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Des Moines, Iowa


Thoughts on our startup community for the Greater Des Moines Leadership Institute

Geoff Wood

The Greater Des Moines Leadership Institute invited me to sit in on a panel this afternoon to talk to their 2014 class about startups in Iowa. I was joined by Leann Jacobsen of the Technology Association of Iowa, Tej Dhawan of StartupCity Des Moines and the panel was moderated by Chris Voggesser. It was a lot of fun and I really appreciate that program taking an interest in our startup community (it's important). They sent some sample questions over ahead of time and I decided to write up my thoughts and share them here: 

What does it take for startups to begin building around Des Moines' strongest industries of insurance, finance, bio-ag in Ames etc.? 

Committed individuals who are willing to go after it. It could be middle manager-level folks at the big companies in those industries who know they can do it better/faster/more efficiently/more profitably being willing to take the risk and do it.

Financial tech is the closest thing to a cluster we have in Central Iowa (Dwolla, SmartyPig/Social Money, WebFilings, LendTrade, etc). coOportunity Health is a health insurance startup - one with a lot of press - that was started to take advantage of a new opportunity created by the Affordable Health Care Act. 

Startups are often known for their ability to move quickly using various strategies. How can these same concepts be used for teams in larger companies? 

I’ve never worked in a “large” company (~300 is the biggest so far) but I think it boils down to company culture that allows for bureaucracy and sacred cows. Those aren’t necessarily bad things and they accumulate over time with any organization. But, startups don’t have to deal with it up front do their (lack of) age. Finding ways to minimize those things in large companies will certainly help (though that can’t be easy if your organization is 20, 50, 100 years old). 

Staff at startups also have a dedication to the organization that you might not find in larger companies. They’re probably not getting paid very much, they probably don’t have benefits, they hopefully have equity so their future compensation is tied into the company’s success and the team is small/nimble enough that they can see and feel their influence on that chance for success daily. 

The founder of a startup actually told me that one of the problems he wrestles with is that new employees who join after the company has grown up a bit see working there as a “job” and not “joining a startup” and its a culture change.

What are the biggest issues facing the creation of startups in Iowa?

I’ve said several times that the biggest issue is lack of investment. Most high net worth-individuals in our state don’t see the business model of risky-investment as worthwhile. There’s more infrastructure to support this now (see Plains Angels) but still not enough investing. Those who do it also don’t make themselves knows. We don’t have guardian angels, yet. Daniel Reed, University of Iowa’s vice president for research and economic development called for the Eastern Iowa community to take more risks, collectively, at last weeks Iowa City Area Chamber banquet. 

We need more successes. We need society to accept that starting a company is an appropriate lifestyle after college (or even during or before).

Are there any off-the-radar startup companies around the state that this group should be aware of?

Most likely all of them. Who here can name a startup?

Rocket Referrals, LendTrade, TourneyMachine, Men’s Style Lab, Offspring, are just a few of the Des Moines/Ames ones that I think are interesting (off the top of my head). Similarly, ClusterFlunk, NextStep, Blend Card, Threads, GoodBlogs, etc in Eastern Iowa. 

How important is it that Iowa have ties to the coasts? To other cities in the Midwest like Omaha, KC, Chicago?

Very. Connections to capital and global press (Dwolla needs to write a case study on both) comes from those places. Also, people from Iowa leave the state (-3,618 estimated domestic migration in 2012). Why wouldn’t we maintain those connections? Keep former Iowans interested and part of the Iowa tech story. They may or may not ever move back. It would be great if they did but what is more important is for them to evangelize their time in Iowa, the community that is here, to raise its profile and (hopefully) invest and otherwise support in the companies that are here. See for a project I’m working on to identify/track/connect with these people.

By the way, we may have had more than 3,500 people leave domestically last year but we had 4,265 who moved here internationally (immigrants are important to our survival). 

A lot of media hype was placed around the creation of data centers in the Des Moines area, do you think this will actually benefit the growth of the tech community? 

No. Facebook, Google and Microsoft aren’t putting engineers into the community, they’re putting HVAC people into the community. A few good jobs but nothing that’s going to cause ripples. I am excited that you’ll be able to see a big “Facebook” logo from I-80 in Altoona because it will surprise people driving through and hopefully make them interested in checking us out. 

The big beneficial “get” would be engineering teams from these companies. Those jobs would involve greater employment numbers and would help grow the community. Those are also the type of people who would be interested and empowered to split off and create new companies. 

How can corporations and startups work closer together?

Corporations can start by buying from startups, buying (acquiring) startups, and in general supporting this section of the creative class like the do with cultural initiatives like 80/35, the Des Moines Art Festival or the River Walk. A robust startup community will raise the profile of Iowa as a place that young people want to be which will attract workers, trailing spouses, etc for corporations and startups. 

Startups should not eschew big corporations simply because they’re “suits”. There is a lot of collective knowledge in the big buildings downtown that they can benefit from. Those corporations also make for great judges, mentors and sponsors for startup events. For fun additional reading, see my post on the Startup Genome blog: "Established companies are part of your startup community, too".