The Broadening Definition of Creative Economy: A four part series
This post is the final post in our four-part series on the broadening definition of the creative economy. For this post, we interviewed two individuals who work in very different roles in the start-up space. Out of those interviews we excerpted comments we believe expand and illustrate a few important aspects of creativity in startups that are presented in this blog. The comments of the interviewees on are inserted in italics.
Part 1 Notable Events in the last 20 years in the Creative Economy
Part 2 Global Creative Economy: The Orange Economy
Part 3 Examining the Nexus of Nonprofit Arts and the Creative Economy
Jeremy Ostermiller (JO), founder and CEO, Altitude Digital
Sarah Jane Coffey (SC), Reboot.io and former director of product for Global Accelerator Network
What is a startup?
The goal of a startup company–like most companies–is to make and sell products and services. One characteristic of a startup that differentiates it from other business endeavors is it seeks to create a sellable product rapidly while maximizing profits in a short time frame. Startups are also strongly linked to venture capital funding streams rather than more traditional bank and financial funding methods. In addition, startup entrepreneurs and their venture capital partners commonly seek to create viable businesses that, at the end of the startup phase, are highly marketable, thus allowing all involved to profit from the earnings. Finally, successful startups are also commonly characterized as growing rapidly, which presents unique challenges for the entrepreneurs who operate these businesses.
Differentiating Creative Products and Creative Thinking
Creativity in technology startups takes many forms, from the design of the product, to the development of the processes needed to bring the product to market successfully. Startups depend on creative workers to think abstractly, understand complex problems and develop solutions. Like workers in other creative industries, these workers are often intrinsically motivated to solve the problems they face.
SC -“Really creative people are drawn to startups because, even if you are not the founder, you are going to have the experience of building something, you are creating something. Employees involved in startups take a problem and devise their own solutions. They do not use a rigid formula, depend on established roles or a set approach or set technique like you see in a traditional corporate environment.”
JO – “We have a division of the company called “Innovation Lab” and they are working on what’s next in the evolution of the internet. We started as a display company, and while display was most of our business, this team was working on video. We soon became a video company. Now this team is working on mobile and the next iteration of Altitude is a mobile first company. This team now is going to be working on television and I think the next iteration is going to be programmatic television. Changing your model every two or three years requires investment and a lot of R&D around what’s next. You’re building an industry instead of joining an industry at that point.”
Leading the way in a Rapidly Evolving Market
Success for technology startups depends upon their ability to develop, launch and iterate on a product. The more rapidly the startup can get the product to the public and the more rapidly it can determine what needs to change to make the product viable, the more likely it is to succeed. Many new technologies are birthed through this process, which is often a process of trial and error.
The challenge for many start-ups lies not only in capturing market share held by other companies but in actually defining a new need in a new market. Many aspects of this process require the ability to make something new–to create a new app or service–and then to do a 180° and redefine what has been created.
JO- “Ten years from now, a business like ours will not be around. It will have evolved to the point where this business doesn’t even look the same. So every two years in the world of the internet is 15-20 years of evolution.”
Start-ups and Workforce Development
A number of economic development entities currently underwrite accelerator programs to move their region’s economy forward. The hope is these new businesses will act as a workforce development engine. While startups can generate new jobs in the first few years, they have a staggering 90% failure rate. The resulting spikes in employment can serve as a new foundation for a region’s workforce development strategy, however startups must move past dependency on outside funding sources for this to occur. This essential step determines if a business is sustainable and will be around long enough to create stable job growth in a region’s economy.
SC -“Communities throw money at the entrepreneurs, but there is no one with experience to grow the company and have mentorship for an exit strategy. Companies do well for a while, but then they don’t last – they aren’t iterating, don’t have a market.”
“Every entrepreneur isn’t founding a startup. Startups are high-growth. Think of a coffee shop versus an online customer management tool. Education is the place where economic development can make the impact, much less glamorous.”
JO – “It takes a special person, and you have to be honest with yourself. A lot of folks get into the startup world, and they just weren’t meant for it or they don’t have what it takes to get through it. Then you have to be honest with yourself when you get out of your startup mode. Are you the person that can run a company after startup mode? Because they’re two different things. So there are the startup guys and then the ones that can run enterprise companies… Completely different businesses.”
Technology Startups and the Nonprofit Arts
Startups and the cultures they create are influencing many aspects of today’s economy. The impact of this influence is concentrated in the creative economy, of which the nonprofit arts are a meaningful part. Many nonprofit arts organizations find themselves challenged by these changes. While they welcome the attention the startups bring to the creative sector, there are hurdles to embracing and partnering with these businesses.
The nimble nature of start-ups, their focus on serving the market rather than preserving tradition and moving toward a state of financial self-sufficiency are somewhat alien concepts in the nonprofit arts. Nonprofit arts organizations stand to benefit from the attention and wealth generated by technology startups in their community. Organizations interested in investigating these benefits, and forging partnerships are solidifying their role in the future as their community evolves with these new businesses and technologies.