In this blog post, we fill you in on the plenary sessions of the fourth annual Frontiers of Entrepreneurship conference, which convenes practitioners, policymakers and academics to discuss the most challenging issues in the field of entrepreneurship and set the agenda for future research and policy. Additional posts on individual breakout sessions will be added as they are available.
Opening Session:Trends in Entrepreneurship Report Launch
Calling it a “body of truth” aiming to “let the expert voice rise above the noise,” Vickie Gibbs introduced the inaugural Trends in Entrepreneurship Report on January 30 at the Frontiers of Entrepreneurship conference. Gibbs, executive director of the UNC Entrepreneurship Center, announced the report’s release to a curated audience of nearly 200 entrepreneurship experts gathered at the fourth annual conference at The Breakers in West Palm Beach, Fla.
The report presents trends uncovered by research from top academics on such topics as venture funding, underrepresented founders and new firm growth.
In addition to the report, the conference’s opening session featured research by Olav Sorenson of the Yale School of Management, a panel discussion on entrepreneurial culture, and a presentation by Sam Gill of the Knight Foundation on Miami’s high-growth entrepreneurial ecosystem.
Sorenson’s research looked at the question of whether startups provide their employees with the three attributes that define a good job – a good salary, career advancement and psychic rewards. Even after accounting for such variables as the relatively young age of most startup employees, Sorenson found that less than five percent of startups contribute to all three attributes. Interestingly, the research also revealed a 16-17 percent higher divorce rate among couples in which one spouse works for a startup.
The panel on entrepreneurial culture, moderated by Jes Averhart of CulTrue, featured retired Food Network executive Erica Gruen and Rodney Sampson of Opportunity Hub (OHUB). Both Gruen and Sampson said that culture must be built thoughtfully. Citing her time at the Food Network as an example, Gruen said that would-be business owners need to learn such “soft” skills as resilience, collaboration, listening, communication and embracing ambiguity, as well as better understanding how other people think. Sampson added that businesses must intentionally build their cultures to be as diverse and equitable as possible, calling appreciation of differences the “secret sauce” of a successful culture. Averhart added to that concept by acknowledging that every time a new employee is added, a company’s culture shifts slightly.
Sam Gill of the Knight Foundation took a personal look at cultural diversity in his presentation on the Knight Foundation’s work within Miami’s entrepreneurial ecosystem. Gill said that while Miami has a strong international business base in Latin America, these ties are not well developed within the city’s entrepreneurial ecosystem. In addition, the entrepreneurial community is still in an early stage, and that founders, employees and investors are relatively inexperienced. Gill concluded by acknowledging that Miami is “on the right track, but we have some important work left to do.”
Thursday Luncheon Keynote: Arlan Hamilton, Founder and Managing Partner, Backstage Capital
Hamilton, founder and managing partner of Backstage Capital, told how, while on the verge of homelessness in 2015, she started her venture capital firm focusing on underrepresented founders with $25,000 from an angel investor. She stressed the importance of what she called this “first yes,” encouraging attendees to “be somebody’s first yes,” and adding, “that’s how we create change in a real, actionable way.”
Like many other presenters at the conference, Hamilton said there’s much work to do to level the playing field for underrepresented entrepreneurs. She told the story of one of her Twitter followers, an African American entrepreneur, who was told just the day before by a venture capitalist that his firm would not fund her food distribution company because “we’ve already invested in one black woman this year.” In spite of this story, however, Hamilton sees progress over the last five years, and says she’s optimistic that the tide is turning with respect to diversity in entrepreneurship funding.
The second half of the luncheon presentation was devoted to a panel discussion on principled entrepreneurship. Tom Byers of the Stanford Technology Ventures Program chaired the panel, which featured Hamilton, Laura Dunham of the University of St. Thomas and Jon Fjeld of Duke University’s Fuqua School of Business.
Dunham began by stressing the importance of ethics, saying, “Ethics are not peripheral to entrepreneurship.” She split ethics into three levels of impact. At the social level, she said entrepreneurs impact how we will live in the future. At the organizational level, the ethics of a company’s founders live on beyond their involvement, with long-lasting symbolic and economic implications. And at the individual level, ethics present a tremendous challenge that is unique to entrepreneurism.
Fjeld stressed the risks of trying to teach ethics, saying that educators can be tempted to either “tie themselves up in theory” or develop a stance of moral superiority. He added that educators need to focus on four key concepts of ethics: the creation of worthwhile goals; the development of values and principles to drive decision-making, reflection around the consequences of decisions; and the development of a personal sense of virtue. To do this, he said, requires that entrepreneurs become self-aware.
Thursday Dinner: A Fireside Chat with Greg Becker, CEO, Silicon Valley Bank
Craig Buerstatte of the U.S. Economic Development Administration’s Office of Innovations and Entrepreneurship, conducted this one-on-one interview with Greg Becker, CEO of Silicon Valley Bank (SVB).
Becker reminisced about his time with the bank, from the early days when the bank was under a regulatory order through the “golden days” of the 1990s, past the financial crisis to what he called “the most thrilling part…being the bank of the global innovation economy.”
Becker described SVB’s mission as helping entrepreneurial companies be successful, noting that it banks a full half of all U.S. venture-backed companies and two-thirds of all U.S. venture capital firms.
Becker also previewed the bank’s annual Startup Outlook Report, which surveys 1,100 of its clients worldwide. He noted that optimism was the key takeaway, with 67 percent of the startups surveyed saying they were optimistic that 2020 would be a better year than 2019 for them financially, and 79 percent saying they were planning to hire more staff in the next year.
Finally, Becker outlined one of the bank’s programs, called “Access to Innovation,” that provides education, job opportunities and connections to the innovation economy for diverse populations. He discussed immigration reform as a critical element to finding the talent to fill innovation economy positions, saying “There’s a lot of things the government can do to help make sure the U.S. remains the best place for innovation in the world.”
Friday Morning Plenary: The Evolution of Venture and Growth Investment
Bobby Franklin of the National Venture Capital Association (NVCA) moderated this panel, which featured Brad Burnham of Union Square Ventures, Alan Cline of Vista Equity Partners, Yael Hochberg of the Rice University Entrepreneurship Initiative and Scott Kupor of Andreessen Horowitz.
Noting that there is more capital available today than ever before, Franklin asked the panelists what the implications might be. Burnham noted that, in some cases, ready access to capital has caused some startups to grow too quickly and ultimately fail. Hochberg agreed, saying that many companies in growth mode have not figured out how to turn from growth to profitability. Cline added that while the cost of starting a business is much lower than it used to be, this presents a problem in that it has resulted in the proliferation of businesses that may or may not be viable.
The panel also discussed potential shifts in governance, particularly with respect to the tech industry. Kupor said regulation will increase to protect consumers’ data, but said that regulators will “overshoot,” creating more problems than they solve. Burnham agreed, referencing the European Union’s General Data Protection Regulation (GDPR) as an instance of regulation working against its original intent and making things more difficult for startups and easier for incumbents.
Finally, the panel debated the issue of diversity and inclusion at the investment level. Kupor said that the lack of diversity in VC funding is largely a “network connectivity problem” – that investors need to develop networks beyond their existing ones to tap into a more diverse pool of founders. Hochberg agreed, but added that the diversity of the investor pool also needs to be increased. Otherwise, she said, investors will miss opportunities. Cline described how, to increase diversity and combat what he sees as “a great deal of inertia around the issue” of inclusion, his firm hires individuals with less VC experience but with potential, then trains them.
Closing Luncheon: Entrepreneurship in Underinvested Areas
The discussion on how to distribute capital more equitably continued during this presentation, moderated by Brett Palmer of the Small Business Investor Alliance (SBIA) and featuring Aron Betru of the Milken Institute, John Dearie of the Center for American Entrepreneurship and Maryann Feldman of CREATE.
Betru presented Milken statistics that show that, against a background of 96 consecutive months of job growth in the U.S., black-owned small businesses saw a 91 percent drop in access to capital during the same time period. Betru said he sees this not just as a question to be resolved, but as an opportunity for innovation at the national, community and family level.
The trick, he said, is avoiding overregulation. “Policymakers don’t always separate out what is risk and what is reckless,” he said, adding that, for entrepreneurship assistance programs to move the needle, they must be open to a certain amount of risk.
Dearie also linked the issue of underinvested areas to a broader picture of the U.S. economy – an economy, he said, that is growing at a fragment of its rate during the post-World War years, which has also contributed to an unequal distribution of wealth. He noted one bright spot, however – the entrepreneurship caucuses that were formed in both the U.S. Senate and House of Representatives in 2019, the first time such caucuses were established. Dearie lauded the selection of a woman and an African American man as caucus co-chairs, ensuring that underserved viewpoints will be included in decision-making.
Feldman, whose research explores geographic disparities in wealth, said that questions still need to be answered about how to bring capital into areas beyond a few thriving urban markets. With respect to underserved minority populations, she cited several factors that inhibit prosperity including a lack of access to funding networks, “banking deserts” in rural areas and a lack of investment in technological innovation for industry and manufacturing.