to emerge. At breakfast, Senator Angus King spoke about how Mainers (residents of Maine) historically are humble and reserved--and when building a startup ecosystem, maybe that's a bad thing. Growing companies need to get the attention of customers, engage far and wide with strategic partners, and generally instill confidence that they are on the right track--and one lesson from the Rise of the Rest tour is that burgeoning ecosystems do, too.
What will determine Portland's turnaround? As Jess Knox, the leader of Maine Accelerates Growth and startup champion of Portland, told a gathered crowd of business leaders in lunch, "attitude is everything." As Steve Case has repeatedly told business leaders throughout the tour--"most people look at startups and point out the ways they'll fail. Success requires looking at a startup and thinking of ways it can succeed." Portland has the opportunity to succeed--but attitude is everything.
The Competitive Advantage of a "Rise of the Rest" Company
Rise of the Rest startups are great investments for a few reasons: 1) companies outside New York and San Francisco are less expensive to run, and investment goes farther (and at better valuations); 2) enterprises in Rise of the Rest cities are able to keep great people for longer, not fighting wars of attrition with talent with competitors, and 3) startups in Rise of the Rest geographies have unique advantages that other areas can't replicate.
We saw the first two in action at Certify, an expense management startup that employs over 50 people. The CEO of Certify, Bob Neveu, talked about the very positive culture (one employee customers call "Mr. Happy") and the great employee retention/commitment in Portland.
Another great company building on local assets is Luke's Lobster. Luke, the founder, has 17 locations across the US that sell lobster rolls and Maine beer. We visited Luke's processing plant/supplier and learned how Luke's is differentiating itself in the rapidly growing fast-casual market (Chipotle, for example, is a $20 billion company). Where else but Maine could you find a lobster-related startup?
Companies like Certify and Luke's Lobster, when they are off the ground, have killer cost and loyalty advantages over startups in more crowded ecosystems. Then why aren't there more of them?
A Culture of "Yes"
Earlier this week, Frank Bonsal, an active startup investor in Baltimore, wrote about how the Rise of the Rest tour challenged Baltimore to create a "Culture of Yes" around startups. Yes, I'll take a chance as a customer of a startup. Yes, I'll have a coffee with a startup, offer some advice, make a connection, recommend a hire. Jess Knox challenged the Portland business community to instill that culture--Jess said his single biggest need was for the business community to take startups seriously--rather than as "cute activities." Attitude is everything.
The other reason a "Culture of Yes" in Rise of the Rest cities matters is that national investors, customers, and other backers take cues from what is going on locally. Steve Case's firm Revolution invests millions per startup in Rise of the Rest communities from its Ventures and Growth funds--but as Steve told local partners during lunch, "it's much easier for us to come in when local investors have shown the way." A Rise of the Rest partner, the Blackstone Charitable Foundation, was able to get the ecosystem off to a great start--supporting Maine Accelerates Growth with over $1 million--but Mainers are going to need to support continued ecosystem development. A culture of "yes" goes a long way.
The Cost of Doing Nothing
Portland was our 19th city of this Rise of the Rest initiative. While the goal of Rise of the Rest is to promote a more evenly distributed innovation economy, the reality is that some communities inevitably will rise faster than others. Portland has shown significant progress over the past few years, but so has Buffalo, New Orleans, Louisville, Albuquerque, and a dozen other cities. The cities that ultimately do rise--and attract talented people and capital, and turn them into jobs--are the ones that will move faster.
Several people over the course of the day said that one worry about a humble, quiet culture is it was slow to move, and at lunch, Steve reminded the Portland business community about the cost of doing nothing: "what you do in the next 1-2 years will determine the economy of the next 10-20 years." Ultimately, leaders in Rise of the Rest cities need to recognize that doing nothing to support startups has an unsustainable opportunity cost.
"Enough Outsiders in One Place"
The quotation at the top of this post comes from Mainer Stephen King's The Stand, and ultimately outlines the Rise of the Rest thesis--startups don't happen in a vacuum, they grow in communities; and a community is only "The Rest" so long as people in the community believe it is. JP Bak, an entrepreneur in Buffalo, said "Steve, we hope that the next time you come back to Buffalo you call this tour 'Rise of the Best'--Buffalo will have come that far!"
In Portland, as in the other 18 cities, we saw tremendous potential--and we can't wait for the mystic osmosis that will happen over the coming years that turn "Rise of the Rest" into the continued rise of the best.