Strategies for Startups Outside Silicon Valley

Intro 00:01
Welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world, stories that will help you in your own journey. Startup Success starts now.

Kate 00:18
Welcome to Startup Success today, we have Rick Turoczy in the studio, who is the GM and co-founder of PIE, the Portland Incubator Experiment. Welcome Rick. (Thank you. Thanks for having me.) I’m excited to speak with you. I think I told you this earlier, Portland has a soft spot in my heart, because, along with the Bay Area, I have a home in Portland as well. So I want to get into things about the Portland ecosystem, because I think listeners can also take lessons you all have learned into their market as well. But if you wouldn’t mind, give us an overview of your background and what led to the founding of PIE.

Rick Turoczy 01:06
Okay, yeah, happy to do that and for people listening, I have a huge gray beard, so it becomes obvious. I’ve been doing this for a while. I’ve been working in, on, and around, particularly venture funded tech startups for the past 30 years. All of that’s taken place in in Portland. For about 12 years, I worked in startups themselves. I was usually early team, working directly with the co-founders, and, you know, everything from building decks to writing copy and PR and all those kind of things. So after jumping around to a few different startups here in town, I decided I’d learned enough to do my own company, and tried that a few times, and really just came to the conclusion that I’m not a founder. Like, that’s not something that’s terribly motivating to me, but I do really enjoy working with founders. Like, I’m really good tactical support for visionary founders. And during this time, we’re talking like 2007 or so, open source was a huge movement worldwide, but, especially in Portland. Linus Torvalds lives here. Ward Cunningham, the guy who invented the wiki, lives here, so like, we have cache from an open source standpoint, and I’m a hobbyist developer, I wasn’t talented enough to contribute to any projects, but what I did realize was that I can open source my marketing for what I saw happening around town. So just on a whim, started writing like my fifth or sixth blog focused on Portland startups, and no one had ever read my blog before, not even my mom, probably. But this time around, for some reason, it struck a chord. So that’s been a hobby for like, 18 years, just writing about what I see happening in Portland, and that led to the founding of PIE. And so PIE at its very most basic, is just this ongoing experiment to figure out how more established organizations like corporations or educational institutions or government entities can more effectively collaborate with startup founders for mutual benefit. So how do you get older companies closer to innovation? How do you get innovative companies closer to established entities? And we’ve been working on that in a variety of ways for the past 16 years now. It’s been everything from like a co-working space to an incubator to a startup accelerator to some other permutation. And we just kind of keep iterating on it, trying to figure out how to do that work for founders.

Kate 03:44
I bet that’s so inspiring. Two questions, is your blog still around? Like, are you still blogging?

Rick Turoczy 03:51
Yeah I am. But like, what I’ve discovered, like, I just, you know, watched the stats and the readership just kept going down and down and down and down, because no one reads long form anymore. So now I also read it to them. So I have a weekly recap where I do like a podcast version of it, so that people still get the news, but they don’t have to spend the time reading. I’m just scripting throughout the week on my blog basically.

Kate 04:18
Oh, that’s so interesting. But yes, that is how the world has moved. And then can you give us some examples of, like, an initiative or two that PIE has done recently?

Rick Turoczy 04:31
Yeah, I mean, it’s so some of our more recent work with corporate partners has been with Autodesk, which has a sizable Portland office through acquisition. They’ve been in town like 20 years or so. And their focus, the software that this Autodesk office focuses on, is kind of the desktop manufacturing size stuff. So one of the issues they had was they didn’t feel like they were getting the voice of the customer regularly enough. So we worked with them to bring in startups that were using their products to design the products they were going to manufacture. And that way engineers could come downstairs, product managers could sit with them and, like, shoulder surf and like, it was this really nice, you know, the startup folks got direct access to the brilliance of the engineering team and the engineers got to see how people were actually using the software. So that’s one of our more recent collaborations that’s been super fun. Another one we’ve done – so we started in software, we moved into hardware, with Autodesk and those kind of things. And then we also do traditional consumer products. So we’ve been figuring out how to build the funnel there. Like, we all know the famous brands that are on the shelves, but like, where do people start? How do they get going? And so we’ve been experimenting with things like, we take out a farmer’s market tent, and then we cycle people through it. Or we grab a bunch of retailers from town and we have them sit down with founders and explain, like, these are expectations of labeling and like, how you need to package the product and how shelf stable it has to be. So we’re always just trying to look for ways to, like, bridge that gap between the people who are trying to do something new and the people who have that knowledge about how it should be done.

Kate 06:26
Great examples, and, you know, two examples where both parties win, right? They’re both getting a lot out of that, which is great. So I want to switch gears a little bit because, you know, as I’ve been doing this show, I talk to more and more founders that are located all over the United States, not just Silicon Valley, right? There’s a definite bias towards Silicon Valley. And so if you’re a founder in another community, not Portland and beyond, we talked about, and I wanted to address with you, accessing capital and just some ideas. And you know what you’ve seen around that for startups that aren’t right in the valley?

Rick Turoczy 07:08
Yeah, I mean, it’s, it’s, I always say there’s, there’s Silicon Valley, and then there’s everywhere else. And like, everywhere else is an incomplete ecosystem compared to Silicon Valley. And so everybody’s trying to, like, shore it up, or figure out how to make their ecosystem work. I think you know, for us, we have the luxury of proximity to both the Bay Area and Seattle. So a lot of you know a lot of situations where our investment community may be more risk averse than the founders need, they can travel to Seattle or the bay area to look for more risk tolerant capital for the stages that they’re at. But I think the most important thing that we’ve learned is there are a whole lot of ways to build a business that don’t involve VC or equity based financing at all. Like, there are grants, you know, there’s this thing called revenue that people pay you when they use your product. We try and encourage people to get creative about it and be opportunistic with equity-based financing that, there’s nothing wrong with that, but you have to be at the right stage, at the right time, with the right people that you’re partnering with to make that really effective. And in Portland and many other, you know, second tier kind of metropolitan areas that I’ve encountered and spent time in, you know, there’s not that, there’s not that same like, sense of urgency, like there’s a there’s more a, not slow and steady, but it’s somewhere between rocket ship and slow and steady, like it fits in somewhere between those two. And I think it’s, you know, I always encourage founders to find your people. They’re in there, in your community. There may only be a handful of them, but I can guarantee that your people are around. I can guarantee the community is there. It’s the challenge of the founder to find that support network and surround themselves with the people who are going to help them build the kind of companies they want to build.

Kate 09:16
Good advice, you know, I had a VC on the show recently from Silicon Valley, who you know, said to founders, stop thinking that you know, going out and raising around is the first step. Like, look at your unique situation. It might be something else, crowd sourcing, trying a revenue play first, going for a government grant, things like that. So I appreciate you saying that. I also like how you said, you know, go out to your community, because I think there’s something about, you know, the companies where they’re started, right? There’s a lot of pride there and whatnot. Suggestions, ideas for founders on how to leverage their community or the culture of their community.

Rick Turoczy 09:59
Yeah. I mean, I think it’s a great question. I think that’s the reason we got into consumer products here. I mean, for people who aren’t familiar with Portland or Oregon, we have practically every major footwear manufacturer exists in Portland, and we have, you know, things like Tillamook or Dutch Bros or any number of 1000s of beer brands around here, we have tons and tons of activity around consumer products, and it took us a long time to figure out, rather than continuing to push this technology rock up the hill where it’s not necessarily achieving the level of success we had hoped, why not focus on an industry that is already having a significant impact here. And what we discovered there was that the people who are in the industry are very willing to engage and help that next generation of folks, either through mentorship or through investment. And it really was us kind of clueing in to like, what we do well. So what I’m always telling founders Portland or elsewhere is both locals can clue into that, but you also need to clue into that as a founder. Like the place to launch your product may not be where you live and breathe, like if you’re doing a media play, you may need to launch it in New York or LA, even if you don’t live there, if you’re doing more of a government play, you obviously want to launch in the you know, in DC, or if you’re doing a publishing play like Chicago, could be a great place. I always encourage founders to just like first and foremost, no matter what you’re doing, do your research. Do your research with your customers, do your research with your investors. Do your research to ensure that you’re starting and engaging in the right place for your product.

Kate 11:52
Excellent advice. And one of the other things that we’ve seen a lot of you know in these different cities is a lot of them are building accelerators to try to attract startups. Talk us through, you know, just based on your experiences with what you’ve seen with PIE, kind of the pros and cons for a founder evaluating to work with an accelerator?

Rick Turoczy 12:15
Yeah, it’s a great question and it’s changed drastically, especially with the pandemic, changed it ridiculously. So when we started PIE, just so folks have context for what was happening at that point in time, it was almost something we had to do because there was YC, which was at this point, no longer running Boston and Bay Area. They just moved to the Bay Area. TechStars had Boulder. They had opened Boston, and they were starting to look around the Pacific Northwest for somewhere to have an accelerator. And then there were the others, like 500, Plug and Play. They were around, but not accessible here. And so we felt very like, felt like we had an opportunity, but we felt like our hand was forced a bit. Fast forward to today. I encourage founders again back to the research. Like, think about what – it’s almost like choosing a college – like, think about what that accelerator does really well. Think about the community that surrounds it. You know, like, you may want to go to Houston for an accelerator if you’re looking at space industry stuff, because that community is huge there. Like, and that might not be the place you want to go, but it may be the place best suited for your startup. And that can also be a way to kind of short circuit some of that early stage capital seeking behavior, like, if you can find accelerators that are either providing grants or equity based investment, that may be a good way of kind of jump-starting some of that capital need too. So there are a variety of aspects you should be analyzing accelerators on, but I also think it’s important to look at almost like a job interview, like you look at who are their alums? Like, how did they like the accelerator program? Did they get what they expected out of it? Because you’re spoiled for choice these days. There’s like an accelerator, it’s like accelerators and Starbucks are competing for, like, there’s so many in every community and but, but they’re also really niche, focused accelerator programs that have significant impact for people if they’re the exact right program for that company.

Kate 14:33
Good advice, I think that’s important. I like how you equated it, maybe to picking a college.

Rick Turoczy 14:39
Yeah. I mean, it’s all the same application. And it’s like, do you want to go to Stanford, Harvard? Like, where do you want to go?

Kate 14:47
Yes. Very true. So how are you feeling about the market today and today’s startup ecosystem, especially for like, these early stage founders?

Rick Turoczy 14:59
Yeah. I think it’s, I mean, this is the first time in my 30 years with startups where capital has felt even harder to access. Like it’s always challenging to get capital, but like, money is so expensive right now, given the broader macroeconomic environment, and so that is a little weird. But then at the same time, like AI, to me, feels like probably the last thing that felt this impactful was at that time when cloud infrastructure was becoming a real thing, and proprietary companies were starting to use open source to build product. Like that kind of perfect storm was so enabling for so many companies and really created that leap from, you know, having to have a room full of engineers and a room full of servers to build something to three people building something in a weekend. Like that feels like where AI is going and has the potential to be impactful. So my hope is maybe, given the lack of easily accessible capital and this kind of like augmentation that AI is providing, that we see that same kind of leap forward that we saw during the during the cloud days. We’re not seeing that as much locally, like I feel like we’re a little behind the curve in terms of AI adoption, but I am seeing that in other like major metropolitan areas. I’m definitely seeing that level of activity. But I think right now for early stage companies. It’s always hard to do an early stage company. I think the hardest problem right now probably is lack of low hanging fruit. Like right now, it’s just like, bolt AI onto a solution, and at some point we need to get to the this is an actual problem that needs solving, and you have the capacity to do that.

Kate 17:05
Are the founders you’re working with? Are they discouraged, or are they still pretty optimistic?

Rick Turoczy 17:13
They’re still pretty optimistic. I think founders naturally are just optimistic, like they’re in there. The thing I love about founders is they’re optimistic generally without being egotistical. They just like, they’re like, I think I can do this. Like, I think, I think there’s something here, and I want to try it. And that’s why I love working with them. You know, they figure out a way to solve the problem. So if there’s no capital, they figure out somewhere else to go get the capital. If there are no customers, they figure out somewhere else to go get the customers. So they tend to be pretty resilient and able to, like, figure out how to get things done. I think there is, again, back to the pandemic, I think many communities are still suffering from a lack of connectivity, or community connection. And so I see a lot of folks leaning into traditional like community organizing and events and those kinds of things, and trying to bring people back together. I think that’s always helpful for founders to be around other people who are going through the same stuff.

Kate 18:16
Is that happening in Portland? I mean, from my eyes, it seemed like Portland took a hit during the pandemic. Do you feel that way?

Rick Turoczy 18:24
Yeah. I mean, I think I’m a little too close to the problem, or too close to the opportunity, maybe to put it in a more positive way. The challenge with Portland and like this is my soapbox for this year, is Portland has never really owned its own narrative. We’ve always relied on somebody else to tell the story of Portland, which is great when Portlandia is winning Emmys and The New York Times is writing up our food scene, but when it goes negative, we don’t control that aspect of the narrative either. And so I think you know, the negatives you hear about Portland are overstated I think. We have challenges, like any community, but not, I talked to so many people who are like, are you okay? Like, are you safe? And I’m like, All that stuff you saw happening happened in a two block radius. It was just the same area over and over. So, yeah, I mean, I think Portland has taken a hit, but this is the first time where I’ve seen a concentrated effort of people really saying, No, Portland is good, and we’re going to start telling more people about how great it is. You know, one really random aside, the new Portland airport is like the first thing that’s happened in a long time that, like people are raving about, we’re getting good press about, and even something as simple as that has really sparked kind of this renaissance of being proud of the community and trying to tell those stories. So I encourage Portland people to keep telling the positive stories, and hope that that can kind of help with that perception of what’s going on here.

Kate 20:09
I appreciate you sharing that, because I think anyone listening can, you know, learn from controlling your own narrative, right, and your own, not the storytelling, but like, you know, positioning things and taking control of what’s being said. I think too many times founders don’t do that.

Rick Turoczy 20:31
So, yeah, well, and it is good, that’s a great word. It is all positioning. Like, it doesn’t matter what the conditions are. Like, it’s you figuring out the positive of those conditions. Like one, I’m always like, you know, classic your back’s against the wall. It’s like, the positive is nobody can sneak up on you because you’ve got the wall at your back. Like there’s always some positive aspect, you just have to tease it out and figure out how to use it from a narrative or storytelling standpoint.

Kate 21:00
Yes, agreed. I appreciate that optimism. So I think you’ve shared a lot of helpful information for founders, especially those outside of the Valley, as we said. We always like to wrap up this show with just general advice for startup founders listening that you can share before we close out that’s really stuck with you.

Rick Turoczy 21:21
Yeah, I think, as the one, it’s overstated, so I’ll give you two, but I think it’s overstated for a reason, because it’s super important, and I, as a founder, did it exactly wrong. It’s talk to customers. Talk to people. Keep socializing your idea. Like nobody’s going to steal your idea, just like, talk it out, get it in front of customers and get that feedback, because that’s what’s going to help you build the actual solution that the community needs. And you can’t be precious about that idea, right? Like, if your customers want to use it one way, that’s how it’s designed to be used. You have to follow that path. I think that’s super important, and not enough founders do that. And then I think maybe for the people who are thinking about starting something, my primary guidance is, don’t monetize your hobby. Like as a human, you need hobbies, you need things that you enjoy doing, whether or not they generate any revenue. So I see so many founders get stuck with like, I love doing this thing, so I’m gonna make it my startup. And then you’re like, now you hate that thing, and you never get to do that thing because you’re too busy doing all the other things around it. Like, just be very cautious about trying to monetize something you enjoy and love. You need to keep some of those things protected.

Kate 22:46
I like your answer. One: every founder on here that’s been successful has talked about, like, customer feedback loops and how in the early days, all they did was talk to customers over and over again, and when they saw a theme, they iterated or made pivots based on the customer feedback themes. So I appreciate that. And then two the same ones always talk about not that they monetized a hobby, but they solved a problem that they were passionate about solving, and then the hobby stays as the outlet, right? They’re always like, you need an outlet because you can’t let it consume you. So I think you hit on two very important things for founders listening. So where can we go to read your blog, hear your podcast and learn more about PIE?

Rick Turoczy 23:37
Oh, yeah. So I picked the easiest username to spell, like my last name, so I’m Rick Turoczy pretty much everywhere, which is impossible to spell, but I’m on the internet. You can find me there. PIE, the easiest way is the website, which is just piepdx.com, and that’s a lot easier to spell than my last name.

Kate 23:58
Great. Well, I encourage everyone to check it all out. Thank you so much for being here. Rick, it was a joy talking to you.

Rick Turoczy 24:07
Thank you for having me.

Intro 24:09
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