Entrepreneurship is a roller coaster, my own included. Just when you wonder whether you will ever succeed, you find out in some roundabout way that you already have.
In 1998, we started Stealthmode Partners, a fee-for-service accelerator for entrepreneurs. From the very first moment, we learned that fee for service wouldn’t cut it, because entrepreneurs had no money (even in those relatively loose money days) and could not pay up front. So we changed our model to include taking equity.
When the dot com market crashed, we consigned most of the equity to the lavatory. And we changed our model to include deferred compensation and pay for performance.
Our income stream was random, although always sufficient. Our efforts at projection were fruitless. When deals happened, they happened, but they couldn’t be predicted in any specific quarter. It was very difficult to measure our outcomes. Never mind the money. You can make money in real estate in Arizona and support yourself. That wasn�t the point. The real question: does a resource incubator really help?
By now, we were a recognized brand. We had more business than we could handle, and we wanted to help, help, help — whether or not people could pay, pay, pay. Fortunately we were self-funded, so as we ducked and wove (weaved?) to ride the market, we didn’t have to answer to anybody but our mortgage companies. (More fortunately, my children were grown).
When I discovered the Kauffman Foundation in 2003, we realized that we could make our services more affordable by using a group setting — in this case, the Foundation’s Fasttrac program. We could help more people at a lower price point by offering Fasttrac programs. We started them in the fall, and people paid $750 to enroll. The programs have been very well received. So we met with more people, but did we actually DO anything for them???
Then the City of Phoenix took a big chance. Last year, they awarded us a Community Development Block Grant to make it possible for companies and individuals in certain industries (technology, construction) and certain categories (downtown, impacted by light rail, disadvantaged)to attend the program for only the cost of the materials.
We are now on our second grant, and our mandate is to generate a certain number of jobs per company we contact. It’s a very modest number — one or two — but we have to keep track of those jobs. We have to account for our outcomes.
What a wonderful way to measure whether our “help” really helps! This week, I ran into two of the graduates from the first City of Phoenix Fasttrac program. One of them has increased staff from a single person to eight employees. The other has increased from one to 4. The members of their particular Fasttrac class are doing business among themselves, and they even want to have a reunion. Everyone�s business seems to be alive and well. In other classes, people have gone from 25 to 50 employees, and no one seems to be laying off. But I only know this because the City of Phoenix grant encourages us to keep those records.
By Silicon Valley standards, this may sound like nothing. But it isn�t. In truth, small businesses like the ones we coach are the backbone of the culture of innovation. They are not externally funded, and they don�t grow quickly or without thought. But their continued survival provides a picture of the American economy as a whole � buttressed not by large corporations who do or do not outsource (I�m watching Lou Dobbs as I write this), but by scrappy entrepreneurs who survive by forming networks and collaborations that contribute to their success.
Why am I talking about this? Because we talk endlessly about what government does or does not do for us, and the talk is usually negative. We are so grateful to the City of Phoenix, which has put its money behind its talk about supporting innovation and entrepreneurship, and for granting us this resource. We know it�s your tax dollar, and we are doing out best to put it to work creating good jobs for our children.