I decided to read this book because I’m planning to get involved in a Start Up Ecosystem very soon. I went through The Founders Institute in 2013, but left without a business that I was passionate enough about to pursue, so I decided to put it on hold. This is the main lesson I’ve learned in all my business research: If you’re not genuinely passionate about it, have the right team, and are 110% sure that you’re willing to see it to the end, then don’t even waste your time starting.
Book background: This book compares the ecosystems of nature and science to the ecosystem of business (start up) innovation, specifically in Silicon Valley where it has been most economically successful. The authors and contributors are Silicon Valley veterans who have deep experience in venture capital, private equity, start ups, company formation, incentive distribution, and the list goes on and on.
This is a list of people who this book is most relevant to (most to least):
- People with the ambition of creating a start up incubator or accelerator.
- Start up incubator or accelerator operators and employees.
- If you’re an entrepreneur who is considering joining a start up incubator or accelerator, read and make a list of what characteristics are most important to you in your decision.
- A business owner who wants to create or improve their company culture to foster better communication and innovation.
The author’s basic idea of a productive and innovative ecosystem, specifically silicon valley, is that 1+1 does NOT = 2. It equals 100, 1000, or even 1 million. Talent, ideas and capital are the 3 main assets that need to flow freely to create innovation, but because of many barriers these assets are difficult to blend together effectively. “We can think of ideas, talent, and capital like particles that are limited by the speed at which they flow.”
Here are some of their “rules of the rainforest” that contribute to success:
Rule #1: break rules and dream.
Rule #2: open doors and listen.
Rule #3: trust and be trusted.
Rule #4: experiment and iterate together.
Rule #5: seek fairness, not advantage.
Rule #6: err, fail, and persist.
Rule #7: pay it forward.
These rules must become part of the culture of the ecosystem for it to be effective, productive, and innovative.
This a contract the authors have people who want to become part of “The Rainforest” to sign:
Some of my favorite quotes from the book:
Real-life linkages are human-to-human, not group-to-group.
Experience shows that it pays to be open-minded to new people, to be helpful, and to treat each person as if they might have “the next” valuable opportunity
The Rainforest requires that individuals strive to create fair transactions with each other, not advantageous transactions. This is not easy in most of the world, where business is about “winning” against the other person.
Commenting on “frontier culture,” which is settlers taking a risky move and coming out to Cali:
“On the frontier, impermanence and uncertainty was the norm. There was no choice but to “give things a try”.
On the East Coast, money was power. Money called the shots. You see this behavior on Wall Street. You see it everywhere in fact. In most places in the world, the presumption in business is that money dominates and sets the rules. But the West Coast was different.
“In Boston, it was the entrepreneurs who dressed nicely and showed up on time to impress the investors,” Phil remembers. “In Silicon Valley, it was the opposite.”2
“What an entrepreneur needs from a venture capitalist is a flow of insights, opportunities, and resources.
|Designing Rainforests is about enhancing the quantum probabilities of innovation, not attempting to engineer perfection.|
|We are all simply ingredients in a biological soup, doing our best to live, learn, laugh, love, and innovate together.|
|The last great frontier to cross is the one that divides two souls.|
Remember that love is a way of connecting two people, a transaction of a sort, but with long credit lines and flexible terms of repayment. In this sense, love is the ultimate enabler of the Rainforest. Love is hard, though, when the world seems to change so quickly.
Further research for those very interested in the book and industry in general:
- There are three major daily newsletters in the American venture business―Private Equity Hub, VentureWire, and Fortune Finance (edited by Dan Primack)—which provide a steady stream of social feedback for the industry, including castigations of venture firms that mistreat their entrepreneurs.
- Another source—the website http://www.TheFunded.com―enables entrepreneurs to provide candid, anonymous eBay-like ratings and reviews of investors.
Here’s a short video I found on Youtube as another summary: