Diatribes by Joah

Thoughts on growing Localeur, one step at a time

People may think we've raised a million-plus dollars because of the beautiful design of our site and the amount of content we've generated (nope) and that we've maybe hired a big team of full-time developers (nope) and that we've been working on this for well over a year (nope), but really Localeur is still in the early stages. We've just outkicked our coverage to the point where the expectations have been raised. This isn't something I'm afraid of, but it's something I'm excited about because it means people have bigger expectations for us. The kind of expectations you only attach to something you appreciate and want more of, I hope. Today was another big step. We moved into our first office. South 1st Street. 78704. Proud to call Austin our home. Enjoying the journey, no matter how stressful it can be at times.

On stepping down from the Austin Music Commission

Just had my last Austin Music Commission meeting after serving for three years and being vice chair for the last two. I moved back to Austin in 2009, the week after Obama was inaugurated, with the hope of doing two things: 1) getting more involved in urban affairs and civic life at the local level and 2) focusing on entrepreneurship. It's perhaps fitting that Now Localeur is the main reason I chose to step down from the Music Commission at this time. I do this with pride knowing that the man I've recommended to replace me - James Taylor of Holy Mountain - will do a solid job shall he get appointed by the City Council and Mayor and not at all without feeling like I've at least made some positive impact albeit minimal on improving the life and welfare of musicians, enhancing and protecting the environment by which the live music community exists and thrives here, and representing the City as best I could.

So SXSW is adding a sports component

So South by Southwest is adding a sports component. That’s pretty big news, and something I must comment on given my a) previous work with SXSW, b) passion and knowledge of the sports industry, and c) constant monitoring of all things that may advance Austin’s creative and entrepreneurial scenes. I should preface this by saying I believe the fact that most of their directors are men leads me to believe this move makes way more sense than what I was trying to do with lobbying them to add an official, fully-budgeted style component because men (at least Austin men) are far less familiar with GQ and the like than Sports Illustrated and such.

Regardless, the context I can lend start with my previous work with SXSW. Many of you know that I was the co-founder of Style X, the official style showcase of SXSW in 2011 and 2012. I conceived of Style X in late 2009 when I was launching Sneak Attack and shared the idea with Brent Grulke – the co-founder and then-creative director of SXSW even before I started working with Jon. Brent liked the idea enough for me to get a meeting with one of the directors and Brad Spies. Brad and I hit it off immediately and I’ve become good friends with him. I think he’s the smartest, most creative person at SXSW and I’m not just saying that because we’ve become friends. I’m saying that because after working with SXSW pretty intimately for 2.5 years of my life I learned that SXSW’s core business isn’t really that creative or entrepreneurial. It’s a convention / conference business. They make money selling badges then selling sponsorships to target those people who buy the badges then having those sponsors show things (usually new products or technology or films) to those people who bought badges. It’s a cycle of creativity, but the company SXSW itself hasn’t really been the key contributor of that creativity for a decade now as much as it’s the house with all the rooms for creatives to play in. No small feat, but you must look at their business through this lens to understand why sports makes sense.

While, Style X made SXSW a fair amount of net income (profit) both years – no easy task for a first-time endeavor – and generated considerable press…which has further enabled SXSW to monetize through both badges and sponsorships to fashion brands, it wasn’t considered a runaway success by SXSW’s higher ups. There are two reasons for this: 1) we were outsiders. Since I was an outsider rather than a SXSW employee, the higher ups had an entirely different set of expectations and justifications for success and going forward than I anticipate they will apply to the new sports component because Rebecca Feferman, the woman spearheading the project, is already on the staff and has fought the internal fights, lobbied to the directors and proven herself to them, and 2) the sports component will have the benefit of having learned from Style X even more recently than Music, Film or Tech, about how to make it work, where to scale back, where to invest, where you get more press, how to market, etc.

That being said, my passion for sports (not to mention I’ve worked for/consulted everyone from the Texas Longhorns and Pac-12 Conference to the Beijing Olympics and ESPN X Games) leads me to believe SXSW has no choice but to view this new sports component as a far more natural fit than an official style component because a) Austin is on the verge of becoming a major alternative sports hub thanks to Formula 1 and ESPN X Games and b) the media dollars in sports are so much greater than the media dollars in fashion (e.g. ESPN is worth billions while Vogue is worth only hundreds of millions), and b) that sports, unlike fashion, speaks to SXSW’s pre-existing male-dominated audience (both internally at the director-level and externally) which means they already have a pretty significant baked in audience to sell badge upgrades and sponsorships to whereas we were really trying to help SXSW attract more females with Style X (something we accomplished).

Overall, what this means for SXSW is that they are realizing that Music, Film and Interactive no longer represent the areas of growth for them…at least not in Austin (which is why V2V took place in Vegas, instead). Now, SXSW has to start killing itself like any smart company by creating new avenues like Eco and Edu and Sports to leverage and target trendy audiences and monetize through the corporate sponsors dollars that are being pushed into those areas.

For example, brands like Pepsi and Target and Bud Light know that SXSW Music may not be a better investment than, say, Lollapalooza Festival, but SXSW overall may reach more of the masses because of its social media influence and reach, its timing (March gives brands more time to build in campaigns than Q3 and Q4 where experiential budgets tighten or get more detailed in advance of the holiday season), its relative low cost compared to TV advertising, and, most importantly, its continued ability to attract some of the biggest names in the world be it Bruce Springsteen or Mark Zuckerberg or, now, Bill Simmons aka ESPN’s Sports Guy.

I’m a fan of SXSW, but I think the next 2 or 3 years are going to be critical – and could go either way - because holding onto people like Brad and Rebecca and Lizzy Newton, another friend in the Music department, is only possible if the directors give them new and bigger opportunities to pursue their passions because – to my earlier point – their core business is actually rather boring: conferences/conventions. That’s something I learned working with SXSW first-hand, and more recently in the tech industry where top talent leaves companies like Bazaarvoice the moment they go public because most of the interesting problems are either a) gone or b) being handed to non-creative, executives who’ve “been there, done that” instead of young, energetic, highly-motivated creatives.

The sports industry isn’t really known for being full of creatives, per se, so this will be a bit of an odd match for SXSW, which really is like spring break for creative professionals. Still, the fact that SXSW is smart enough – perhaps even smarter after the early success followed by internal disappointment of Style X – to know that there are many new avenues to go down is a good sign. It means that Brent’s passing didn’t have to mean the passing of SXSW’s creativity either, it may just mean the passing of the torch to people who don’t have director titles, but bring the same kind of energy and passion that Roland and company brought way back in the mid-late ‘80s when SXSW was created or in the early-mid ‘90s when Film and Interactive were introduced.

How I Became an Entrepreneur in 1983

If there’s one thing I’d say is true for my 2012 it’s that I haven’t blogged as much as I’d have liked to. The main culprit? My entrepreneurial endeavors have taken up my time. Now that is not to say I’m the busiest man alive or anything close to, but simply to state why I haven’t had enough mental space to have the type of stream of consciousness blogging I prefer after long periods of internal dialogue and introspection. Regardless, I figured there’s no better way to improve my blogging plight than to start blogging about the very thing that has consumed me. Entrepreneurship.

I was born with a knack for entrepreneurial thinking. At least that’s what the story of my life indicates. Since a very early age, upon reviewing the challenges and life situations of my family members, I realized that the best way for me to make something of myself was to create my own success. I couldn’t rely on a wealthy or college-educated family or the government or my public schooling. I started educating myself on entrepreneurship through action.

In the last few years alone, I’ve experienced challenges that I’ve come to learn only entrepreneurs (and maybe people with really bad drug addictions or mental health issues) experience. Namely, the fact that my life has been a series of highs, lows, ups and downs, successes, failures, and that’s before I tell you the see-sawing effect that my personal bank account has shown in the last four or so years since I moved back to Austin and decided to pursue an entrepreneurial path more directly.

At 11, I started my first business. Mowing lawns, pulling weeds, raking leaves, edging bushes and every other landscaping thing my grandfather taught me became part of my arsenal when I took market leadership in the Lora Lane / Lily Street landscaping industry (from my brother Ramiah). I netted about $1500 a summer and $1000 a fall through middle school to pay for new school clothes, field trips and other things most kids relied on their parents for.

 At 12, I started my second business. I sold Bubble Yum and Bubblicious gum at school. Grossing $20 to $40 per week in seventh and eighth grade was a great way to supplement my income while getting my learn on.

At 18, I received something like $110,000 in college scholarships after sending in more than 100 applications and winning around 30% of them. And at 22, I became the first in my immediate family to graduate from college. I guess you could say I was an entrepreneur of educational attainment.

At 25, I got my first book deal on the strength of a single blog entry on this very blog.

At 26, I started Sneak Attack, a pop-up sneaker boutique. Yeah, you probably read about it in a magazine or newspaper.

That same year, I started a social media consulting practice. I advised different Austin and Memphis-based companies and organizations (FedEx, Deep Eddy, Lustre Pearl to name a few) on social media strategies and tactics. I didn’t have a regular day job from August 2009 to April 2011 living solely on this business while taking almost every dollar to put it back into my work on Sneak Attack and Style X.

No, these weren’t tech startups. That lawn mower was given to me from an angel investor, and a friends and family round (mostly my mom) was how I started the candy business. I wasn’t building computers or coding programs, but these were privately held, limited-liability enterprises bootstrapped by yours truly. I was an entrepreneur long before I met any real investors. I did a friends-and-family round for Sneak Attack, and even borrowed money from six of my former bosses, best friends and brother over the last few years to keep operations afloat. Sneak Attack is on hiatus, but I still started paying dividends back to those friends in 2012 and will continue to do so because I wouldn’t be anywhere close to where I am today without the support and faith those early investors showed me. I’m also happy so report that every loan I’ve ever received was paid back on time with at least 10% interest. I’m not in the business of playing with people’s money because I know it’s like playing with people’s emotions as Big Worm famously said in the classic movie Friday.

But I know beyond a doubt that I was an entrepreneur even before I started a single one of those ventures, before I ever took any investments and before I got into the technology industry. Why? Because I was born in 1983 and something was instilled in me at birth, it seems.

In 1983, Thriller was the hit album and Michael Jordan was the young phenom. They would go on to revolutionize the way we think about music, sports, marketing and Blacks in America among other things. It was also the year the famous 1984 commercial was debuted by Steve Jobs and co. You could argue that those occurrences alone make the year of my birth very special and extra significant in the history of America.

But actually those events pale in comparison to something that really sets 1983 apart for me. In July 1983, Harvard Business School held a symposium on entrepreneurship that re-wrote the playbook on what it means to be an entrepreneur thank to a certain man named Howard H. Stevenson.

Just three months after my birth, Stevenson’s name started to ring out in more and more academic and business circles when he laid out key elements of his then-upcoming work titled, “A New Paradigm for Entrepreneurial Management” (1984, Harvard Business School). In essence, Stevenson stated that great entrepreneurs create or seize an opportunity and pur­sue it regardless of the resources currently controlled therefore constituting an entrepreneur as anyone in the pursuit of resources which they don’t currently control.

Nowhere in that definition do you see the word business. Nowhere do you see the word technology or product either. Stevenson’s broad definition has proven far more adequate for what entrepreneurship truly is than any other, especially The American Heritage Dictionary’s definition for an entrepreneur as "a person who organizes, operates, and assumes the risk for business ventures.” That dictionary does not understand the differences between a business executive or manager and an investor because it does not demonstrate the value of resources only risk.

Others whom have defined entrepreneurship have also missed the mark, in my opinion. Even such legendary business minds and luminaries as Peter Drucker, author of Innovation and Entrepreneurship, who once said anybody from any organization can learn how to be an entrepreneur because it is "systematic work.” Other academics have since corrected Drucker; Morton Kamien, an entrepreneurship professor at Northwestern University, said "When a person earns a degree in physics, he becomes a physicist, but if you were to earn a degree in entrepreneurship, that wouldn't make you an entrepreneur.” Affirmative. Systematic work will not suffice.

Stevenson’s 1983 words must have been whispered into my ear while I rocked in the crib because ever since I’ve had an intense and intimate understanding of the resources that fuel an entrepreneur’s path to success. Existing business (e.g. clients) and people (e.g. co-founders), especially creatives and creative thinkers in traditional roles such as law and accounting, along with physical (e.g. real estate), financial (e.g. investors) and intellectual (e.g. IP) assets, and, the hardest to measure resource: industry network understanding.

Stevenson said that great entrepreneurs interpret the need for and control of these resources in the pursuit of opportunities dif­ferently from the way a large organization’s managers or business executives perceive them. He said that an entrepreneur’s duty is to decide what resources are needed, when they are needed, and how to acquire control rather than simply ownership of them through dynamic strategies while keeping a keen focus on deploying the absolute smallest amount of these controlled resources to seize opportunities. Apple may not sell all of the world’s computers or mobile phones, but they control the industries. Google doesn’t own the Internet, but it controls a major passageway. Facebook’s valuation is attached to its ability to control social experiences for something like a billion people around the world. Technology companies, unlike say consumer product goods companies, are able to attain high valuations because they can control resources like data without actually having to own them the way Pepsi has to sell cans of soft drinks to prove its value.

So what got me thinking about all this? Well, entrepreneurship is something I’ve thought about for years and years, and part of the reason why I worked for Bazaarvoice. I wanted to get closer to guys like its founder, Brett Hurt, whom have established themselves as savvy entrepreneurs, especially in Austin. Don’t get me wrong, I know a lot of people who are highly successful in what they do for a living and many of them own their own businesses like agencies, bars and law firms. But true business entrepreneurs? Maybe a dozen in Austin, maybe a few more if I add my New York and West Coast networks.

Many people whom I have considered entrepreneurs have actually proven to me over the years that they are more akin to savvy business executives and leaders than entrepreneurs. This isn’t a bad thing. It’s not easy to be the president or CEO of a company, especially a successful one. And leading companies or organizations of dozens or hundreds of people has to be very challenging. Being a business leader like Tim Cook or Eric Schmidt is impressive.

But I guess I’m more interested in guys like Steve Jobs and Sergey Brin. Maybe there isn’t as much of a difference as I’m making it out to be, but whatever difference there is however slight is something I care to pursue.

Tufts University professor and author Peter Levine explained it like this in a blog:

If you decide how to allocate a budget, personnel, or other resources that you have in hand, you are administering. If you make those allocations collaboratively, you are negotiating or deliberating. If you plan a ten-million-dollar house in your mind, without having any way to get the $10 million, you are daydreaming. If you have the capacity to seize someone else’s resources, you are stealing. But if you come up with a plausible plan to raise $10 million in voluntary investment capital, you are an entrepreneur. You can be an entrepreneur (as opposed to a mere administrator) inside business, government, academia, or the nonprofit sector. Wherever you work, you must make plans that involve resources that you can get but don’t yet have.

What I’ve learned while raising money for AvecMode these last few months is that even people whom self-describe as entrepreneurs have trouble taking off their managerial (administrator) hat once they become successful. They forget how to think like an entrepreneur and focus on the resources needed and the pursuit of them rather than spending too much time focusing on the resources currently controlled and managing them. Perhaps this is sound logic because they have fiduciary responsibilities to be mindful of. Perhaps this is logical because it’s in their best interest to maintain their current resources rather than pursue new ones, especially if the new resources compete with their current businesses or take them further away from the resources they currently control.

But I happen to think this behavior is akin to what conservative Republicans who are against any type of tax increase for wealthy Americans are doing and saying despite the obvious need for increased revenues to offset the deficit. You can’t say you’re for decreasing the deficit on one side of your mouth and then say you’re against tax increases of any sort.

Investors shouldn’t consider themselves entrepreneurs simply because they invest in various ventures unless they are thinking like entrepreneurs when they make those investments. If they’re not thinking like entrepreneurs under Stevenson’s definition, then they should truthfully just refer to themselves as bankers with entrepreneurial experience. It’s two completely different things.

I've been most impressed with a handful of investors who think like entrepreneurs. Along with Brett who is now at Austin Ventures, I've been appreciative of guys like Josh Kopelman at First Round Capital and Thrillist founder Ben Lerer who approached me as investors who thought like entrepreneurs rather than as bankers.

Regardless, I don’t share this because my experience raising capital for AvecMode has been negative or has led me to think unfavorably of entrepreneurship. To the contrary, I'm in New York right now for something like the 12th time this year and I think this may have been my favorite trip up here in the last two years. Meeting with guys like Eddie Mullon, founder of Fashion GPS, Ari Goldberg, founder of StyleCaster, Meghan Stabile, founder of Revive Music Group, and other friends and acquaintances both new and old has only revitalized and re-affirmed my childhood and ongoing obsession with learning about savvy entrepreneurs and the way they think about the world and approach problems. I couldn't even dream about approaching business the right way if I didn't approach the world with a good attitude, a knack for learning from others, and a belief that I'm on the right path regardless of hurdles.

Entrepreneurs aren’t only in business, though. I happen to know dozens of people who reflect the spirit of Stevenson’s 1983 words more than many business owners and investors I know. They are creatives, educators, government or nonprofit aides and, yes, technologists. They are innovating, tinkering and attacking problems both large and small in new and groundbreaking ways. They aren’t just sitting in their chairs and protecting the resources they’ve amassed over the years. They’re out there every day fighting for new resources in new ways. It’s truly inspiring how many amazing people I’ve come to know over my lifetime who live this way.

One of the reasons I moved back to Austin was because I believe it is a world-leading city and place for entrepreneurial activity, and not just investments in software companies because the founders have all the right degrees and their presentations have all the right buzzwords like Big Data, SaaS, Cloud and scale. I would love to know what kind of investor Stevenson is. I have to meet him.

Stevenson has published several more volumes of wisdom on entrepreneurship, but my personal favorite of his is titled, “Why Entrepreneurship Has Won!” (2000, Coleman White Paper), which states the following:

1. Entrepreneurship flourishes in communities where resources are mobile.

2. Entrepreneurship is greater when successful members of a community reinvest excess capital in the projects of other community members.

3. Entrepreneurship flourishes in communities in which success of other community members is celebrated rather than derided.

4. Entrepreneurship is greater in communities that see change as positive rather than negative.

Stevenson adds:

No claim is being made that the 1983 paper drove the academic agenda. Rather the observation is that the arena of entrepreneurship involves many fascinating and important problems that have come to the attention of mainstream scholars. Entrepreneurship, properly conceived, is an intellectual domain of hard and important problems that can be attacked with the best possible scholarship. The progress of the field has been substantially enhanced as it attaches its problems to discipline tested tools.

The caveat must be given, however, that entrepreneurship is more than the sum of its parts. Successful entrepreneurship is a study of the dynamic fit between a set of people; an opportunity derived from a particular context and the deal that unites them. The nature of the fit requires constant vigilance. There is no such thing as an opportunity forever. Context changes and the opportunity becomes a trap. Deals need to be robust, but the best deals are subject to strategic behavior when their consequences are fully understood. People change too. Assuming the premises of rational, evaluating maximizing individuals cannot begin to fully account for the instances of creative genius, self-sacrificing loyalty and charismatic leadership.

The last two decades have shown the importance and the relevance of the field of entrepreneurship. It is not important in isolation. Its importance is part of the global change that is affecting the way we live and work.

So to his point, I’ve picked a community (Austin) that fosters entrepreneurship. I strive to support and celebrate other entrepreneurs to further support this community. I embrace change. I seek out people and opportunities that are both dynamic and meaningful. And I fight like hell to be the type of entrepreneur that reflects the level of creativity, self-sacrifice and charisma worthy of the confidence of my investors be they family members, friends or bankers with entrepreneurial experience.

Wish me luck. It’s real out here on these entrepreneurial streets.

Austin's Best Rated & Reviewed!!

Thanks to Beyond Arts & More Magazine!

Read the article on page 24 here.