What Does a Successful MN Tech Firm Look Like?

“The region has just a few large tech operations left (Lawson, Digital River, Seagate), and venture capitalists say most local software startups are tiny and will never grow into market leaders or large companies.” – Dan Haugen.

Most businesses, local or otherwise, are tiny and will never grow to market leaders or large companies. Minneapolis’ thriving restaurant, music, and art scenes immediately come to mind. Not to mention – my 2 favorite auto repair shops aren’t owned by large companies (though – they are market leaders within this 10 block radius).

I don’t hear many stories of restauranteurs struggling to get venture capital funding for their newest dining concept. Nor do I hear similar cries from other ‘industries’. Yet, the local zeitgeist in the web tech community defaults to getting early stage funding for ideas that aren’t capital-intensive or significantly innovative at a changing-the-world level (changing-our-world level: yes, that’s entirely different) ^[1].

“But not all industries are as capital efficient as the Web or Information Technology. Biotech, medical devices, semiconductors, communications and CleanTech require significantly more capital to build and scale before they can generate profits. It’s in these industries that the lack of a public market has taken the heaviest toll on entrepreneurs and their startups.” – Steven Blank

Re-read that statement from Blank. His list of industries hurt by the non-existant IPO market is a list of all the industries Minnesota is, or wants to be, known for.

From this angle – the acquisition of ADC Telecom is a success story. They beat the odds. Minnesota’s tech community should be celebrating. ADC found a $1.25b exit in a tough market.

Congrats.

In a world where IPOs and acquisitions are non-existant, the question isn’t – what local entity will grow to fill ADC’s shoes (assuming it vanishes from MN’s landscape)?. The question is – What does our tech community look like where everyone…

“…can find 2,000 people to pay … $40 a month for a product … make $1 million a year. The economics of that are liberating. When I can build a company that costs nothing to operate, that changes the way I can live” – Dan Grigsby

Grigsby paints a very compelling vision of Minnesota entrepreneurship. A vision less reliant on state policies, big funding, and big exits and more on a sale-able product to a global market. A vision that resonates with me, and I suspect many of you.

P.S. There’s been chatter over on Minnov8 on this topic as well, where Minnesota’s ‘risk-adverse’ culture (as compared to where?) is brought up as a negative.

If anything, it’s a list of positives.

If you want to have it all; raise a family, bootstrap startups while making a living contracting and consulting – Minnesota is the perfect place.

I’ve had enough conversations with people that have moved elsewhere to get funding for their company, find developers, and build businesses to know – it’s not any easier anywhere else. No place guarantees success.

1. The most recent example comes from Gene Rebeck, Twin Cities Business Senior Editor
“But one thing’s for sure: Start-ups are going to need access to capital.”