An entire episode dedicated to one topic: the current State of the Iowa Startup Community
Matt Patane, technology and innovation reporter for the Des Moines Register and Geoff Wood, community builder at Gravitate, sit down for an in-depth discussion of the companies, events and ideas making news in the Iowa innovation community.
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Geoff Wood: Hey there, this is the Minimum Viable Podcast, Episode 18. I'm Geoff Wood, a community builder at Gravitate and he is Matt Patane the technology and innovation reporter at the Des Moines Register. Hi, Matt.
Matt Patane: Hi, Geoff.
Geoff Wood: Each week we take an in-depth look at the companies, events, and ideas making news in the eye of the innovation community. What have you been up to this week, sir?
Matt Patane: Digging into a couple non-tech things, more on the finance and insurance side. Then over the weekend I checked out a cool event up in Ankeny, that's a bunch of drone racers. These eight guys basically got together, had some spectators, and they built their own quad copters and were racing them up and down the field outside of DMACC.
Geoff Wood: Wow.
Matt Patane: It was really cool to see, still kind of a new group, I'll have something on that. It's written but we're waiting for a video to come through so that'll be published hopefully in the next couple days.
Geoff Wood: Is it a hobbyist thing or is that like they're trying to…
Matt Patane: Yeah, so here would be kind of as a hobbyist event but there's been a lot of bigger groups taking off and bigger races. There's a huge race in Dubai a couple weeks ago with a million dollars in prizes. There's another company called The Drone Racing League, which I think is based out of Florida but I could be wrong about that. They have some investors including the owner of the Miami Dolphins, I think. They've made it into a spectator sport. Yeah, here so kind of getting off the ground, no pun intended. We'll see where that takes off. Also, no pun intended.
Geoff Wood: I like it. Aviation puns!
Matt Patane: Unfortunately there's a lot of those.
Geoff Wood: Very good. I guess we should probably mention that we had no show last week because we forgot to get it scheduled.
Matt Patane: Kind of forgot. Kind of really busy.
Geoff Wood: Ran out of time. We'll try not to do that in the future.
Matt Patane: Yeah.
Geoff Wood: As for me, I went to the Ames Seed Capital lunch on Tuesday. That was pretty interesting. I'd never been to a big…I don't even know how you describe that.
Matt Patane: Business luncheon annual meeting.
Geoff Wood: Yeah, I mean it was like 300 people. The Chamber invited us or who helps the Ames Chamber helps… the Ames Seed Capital is like an affiliate of the Chamber there.
Matt Patane: Right.
Geoff Wood: They wanted to get more folks from Des Moines involved in what they're doing and aware of what they're doing. Then obviously we've been working with them on Gravitate Aims so they thought that would be fun ...
Matt Patane: Right.
Geoff Wood: ... to have a table-full of folks come up so we did that. I'm not an investor. Never have been. I've never raised funds either but it looks like that's a pretty successful fund. I've always kind of known that because there's very few IPO's in Iowa and most of them have ...
Matt Patane: Right. They have a very ...Ames Seed Capital has very specific focus, which is Ames companies basically. A lot of, or not a lot, but at least couple of their companies are based in the research part of Iowa state so like New Link Genetics, Harrisvaccines I don't think based in the research part but still in Ames. I could be wrong about the ...
Geoff Wood: I think it's the research park.
Matt Patane: Are they?
Geoff Wood: Yeah.
Matt Patane: A lot of medical, from when I went a couple of years ago, because they invited me up just to kind of check it out, that was kind of the story. It's like these companies have gone public and even though they are still working on products, they still have a lot of promise in them, so that's been kind of their focus.
Geoff Wood: Yeah. Workiva, as well, is one of those and obviously in the research park that's made a lot of news. That was good to see and they actually walked through their returns, what they've done with companies, and like a lot of pie charts on how the fund has done and then they returned cash to the members that they ... It seems really successful. Dr. Leath from Iowa State, the President of the University gave a key note on what their working on, their agenda. A lot of that I think we've known, it's been reported but it was still good to hear. It was good.
Been kind of a slow news week. You and I talked, as we were putting this together, about maybe doing a different type of show today. Instead of going through three stories like we usually do, talk about one specific topic for the entire show.
Matt Patane: Right.
Geoff Wood: A lot of our listeners probably saw this in the startup of our Facebook group. We asked people for some thoughts on this topic which was kind of like what is the state of the startup community in Iowa right now. It seemed like there were a lot of replies on the post and then I got a bunch of direct messages on various platforms. Do you talk to some other people as well?
Matt Patane: Not directly about this but I kind of left that to you and went back to my usual day job. I looked at some of the comments and there are a lot of interesting thoughts. This is something that you and I have talked about a lot mostly because we are both super involved. You from the community level, me from the coverage of this community. It's been a topic, this idea of “where things stand right now”, where they're going, or what needs to be done. I think we should say like this isn't a one conversation done type of thing, this is something that probably everyone who cares or is involved in the startup community should be talking about at some level.
Geoff Wood: As I put in that post, if you're listening to this, you probably care about the startup community, I don't know why else you would be listening to this. Or you're my mom, or your dad.
Matt Patane: Right.
Geoff Wood: You're right. Absolutely. Everybody should have an opinion. We're not necessarily experts, we're just involved in this a lot so we have a lot to say and have thought a lot about this. Before we jump right into that question, though, do you want to thank our Patreon backers at patreon.com/welchavenue. If you like this show, this is how we fund it. We would really appreciate it if you go there and pledge an amount, say maybe a dollar per episode. We are getting towards the end of the month. This will actually come out in April so everybody who pledged during March will get their pledge times the number of shows we did, which I think was four, and that I'll run through. That's really an easy way to help support what we are doing. Thank you to everybody's that's done that and if you're interested in doing that as well, go to patreon.com/welchavenue.
State of the Startup Community, let's say April 2016 to beginning April. April, right.
Matt Patane: Just about. March 31st is when we are recording so.
Geoff Wood: Yeah. This year is moving quickly.
Matt Patane: Yeah.
Geoff Wood: I have written kind of “state of the startup community”-type of posts in the past and some things that I have looked at are like what's startup media like in Iowa and how is that contributing or not. Really I wrote about that because that's what's most interesting and I think would be most interesting to you or most relevant to you.
Matt Patane: Right.
Geoff Wood: Thinking about the investment community in Iowa which I know less about but is kind of crucial to lots of pieces to this and also about the startups themselves. We are going to start I think talking about media. Probably dip into some of those things ... We'll probably need to, as you said, continue the conversation at another time as well.
Matt Patane: This is kind of a disclosure, because I am reporting on a lot of this stuff I am going to try to play devils advocate ...
Geoff Wood: Are you going to challenge me?
Matt Patane: Challenge may not but try and like ... From what I've heard from other folks, if we are leaning on one point, I hopefully will be able to come up with the well, here's the counterpoint to whatever it is. Hopefully we'll get around to that. On the media one I have plenty of counterpoints, probably.
Geoff Wood: I like that you're going to do that. I am going to do my best to get you to offer opinions on things, which I know you do not like to do.
Matt Patane: Right.
Geoff Wood: I think, especially on the media, I think you can speak as a member of the media and not necessarily as someone who is being covered but part of the industry that is covering it.
Matt Patane: Right. Also, if anyone else has thoughts on this, please send us messages on whatever platform you like and we will circle back around.
Geoff Wood: I have asked you this question a couple of times. Can we start out with the premise that it feels like activity statewide is lower maybe than it was two, four, six years ago, for the startups.
Matt Patane: I think that fits because you and I have talked a lot about this off mic. Whenever you have asked me this question, and the question you often pose is, is activity down or does activity just seem down because there seems to be less coverage. For those who don't know the media landscape for technology, NI or just the media landscape in general, there's basically the Register, the Cedar Rapids Gazette, are two of the biggest papers that would cover business. There's a lot of small local papers that do a great job in their local communities. Then there's TV stations that I don't know are going to cover specific companies as much just because of how they format their news. Then there would be “Silicon Prairie News”, which was around and then their parent company went away and then they came back but they are based in Nebraska.
Geoff Wood: They're more I would say, for those who don't know I helped kind of start that company and worked for them for ... Really introduced them to Iowa and worked with them for four years. Lots of opinions there. I would say they are more of an industry blog type of thing than they are a traditional news source like the Gazette or over the news stations that you mentioned.
Matt Patane: Kind of general news outlets.
Geoff Wood: Right. They are specifically, at least back in the day we would say, we are writing for the people in the community. On top of that I think you throw in the business the record which is similar industry pub but for a different type of industry than “Silicon Prairie News”. Then there is national coverage too. The Tech Crunch, which is more like a “Silicon Prairie News”, but national and occasional like New York Times story that I'll mention.
Matt Patane: I could be wrong about this but from what I see I think, I'm the only reporter that specifically has a job to cover "innovation". One of my titles is Innovation Reporter. I don't know that the other news outlets have that. I don't say it to brag, like hey, I'm the only one but that's kind of just how things developed at the Register and recently at other outlets, I guess. That might be a tribute to the question of like, well is coverage is less, you know.
Geoff Wood: Right. At the end of 2014 ... 18 or 15 months ago, I guess. There were 3 reporters that had that, had Iowa as there coverage area and had full time beats related to this topic, right. There was you, who had just taken on the job recently.
Matt Patane: Right.
Geoff Wood: Right? In 2014?
Matt Patane: Yeah, late 2014.
Geoff Wood: There was Sarah Binder who is writing for We Create Here, which is kind of a subset of the Gazette. There was Megan Banister writing for Silicon Prairie News. There's those three. There was also Kyle Oppenhuizen, at the Business Record at the time had it as a shared title. He left to go to the Partnership. Perry Beaman is the one I think who took over that role. My instinct is, and I don't know if I've asked Perry this so I don't mean to be putting words in his mouth but I think Kyle was more personally interested, so found more stories to write about than Perry was on this. I've seen that decrease. They still do, I think they do like a technology issue at least once a year so they do coverage, it just doesn't feel like it's as frequently as they did before.
SPN basically collapsed at that point. Knowing a lot about that collapse and knowing the people involved, I don't think that had to do with lack of stories to cover in Iowa.
Matt Patane: Right.
Geoff Wood: That was like an activity issue. I think there was probably some people in leadership at the time that would say that. After I left they pulled out of Iowa pretty heavily but they had a staff person here. It wasn't like there weren't stories to cover.
Matt Patane: Right.
Geoff Wood: It was other issues the company was having. We created here, continued to write until, I think last time I checked was October of 2015, was the last time they published. I've never seen them announce anything about that being done but it is effectively a zombie blog at this point.
Matt Patane: That automatically, less reporters automatically means less coverage. Not to say that the Gazette, SPN, and the Business Record, and I aren't covering this stuff, there is just naturally going to be less of it. From my perspective in my role, since I have taken over, I will say we have changed the way we approach covering a lot of things. I have gotten away from doing a lot of the daily like, here's this event, or here is a calendar item, or stuff like that, mainly because I don't think people are coming to the register for that. People that are going to go to those events or be interested in those types of things probably already know about it or probably going to go to Gravitate or, the Partnership, or ...
Geoff Wood: Twitter.
Matt Patane: Twitter, yeah, exactly. You're already going to probably have a different source for that kind of day-to-day stuff. We kind have done that across the board. We don't do a lot of awards unless it's a really big Iowa based award thing, like the Prometheus Awards would be a little bit different, but there's tons of awards all of the time, we don't do a lot of the stuff.
Geoff Wood: Companies awarded and innovation awards, even.
Matt Patane: Again, that not only cuts day-to-day stuff. For me, just trying to re-evaluate a way to tell the stories coming out of the community, is doing the quick hit profile better, is waiting a couple of months to develop something better, is it better to do it around a topic that includes multiple startups. All of that contributes to a shift in the amount of coverage. Some days it will be a lot more, some days it will be a lot less.
Geoff Wood: It does feel that you're covering less stories in total on the innovation community, for whatever, like the sum total of what you talked about.
Matt Patane: I would say that's probably true.
Geoff Wood: At least on this beat. You also have other things you cover.
Matt Patane: Yeah. The startup community is not the only thing I cover. Again, up until two months ago, I was, as most people know, covering Caucus stuff as well, so there was a couple of months where I didn't have a lot of time. Even in, we are trying to put a lot more thought into the best way to both write the stories and get it to the most people because it doesn't do anyone any good for example, if I write up a Gravitate, that might be good for you because there is a headline with Gravitate in it, but that really doesn't do anyone good if no one's looking at it, or if there is nothing in the story worth looking at.
Geoff Wood: I did talk to Sarah Binder, the messenger yesterday, about this, she was really interested in what we were going to talk about, and it was your suggestion to reach out to her, so thanks for that. She had a lot to say which was great but she said a little bit of the same thing that you're saying, like we create here, she said really the struggle they had as the team was finding an identity internally. Like, within their newsroom, how is that different than the Gazette's business section.
Matt Patane: Right.
Geoff Wood: I am trying to describe this more than just what I got from her via messenger, so this isn't direct quotes. That was a struggle for them that I don't think they ever got passed and then externally what does that mean. It was a little bit of like a corporate innovation project and sometimes those don't work out, that's fine.
Matt Patane: Right. For me, I don't have ... I am a part of the business desk. I am not a separate entity within the Register.
Geoff Wood: Then she said we failed to find a big enough or engaged enough audience to keep going. She said had we found that a lot of those internal issues probably would have gone away because they just would have been smoothed over by like, oh there's all this interest in it.
Matt Patane: People weren't coming to us to read this stuff. That's a struggle for every, well not every but for most journals I would say. Unless you're sports and you have a dedicated audience for that, politics and have a dedicated audience for that, or here, agriculture issues are a big deal so there is dedicated audience for a lot of that stuff.
Geoff Wood: Okay. Maybe non-dedicated audience for, as big of a dedicated audience for this stuff.
Matt Patane: Definitely not as large I would say, for where I started with news.
Geoff Wood: What Sarah kind of observed in her experience at the Gazette is similar to what you're ... You guys haven't come to the same conclusions yet but…
Matt Patane: Right. We have no ... I mean no one has ever said we are going to stop doing this. If anything, the conversation has been how do we do it better.
Geoff Wood: Sure.
Matt Patane: You know. Better ...
Geoff Wood: Like doing podcasts.
Matt Patane: Better might mean less stories but higher quality or less stories but more people looking at those stories.
Geoff Wood: Yeah. Another issue on news coverage that Sarah brought up that I think goes a little bit to what you and I have talked about off line at different times. She said as legacy media is covering new businesses, she is seeing a trend where they are lumping all new businesses together, whether it is something that is maybe retail, small business start, or it's a startup. That type of thing. She says whether it is a coffee shop or high growth tech startup there is kind of a lack of understanding or sophistication in the media about the differences between those types of things. They are kind of reported as if they are the same thing but maybe they are not. If you go to the, and this is not what she's saying but my take on this, if you go to the Gazette today you can read about new business starts a lot but it's like dog groomers, hair salons ...
Matt Patane: We also have that.
Geoff Wood: You guys, was it the Altoona Movie theater was a big story for you guys, right?
Matt Patane: Right.
Geoff Wood: But not necessarily an innovative story, there's lots of movie theaters.
Matt Patane: Right. We have reporters that cover new businesses, changes in the East Village or whatever else, and then there would be me which would be more of, like what the Insurance Accelerator is trying to do, or this Ag Accelerator, if it ever comes around, what that would be. The newer things or disruptive, although I don't like that term because everyone wants to disrupt everything. That type of stuff would be what I cover. Or technology policy like the Apple-FBI fight.
Geoff Wood: Sure. Thinking about the quote, "Disruptive", companies that you cover, talk about how people ... You track metrics, as opposed to that Altoona story or different stories, how do you or readers and that engaged audience Sarah was talking about in Iowa, what is your observations on that?
Matt Patane: In terms of what stories do better?
Geoff Wood: Yeah, because you guys have to, every business looks at metrics, right?
Matt Patane: Yeah. I don't want to give away everything. A lot of, and this is kind of basic stuff, a lot of it depends on if what I am writing about, or what the company I should say already has a dedicated audience ... Principle financial has a huge presence in Des Moines. If they do anything and we write about it people will probably look at it because it affects a lot of folks. Dwolla would probably be another example, or Workiva, again not always, but it's kind of easy examples because of how big of a presence they are. To keep picking on you just because I don't want to pick on anybody else.
If I write about Gravitate, just having Gravitate in the story doesn't necessarily equate to a lot of people being interested. It might be if I am writing about something and then I am just talking to you about that policy. An example might be like I've written about a long time ago now, I wrote about a startup here that was trying to do something with Bitcoins. The story started talking to that company. The story was a little bit about that company but it also ended up being more about Bitcoins, the policy behind it, and concerns with it and everything else, and that got a lot more traction than if I had just done the quick hit on the one company.
Geoff Wood: Right. That's also a pretty, especially at that point, a trendy time to write about Bitcoin. If you were to write a profile of a new startup to people just with a technology that is maybe even not out yet, like a profile, how would that compare to a story written about a new coffee shop in Des Moines, do you think metrics wise? No name recognition for either.
Matt Patane: That's difficult for me to answer because I take a lot of personal responsibility in that ... I have no thought that this story deserves to be read just because I am writing it or it's about a new company or new startup. A lot of that is on me to develop a story in a way that is interesting. The coffee shop might do better just because at the outset that affects a lot of the general audience more. I do an apartment building or the High V downtown, people are going to be able to see that happening and it's going to affect them everyday versus a new startup, and I think maybe this is something that could be talked about more, a new startup does not. Facebook now ...
Geoff Wood: It gets me excited. I will read any ...
Matt Patane: It gets you excited. It gets me excited. It'll get a few hundred people maybe excited. But the general audience of Des Moines in Iowa, they might just look at it and go, this doesn't affect me. Ultimately that's what our job is. Our job is to write about stuff that affects people everyday.
Geoff Wood: My maybe reactionary response to that which we've talked about before is somebody trying to develop a new technology that's going to build in Des Moines is probably does affect more people than a new coffee shop because we have 50 coffee shops or something. But I understand that the general Register reader is going to be like, oh, a new coffee shop as opposed to, here is a company I have never heard of and I'll never hear of again.
Matt Patane: Right. They may not hear of the coffee shop ever again either.
Geoff Wood: Right.
Matt Patane: A lot of that I think is on us. That is not on the startup or the coffee shop to worry about. That is us doing our job better.
Geoff Wood: Right.
Matt Patane: Which I think is a general journalism trend.
Geoff Wood: I don't know if I completely expressed the thing that Sarah was bringing up there but would you agree with that tangent she threw or that kind of hypothesis?
Matt Patane: The idea that we need to find an audience?
Geoff Wood: That's an issue, is knowing the difference between different types of businesses in the media today. Maybe it's the making it interesting piece that you brought up.
Matt Patane: I think Sarah has a point. I struggle with this quite often, what do I count as a startup or who is actually an entrepreneur. Even here, with the smaller community, that word gets thrown around a lot, like everyone is an entrepreneur if they just have a new idea. Not that anyone here has told me, but that can easily become the trend, or I can write a story that's about people doing things and throw in the word entrepreneur just because I don't have any other word to describe them. It can get kind of diluted. Startup and entrepreneur, those terms can get used a lot more often than they probably should be. Even covering innovation technology, what really is innovative or a technological improvement. Yes, it's hard to parse what fits where.
Geoff Wood: It does get overly used and it is an issue in our community, not in the media, but in our community. I think part of it is to feel like you matter in the startup community you want to be an entrepreneur, right?
Matt Patane: Right.
Geoff Wood: Because that's who leads startups. I think taking a step back from that reaction opinion, startup community's much more than that. I tell people a lot that Gravitate is not a startup, I've never called this a startup, Gravitate is a small business that's more similar to a coffee shop but our customers are startup people, sometimes entrepreneurs, sometimes early teams. I have obviously thought this out more than that type of thing. I think that people want to be an entrepreneur because it's sexy within this community to be like, oh that guy founded a company and that girl is leading it. That is interesting. I am as guilty of it maybe on the other side.
I was in this Area Development magazine thing the other day where they called and I think Workiva had told them about us and they had said we are doing a story on incubators. Now I am not an incubator and I'm very clear about that. I knew what he was trying to write in that story and I'm like, we fit in the idea of what you're trying to write so I am going to answer these questions but my gut reaction is we are not an incubator, that type of thing. I knew what he was trying to get to. Even though the headline is Incubators Helping Cities, I don't know if that makes sense. That was me being on the interviewee side to craft my words to fit the type of story he was trying to write.
Matt Patane: Maybe we should move on because we want to at least touch ... But I want to circle back so I think all of this discussion is very journalism heavy discussion because it's what I'm super interested in and I think what you're interested in but I think it goes back to the question of what is the state of the community right now. Is there less attention because there is less stories being written. I think part of that is because the audience, I'll be honest, the audience for specifically startup news in Iowa probably isn't as big as a lot of people think. Now that being said, that doesn't mean none of these people aren't worth writing about. It means that I as a reporter or the other reporters, if we think the story is valuable we have to do a better job of explaining to the general public like, hey, this is why you should care about these people.
For me, my other beat being insurance, that's the exact same thing. Me, writing about principals new logo is fairly easy, partially because it's interesting to a lot of folks, people care about new logo and principal employs 6,000 people in Des Moines. If principal rolls out some new product or some new insurance policy, that's very dense but it's important, I have to then explain it in a way that the general audience can grab onto it.
Geoff Wood: That makes sense. I would say, we kind of talked about just a few publications, there are, if you read my newsletter I try to pull a lot of stuff. I would say most of the things written outside of those publications are not written about startup, they maybe written about a startup but not because it's a startup, it's a small business story. I think the answer is, well I don't know what the answer is. I mean is there less activity or just less coverage of activity so we feel like there's less. Do you have a definitive?
Matt Patane: I kind of think it's a bit of both.
Geoff Wood: Okay.
Matt Patane: One example I will give is Startup City. Startup City had already closed by the time I started but I think in Des Moines, Startup City at the time was doing a lot for the infrastructure of the community, because it was kind of the first, at least from what I have been told. Kind of the first time there was an organized space, like a specifically organized space for startup folks. Even those startup entrepreneurs had been around long before. Not the first but the first long lasting.
Geoff Wood: No, there were coworking places that were serving that need. I think one had the name “startup” in it and that was a time when that word was very ...
Matt Patane: I'll put it this way, it grabbed a lot of attention.
Geoff Wood: It did. I think part of that was the entities that backed it were people that knew how to get attention. The Partnership, the state, the county. When you have governments involved there is more scrutiny but almost in a positive way. Like look what the governments doing.
Matt Patane: There's a difference between grabbing a lot of attention, which is good, you need attention to grow anything. There is a difference between grabbing attention just to grab attention and then grabbing attention because you're doing something. Doing something worth writing about, from my perspective.
Geoff Wood: Right. We don't have a definitive answer but I think we feel like it's less. I feel like it's less. I talked to somebody recently, I didn't ask so I won't share his name, but had lived here and saw the excitement at that point, has been gone for three years, and recently moved back and he just feels like there is nothing going on in Des Moines.
Matt Patane: To play devils advocate, some of it might be the community's a little bit more mature in that there might be more folks doing things but they're actually just trying to do the thing that they want to do.
Geoff Wood: Like their ...?
Matt Patane: It's a very vague term. Like they're actually trying to build something instead of throwing parties, having meetings, or whatever else. They want to just build something. Maybe they are using that other folks that can get them attention to do it, where they're going to an incubator, going to an accelerator, or they're leaving the state and coming back, or they are having their heads down at their desks building because they want to build a company. That's another possibility.
Geoff Wood: Could be. Where do you want to go next with this?
Matt Patane: I would say let's try to hit on the investment route because that's probably what some folks are interested in.
Geoff Wood: What is the state of investment today, is that the question we care to talk about?
Matt Patane: Yes. Again, I'm not an expert in this. I have never raised money. My only experience is talking to folks who have raised money and those who invest in companies. I think it's probably ...
Geoff Wood: I'm in the same boat. I've never raised money. I'm not an investor.
Matt Patane: ... I think it's probably better than five years ago. It's definitely improved because we have, not we, the state has Next Level Ventures, there's a new investment fund coming online, there's a couple others that might be in the works. I think Des Moines and Iowa in general have grabbed more attention so there's more eyes on the state. That being said, I have heard from a lot of companies that it's still very difficult to raise money compared to other cities kind of just because it's Iowa. There's either less funding available or the investors want more out of you. They're not going to invest in you, necessarily just because it's you, or because you have this idea. They need to see something first.
Geoff Wood: Right. In more sophisticated evolved markets, I think there is the idea that you just invest in the team. Like, do I believe this group of people is going to be successful. Here there has been the feeling at least, people want to see revenue before they'll start to talk to you. At the time that you needed the early stage capital to get to the revenue, they're not interested in talking to you. But once you have the revenue, all of a sudden they want to invest and help you scale that maybe, but at that point do you need it and is it enough.
Matt Patane: The consequence of that would be if you have to wait longer to get money, so you're trying to find money from other sources like a day job, it takes longer for you to build your company and maybe you cannot do it.
Geoff Wood: And maybe you missed the opportunity.
Matt Patane: Right. And you give up.
Geoff Wood: As a whole I would say 2016 feels like it's starting really strong for investments.
Matt Patane: Right.
Geoff Wood: 2014 was really strong for investment. 2015 was not. I don't know if that reflects national trends too.
Matt Patane: Yeah and that could just be, I mean some people that I have talked to said the community just kind of goes in cycles. There's a couple of years where things are really great and there's a couple more years where there's a lull and then it kind of goes back a little bit. I mentioned this a couple of weeks ago when we were talking about all of these new investment stories that I have written and others have written. I pointed out, as most people are probably aware, this didn't happen overnight. A lot of these deals have probably been worked on for the last year.
Geoff Wood: Right.
Matt Patane: They were being worked on in 2015 but only finalized in 2016.
Geoff Wood: Seeing the investments made is a lagging indicator of where the investment community is, maybe?
Matt Patane: Probably. Yeah.
Geoff Wood: We don't know just because we're seeing a lot of investments announced right now that we'll have more coming because ...
Matt Patane: 2017 could be a lot more or it could be none because maybe all of the money went this year.
Geoff Wood: Yeah.
Matt Patane: You know.
Geoff Wood: You brought up something before we started recording that I want to talk about here. No one is definitively tracking this data for Iowa.
Matt Patane: Right.
Geoff Wood: At least we cannot find anybody. I am doing it haphazardly.
Matt Patane: I am kind of in the same boat. I don't view my job as trying to be the ultimate database of startup information. I think that would be the wrong thing for me to do. My story, or journalism stories, act as that database but if I miss a seed round and I don't hear about it, that's automatically something I don't have, or that we don't have.
Geoff Wood: Did you report on AgriSync’s raise?
Matt Patane: I did. Yeah.
Geoff Wood: Okay. Because I found that in something called Ag Funder News down in Florida.
Matt Patane: Right.
Geoff Wood: I actually called or emailed Casey and was like is this a real story because Ag Funder News sounds like a made up news source. He's like no, that's the place you announce ag funding. Oh, okay, I had no idea. Where I was going to is like had you not reported on that, we could have been completely missed because that's a good point. There are some online sources, like databases and things like Crunchbase and AngelList and things like that. I don't feel like we are a sophisticated enough market now where people really put that information out there for you to be able to go and look at AngelList and see what the funding was for the first quarter. That is just not there for us.
Matt Patane: Right. Every time, and I bring this up because for me it would be helpful, like at the end of the year or once a year there was a group that was putting together an annual report. Like the Kauffman Foundation has their, it's kind of like condition of each state. Last year Iowa did not rank very well, you know, and there were various reasons for that.
Geoff Wood: I feel like that's probably often the case with Kauffman’s report. The metrics they track are probably not what we really perform well.
Matt Patane: There are groups and organizations that track investment funding and I have seen state numbers for Iowa but I don't know how their getting their information necessarily. I don't know who they are talking to or because I haven't seen a state wide database for this, I don't know exactly what they're tracking.
Geoff Wood: Right. I've looked at some of those numbers at various times and found there are things that I know about that happen that aren't reflected there. I don't know that I can trust those even if you see them. You mentioned, the state of Wisconsin has a pretty active VC association tracking?
Matt Patane: I think it's Wisconsin. I could be getting my states confused.
Geoff Wood: I feel like I've seen that too. Maybe that came from a generator email or something where they were sharing it. There's a relatively new Venture Capital Association here.
Matt Patane: Right.
Geoff Wood: Do you know if that is something they intend to do as part of their work?
Matt Patane: I don't want to say because I am not sure. Possibly. I am sure I have talked with them about it, I am just not remembering. There are other groups in the state that I think would like to try and do that and for whatever reason, just haven't started doing it yet or haven't been able to yet.
Geoff Wood: I think the other piece of that is if somebody's doing it, somebody may be doing it and not sharing it. If somebody like the Venture Capital Association does, it doesn't mean they have to share it outside of their membership, either. It is hard for us as observers and members of the community to get a feeling on that one way or another.
Matt Patane: If you're going to use purely investment as a measure of success or failure, which I don't necessarily think it should be, but if that is one of the metrics you are going to use, I don't know that there's a good way to track that right now.
Geoff Wood: We do know what's important, I think. To be able to access investment capital, if you choose to go that route for your idea, that needs to be something that can actually here.
Matt Patane: I might be jumping too early but this is something that Greg Bailey had pointed out a little bit, I am probably taking his point a little bit farther, in the Facebook group he had pointed out kind of “how are we measuring success”? Is measure of success going to be how many small businesses do we create that have X number of employees, so in other words more employees means more success, or is success measured by the number of entrepreneurs that positively exit their companies. Then I am adding this, hopefully going back and starting newer companies so these entrepreneurs are continually successful.
Geoff Wood: Like a Matt Ostanik exiting his first company and now doing …
Matt Patane: Or someone from Workiva or Dwolla going and starting something new. I don't know what the answer is. Do we want success to be these two hundred technology companies that started small and now employ 10,000 people or do you want it to be these 50 entrepreneurs have started 200 companies and raised X amount of money.
Geoff Wood: I don't know that there is a way, who determines that metric. It is a good discussion thing but what I think is important for success, and what Grieg thinks and what you think are probably all a little different things based on where we are, or what our personal agendas are, what we are most interested in. I don't have a good answer to that, I guess.
Matt Patane: That's another, to go back to that question, what's the state of the community right now or what's the state of startups in Iowa, that would be one way to measure it. Either way I don't know that either one is super high. I mean like Workiva obviously employs a bunch of people. I don't consider them a startup anymore since they have gone public.
Geoff Wood: It's kind of tough to call yourself a startup, not that they would.
Matt Patane: So the technology sector employs thousands of people. It's mid range compared to other states, we are like 30 or 40 compared to other states.
Geoff Wood: Is that per-capita measurement?
Matt Patane: I think it's just total ... I'm getting my numbers confused. I think it's just total number of people employed in the sector. California is obviously super high. There's different reports that I'm vaguely pulling this data from.
Geoff Wood: 3.1 million people here so I wouldn't expect us to ... Maybe, I guess, other states are smaller. That's a good point. I would say, just saying more like, we talked about Ames Seed Capital, I think there are other groups like that around the state. There is lots of people trying to raise Venture funds at some level, not lots but some. I feel like at one point there wasn't. We have things like Planes Angels, I don't know if there is an opinion, I don't hear about Planes Angels very much anymore. I know they are still operating but there was a time where everybody was like, "This is exciting!" I don't feel like that is there. They do now put their portfolio list but they're not like Ames Seed Capital, where Ames Seed Capital is fund that invest. Planes Angels is like shared du-diligence organization and then individuals can. It's tough to look at them an know whether what they're doing is ...
Matt Patane: Plains Angels, to play devils advocate, they are also a smaller group. With Angel groups you're not going to see them with these huge rounds. They were one of the investors in Clinic Note.
Geoff Wood: They weren't. People, members of that group.
Matt Patane: That's true.
Geoff Wood: That's what I'm saying like it's hard to ...
Matt Patane: It's not the group itself.
Geoff Wood: Whereas Ames Seed Capital is a group that invests as a fund as opposed to ...
Matt Patane: On behalf of the individual investors.
Geoff Wood: I don't know ... That's an entity I am glad is here and I think, like I said I have not raised money, so I don't know if it's working or not necessarily but I am glad we have things like that here. I remember Tej being pretty excited a couple of months ago in talking about that they had worked out syndication deals with other states. They were also looking at Minnesota deals. Then, I think, those states were looking at Iowa deals. I haven't heard any results from that yet. Maybe it's out there, they don't put out press releases when they do them.
Matt Patane: I think that goes back to you're not going to see funding news everyday.
Geoff Wood: Right.
Matt Patane: On Tech Crunch, if you go on Tech Crunch there is always a funding story. To be fair, they're also covering national, international companies. It just depends on how much weight you want to give that. Given investment news to success.
Geoff Wood: This might be a topic that we could bring a couple investors in on a future show to talk about the state of the investment community or people who have tried to raise or that type of thing. And get a little more in depth on ... Maybe before we move onto the next thing I'll just say that I always think about something, I think it was in startup communities that Brad Felt said, "No market will ever think they have enough capital."
Matt Patane: Right.
Geoff Wood: It's not like we'll get to a certain level and be like you can get anything you want here funding wise. We'll always be having this discussion.
Matt Patane: That's absolutely a good point. The investors will say, of course we're not investing in you, you haven't shown that you can do anything yet. From their point of view it makes perfect sense, if they're going to give you money. Then if you do it from the start you're like yeah, but I need the money to do the thing I am saying I want to do.
Geoff Wood: Right. It maybe easier in another place or there maybe a market that understands your idea better than another market. Let's say it's an insurance idea, there are ways to get that funded in Des Moines now that it didn't used to be here, like the Accelerator. That was hit. What do you want to talk about next?
Matt Patane: I'll let you pick because I've picked ...
Geoff Wood: Let's talk a little bit about, I guess what I have been calling infrastructure for the startup community. In framing this against those posts I wrote a couple years ago, I didn't write about infrastructure but I feel like we have come maybe the farthest on the group of people, which includes myself, that is supporting what's going on with startup activity in some method or another. I think we've talked, I know we've talked here, sixteen coworking communities, maybe more now, two accelerators that are the traditional sense, maybe five other things that are called an accelerator in one sense of another.
Matt Patane: If you want to count three 1 Million Cups chapters to however many community events there are.
Geoff Wood: Venture School going on all across the state. Startup Weekends. You know we had the four or five startup weekends going simultaneously. All of that get an idea, get better information about it, improve it. That supporting thing out there seems to be booming for us now.
Matt Patane: More pitch competitions.
Geoff Wood: Like Invest In She.
Matt Patane: In the InnovateHER, there is the Pappajohn Pitch competition, there's a whole bunch of Dream Big, Grow Here, which has been around for a long time.
Geoff Wood: There was some story in the Gazette this week, I didn't put in my news letter, I think it was a Main Street pitch competition. I think it hit my radar because you got coaching from the startup accelerator as part of that. How do you feel about infrastructure right now?
Matt Patane: I think, what you pointed out is accurate. I think from just a couple years ago, a lot more stuff, organizations have popped up. I think either individual cities or individual groups, I should say, have caught on to the idea. If we want startups to grow here, they have to have some support, some formal support. Just going and grabbing coffee with someone might be great, but it's probably not enough for them just to continue on. You need to have, if you're a student, having the Pappajohn Center probably really helps because if you have no idea how to start a company, you now have someone to go to and talk with.
Geoff Wood: When you say the Pappajohn Center, there are five of those in the state?
Matt Patane: One of those ...
Geoff Wood: That's what I'm saying, that's how much is out there.
Matt Patane: Those have been around for a long time. Even Iowa state is starting a student summer accelerator, similar to Drake’s, and similar to, I think the one nearest to Iowa, and a couple others. The idea being that if we want students to go into entrepreneurship, we need to offer them a way to do it. They probably cannot support themselves with ten thousand dollars. The insurance accelerator and the Iowa startup accelerator, kind of the same thing. Instead of having, and I am probably putting words in their mouth but the organizers of that I think would be, if we want to support startups in Cedar Rapids or Iowa or Des Moines, why would we have them leave the state to enter an accelerator, why don't we have them look to us to do it. NewBoCo and Cedar Rapids is doing even more than that from coding education to just one way 1 Million Cups to other get-togethers, stuff like that.
I think the infrastructure has grown a lot in terms of the support structure. I think, the question I would ask a lot of people, is does that translate into more success for specific startups. In other words, is the community, while worth while, is the community, does the community matter enough or would you rather just be working in your startup. What comes first, a community or your company.
Geoff Wood: I think there's two ways to think about that. Are we seeing more startup activity because we have the infrastructure to support it. The infrastructure is there but are people taking advantage of it and is it resulting in more companies or more investment or more employees or whatever metric you want to pick. There's that piece. Then there's the is the community around startups helping, and I am not even talking about this stuff ... We haven't really talked about the events a whole lot, which you are at a point now where you can go to events pretty often. Several times a week you can go to events but is it worth it to you on your startup to do that.
Matt Patane: The other point that I was going to bring up is another question I would post to people is just because we have more events, pitches, or groups, is the quality as good or are more things just popping up just to pop up. I don't have any specifics so I'm not trying to call anyone out, necessarily but that's something to think about. Are we just starting stuff just to start stuff. Are we starting stuff because it grabs attention and it gets people together or is what the community is starting actually resulting in growth.
Geoff Wood: Right.
Matt Patane: I don't know that there's a good answer to that.
Geoff Wood: It's important to consider. I think there are things that are started because maybe we see them somewhere else and feel like, oh that's providing something there, we should learn from that and do it here as well. I don't know that we always vet those to see if they really provide value here. These are important questions. I feel like I should have an answer for them but I don't. Sarah and I were talking about this as well, I really like that there is a pretty low friction path to building a company here right now, if you choose to take advantage of it. This is something I didn't used to think exists but you can go from a startup weekend idea generation event to Venture school, which helps you vet and do customer discovery to see if that's worth going on, at pretty low friction, keep-your-day-job, $500 or something and then potentially get into something like the Iowa startup accelerator or if it's an insurance idea, GIA.
You kind of have all of those steps that you can do within the state, if you choose to stay in the state. You can always get those somewhere else if you wanted to. I don't begrudge anybody. Elizabeth is out in San Francisco and Jackovin went to Boulder. Those are probably even better for us than when people stay in the state because they bring networks with them and are more like ...
Matt Patane: Right.
Geoff Wood: You can stay in Iowa to do that. I don't know that we've seen anybody do that yet, that has gone through that cycle but the cycle's here. The closest thing we could come up to was Care Drop, which is not a traditional startup because it's kind of a joint-venture, corporate innovation-thing with Mercy and Geometric, but it's done those three things, now. The group that does those three things is also ... It's a little incestuous, not in a negative way, but it's all internal there. You literally can do that now and go through that path. I think that's an exciting thing to say like, all of these steps are here, you just have to take advantage of them, have the right idea, and put the work in. I would say that is a positive thing for our startup community, for sure, right now.
Matt Patane: I don't have any good answers to any of this. Part of my job is not to have the answer necessarily but to ask all of these questions.
Geoff Wood: How about your opinion on this?
Matt Patane: You know, I don't think none of this ... The reason we brought this conversation is not because either one of this thinks oh my god, the startup community in Iowa or Des Moines is all of a sudden gone. I don't think that whatsoever. I don't think you think that whatsoever. Maybe I am wrong but you have a different opinion. For instance, the Register would not be asking me to cover this stuff, even if I'm covering less of it, they wouldn't be asking me to cover it at all if there wasn't something to cover. That's kind of what happens, from what I was told three years or four years ago now. When the Register started covering this it was because something was happening. Because there were companies here trying to build things. In terms of the community though, yeah, I think these questions have to be asked and answered by members of the community, like you or the GIA or the accelerator. For this to continue ...
Geoff Wood: Or really the founders of the companies, right?
Matt Patane: Right. Now that there's one correct answer, a different founder could have a different sense of success. I think there still is a long way to go.
Geoff Wood: Yes.
Matt Patane: In all of this.
Geoff Wood: Before we wrap that up, I think, the other thing is probably the events thing. Let's talk about your point there on events more. Is it worth it, all of that. Do you want to talk more about ... Because you said you have asked that question before.
Matt Patane: I have kind of, and these were all informal conversations so I am not going to name names but this idea of all of these different pitches, all of these different events. You know, for me, I don't go to all of them anymore partially because of scheduling and partially because how do I decide which pitch event, and again I have a different perspective than a lot of folks because I am covering it, I am not participating. Do I drive all the way to Cedar Rapids or Iowa city for this event when next week there might be something in Des Moines that's kind of the same. I made that decision yesterday. There was a cyber security panel at Iowa state and there was going to be a similar one at Drake. I didn't go to Iowa state because there was going to be the one at Drake.
I think as a startup, founder, entrepreneur, community member, it might be the same thing. How much is too much. Why go to that pitch competition when I can just go to the one that's closer to me. I think, from what I have heard from some folks it might be that events that have been around for a long time, because there is all of this new stuff, might not serve the same value. It's either we are assessing those events to make them better or not doing them anymore, because they have been replaced. Which again, I could argue is a good thing. If something came along to replace something else and is doing it better, that's fine. I don't know if that was an answer.
Geoff Wood: I think it's a good point. It's something that I struggle with because, same thing, I get invited to all of the events and in my role as community builder, I want to show support for the events. I have had to take a step of thinking about, because I run my own business now, and I don't like any of you who have emailed me. I don't get back to people as fast as I want at all. I just cannot do it. 1 Million Cups is an event that I have had to just say I cannot go to anymore. I used to, for two and half years maybe, I think I went every week to that but that's like two hours of your week, every week. I got to a point where I'm not getting stuff done. I was like, I am coming to this now out of obligation versus seeing real value in this. Lots of people see real value in 1 Million Cups, I'm not saying it's a bad thing. I'm saying for me it got to a point where it just wasn't working.
Matt Patane: Right.
Geoff Wood: Now I have had to say rather than plan my day, my week around it, I just need to look at who the speaker is and see if it something pertinent to me to go. I feel bad saying that out loud but that's just where I've got to.
Matt Patane: You have a point. If you have been going for three years, maybe it doesn't offer the same thing anymore but the reason it's still going is because there are people who are going to present that get something out of it.
Geoff Wood: Right.
Matt Patane: When 1 Million Cups moved to downtown and moved to the science center, the crowd seemed different, first because the timing was earlier, it's a different location. It gathered different people that hadn't gone the last two years.
Geoff Wood: Right. I think the role that I see that event playing really well is, hey, you're new to Des Moines, here is a consistent, reliable event that's going to happen every week, so if you cannot go this week, go next week. It's a way to meet people and kind of see what's going on with the community. There's value to the companies their pitching too. That's where I recommend, and I still, I have always recommended1 Million Cups for that reason, for that purpose. I think this also kind of speaks to something that I have talked to a couple of people about this week, startup weekend the organization at one point had this chart that kind of showed the entrepreneurial path, or the founders journey or something.
The first step, I think was called inspiration and then, I don't remember what the last step was, maybe like IPO. You have different needs, different events, different support things that help you at the front of the path versus the middle of the path versus the end. At one point I actually, because I was working with startup weekend in 2011 on a project, we were tracking all of the things going on in Iowa for startups and what steps they fit in. Almost all of our events, at least in Des Moines, are really up front. They are at that inspiration. It's the get excited about maybe being an entrepreneur. It's not about now I have two employees, it's not about now I have 30 employees. You don't see Ben Milne at 1 Million Cups because he has 60 employees, I'm not sure that provides value to him, not to speak for him, I am just throwing his name out there.
What I think maybe missing, and maybe why it feels like events aren't worth it ... No, that's probably not the right ... This idea of it's just a bunch of drinking, it's just a bunch of coffee, and that type of thing and there's not tangible value for it, it's because there's not a lot of events ...
Matt Patane: For people beyond the introduction stage.
Geoff Wood: ... beyond that first step. I don't know what those events would be. Speaking of Ben, I remember a couple of years ago, Ben, Jackovin, and Mike Ferrari from SmartyPig and I went to dinner. Ben invited us all to dinner at Americana and he's like, "We're just going to talk about Bawte, tonight." This was before the accelerator and everything. Let's run through some ideas. John's got some things he's struggling with and some things he wants to try and I just want to get your feedback on that. It was really fun, we had a three hour meeting, we had a great time, and I hopefully provided value for John. I remember Ben saying like this is the type of thing that when he is in San Francisco he gets invited to. It's not a formal 1 Million Cups, or Startup Drinks, or Tech Brew or whatever event, but that's more maybe the events. Maybe those are happening all around here, I just know of them.
I really enjoyed that. That might be something that is more later on in the cycle that we need more of to evolve the level of sophistication. That sounds negative and I don't mean to but as our community evolves, more events further up the scale.
Matt Patane: If you want the community to mature or if you want startups in the community to mature, the community has to kind of grow with them.
Geoff Wood: When you say, is the community worth while or worth it, like that type of ... I don't remember how you phrased that question originally. I think, yes. I think yes at every stage. At community it is probably different at every stage. I think when we say community a lot of people are thinking about that first step. The things that are very visible because they are trying to attract people on a broad scale rather than pin point like, I need you and you right here. That type of thing. Does that make sense?
Matt Patane: Yes.
Geoff Wood: Maybe more of an answer to that, then we have for somebody else. We are way passed time today. The group that we didn't really talk about and maybe the thing people tuned in to listen to was really the last bucket I had, was the startups themselves. Obviously they have woven through everything we have talked about but we haven't talked about talent. We haven't talked about diversity, which was the very first thing somebody commented, Clare McGranahan commented on diversity, especially around women entrepreneurs, which has been a focus. We haven't talked about things like depth of experience. Are there people here to learn from or do you tap out and maybe leave the market. I want to talk about all of those things. Maybe we can do that on a different show. Just talk about that, does that work for you?
Matt Patane: Yeah, that'd be great. I would really, and I know these conversations are happening all of the time and I'm probably not privy to them because I am a reporter and people don't want me to speak in public, but I would encourage everyone to just keep having these conversations or to question us ...
Geoff Wood: Yeah.
Matt Patane: ... if you think that we're wrong or we didn't point out something, let us know.
Geoff Wood: Right. Yes. Let's do another show, I don't know if it'll be next week, but maybe at same point.
Matt Patane: At some point, yeah.
Geoff Wood: Where we talk just about that. Please give us the feedback so we have more to talk about. Not that, we obviously have plenty to talk about, so we have more of your opinions. I think that would be good. You can comment on the posts on the gravitate blog, on Facebook, whatever channel you want to do. I think this has been a really interesting, hopefully valuable conversation between the two of us, and hopefully our listeners, thinks so too. Of course you brought your trivia question to ... No?
Matt Patane: Actually I was going to come up with a trivia question and then you asked me something earlier. My trivia question was going to be which member of the startup community got quoted in the New York Times recently, or referenced in the New York Times recently, and you brought it up so now I don't have one.
Geoff Wood: Oh, well you can ask it still.
Matt Patane: Which member of the Iowa startup community got mentioned in the New York Times recently?
Geoff Wood: That would be Aaron Horn, this morning, Thursday or as the New York Times says, Mr. Horn, talking about the Amazon Dashbuttons.
Matt Patane: Amazon Dashbuttons.
Geoff Wood: Yeah. He's kind of the way they framed that whole story so that's fun. There's a neat little anecdote at the end of that story about maybe some dangers of the Amazon Dashbutton.
Matt Patane: I haven't read all the way through it.
Geoff Wood: That's really cool. We were talking about it. Aaron said he had Tweeted about that and New York Times called him out and said can I interview you about the Amazon Dashbuttons. That's a good trivia from yesterday.
Matt Patane: It would have been a great trivia question but you've ruined it.
Geoff Wood: Sorry man. I guess that's it for this week. Thank you Matt. Thank you listeners. We'll see you next week for another edition of the Minimum Viable Podcast.