Reducing Pressure on Founders, Rick Rubin on Feedback, & New Research on Affordable Housing Policy
Small Cities Weekly | 04.12.2024
As part of the work we are doing on the Small City Segment, we send out a brief weekly post of thoughts, links, and research in progress that reflect the week’s work. I’d love to hear from you if you have any thoughts, questions, disagreements, or things to add. Please forward this on to people you think might enjoy reading it.
Taking Some of the Pressure Off
I’ve been thinking a lot lately about these two posts (here, here) from the newsletter What’s New Under the Sun about whether entrepreneurship is “contagious” and if so, how that works.
After reviewing the research, the author finds that yes, you can say it’s contagious. He sums up the findings well near the end of the second post:
Entrepreneurs are often found in social clusters (workplaces, neighborhoods)
Quasi-random exposure to entrepreneurs increases the probability of becoming an entrepreneur
Entrepreneurial influence seems stronger when entrepreneurial peers occupy a more similar social position
The effect of exposure to entrepreneurs is much weaker for the people most likely to already be considering a career in entrepreneurship
This makes logical sense and it’s cool that the research supports that gut feeling. It also seems to be pretty actionable.
Where I’ve been feeling some tension is how this plays in nascent entrepreneurial ecosystems. The above research seems to support the practice of panels, podcasts, networking events, happy hours, etc. that connect people that are actively pursuing an entrepreneurial endeavor with those that might be less exposed to the idea.
But here’s the rub - because these places are still nascent in their examples of success, founders are often asked to participate when they themselves are still at a really early stage. They are often first-time founders and still trying to turn an idea into a real business. But they are also in a “similar social position” as others that we hope to activate.
From a founder’s perspective, whether they say it aloud or not, it can be a lot. Pressure is put on things that are barely born to be “the example”, before they even know if it will work. There is an argument that that’s ok - that just the act of starting something in and of itself is what is to be celebrated.
But there is also a cost - the time and pressure on the founder to be more than just someone building a business, but to also be a story. To be a main character. To sit on panels, speak to students, record a podcast - be that catalyst to show others that they can do it too.
I see both sides. And I’ve been on both sides - being asked to speak and being the one doing the asking. The stories are important, especially given what the research says about entrepreneurship being contagious and how small cities are lagging in entrepreneurial rates. But I also feel for the founders. Starting a business is hard enough; being an exemplar while doing so - when you’re not even sure it’s going to work - can be another level.
And if the company doesn’t work out, having been on a semi-public stage can be tough in a smaller community. If you start a company in Silicon Valley, you’re no more special than the next person - most come and go in obscurity. It’s like being an aspiring actor in LA or a musician in Nashville. But as a friend of ours once said, “If you’re a startup founder here, you’re a super hero.” If odds play out as the data show, making the likely move from super hero back to a normal citizen can be tough.
This might just be the cost of being early in these cities. We might just be asking people to bear that cost, knowing there is no way around it. But we also might be able to make it less difficult for founders along the way.
Here’s a few ideas I’ve been thinking about that could help alleviate some of that pressure:
Make it clear that being a public figure while attempting to build your business locally is optional, and no resources, support, introductions, or anything of the like is dependent on participating. If you just want to be heads down and building, we love that too.
Don’t put people in a place to comment on things that aren’t applicable to them or their business yet. Be intentional with questions, prompts, and panels to be asking them about their experience to-date, and not make them feel like they have to bear a persona of an already “successful” founder.
Let them be real and honest. If it’s been hard, let them share it. If they are struggling, let them share it. If their experience locally hasn’t been 100% positive, we want to hear it. One of my favorite pieces of startup media is the first season of the “Startup” podcast by Gimlet back in 2014 because of this fact. They recorded, in real-time, what it was like to start a company - the good, the bad, and the ugly. It feels real, and I think that is helpful to the contagion effect, not detrimental to it.
Finally, remember that if people are able to build thriving businesses, we will have more than enough contagion to spread. Focus on that first - the stories will follow.
Links
You can find links from this and all previous editions here.
The Real Estate Nightmare Unfolding in Downtown St. Louis, Konrad Putzier, WSJ
As in other Midwestern cities, the St. Louis office district has suffered a slow demise for decades. Population loss, competition from newer offices in the suburbs and failed urban planning left behind a glut of dreary, empty buildings and wide, dangerous roads. The business district has few apartments. There are some tourists, but not enough to make up for missing office workers.
“It’s a classic chicken and egg kind of deal,” said Glenn MacDonald, a professor of economics at Washington University in St. Louis’s Olin Business School. “People don’t go there because there’s nothing to do. There’s nothing to do because people don’t go there.”
My friend Samuel and I went back and forth about this article a bit this week. One of the things we talked about is a need for an almost irrational actor to break the cycle described above. Someone willing to bet so long-term on a downtown that the “numbers” don’t matter to them on the type of horizon that most people would consider reasonable. I hope to look more into this and see if there are examples or research that support it.
Steven Pressfield, Tetragrammaton with Rick Rubin Podcast
Yeah, it's never a debate. It's like we're working together to get to the best goal. So an example that happens all the time in the studio is a suggestion is made to me that sounds terrible, and I say, okay, let's hear what that sounds like. And then it's demonstrated. And it was incredible.
Happens to me all the time. […] I'm wrong in my head, but I don't allow what's in my head to impact anything. All that matters is what's outside of us. We don't argue over the theoretics, which I see all the time.
Bands get into fights. Bands break up over theoretical argument. It's a form of resistance. […] This exact story that gets in the way of the process, exactly what it is. Let's take all the stories out of it, let's demonstrate it and then talk about what was demonstrated.
Yeah, but it was never, you're no good. It's the second verse lyrics might not be as good as the first verse lyrics. The bridge is the weakest part of the song. Maybe we can make that better.
And I'm not even saying I'm right. I'm saying this is what I see, and then we talk about it.
The above is Rick Rubin talking about how he thinks about giving feedback to the musicians he works with. I love this idea of (1) not letting “being wrong in my head” impact what you’re willing to test and (2) the phrase “I’m not even saying I’m right - I’m saying this is what I see.” I think it’s a masterclass in how to support founders, whether you are an investor, board member, mentor, or advisor to early-stage companies. This whole episode is great if you’re into the creative process, but the above section takes place from 26:44 - 35:22.
Modeling Inclusionary Zoning’s Impact on Housing Production in Los Angeles: Tradeoffs and Policy Implications, The Terner Center for Housing Innovation
Using the TOC program and the production of ELI units as an illustrative example, I find that changing the level of IZ entails significant tradeoffs between BMR (below-market-rate) and market-rate production. The simulation shows that up to a point, higher affordability requirements do produce more BMR housing. But increasing the IZ (inclusionary zoning) requirement also substantially reduces overall housing production over a 10-year period, with relatively limited gains to below-market housing.
This feels like a good example of not treating the “housing affordability problem” with too broad of brush. There are different segments that face different problems when it comes to housing, and assuming that one policy can fix it all doesn’t make a whole lot of sense. I actually think more targeted policies that together create a suite of actions makes it easier to see where entrepreneurial opportunities are to make those policies go even further.
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