Startup Ecosystem Quotes

While the range of people, organizations, resources, and conditions involved in an entrepreneurial ecosystem are useful to understand, they are not the most critical construct. Instead, the interaction between each of the components is what matters.

Here is a key insight for any startup: You may think yourself a puny midget among giants when you stride out into a marketplace, and suddenly confront such a giant via litigation or direct competition. But the reality is that larger companies often have much more to fear from you than you from them. For starters, their will to fight is less than yours. Their employees are mercenaries who don’t deeply care, and suffer from the diffuse responsibility and weak emotional investment of a larger organization. What’s an existential struggle to you is merely one more set of tasks to a tuned-out engineer bored of his own product, or another legal hassle to an already overworked legal counsel thinking more about her next stock-vesting date than your suit. Also, large companies have valuable public brands they must delicately preserve, and which can be assailed by even small companies such as yours, particularly in a tight-knit, appearances-conscious ecosystem like that of Silicon Valley. America still loves an underdog, and you’ll be surprised at how many allies come out of the woodwork when some obnoxious incumbent is challenged by a scrappy startup with a convincing story. So long as you maintain unit cohesion and a shared sense of purpose, and have the basic rudiments of living, you will outlast, outfight, and out-rage any company that sets out to destroy you. Men with nothing to lose will stop at nothing to win.

When you're thinking about where is the best place to start a business, there's a lot to consider - It's about culture, it's about physical infrastructure, it's about how educated the people are, it's about the housing, it's about the natural ecosystem, it's about the regulatory and legal frameworks, it's about the local transportation system and the efficiency of all the other systems that are there. But location matters.

The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing. I had started doing this just to simplify the task of managing people. But then I noticed a deeper result: defining roles reduced conflict. Most fights inside a company happen when colleagues compete for the same responsibilities. Startups face an especially high risk of this since job roles are fluid at the early stages. Eliminating competition makes it easier for everyone to build the kinds of long-term relationships that transcend mere professionalism. More than that, internal peace is what enables a startup to survive at all. When a startup fails, we often imagine it succumbing to predatory rivals in a competitive ecosystem. But every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.

When a startup fails, we often imagine it succumbing to predatory rivals in a competitive ecosystem. But every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.

When assigning responsibilities to employees in a startup, you could start by treating it as a simple optimization problem to efficiently match talents with tasks. But even if you could somehow get this perfectly right, any given solution would quickly break down. Partly that’s because startups have to move fast, so individual roles can’t remain static for long. But it’s also because job assignments aren’t just about the relationships between workers and tasks; they’re also about relationships between employees. The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing. I had started doing this just to simplify the task of managing people. But then I noticed a deeper result: defining roles reduced conflict. Most fights inside a company happen when colleagues compete for the same responsibilities. Startups face an especially high risk of this since job roles are fluid at the early stages. Eliminating competition makes it easier for everyone to build the kinds of long-term relationships that transcend mere professionalism. More than that, internal peace is what enables a startup to survive at all. When a startup fails, we often imagine it succumbing to predatory rivals in a competitive ecosystem. But every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.

Entrepreneurship itself is an emergent system, where companies create the conditions for experimentation and learning to occur, often symbiotically with customers. In 1978, Eric von Hippel (my PhD advisor at MIT) pioneered the notion of user-driven innovation.10, 11 Back then, the conventional wisdom was that innovation only came from corporate, government, and university research-and-development labs. While some still believe this today, Eric's insight proved to be prescient in many areas, especially in the information age, as the widespread adoption of open-source software and Lean Startup methodologies have demonstrated.12 Twitter is a tangible example since three of the platform's most popular features—the @ reply, the # hashtag indexing, and retweet sharing—were all generated bottom-up by users.

Creative people in particular traditionally have strained relations with systems, structures, standards, and other perceived constraints on their creative freedom. Nowhere is this clearer than in big organizations where people often complain that “the systems” kill creativity, longingly thinking back to the halcyon days when the company was young and less bureaucratic. Going back to the unstructured start-up days is not an option, however. Established companies require a different kind of innovation: they need a culture in which creativity is part of the corporate ecosystem. The key to building a creative culture is not to declare war on systems, processes, and policies, but to embrace and redesign them so they support and actively enhance innovative behavior. Managers, in other words, have to fight systems with systems, creating an architecture of innovation in their teams and departments. The primary aim is to help people behave more like innovators.

good storyteller, build good relationships internally and externally with key ecosystem constituents, take calculated risks, be quickly adaptable and flexible, communicate humbly but firmly, recruit all the time, implement sound business processes, and execute-execute-execute pragmatically within your ecosystem with purpose! If not, success will be just a pipe dream or fleeting experience, as building a start-up successfully is quite difficult. And great ideas don’t just come to you. You must pursue them. Regardless of what your vision for the future is, find ways to keep strengthening your pragmatic combination of mind-set, skill set, direction, strategies, know-how, and execution! If the featured young

But then I noticed a deeper result: defining roles reduced conflict. Most fights inside a company happen when colleagues compete for the same responsibilities. Startups face an especially high risk of this since job roles are fluid at the early stages. Eliminating competition makes it easier for everyone to build the kinds of long-term relationships that transcend mere professionalism. More than that, internal peace is what enables a startup to survive at all. When a startup fails, we often imagine it succumbing to predatory rivals in a competitive ecosystem. But every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.

More than that, internal peace is what enables a startup to survive at all. When a startup fails, we often imagine it succumbing to predatory rivals in a competitive ecosystem. But every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.

it enjoys strong network effects from its content ecosystem: thousands of developers write software for Apple devices because that’s where hundreds of millions of users are, and those users stay on the platform because it’s where the apps are.

Loiseau killed himself anyway in 2003 when a competing French dining guide downgraded his restaurant.) The competitive ecosystem pushes people toward ruthlessness or death.

Now that you understand the key players in ecosystems, here are the key principles of building an ecosystem. They are similar to the principles of creating a community discussed in chapter 8, “The Art of Evangelizing.” CREATE SOMETHING WORTHY OF AN ECOSYSTEM. Once again, the key to evangelism, sales, presentations, and now ecosystems is a great product. In fact, if you create a great product, you may not be able to stop an ecosystem from forming. By contrast, it’s hard to build an ecosystem around crap. DESIGNATE A CHAMPION. Many employees would like to help build an ecosystem, but who wakes up every day with this task at the top of her list of priorities? Another way to look at this is, “Who’s going to get fired if an ecosystem doesn’t happen?” Ecosystems need a champion—an identifiable hero—within the company to carry the flag for the community. DON’T COMPETE WITH THE ECOSYSTEM. If you want people or organizations to take part in your ecosystem, then you shouldn’t compete with them. For example, if you want people to create apps for your product, then don’t sell (or give away) apps that do the same thing. It was hard to convince companies to create a Macintosh word processor when Apple was giving away MacWrite. CREATE AN OPEN SYSTEM. An “open system” means that there are minimal requirements to participating and minimal controls on what you can do. A “closed system” means that you control who participates and what they can do. Either can work, but I recommend an open system because it appeals to my trusting, anarchic personality. This means that members of your ecosystem will be able to write apps, access data, and interact with your product. I’m using software terminology here, but the point is to enable people to customize and tweak your product. PUBLISH INFORMATION. The natural complement of an open system is publishing books and articles about the product. This spreads information to people on the periphery of a product. Publishing also communicates to the world that your startup is open and willing to help external parties. FOSTER DISCOURSE. The definition of “discourse” is “verbal exchange.” The key word is “exchange.” Any company that wants an ecosystem should foster the exchange of ideas and opinions. This means your website should provide a forum where people can engage with other members as well as your employees. This doesn’t mean that you let the ecosystem run your company, but you should hear what members have to say. WELCOME CRITICISM. Most organizations feel warm and fuzzy toward their ecosystem as long as the ecosystem says nice things, buys their products, and never complains. The minute that the ecosystem says anything negative, however, many organizations freak out and get defensive. This is dumb. A healthy ecosystem is a long-term relationship, so an organization shouldn’t file for divorce at the first sign of discord. Indeed, the more an organization welcomes—or even celebrates—criticism, the stronger its bonds to its ecosystem become. CREATE A NONMONETARY REWARD SYSTEM. You already know how I feel about paying people off to help you, but this doesn’t mean you shouldn’t reward people in other ways. Things as simple as public recognition, badges, points, and credits have more impact than a few bucks. Many people don’t participate in an ecosystem for the money, so don’t insult them by rewarding them with it.

As a venture-capital investor, I see a particularly strong role for a new kind of impact investing. I foresee a venture ecosystem emerging that views the creation of humanistic service-sector jobs as a good in and of itself. It will steer money into human-focused service projects that can scale up and hire large numbers of people: lactation consultants for postnatal care, trained coaches for youth sports, gatherers of family oral histories, nature guides at national parks, or conversation partners for the elderly. Jobs like these can be meaningful on both a societal and personal level, and many of them have the potential to generate real revenue—just not the 10,000 percent returns that come from investing in a unicorn technology startup.

Today, there are two kinds of revolutionaries: technological and political. And there are two kinds of backers of these revolutionaries: venture capitalists and philanthropists. The backers seek out the founders, the ambitious leaders of new technology companies and new political movements. And that is the market for revolutionaries. Equipped with this framework, you can map the tech ecosystem to the political ecosystem. You can analogize tech founders to political activists, venture capitalists to political philanthropists, tech trends to social movements, YC Startup School to the Oslo Freedom Forum, the High Growth Handbook to Beautiful Trouble, startups to NGOs, big companies to government agencies, Crunchbase to CharityNavigator, and so on.

Only myopics judge people, relationships, businesses with short term lens. Any startup or public company that survived the dot com bust and 9/11 came out bigger than anyone imagined. If India wants an ecosystem like USA or China, new age companies need nurturing & patience vs. criticism or outcast.

Offer Incentives to Get All-Important Early Wins For most start-ups, creating incentives for early investors is a sensible path. Whether through a seeder or founder’s shares, preferential terms can align the manager and early adopters to encourage growth. As the industry faces scrutiny on fees, the opportunity to offer something that clients are actively seeking is a win-win proposition. If a manager canvasses a wide range of potential investors, he will encounter both supporters and critics of seeding and discounted shares. Among the pools of capital invested in hedge funds, the fund of funds community tends to embrace founder’s shares more actively than others. In doing so, funds of funds have a place in the industry ecosystem by providing R&D for the industry. Except for the fortunate few whose brand allows a mega-launch, a start-up needs flag wavers in its corner to create positive signaling effects and branding. Both seeders and founder’s share investors can help.

For enlightened incumbents, ecosystem carryover is the “secret sauce” for creating new market space. For startups, once they are established, ecosystem carryover can be a powerful accelerator of growth and expansion. Carryover is a delicate process, as you work to convince partners to follow your vision into a yet-to-be established ecosystem.

Bundling eventually stopped working for Microsoft. After the antitrust investigation, the company maintained its dominance on the PC operating systems market, but it lost control of many other markets. Eventually the industry jumped from PC to mobile. Microsoft tried to exactly replicate the network effects it had before—an ecosystem of hardware manufacturers who paid a licensing fee to run Windows Mobile, and app developers and consumers to match—but this time it didn’t work. Instead, Google gave away its Android mobile OS for free, driving adoption for phone makers. The massive reach of Android attracted app developers, and a new network effect was built, derived from a business model where the OS was free but the ecosystem was monetized using search and advertising revenue. Microsoft has also lost the browser market to Google Chrome, and is being challenged in its Office Suite by a litany of startup competitors large and small. It continued to use bundling as a strategy, adding workplace chat via Teams to its suite—but it hasn’t achieved a clear victory against Slack. If bundling hasn’t been a sure thing for Microsoft, it’s an even weaker strategy for others. The outcome seems even less assured when examining how Google bundled Google+ into many corners of its product, including Maps and Gmail, achieving hundreds of millions of active users without real retention. Uber bundled Uber Eats across many touchpoints within its rideshare app, but still fell behind in food delivery versus DoorDash. Bundling hasn’t been a silver bullet, as much as the giants in the industry hope it is.

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Singapore has found a way to provide cost-effective quality healthcare for its citizens with superior outcomes as 25% the cost of the US and 40% the cost of Europe. Israel has created a start-up ecosystem to rival Silicon Valley. Finland and Singapore consistently rank among the highest in PISA scores although their spending per pupil is among the lowest of OEDC nations. Zwolle, a town in the Netherlands, makes roads out of recycled plastic which are cheaper, last longer and are environmentally friendly. The Dutch pension system is the envy of the world. Swiss citizens passed a law to limit their congress’s ability to impose obligations on future generations, eliminating the moral hazard of elected officials engaging in “buy now, pay later” policy enactments. Ireland, once among the poorest nations in Europe now ranks among its most prosperous. Through its “Citizens Assemblies”, Petri dishes used to form political consensus at the ground level on sensitive matters such as abortion and gay marriage, it has morphed from one of the conservative societies to among the most liberal. New Zealand has just introduced ‘naked vegetables’, requiring produce in supermarkets to be sold without plastic packaging.

The most powerful mentor/mentee relationships are those in which the mentor and the mentee ultimately become peers.

the head of innovation of an international French insurance company. I was supporting a HealthTech start-up providing remote chats with GPs in South Asian emerging countries. As data is the new oil, the start-up was also capturing analytics in the process on key trends for main pathologies. Patients in those countries miss affordable access to medical consultations. Equally, insurance companies miss useful data of the healthcare market and the patient requirements. People in this part of the world cannot pay for yearly insurances with large coverage but they could afford some level of insurance addressing specific diseases, pregnancy or partial coverage for their children. Hence insurance companies are keen to better understand this population and tap into a huge market. As the win/win was obvious the founder of the start-up had engaged with several insurance companies in view of developing an open innovation program. I was following up the engagement bringing the professional experience of working with a major healthcare innovative company in the US. The conversation started very well with an innovation manager genuinely supportive of integrating start-up creativity in the enterprise. Knowing the corporate world, I was not surprised to uncover two obstacles:

The crypto industry's fast pace and intense competition demand that startups not only secure funding but also develop resilient business models, build trust with investors, and execute strategic plans meticulously to survive and thrive in this complex ecosystem.

Deep in the hot thinking depths of the solar system, vast new intellects come up with a new theory of wealth that optimizes resource allocation better than the previously pervasive Free Market 1.0. With no local minima to hamper them, and no need to spawn and reap start-ups Darwin-style, the companies, group minds, and organizations that adopt the so-called Accelerated Salesman Infrastructure of Economics 2.0 trade optimally with each other. The phase-change accelerates as more and more entities join in, leveraging network externalities to overtake the traditional ecosystem.

Tencent had two core competencies: capital and traffic volume. ‘There’s a lot of great entrepreneurs outside, and if you turn every single one of them into your enemy, it’s not a good thing. As a company you can’t actually hire these entrepreneurs, so what are you going to do? Investment is actually the best way to get a piece of their action.’ This became the breakthrough in Tencent’s new strategy: from then on, the company would embark on a new chapter by becoming an incubator for startups, instead of a killer. It would invest in them, often by taking minority stakes, and grow an ecosystem of companies.

The rise of AWS and other cloud computing providers, in turn, helped to drive still more innovation, lowering the cost of computing power and fueling the conditions that drove the emergence of Ecosystem 1.0 in the first place. Startups, suddenly, could get the IT services they needed at a variable rather than a fixed cost—what Amazon called “pay as you go.”28 This created opportunities for new players, but it also made it much easier for established companies to enter new sectors, especially digital ones, and compete in unexpected ways.

Silicon Valley’s and China’s internet ecosystems grew out of very different cultural soil. Entrepreneurs in the valley are often the children of successful professionals, such as computer scientists, dentists, engineers, and academics. Growing up they were constantly told that they—yes, they in particular—could change the world. Their undergraduate years were spent learning the art of coding from the world’s leading researchers but also basking in the philosophical debates of a liberal arts education. When they arrived in Silicon Valley, their commutes to and from work took them through the gently curving, tree-lined streets of suburban California. It’s an environment of abundance that lends itself to lofty thinking, to envisioning elegant technical solutions to abstract problems. Throw in the valley’s rich history of computer science breakthroughs, and you’ve set the stage for the geeky-hippie hybrid ideology that has long defined Silicon Valley. Central to that ideology is a wide-eyed techno-optimism, a belief that every person and company can truly change the world through innovative thinking. Copying ideas or product features is frowned upon as a betrayal of the zeitgeist and an act that is beneath the moral code of a true entrepreneur. It’s all about “pure” innovation, creating a totally original product that generates what Steve Jobs called a “dent in the universe.” Startups that grow up in this kind of environment tend to be mission-driven. They start with a novel idea or idealistic goal, and they build a company around that. Company mission statements are clean and lofty, detached from earthly concerns or financial motivations. In stark contrast, China’s startup culture is the yin to Silicon Valley’s yang: instead of being mission-driven, Chinese companies are first and foremost market-driven. Their ultimate goal is to make money, and they’re willing to create any product, adopt any model, or go into any business that will accomplish that objective. That mentality leads to incredible flexibility in business models and execution, a perfect distillation of the “lean startup” model often praised in Silicon Valley. It doesn’t matter where an idea came from or who came up with it. All that matters is whether you can execute it to make a financial profit. The core motivation for China’s market-driven entrepreneurs is not fame, glory, or changing the world. Those things are all nice side benefits, but the grand prize is getting rich, and it doesn’t matter how you get there.

MANY YEARS AGO, I had joined the local news desk of a prominent newspaper in Bengaluru, the sleepy south Indian town that became the country’s Silicon Valley. After trying my hand at crime reporting and general business journalism, I developed an interest in tracking technology. Among other things in the mid noughties, I had half a page in the paper to feature new gadgets every week. Nokia, Blackberry, Samsung and a few other companies were regulars on the page. While I was enjoying my work, my salary needed a boost. (The media industry’s decline was just about beginning, and salaries were as poor then as they are today.) Getting out of the rather difficult circumstances that I found myself in, I moved on to the Economic Times to report on technology. The business daily was India’s largest pink paper by circulation, and I worked with some of the best journalists of the time. My job was mainly to write about technology services companies. Soon I got bored with tracking quarterly results and rehearsed statements. This was around 2012, and India’s start-up ecosystem was in its infancy. I quit the paper to join a start-up blog. I didn’t ask for a raise. I was just happy to be able to write about start-ups and their founders. It was something new, and their excitement was infectious. In those days, ‘start-up’ was not a mainstream beat in India. Only niche blogs wrote about them. On the personal front, there were months when I was flat broke. One evening I sold my old Nokia 5800 for ₹300 at a second-hand electronics shop to buy a packet of biryani. That is still the best biryani I’ve ever had. The two years at the start-up blog were also my best two years ever. As start-ups became the buzzword, I went back to the pink paper to write about them. I was able to upgrade my life a little. I moved into a middle-class apartment with my family. I got some furniture and so on. After selling the Nokia phone, I used a feature phone for a few days. But now I had to upgrade my phone. After much research, I zeroed in on a Micromax handset. Micromax, a Gurgaon-based company that began making handsets in 2008, had some smartphones that were affordable on a young journalist’s salary. It was also a leading brand and had some interesting features such as dual SIM and a great touchscreen display. Going from a phone that ran on Symbian (Nokia’s proprietary operating system that failed) to an Android-based phone was like suddenly being

In fact, following the narrative’s prescriptions seems to produce the opposite of the intended result: As more business plans are written, and as more local ecosystems are created, the number of startup businesses continues to fall.

As most new businesses fail, saying start-ups have a very high rate of failure is by itself not particularly revelatory. But a start-up is not a small business. A start-up is designed from the beginning to either become very big or completely fail—the modern-day equivalent of an uncertain, cross-ocean voyage to the New World as opposed to, say, a predictable, moderately profitable seventeenth-century trading voyage from London to Amsterdam. Stakeholders in a start-up are more interested in increasing the potential magnitude of a spectacular outcome than in bettering the probability of modest returns. Thus, the financial ecosystem’s willingness to accept a high risk of capital loss made venture capital accessible to outliers and eccentrics.

All had become established breeding grounds, or boot camps, for the country’s start-up ecosystem.

ecosystem.

In all the focus on political instability in the region, less examined is that many countries have adopted restrictive internet access and privacy laws. This includes business-friendly Dubai and lean-forward tech center Jordan. Often described as necessary steps in areas like press-and-publications law in order to protect libel concerns, these restrictions are usually vaguely worded and subject to wide and opportunistic interpretation. On the ground, entrepreneurs and investors alike view these as moves that risk chilling business development in their promising ecosystems. Jordan’s

Social Media Marketing is just one part within the Digital Marketing ecosystem and both enable you to share your brand story with the world.

rhetorical appeal to make the local research university the next—and you can fill in the

When you’re scaling, you know your product and your market. Your metrics are now focused on the health of your ecosystem, and your ability to enter new markets.

Silicon Valley’s ecosystem had taken shape organically over several decades. But what if we in China could speed up that process by brute-forcing the geographic proximity? We could pick one street in Zhongguancun, clear out all the old inhabitants, and open the space to key players in this kind of ecosystem: VC firms, startups, incubators, and service providers. He already had a name in mind: Chuangye Dajie—Avenue of the Entrepreneurs.

Government runs in short time cycles, usually less than four years. It often feels like we are in an endless campaign cycle and, in some cases, at least half of the activity of government leaders feels like it is around the process of getting reelected. After an election, there is often a three-month lame-duck period where nothing happens, followed by a six-month period as the new administration gears up, puts new leaders in place, makes its plans, does its studies, writes its reports, and then launches its new initiatives. That’s nine months of a four-year cycle wasted.

In fact, the culture of innovation is so pure and so stridently noble that it often sounds like advertising. You hear about the startup that is going to help with sanitation in African cities; the one that’s going to print out prosthetic hands for disabled children; the one that’s procuring clothes for homeless children. “We’re with people who are curing cancer in a different way, and changing banking technology, and helping folks who can’t see anymore,” says a woman in a short YouTube video about MassChallenge. Inno is going to solve global warming. Inno is coming up with new treatments for autism. Inno is so inherently moral that there is even a UNICEF Innovation team; dial up its homepage and you will encounter the following introductory sentence: “In 2015, innovation is vital to the state of the world’s children.” The fog of righteousness surrounding this concept is so thick it allows all manner of absurdly altruistic claims. “Can startups help solve Boston’s Biggest Problems?” asked an email I received last spring. Of course they can! The group that sent it, CityStart Boston (“Leveraging the Innovation Community to Tackle Civic Issues”), announced plans to mobilize “the entire Boston startup ecosystem” to “collaborate to develop viable ventures designed…” Wait! Stop here for a moment, reader, and try to guess: in what way is the startup ecosystem going to collaborate to solve Boston’s biggest problems? If you guessed “to enhance innovation in Boston’s neighborhoods,” you were right. Startups are going to collaborate to enhance startups.

This struck me as a pretty basic misunderstanding of the way capitalism works—as does, in fact, the whole notion of a nurturing “ecosystem” dedicated to “mentoring” and “incubating” other people’s precious startups. (It’s a basic misunderstanding of ecology, too, but we will let that pass.) Other than the chance to make some money, why would a capitalist participate in such a thing? If startups really were to encourage other startups, they would be contributing pretty directly to their own competition—and robust competition is precisely what today’s thinking business person wants to avoid. The winning quality today is monopoly, not competition. But this is not a literature given to subtlety or introspection. As the tech writer Evgeny Morozov points out in To Save Everything, Click Here, the cult of innovation holds every info-age novelty to be “inherently good in itself, regardless of its social or political consequences.” Sure enough, as far as I have been able to determine, few of the people who write or talk about innovation even acknowledge the possibility that innovations might be harmful instead of noble and productive. And yet recent history is littered with exactly such stuff: Innovations that allow companies to spy on us. Innovations that allow terrorist groups to recruit online. Innovations that allowed Enron to do all the fine things it used to do. Come to think of it, the whole economic debacle of the last ten years owes its existence to the financial innovations of the Nineties and the Aughts—the credit default swaps, or the algorithms companies used to hand out mortgage loans—innovations that were celebrated in their day in the same mindlessly positive way we celebrate tech today.

A contemporary example of holistic thinking is found in the approach Mark Suster and his firm Upfront Ventures took in helping evolve the Los Angeles startup community. A decade ago, many perceived LA as a small, relatively unimportant startup community. Mark and his partners at GRP Partners rebranded the firm Upfront Ventures in 2013 and began a concerted effort to amplify, publicize, and evolve the LA startup community. Mark was unapologetically bold about the awesomeness going on in LA. He started an annual Upfront Summit that was inclusive of all LA entrepreneurs, bringing venture capitalists and limited partners from around the country to LA for a two-day event showcasing everything going on in the region. By approaching the problem holistically, rather than attempting to solve one particular issue or to control things, Upfront dramatically accelerated the LA startup community while at the same time building an international brand for the firm.

Open Data Institute in Paris, and served as an open data advisor to the French government, all of which anchored her to an ecosystem that was fast emerging as a European start-up hub.

Hierarchies are best suited for situations that require tight control of production, information, or resources, such as manufacturers or large bureaucracies that exist in universities, governments, and militaries. Hierarchies are robust and inflexible, requiring formal rules, standard operating procedures, and a chain of command. In contrast, networks are resilient and adaptable, requiring flexibility and horizontal flows of information. Healthy startup communities rely upon unencumbered information flows organized in network-based structures. Conversely, they suffocate under hierarchical control.

Social capital, or “networks of trust,” are rooted in relationships based on a common set of norms and values that bind a group of individuals together and enable them to collaborate more effectively. Networks of trust are critical in complex systems that demand high performance under fast-paced, ambiguous, and evolving conditions. Successful outcomes in military special forces, modern aviation, championship sports, and hyper-growth startups all require teamwork that is grounded in trust and a shared sense of purpose.

The complex nature of today's innovations requires teams of people with diverse skills. As Victor Hwang and Greg Horowitt describe in their book, The Rainforest: The Secret to Building the Next Silicon Valley, we are in need of diverse teams more than ever, but we are unfortunately hardwired to distrust people who are different from us. The ability to consistently overcome this limitation of human nature separates vibrant innovation systems from the others.

The costs of coordinating labor and resources toward value creation are declining rapidly as new coordination tools enable a distributed ecosystem to work together to create value.

Ecosystems are the key enablers of value creation on platforms and a new source of competitive advantage.

You don’t need an MBA from an elite Ivy League school to find funding and be successful, but you do need to understand the start-up ecosystem.

Consider the case of two very similar companies, Twitter and Tumblr. Both had brilliant, product-oriented founders in Evan “Ev” Williams and David Karp. Both were hot social media start-ups. Both grew at a remarkable rate after establishing product/ market fit. Both had a major impact on popular culture. Yet Twitter went public and achieved a market capitalization that peaked at nearly $ 37 billion, while Tumblr was acquired by Yahoo!—another start-up that used blitzscaling to become a scale-up, only to decline and fade away—for “only” $ 1 billion. Was this dumb luck on Twitter’s side? Perhaps. Luck always plays a larger role than founders, investors, and the media would like to admit. But a major difference was that Twitter could draw on numerous networks for advice and help that Tumblr could not. For example, Twitter was able to bring in Dick Costolo, a savvy executive with prior scaling experience at Google. In contrast, even though Tumblr was arguably the most prominent start-up in its New York City ecosystem, it couldn’t easily draw upon a pool of local talent who had experience dealing with rapid growth. According to Greylock’s John Lilly, for every executive role that Tumblr needed to fill, there were less than a handful of candidates in all of New York City.