[mattbauer]

Proven returns isn't being cocky. If your plan to compete directly with the coasts startup for startup, idea for idea I wish you the best of luck. I'm going to have to short your stock though. The Midwest at this time and possibly forever can't compete against the coasts for the types of startups project skyway is looking for. They have more quality talent for web/mobile/social/etc. They have more advanced networks and streamlined capitalization. They also have founders going on startup three, four, five and not all successful. If I had a web/mobile/social/etc startup or saw myself being a founder of one, the first thing I would do is move. The statistics of success dictate such.

Things brings up a problem see with project skyway. You are left funding founders not dedicated enough to their startups to move and give their startups the best chance. I would have serious reservations about investing in such a founder.

Incumbators were great even two years ago but now they really aren't as necessary. Thanks to Angel List you don't have to pay an accelerator for access to the network. In the world of Angel List an accelerator is actually a decelerator. If you have an idea for a startup, get a prototype done and submit it to Angel List. If it's got merit, you'll get interest. If not, move onto something else. I view project skyway more as a founder school that you pay with equity rather than an accelerator. I wish it would market itself as such.

The Midwest can kick the coasts' ass any day of the week but not with the type of companies project skyway wants. It's with the type of companies it specifically doesn't want.

I wish project skyway the best (that's Minnesota nice for I don't think it will work).

[cemerdem]

I am the founder of Project Skyway. Just checked out your web site Matt. Great product. Great accomplishment. Would love to have you in our network.

To respond to your comments, we chose not to entertain any device companies like yours because we do not have the expertise, network or resources to benefit these types of companies at this point. Since this is our first class, we wanted to have a narrow focus. This might change however as we add individuals like you to our network. If you don't fell for the spell of the coasts, that is, and continue to enjoy what MN has to offer to our entrepreneurial community.

BTW, I can make an intro for you to the CEO of one of the largest health clubs in the country. They do a lot of biking related events. Might be a good partner to get the word out about your product. Let me know.

[mattbauer]

Just checked out your web site Matt. Great product. Great accomplishment. Would love to have you in our network.

My company is specifically listed as an example of a company you're not interested in on your website FAQ and you just checked out our website? Additionally I say something challenging about Project Skyway and you ask me to join your network? Thanks but you're better served by guys like Rob Weber and Justin Kaufenberg. They made it. I'm just in the process of.

we chose not to entertain any device companies like yours because we do not have the expertise, network or resources to benefit these types of companies at this point.

This is the part I just don't get. MN has more expertise in MedDev (Medtronic, Guidant, Mayo, United Health Care, etc) and hardware (Compellent, Xiotech, Cray, IBM, etc) than anything else. I guess I would add advertising to that list (Fallon, Olsen, Brew).

If you don't fell for the spell of the coasts, that is, and continue to enjoy what MN has to offer to our entrepreneurial community.

I'm staying. See above for the reason.

In the end Cem you've made a bet with your own money. We'll see how it plays out.

[cemerdem]

"My company is specifically listed as an example of a company you're not interested in on your website FAQ and you just checked out our website?"

Many people are working together to build Project Skyway. Although I approved our FAQ, I didn't make the connection when I saw your company name.

MN might have more expertise in MedDev or hardware or advertising. I don't. As you stated I am betting my own money. Naturally I put it where I know the most. I would invest in real estate in FL before I invest in a med company. And how much do you think I know about investing in real estate in FL?

[crawdad1313]

Matt,

I'm not sure that I agree with you, for a number of reasons, but I cannot completely discount everything you say either. The idea that, because it is more difficult to build a software/web/mobile company in the Midwest; more difficult to get funded; and more difficult to become successful holds as much fiction as it does truth. And your assertion that, as you put it, we "are left funding founders not dedicated enough to their startups to move and give their startups the best chance." is kind of silly and naïve.

On a couple of different occasions I have heard you speak about the challenges you face in getting your company off the ground, and your product built. (most recently a couple of months ago at Bootstrapper’s Breakfast at Maria’s Cafe) and I understand your frustration. I was even there the night you originally pitched it, at MinneBar. And I don’t even disagree that the Twin Cities will probably never become a clone of Silicon Valley ($20... Inside Joke). But having lived there, I can honestly say, from the bottom of my heart... Thank God for that!

I know that this is a completely unfair, anecdotal example, but I have a company that I started last August, in the Twin Cities, got funded and is now on the precipice of becoming another wildly successful, Minnesota-based, early-stage tech company. It isn’t impossible, but it also probably isn’t as easy as it would be if I had a similar-sized network somewhere near the 101 corridor. However, that is kind of the point. It is absolutely ridiculous to think that I could simply jump on the BART from SFO, plant myself in the Tenderloin, haul my cookies down to 2750 Sand Hill Road and start begging for money from folks who have never heard of me. My network, the thing that is the real lifeblood of every successful accelerator, is here; my family is here, my home is here, and there are plenty of other reasons for me not to drop everything and go west, but they have nothing to do with a lack of commitment. In fact, I lived THERE for a while and chose to come back here to start my first company, to get away from some of the negative things that I felt weren’t conducive to my success. Since then, I have started, built and successfully exited from a couple of different companies, so I know it can be done.

There are SO MANY people here in the Midwest, for whom the Dream of Silicon Valley is so strong, that they think the streets of Palo Alto are littered with $50 million term sheets, where entrepreneurs get to keep 90% of the company they started 2 weeks ago. Most of the local "entrepreneurs" that have this terminal case of "SV Envy," have never even been there. (and usually have only talked about starting a company) The thing that we in the Midwest don’t seem to grasp is that good companies get funded and succeed, no matter where they are. There is not a higher rate of success, per-company-started, in SV, there are just many, many more started, so it is natural for folks to see the great number of successes as a sign that there are fewer failures. That is a fallacy.

After all, it would be ludicrous to think that a kid from Pittsburg, who had gone to Northwestern to study music, then dropped out of grad school to build a start-up in, of all god-awful places, Chicago, could make it work. It would be a certifiable miracle, if that company raised $165 million from VC’s in Silicon Valley (and Moscow), hired more than 1,000 people and turned down $6.5 BILLION from Google, because they figured they could make a lot more by waiting to do an IPO.

I guess the way I look at it, NOT having some of the "advantages" that you spoke of could be looked at another way. Perhaps the folks who stay in the Midwest, or (gasp) actually migrate TO the Midwest, see that this IS a different kind of place; though not necessarily better. But, it is the kind of place that, if you leverage your network; bust your ass; and ignore all the people who say it can’t (or shouldn’t) be done; spawns companies that will be around for a long time, create jobs, create wealth and create community pride. And, because we freely acknowledge that it IS definitely harder to raise money here than some other places, we need something like Project Skyway to help fund and mentor folks, so that we can build our own startup Mecca (or at least a place that isn’t repellent to early stage companies.) One thing we can definitely agree on though, the Twin Cities will never look or feel anything like SV.

As for the differences that have been pointed out between what we are doing with Project Skyway and what others are doing; we aren’t trying to be exactly like other accelerators, because we have a different set of issues facing us and we also bring different strengths. Cem Erdem is funding this with his own money and his vision and instincts, (along with mine) tell us we are heading in the right direction. Time will tell if we, like any early-stage company, have to pivot and try something different, but for now we are excited about what we have built so far.

In fact, we love YC, TechStars and all of the rest of the accelerators that have come before us, and we look forward to joining them in building an amazing nationwide, or even global, entrepreneurial ecosystem. No observer in one of our Project Skyway planning meetings (including me), has ever heard Cem, Casey or anyone else say anything but complimentary things about other accelerators, their founders, or their graduates. In fact, I think we can all agree that we likely wouldn’t be doing what we are doing, if it weren’t for them blazing a wide trail. There is something we can learn from all of them and we have done our best to do so.

However, we happen to believe that there is more than one way to support, inspire and help give life to early-stage companies and we are taking a slightly different course. In truth, there are far more ways that accelerators and the entrepreneurs who seek their support are similar, than there are differences. It is true that we do not REQUIRE a technical co-founder, but then there is no evidence that the single-most important component to building a successful tech company is having a founder who can sit down and code all night. In fact, there are plenty of reasonable arguments in support of both approaches and there are plenty of horror stories that provide ample anecdotal evidence for both as well. In the same vein, there is no rule that says that I cannot be just as successful as someone in another part of the country, so I choose to build my company here, where I have a strong foundation, a supportive network of other entrepreneurs and where there is plenty of money available to me to build a company that will change the world. And if, for some reason, I find that things are not as I believe them to be, I will take your advice and start hammering AngelList. But I didn’t see anything on their site about me having to be within 20 miles of an ocean.

We at Project Skyway are confident in our approach and in our ability to provide many of the critical elements that lead to building successful, sustainable, companies and, for the most part, those elements are derivative of the direction that the accelerators that have come before us have provided.

In the end, there is no magic bullet; no perfect solution; no supernatural zip code and no single formula that will make every early-stage company an unmitigated success. Regardless of how far we’ve come in the past 12 years to further our understanding of what specific kinds of resources evolve to create the best ROI for founders, investors, employees and communities, building early-stage tech companies is still akin to being a 19th century settler getting ready to cross the Mississippi River and head West; Great Potential - Poor Maps; But it is still worth the effort!

[mattbauer]

Why are you arguing points I didn't contest?

I have started, built and successfully exited from a couple of different companies, so I know it can be done.

Given this, how many angel investments in MN web/mobile/social/etc startups have you made?

[crawdad1313]

Hey Matt,

It seems like you are getting more worked up about this than is warranted. Nobody is trying to pick a fight with you. In fact, we all admire what you are doing with PedalBrain and we all wish you nothing but complete success. We feel like every startup in Minnesota that "makes it" puts us one step closer to our goal.

Now, to answer your question: I am not an investor right now. I hope to be able to do that someday, but I don't feel that I am financially savvy enough to hold my own in a highly technical conversation about the minutiae of financial terms within a complicated deal structure. I am a sales and marketing guy with a talent for picking winners, but that doesn't necessarily mean that I am a pure numbers guy, so VC's and angels who have been doing this for a long time would eat my lunch.

With that said, I have done viability analysis on hundreds of ideas, inventions and discoveries, on behalf of dozens of local investors, as well as having been a contract strategy consultant for the U of MN's Office for technology Commercialization; helping them figure out the commercial prospects for IP coming out of university-born-research. Also, I currently am privileged to have some of the most prominent, business-savvy investors in town support my company. So I continue to learn and hope to be able to jump into the angel investment side of things at a point when I don't feel like I am going to get chewed up in the process.

I am part of team who built the Project Skyway selection process, I see every application that comes in and I will play a role in deciding who gets funded. So, I can play a role in helping worth early-stage tech companies get seed-funding in that way as well.

Casey and I have also leveraged our personal networks, to ensure the participation of some rock-star investors, from both coasts as well as the Midwest so that, should our companies agree with you, that they would be better off somewhere else, they will at least have been exposed to investors from other parts of the country.

[mattbauer]

I'm not worked up. I'm seeking clarity for those applying to Project Skyway. They're new, naive and easily taken advantage of. I'm asking the questions I would hope they would ask.

If you haven't made enough on your exits to angel invest, then you built lifestyle companies which I understand Project Skyway doesn't want. Additionally, you're providing advice to entrepreneurs on how to create something which you haven't done yourself. That would give me pause if I was applying. Maybe your just providing your network to entrepreneurs for a fee (the equity stake Project Skyway takes). In that case, your price is much too large compared to Angel List and your value is significantly less.

[trmite]

Isn't it little presumptuous of you to claim that their applicants are "new, naive and easily taken advantage of"? If you have something to say, say it for yourself instead of claiming to talk on behalf of others.

[caseyallen]

Hey Matt, nice to see you chiming in. Appreciate the thoughts.

You say "You are left funding founders not dedicated enough to their startups to move and give their startups the best chance." Interpreted another way: everyone not smart enough or driven enough to move to the Valley we'll be stuck with. Second raters.

But you're missing the point: Is this pool still good enough? In the pool of 5,000 rejected YC and TS applicants per year are there any winners? We think so. We think there are a lot. Chicago is a far cry from SV or NYC yet a full half of Accelerate Labs' last class* went on to raise an impressive angel round. 50% follow on funding is nothing to sneeze at no matter how you measure it. Most accelerator programs cross their fingers for that.

You say "Thanks to Angel List you don't have to pay an accelerator for access". You just made raising a round leveraging AL sound really easy. You've found success with it -- is it really that easy? But even so, how do you think companies that are a tad too early for that going to maximize their chances of getting to that point? A Pedal Brain c. 2009?

You bring up good points, and I think that they lead to the fact we appear to be "just another YC". Stay tuned. This is just our first class (what we call a cycle). In 2012 and beyond we'll be focusing much more on niche cycles. Ones that are absolutely perfect for this ecosystem. See this year merely as our test drive, but we know we're not perfect. Factor that in before you short us into the ground. =)

Thoughts welcome. *http://www.exceleratelabs.com/portfolio/

[mattbauer]

Hey Matt, nice to see you chiming in. Appreciate the thoughts.

Ah more MN Nice.

You say "You are left funding founders not dedicated enough to their startups to move and give their startups the best chance." Interpreted another way: everyone not smart enough or driven enough to move to the Valley we'll be stuck with. Second raters.

No interpretation needed. I said dedicated enough. You stated they weren't smart enough or driven enough.

But you're missing the point: Is this pool still good enough? In the pool of 5,000 rejected YC and TS applicants per year are there any winners? We think so. We think there are a lot. Chicago is a far cry from SV or NYC yet a full half of Accelerate Labs' last class went on to raise an impressive angel round. 50% follow on funding is nothing to sneeze at no matter how you measure it. Most accelerator programs cross their fingers for that.*

Geography does not dictate success. If so, Phoenix would have more successful incubators than Boulder.

You say "Thanks to Angel List you don't have to pay an accelerator for access". You just made raising a round leveraging AL sound really easy. You've found success with it -- is it really that easy? But even so, how do you think companies that are a tad too early for that going to maximize their chances of getting to that point? A Pedal Brain c. 2009?

It is that easy. If you can't get to the point of a prototype, you shouldn't be funded. If you can't convince someone to work for equity/options to get you to a prototype, you shouldn't be funded.

You bring up good points, and I think that they lead to the fact we appear to be "just another YC". Stay tuned. This is just our first class (what we call a cycle). In 2012 and beyond we'll be focusing much more on niche cycles. Ones that are absolutely perfect for this ecosystem. See this year merely as our test drive, but we know we're not perfect. Factor that in before you short us into the ground. =)

Do the startups applying this year and giving you 6% of their founder shares understand it's just a test drive this year?

[caseyallen]

You ask: "Do the startups applying this year and giving you 6% of their founder shares understand it's just a test drive this year?"

We're not going anywhere, nor will our support, nor will our mentors. We may change the focus of our classes (although we haven't decided yet) but nothing changes for our startups this August. They still receive massive value from us and will continue to long after they leave the nest.

[domodomo]

Although I hope Project Skyway succeeds, I think your perspective is interesting.

The Midwest can kick the coasts' ass any day of the week but not with the type of companies project skyway wants. It's with the type of companies it specifically doesn't want.

By this you mean companies that actually charge for their product, right?

[rdouble]

They list the types of companies they don't want:

Bad Fit: Lifestyle companies. Consulting companies where the pricing model is tied to hourly labor. Anything with a hardware component (i.e. WakeMate or PedalBrain). Med device. Oil rigs in The Gulf.  You get the picture.

[domodomo]

My bad for not noticing this. Thanks.