Making Entrepreneurial Sausage



By John Tedesco,

sausage-grinder-photoMany members of the Twin Cities tech community were  disappointed with an article in the Star Tribune on November 16 with the headline “Problems Hit Tech Accelerator.” The accelerator referenced is Project Skyway, co-founded – and 100% financed – by local tech entrepreneur Cem Erdem.

The article summarized the inaugural year of the program by focusing on a series of operational issues, including complaints about disorganization, unmet expectations and renegotiations of equity allocations.  I felt the reporting had a negative slant and was short-sighted, highlighting what are routine issues in early-stage ventures while de-emphasizing its accomplishments and ignoring the longer term goals of this type of organization.

Anyone experienced in building a successful company from the ground up will tell you it is never as smooth as the sound bite:  bold entrepreneur has a vision, overcomes a few obstacles, catches a wave and becomes a big success.  Building a successful technology company is more akin to making sausage: everyone loves the end product but few can stomach the process that created it.

Early stage technology companies are rarely organized; that is why the earliest days of a start-up are widely known as a period of ‘disorganized chaos.’ They will fail to meet expectations, with 7 out of 10 venture investments not generating a return for investors.

And they will find equity allocations to be fluid, not fixed, as in the case of Zynga.  This ‘sausage making’ occurs at even the most admired tech companies.  They will change strategies, like PayPal did when it began as a way to ‘beam’ money between people’s Palm Pilots.  They will have misaligned stakeholders, such as at Zappos where esteemed venture capitalist Mike Moritz viewed Tony Hsieh’s focus on company culture as ‘pet projects’ and ‘social experiments’ that didn’t move the overall business forward.  And they will be written off for dead by the media at least once in their lifetime, just as was back in the early days.

Project Skyway is itself an early-stage venture and deserves not only to be judged through a more appropriate lens but after a number of years when we can measure the impact this technology accelerator has had on our community in terms of companies built, jobs created and wealth generated.

So are we techies simply overreacting or is Project Skyway under the media microscope here?  Probably both are true and for good reason – Project Skyway is crucially important to techies and the Twin Cities alike.   The local tech community wants to protect our first – and only – attempt at an accelerator to prove we can be as entrepreneurially vibrant as a Boulder, Colorado or an Austin, Texas.  Meanwhile, Twin Cities’ officials and business leaders are eagerly watching this ‘experiment’ because of the important role of innovation in the reinvention of cities as they prepare for the challenges of future generations.  When the Project Skyways of Minnesota are successful, we all benefit.  We need even more privately financed entities embodying the spirit of Project Skyway as we hope to reduce the friction our best and brightest entrepreneurs face as they try to grow their companies locally.

In the meantime, we can only hope that future report cards issued by the media on our regional technology accelerators are done with a long-term perspective in mind and with an emphasis on outcomes.  Because focusing on the ugly and unavoidable realities of the process will scare all but the entrepreneurs and butchers away from what is a truly amazing experience.

John Tedesco, a recent transplant to Minnesota from the West Coast, has started three venture-backed technology companies in his career with one exit and a second underway. He’s a product of a late nineties California incubator who made a bet on him and his idea. John is a Captain at Project Skyway, a mentor in the Minnesota Cup high tech division, and works with the University of Minnesota’s Venture Center .


  • Casey Allen

    “…or is Project Skyway under the media microscope here?”

    Good point. What's worth noting here is that anything new and exciting will (and should be) under different groups' microscopes, doubly if it's taking money or equity from entrepreneurs. That's sacred ground. We're happy to be under a microscope, have been since our early open planning meetings and try to stay so via our blog. If anyone ever feels we're not I hope they reach out to us and let us know…the only thing that makes sausage making a net win is if people either don't care about how it's made or if they feel they absolutely know. No middle ground.

    We prefer the latter.

    Great breakdown, John, and we appreciate you and all the other Captains' support in what we're building.

    • Random Question

      Casey, what was your biggest takeaway from the first class?  It seemed like you took on companies that were a lot further along than it appeared you were looking for based on my assessment of your ideal candidate. Was that the case, or did I misinterpret what you were looking for?

      • Casey Allen

        As with any investor we'd like to take the best team with the best traction on the best idea. Outside of that, we weren't sure exactly what we were looking for because we had no idea what sort of companies would apply. How do you predict such things? You just can't.

        For a longer list of takeaways you can read our blog post:….

        One key takeaway was to address rumors as quickly as possible. People in the community who were several steps removed fell into gossip traps and rumors went absolutely haywire. Few people actually came to us to ask if any of it was true. Our first cycle was actually quite tame.

        However, we owe it to our supporters to address rumors quicker. If even half of the dramatic rumors about the our first cycle / companies were true we'd have all the makings of a reality show. 

        Oh, wait. Techstars already did that. =)