By Sid Krommenhoek, Managing Partner at Peak Ventures.
This article was originally published in the Spring 2017 edition of Silicon Slopes Magazine.
In 1994, Hush Puppy shoes were on their deathbed. They had sold a weak 30,000 pairs of shoes the previous year, and the parent company was about to kill the brand. Two years later they sold approximately 1.7 million pairs. Malcolm Gladwell, after recounting this story in his book The Tipping Point, then asked, “How does a thirty-dollar pair of shoes go from a handful of downtown Manhattan hipsters and designers to every mall in America in the space of two years?” The answer? Preferences of a few quickly escalated to the appeal of many, and tipped the scales to success. Without the initial interest of a handful of trend setters, Hush Puppies would likely have disappeared.
Every entrepreneur faces the harsh economics of tipping points. In 2007, my Zinch cofounders and I had burned through most of our $750K angel investment. We needed to grow enough of a critical mass to survive. We needed a tipping point, but fighting on our own we would never get there. When we laid off most of our team — paying the remaining members in equity alone — it was local entrepreneurs who came to our rescue. They saw our potential and stepped in with capital and coaching. Their involvement tipped the scales, and the business was ultimately acquired and taken public. I remember like it was yesterday sitting in a Santa Clara hotel shortly after our company had been acquired, staring at a celebratory bottle of wine left for me (and that I couldn’t drink), remembering one of those who had lifted me up along the way. I gave him a call to share the news, swap some stories, and compare notes on startup. That friend, Jeff, is now my partner at Peak Ventures.
The tech scene has radically grown since my days at Zinch, and Silicon Slopes has become a major player. Utah’s tipping point in tech is homegrown, catalyzed by founder-led support for other founders, and it spans from budding entrepreneurs to the the most prominent figures in the Salt Lake Valley. So where can you find the love for your startup, as you reach for a tipping point?
- **Through an unprecedented release of talent and capital. **This year in Utah we may witness the IPOs of Qualtrics, PluralSight, and Solutionreach. These events release both capital and talent into the state. Newly-found cash and newly-found freedom, combined with the confidence that comes from taking your business past that real “finish line,” is the perfect pool from which to draw mentorship and capital. This is exactly what my partners and I did after successful exits — formalized a fund (Peak Ventures Fund 1, and now the largest seed fund in the state through Fund 2) to back other founders.
- From tribes of fellow founders: A few months ago I joined four other startup founders for a week-long diving adventure in Thailand. We had a great time. And whereas social gatherings like this don’t make startups, dedicated time with others facing similar challenges, or who have already navigated a startup, can provide a needed boost to startup founders. These tribes of founders, whether enjoying the outdoors together or swapping stories over dinner, are commonplace and multiplying across the Wasatch Front.
- Via air coverage from the state’s tech giants: The “Titans” in Utah tech (CEOs of Domo, Pluralsight, InsideSales, Entrada, and Qualtrics) have aligned around Silicon Slopes, decidedly building our brand as tech elites, to further our state’s recognition and reach outside of Utah.
Utah’s startup economy is on the verge of a major growth spurt, with burgeoning expansion of talent, of tech, and of new industries. If you didn’t receive the message here it is: Utah’s founders have laid the groundwork, and are not leaving the next generation of founders to fight alone. Together, we will tip the scales to build a thriving, standout economy.