Fail More. Experiment More. Plan Less.

What we’re seeing in Minnesota is that in the Internet consumer space or in the Internet space as a whole, I think the companies are a little more skewed toward the enterprise market, for example, than say in Silicon Valley, and I think that’s because in the enterprise market, business models are a little more proven, it’s a little bit safer. In those models, usually you rely on having revenue fairly early on, the value proposition is very clear—‘Here’s the service you provide, here’s how much you can charge.’

In Silicon Valley, what I’m seeing is a lot more experimentation with business models, and that can be good and bad, right? I mean, in the last few years, it’s not entirely clear if the business model for social networks and user-generated content works. It works to some degree, but will it work in the long run? We don’t know. But there’s a willingness to do more experimentation with business models, and as I mentioned, that leads to more risk, but people seem to be more open to that in Silicon Valley.

Also, it’s a function, I think, of who you’re surrounded by. In the valley, pretty much everyone is doing a start-up, so comparatively speaking, you’re not really taking on that much risk if you’re doing a start-up. Whereas here, it’s more of a unique thing, so compared to your friends, you might be wondering, ‘Gee, how am I going to retire if this next thing fails?’ or whatever. Those are some of the big differences, I would say.

And then I’ve also noticed in my interaction with entrepreneurs from both places that I think there are a couple of misperceptions engrained here. And again, I’m mostly speaking to the Internet consumer space.

In Silicon Valley, when we get submissions on our Web site for new ventures, usually people will submit a fully functional product for consideration as well as a business plan. Here, what I oftentimes see is that people seem more focused on planning in the business-plan stage, whereas in the valley, the effort goes into the execution and implementation stage.

So for example, in the valley again, we’ll have some Stanford grad students e-mail us and say, ‘Hey, here’s this great thing I built and people are using it. What do you think?’ Whereas here, I oftentimes get 50- to 100-page business plans with revenues projected into 2015, and things like that—without a product. There is a product idea and a concept idea, and oftentimes those are very good ideas, but I think there’s too much focus on things that are too uncertain. Certainly, no one can predict any kind of revenue numbers into 2015.