Robert “Kim” Wilson has spent the last four years researching what makes some start-ups successful and others not.
Last year he published the outcome of his research in the book “They Will be Giants,” which focused on entrepreneurs in the 21st century.
What Wilson found was that a start-up’s ecosystem plays a critical role in its success, and one kind of ecosystem — the purpose-driven business ecosystem — was the most likely to drive a successful outcome.
Although this may sound intuitive, it probably comes as a surprise to many people, especially entrepreneurs.
Wilson's book offers a lot of detail about purpose-driven business ecosystems, and though it's a dense read, I recommend it for entrepreneurs and start-ups.
Wilson shared some of the key concepts of the book during an interview in November 2016.
Driven by a Shared Purpose
Coleman: Where did the idea for the book come from?
Wilson: I did not start out to write a book. I had spent the previous 30 years working with large enterprises. So I made a pivot, and tried to figure out how all I learned with enterprises could be applied to small business and specifically, early stage start-ups.
Entrepreneurs and the enterprise are very different. So I started talking to entrepreneurs (innovators), and investors. I affiliated with the Kiretsu Forum which at over 2000 investors is the largest group of Angel investors on the planet, with over 46 chapters worldwide.
I started looking at their perspective, and what for them is good entrepeneurship. I also went directly to the entrepreneurs and spoke with over 300 of them. I did not limit myself to Kiretsu, but talked to people all over the world.
Silicon Valley is a mecca for entrepeneurship, innovation and leadership, mostly in technology. Globally, I saw the word “ecosystem” being used more often. My partner (Del Langdon) and I kept a count on every time “ecosystem” was mentioned.
Over our first year, the number of times it was used doubled or tripled. It was now being used for business ecosystems, and I expanded the population I was talking to and included professionals (lawyers, accountants, consultants, etc.) that serviced the start-up marketplace.
The term “ecosystem” was growing in popularity, but what it meant wasn't clear, or it meant different things to different people.
Coleman: What did you ask them?
Wilson: What were the barriers to success? What is keeping your good idea from getting into the market and being successful? I asked general questions on why will you be successful, what stands in your way and what constitutes success?
I looked at the literature and found a few books written about ecosystems, and they were all written by investors. All about solving the issue of putting a new Silicon Valley in different geographies around the world.
They were looking at building ecosystems from the top down. They wanted to build ecosystems to promote entrepeneurship, but were doing it from their perspective.
We quickly decided that a book on this, with a bottom up perspective was needed. Here we are looking at an ecosystem, not for an entire region, but an ecosystem that serves your burgeoning business the best. How would such an ecosystem accelerate start-ups into the market? That is how the book evolved.
Coleman: How does a start-up ecosystem differ from a network?
Wilson: We defined a network like a LinkedIn relationship: a social, business network. Networks are the important and potentially promising relationships that you have — but that is it. An ecosystem, is a sub-set of the network, which generates tangible, desirable end-results for your business.
A network creates opportunity, and ecosystem creates tangible results.
People go to Silicon Valley networking events, they accumulate numerous business cards, but rarely do any of those turn into any value for the start-up.
Networks are still valuable, and from them you select the individuals who will be the contributors to your start-up, or you see a big hole in what you need … so you have to go out and recruit people in those areas to be part of your ecosystem.
Coleman: What is critical in an ecosystem for a start-up to be successful?
Wilson: In our research, we discovered a big difference between “business ecosystems” and “purpose-driven business ecosystems.”
We found very few of the latter — that were driven by a clear purpose, and had accountability, as well as other characteristics.
Most business ecosystems for early stage entrepreneurs are like a patchwork quilt: You form a relationship with another individual or business because it helps with your goal or need. When you have achieved that goal you move on to business as usual, and those that contributed to your near-term goal often just float away.
We ask that you consider your ecosystem as a literal (and valuable) extension to your business.
It could be similar to a department in a business. Just like you have product development and administration, you may have eco-partners who can help on an ongoing basis with sales and marketing.
With software start-ups here in Silicon Valley this is a very common situation.
Coleman: So these partnerships are dynamic. Does this mean your ecosystem is always changing?
Wilson: The key point is you will never be fully aware of the ongoing contribution of your ecosystem, but what potential does it have to contribute in ways you have not yet envisioned?
A good example is asking a good friend for an introduction to a decision maker at a potential client you have targeted. Your friend becomes an ecosystem participant, helps you with an introduction, helps write a proposal, etc.
So your friend becomes a productive contributor for your ecosystem. But if that friend was to become a channel partner that not only helped you with one deal, but helped you on an ongoing basis … it could be much more valuable to your business.
As an entrepreneurial strategy, you must ask yourself hard questions such as was your time better spent making one sale or spending time with a partner who will help you with multiple sales over an extended period of time, even years?
Coleman: What do those in your ecosystem get out of a purpose-driven business ecosystem?
Wilson: The underlying key to success is to have ongoing partnerships in which you give something valuable back to them.
The initial conversation is about what you will do for each other, in the form of strategic and tactical steps to accomplish your mutual goals that you mutually derive with your new ecopartner.
This provides more of an assurance that we will stick with each other over an extended period of time. Only with mutual value will these things start to work like magic.
Coleman: How long does it generally take an entrepreneur to form an ecosystem?
Wilson: It varies. I have seen it happen after a 2-hour conversation, and others take months. The key factor is finding the specific purpose(s) you both resonate with. If you are not tied to a common purpose, you may get results, but they are not likely to be optimal.
Coleman: Can you share any examples of entrepreneurial companies that have successfully built a purpose-driven business ecosystem?
Wilson: All of the larger software vendors — Microsoft, Facebook, Google — accelerated their growth and expansion based on ecosystem formation.
We also have the example of a guy I started working with a few years ago.
He had a marvelous product in the collaboration space that he worked on for over 11 years. He also had raised over $2 million in investment capital. Conceptually, his product was marvelous, yet he had not sold a full project or had a customer in 11 years.
When I started working with him, I told him he needed an eco-partner in one of his blind spots: product design. I connected him with a design group on the east coast, who decided to work directly with him without charging. This was not expected by my client, but this month (18 months later) he has totally overhauled his product, and has several potential marquee customers beating down his doors.
But without the introduction to the design eco-partner (who also had their own ecosystem to draw from, and got him the help he needed relatively cash free), he would most likely be out of business now. He thought he had a product, but not really … it was more of a set of cool features.
Coleman: What are the three basic tenets of a purpose-driven business ecosystem?
Wilson: To me, the nucleus of any ecosystem or business are the relationships you have with other businesses or individuals. They are the backbone and what holds the ecosystem together.
The book shares 7 attributes, but here are three of the big ones:
- Mutual goals — All partners should sit down together and agree to goals that are important to both eco-partners
- Shared risk — Things work better, when both eco-partners are willing to also take some risk
- Accountability — Each partner declares and fulfills an agreement, where they are accountable to and trust one and other
Mutual trust, as well as clear and open communication also help with this process. You are in it for the long run. It isn't easy, but your chances of getting superior performance are much, much, greater than if you do it on an ad-hoc basis.