I’m an unabashed fan of startup competitions, whether they be brief (like the MIT 100K Elevator Pitch competition,) multi-stage (like the Rice Business Plan contest,) or even multi-lingual (e.g., Le Defi des Anges Financiers in Montreal). What’s not to love? New companies get pitch practice and exposure, and the event draws together all the various players in the startup ecosystem…and the more times you can get a critical mass of decision-makers together, the better. While Vermont can’t run the same playbook as Massachusetts (which is the most entrepreneurial state according to several measures), as VT works to start a statewide competition it would be wise to copy as many elements from the Mass Challenge as possible.
I got a groundfloor view of the MassChallenge as a participant via Stromatec, one of the finalists. In addition, I’m linked as an investor to a few other companies involved in the MC: Project11, Pixability, and Gramify–and there’s one I’m still trying to get involved with.
Bostinnovation.com has already written on how MassChallenge came into being to help create jobs and spur the local economy there, and how the local community competed to help host the event. Before going a second further, click on this link for the scoop.
With that background, we can now ask what makes the MC different and/or structurally superior. Here’s what it boils down to for me.
#1 Purity of Purpose: Going Non-Profit
I think of the MassChallenge as another form of accelerator/incubator. Over 100 of these have shot up in the last year, and that’s terrific. But many of these are either commercial, or limited to a specific school or geography. Those factors make it harder to recruit the best mentors, and the quality and breadth of mentorship is the biggest benefit for all startups involved. I doubt that there would have been so much pro-bono involvement from mentors or contributions sponsors if MassChallenge itself had been making money off of the labor of its volunteers and backers. This isn’t to say that other incubator programs still won’t attract lots of attention from mentors–quality programs always will. But if MassChallenge in the future can offer similar networking and coaching without the giveup of any equity stake, they will start attracting the top tier companies. As evidence, several TechStars and Y-Combinator alumni startups entered the MC.
#2 Run BY and FOR Entrepreneurs
This will undoubtedly get me in trouble with academics, but entrepreneurship is not best taught out of the ivory tower, and academics who are not also entrepreneurs shouldn’t direct something of this magnitude. This is not to say that the schools’ involvement is minor: indeed, several schools are sponsors, and others provide feeder start-up competitions, space, and access to technical expertise. Similarly, the St. of Massachusetts was a key partner in promoting and sponsoring the event. Nonetheless, the successful accelerators—e.g., Y-Combinator and TechStars—all are run by people who have gone through multiple startups and forged successful exits. A Vermont Challenge can and should have a steering committee involving of a few academics and government officials, but it shouldn’t be run by them. MassChallenge had the support of both schools and government, but it could not have had the success it had without being run by two hungry entrepreneurs, John Harthorne and Akhil Nigam.
#3 Viral Recruiting
The neatest innovation at MassChallenge came via the application process. In it, 10% of the grades in the first and second rounds of qualification consisted of endorsement points from MA business leaders, including lawyers, accountants, VCs, angel leaders, business school heads, other entrepreneurs, etc. Applicants were told they needed to find the people who had been given these endorsement points, but weren’t given any names. What happened? A lot of buzz, a lot of networking, and some effective nudges for fledgling entrepreneurs to make things happen.
Since I don’t live in MA, I simply sent out a blast email to 10 angels I knew in MA, and snagged some endorsement points. One angel wrote back to me to say that he didn’t have time and wasn’t involved in the Challenge. Interestingly, after multiple other requests for endorsement points, he changed his opinion, rearranged his schedule, and not only served as a mentor but also joined in on an angel “master class” panel event. Effectively, the MC turned this qualifying element into a viral recruitment campaign to enlist mentors, as my experience was duplicated dozens of times by other applicants with other mentors.
On a more traditional networking basis, the MC was able to attract incredible speakers, because they lined up the commitments of a few big hitters (such as first tier entrepreneurs Desh Deshpande and Josh Boger) up early. With big names up early, they were able to attract the crème de la crème of MA entrepreneurs to speak with the startups, like Steve Case of AOL, Twitter and Tumblr board member and investor Bijan Sabet, Gail Goodman of Constant Contact, Robert Tepper of Millenium Pharmaceuticals and Third Rock Ventures, etc. As always, momentum begets momentum.
#4 Many Things for Many People
There were multiple attractions for the different entrants. One successful hi-tech startup, which came into the event with funding in place, viewed it as a business competition to win money, space, and visibility, and they achieved all three. During the day, you could see their team with heads down, banging out code. They didn’t attend the networking events much, but they were already well-coached and well-connected coming in, and they achieved their objectives.
Stromatec, on the other hand, wasn’t looking for space or for the money (not that we wouldn’t like more of both). We already had offices in Burlington, VT, and are supported monetarily by SBIR funding and advised by the Vermont Center for Emerging Technology. However, management needed to learn more about regulatory, reimbursement and legal issues concerning bringing medical devices to market, and it was important for us to link up with the important medtech community centered in Boston. A few hundred business cards later, the event was a total success for us.
Still other companies were in search of product/market fit, technical employees, getting together a funding strategy, etc. By blending both the best elements of an accelerator with a classic cash prize competition, the event was a success for most of the finalists selected.
#5 One Centralized Location with Subsidized Office Space
All finalists received the offer of free office space, and 90% of the events took place at those offices at Fan Pier in Boston. I’m convinced that those who relocated got more out of the 3 months than those who didn’t. While those who were on campus had access to more scheduled events, it was the unscheduled, serendipitous meetups that provided much of the synergy. Those in the office were able to get more leads from the great networks of the organizers, but the chance encounters with engaged mentors like Karl Buttner or chats with peers over the ping pong table were at least as important. Perhaps this is impossible in such a densely populated state…but if you can’t meet physically, we should find ways to do so virtually.
The Flipside: Where MassChallenge Can Improve
#1 Increase Selectivity: Too Many Finalists Now John and Akhil will argue that even very selective VCs have a terrible track record in finding the eventual big winners, so they wanted to keep the event as big as possible. I acknowledge their argument, and I understand that “The BIGGEST Startup Competition in the World” was a big starting point for getting enthusiasm kindled. But the tradeoffs included too small a signal to noise ratio for investors (even I, who spent many days on site, didn’t manage to meet half of the companies), too many demands for scarce time resources, and other compromises. While the governor and other civic boosters would disagree, I’d rather have seen more quality and less quantity in virtually all things, from entrants to programs. Just as companies prefer to recruit at the most selective colleges, angel investors with limited time and money prefer to attend demo days at the most selective incubators. Given one day, I’d rather see a TechStars or Y-Combinator demo day, where acceptance rates are 2% and lower, than a big event where 1 in 4 make the finals. Selectivity will assuredly increase next year based on this year’s success.
#2 Improve Communications (See point one for a main reason.) I have no doubt this will be streamlined and improved next year. The use of multiple Google Groups was a good early answer, but better methods will evolve. I especially would want to see all of the keynote speeches archived and accessible via UStream, with presentation materials archived and available via SlideShare or something equivalent.
One challenge right now is figuring out how to best establish “alumni cohorts”, or other ways to continue the momentum. It’s understood that this event is meant to be short to create urgency, and that it’s up to the entrepreneurs themselves to milk the connections, but an ongoing structure of future events and meetups can only help. I’m not sure how to improve this, and comments on how to do so would be great.
Lastly, since much of the value is peer-to-peer interaction, having clusters of activities on a single day to bring in all of the companies for a sector (say, “HealthCare Wednesday” or “Tech Tuesday”) would get critical mass (no pun intended) together more often.
#3 Specific Feedback Loops to Upgrade or Coach Mentors and Judges. Some mentors, as well as some entrants, were just dogs. How did they get in, and how can the MC improve the process for next year? Without specific 360 feedback, there won’t be data to help on this. I know of one terrific MA-based company that didn’t make it through the semi-finals, because they got dinged by a judge. They went on to receive over $1mm in venture funding and are doing exciting, disrupting, and potentially game-changing stuff in a massive market. Is anyone following up on the judge who dinged them, or looked at the process that froze them out, when many companies with less potential, less importance, and a weaker team got through? You can’t improve in future iterations without data, so we need to figure out a feedback loop. I suggest a 360 degree anonymous feedback process. Broad surveys were sent out, but adding specific questions (e.g., “Name 5 strongest and 3 weakest people you interacted with–please explain why with examples”) could only help.
There are numerous other instances where the event will continue to refine and improve its effectiveness. I am certain that the local angel groups will coordinate even more closely, resulting in more funding to deserving companies.
All in all, I give MassChallenge an A in vision, and a B+ in execution, with the expectation that next year’s execution will be even better. I’ll be back next year as a mentor/angel advisor, and I hope that when Vermont sets up its “Vermont Challenge” equivalent, it borrows liberally from the big 5 points listed above. Here’s hoping the new Vermont legislature and former entrepreneur/angel investor and incoming Secretary of Commerce Lawrence Miller talk to their Massachusetts colleagues to set up something comparable. Next post will highlight what elements a small state like Vermont can borrow from an enormous event like the MassChallenge, but on a lighter weight basis.