Washington DC Potomac River vs. California Silicon Valley

Every one is talking about change these days. As a serial entrepreneur who would like to position our nation’s capital as the technology hub and center for entrepreneurship, I have been thinking of the changes I would like to see take place.

My proposed changes are based on my educational and professional background as a Washingtonian since 1986 – working for startups like Yurie Systems (acquired by Lucent for $1.23 Billion in 1998), Newbridge Networks (acquired by Alcatel for $440 million in 1999), working for a several government contractors, and dealing with a wide range of both venture capitalists and angel investors while raising a total of $7 million for my two internet businesses B2B telecom marketplace Telezoo in 1999 and social media & search company Searchles in 2006.

Let me address the problems first before I start talking change.

If you contact our census bureau, they will tell you that DC has the second highest technology population after Silicon Valley. In addition, we have the nation’s highest concentration of advanced and post graduate degrees – meaning there are more entrepreneurs in DC with advanced degrees than in Silicon Valley. So then, why are Washingtonians not even close to Silicon Valley in terms of technology, funded startups, and investment opportunities? Three reasons:

1. Our local media companies have not been particularily supportive of the little startups these past ten years. Take the Washington Post as a classic example – they don’t provide enough coverage of our local small ventures. They mostly cover the big boys with deeper pockets, possibly in anticipation of future advertising revenue. And when they do cover a couple of the larger players like Sprint Nextel or AOL, their coverage is hardly positive. They do a good job covering government contractors though, which I think explains why 80% of all businesses in our town originate from the US government and why our government ends up buying products and services that are “proven” and have been operational for years.

The other reason I think our local media holds back from covering the little guys is their bad experience from covering startups prior to the 2001 bubble. We all know what happened then – most of them ended up shutting down. Our media may have simply concluded that it wasn’t worth their while covering startups with no future. If that is the case, it is worth noting that the same situation existed in Silicon Valley during the Web 1.0 era. But you didn’t see it stop their local media from covering the startups popping up throughout their region.

2. Our VC (Venture Capital) Community has never been as involved with their portfolio companies. Their classic mistake is asking entrepreneurs the financial and business model question during the very first meeting.

Don’t bother. Most first-time, young entrepreneurs lack business and financial experience. They typically have an idea and have built only the prototype. If interested, like most VCs in Silicon Valley, you need to a) Do your own part to evaluate the market and its potential for the product, and b) Tap into your rolodex and help them bring in the business-minded management team to execute the company’s vision. This way, the entrepreneur/founder focuses on the technology. So, spare them the business questions. Unless they intend to stay as the CEO or you intend for them to stay on as the CEO.

3. There have been only a few great local entrepreneurs from Web 1.0 era like Mark Walsh, Steve Case and Doug Humphrey helping new entrepreneurs in the Web 2.0 climate, but given the number of potential entrepreneurs our local schools – University of Maryland, the George Washington University, Virginia Tech – matriculate annually, we need many more successful mentors active in the community. This “grooming” deficit has contributed to a shortage in quality managers who are supposed to run our region’s emerging growth companies.

I believe a combination of these factors have been killing the culture of risk that existed in the 80’s and 90’s in the DC area. We tend to be more conservative on this cost anyway – it doesn’t help that a budding entrepreneur coming out of our finest universities has to weigh the benefits of operating solo in this unpromising environment with tossing his/her hat in with an established firm offering a good starting salary. Referring to my earlier comment about DC with highest concentration in the country of advanced and post graduate degrees compare to the people in Silicon Valley, think about it. Why would someone who has invested many years of his or her life in an advanced degree program, wants to risk it to start a new company as supposed to working for a well established company with a much higher pay. It is easier for a person to take such risk if he/she has not gone through all that years of schooling. just a thought.

In terms of a solution, we need some robust team work between our universities, VCs, local media, bloggers and the Gov 2.0 folks. Here is my message to each one of them:

1. Local media – in particular, the Washington Post, the Washington Times, and Washingtonians – large and small alike – need to place more value on coverage of startups. They may not have the advertising dollars to help your revenue stream initially, but with your support, many of them will in future. So, think big PLEASE. We need you as much as you need us.

2. The VC community needs to lighten focus on Excel spread sheets and la-la land exit strategies and hone in on ideas, technology, market potential and entrepreneurial je ne sais quoi. Do your homework on our inventions and craft your own analysis of its business potential. Then, use your own business and financial experience to identify key executive hires like the CEO, CFO and VP of sales. As an entrepreneur – particularly a first time entrepreneur – don’t depend on our vision of an exit strategy to close your deal. We have probably never done it, and are dreaming a Google dream on your dime.

3. Washingtonian Bloggers… if our online media and VCs drop the ball, it is your job and mine to create the buzz desperately needed by our startups – blog, baby, blog. Stay positive though. We need to work with our local universities on this.

4. Local universities – particularity the University of Maryland, the George Washington University, Virginia Tech, and George Mason University – all offer some sort of entrepreneurial program. Well, please ramp it up. I myself am a member of the GWU NAC (George Washington University National Advisory Council) and am working on several initiatives on this matter.

5. Washingtonian Gov 2.0 gurusMark Drapeau, Alec Ross, Federal CIO Vivek Kundra and Federal CTO Aneesh Chopra – you heard the problem. There’s a way to figure out how Gov 2.0 efforts and initiatives can fundamentally shake up DC’s startup environment, and there are some best-practice examples across the country for you to draw on. Do it quickly and efficiently please. Our region needs an injection of entrepreneurial opportunity, fast.

I look forward to working with all of you to make our nation’s capital a truly Awesome technology town.

For start, someone has to tell our DC CTO, Chris Willey to smile a little bit when giving speech in front of a large audience or speak with enthusiasm as supposed to putting them to sleep 🙂

Feel free to connect with me via awesomize.me

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About Elias Shams
I have been a serial entrepreneur in telecom and social media space for past 12 years or so. I hold a M.S. degree in Telecommunication Engineering from the George Washington University and a B.S. degree in Electrical Engineering from the University of Maryland. I’ve lived and worked in many countries and cities including London England, Tehran Iran, Bonn Germany, Paris France, Alicante Spain, Delhi India, and my favorite of all Washington, DC of great US of A. Two of the greatest Washington, DC based companies I worked for and very proud of are Yurie Systems which was sold to Lucent in 1998 for $1.23 B and telezoo.com that I founded in 1999. I am currently the founder and awesomizer @ awesomize.me

10 Responses to Washington DC Potomac River vs. California Silicon Valley

  1. dumbfounder says:

    I think Silicon Valley is to the US as the US (used to be) to the rest of the world. People came to the US for opportunity, and the US prospered because we accumulated hard working, gutsy people that were willing to risk it all to start a new and better life. SV has become like that for tech companies, and they have built a critical mass of mindshare such that it will be difficult to dethrone them anytime soon.

    As for the media, the WP is first and foremost a political newspaper. But nowadays they are going to cover whatever turns them a profit. They are just catering to their audience. I don’t see them taking a chance on anything else because they have neither the mentality for it, nor the money to spare to try new things.

    I do feel like the startup community is more active than it has been in the past thanks to events like Tech Cocktail and Social Matchbox, I believe both of which were covered by TechCrunch. Now the VC’s just need to pay attention.

  2. Kay says:

    Right on! right to the point! Could not agree more about our VCs in DC area

  3. As the recent Chairman of a technology startup, DayStar Technologies, Inc, I want to point out that there is a fundamental difference between the DC area and Silicon Valley that caused us to move DayStar from the East Coast to Silicon Valley.

    Silicon Valley’s technology heritage is in technology manufacturing and to this day harbors a very large pool of skilled scientists, engineers, technicians, universities, news media, VCs and angel investors with a start-up manufacturing culture. Having lived in the DC area now for the past 4 years and been active here in the growing start-up business community, I believe there is fundamental difference that restrains the DC area from reaching its true potential: a culture of technology consulting and reliance on risk adverse “government business.”

    DC’s heritage is in “government business” and lacks the vibrant energy of the risk-taking start-up culture prevalent in Silicon Valley. For the past 4 years, I have seen this difference first hand and close-up and while DC does have growing pockets of technology entrepreneurship, it is hindered by its ties to the risk-adverse “government business” mentality so prevalent here in all of the area’s institutions.

    You cannot have a vibrant technology commercialization community with a general “risk-adverse” mentality.

    • Elias Shams says:

      Hey Randy, Thanks for the comment. I think we are both on the same page. I need an Army of people like you to change the culture in DC. What are the odds of that happens within the next 100 years? 🙂 So, you are in DC, but your company in the West Coast?

      • Kevin Dewalt says:

        Elias,

        Great article. I think you actually missed another reason that is even more important in today’s environment: our local entrepreneurs do not collaborate like they do in Silicon Valley, New York, or Boston.

        “next 100 years”? Unfortunately I don’t have that much patience? 😉

        A few months ago I starting thinking about many of the issues you discuss. I concluded that I can continue to whine about my fate as a DC entrepreneur or I can do something about it. I chose the latter.

        We can’t quickly make the structural changes you talk about, but can start making a difference by getting people to help each other.

        We can start organizing at the grassroots level. We can start sharing what really does and doesn’t work with upcoming entrepreneurs. We can introduce them to the great funding resources like the NSF. We can help people figure out how to bootstrap on nights and weekends when they are away from their contracting 9-5 job.

        Heck, we can even ask Silicon Valley for help! We can take the best practices advocated by Eric Ries, Sean Ellis, Steve Blank, etc. and ask them to help us get innovation going here. The entire country has a vested interest in making DC an innovation hub in the backyard of our policy makers. Look at the start-up Visa movement as an example.

        In short, we can start building tomorrow’s army.

        That is the contribution I and a few others are trying to make,

        DC Lean Startup Circle

        Washington, DC
        3,288 Entrepreneurs

        We want to help you be a better entrepreneur. We’ve found the Lean Startup methodology is an extremely effective way to do that.Lean: Accomplish your objectives wasting a min…

        Next Meetup

        Generating Recurring Revenue through Lean Biz Dev + Sales

        Tuesday, Sep 16, 2014, 6:30 PM
        16 Attending

        Check out this Meetup Group →

        I’ve got a lot more thoughts on this topic including one big advantage we have over other incubation hubs. Just drop me a note at kevindewwalt –AT– kevindewalt —DOT— com if you want to grab a drink or a meal sometime.

        Thanks again, great post. And thanks also for the contributions you a making to our region.

  4. Elias Shams says:

    Hey Kevin, Thanks for the note. I will contact you shortly. I will also check out the DC Lean Startup.

  5. Anne Bentley says:

    Great to see this conversation and have joined the DC Lean Startup Meetup group. Elias and Kevin, happy to connect to discuss local PR and help in any way possible with your efforts.

  6. Glen Hellman says:

    Very well done Elias. You go guy! 😉

  7. I need to to thank you for this good read!! I absolutely enjoyed every little bit of it.
    I’ve got you saved as a favorite to check out new stuff you post…

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