#1: Ed Buchholz (Start in CLE)

We're just trying to build a sustainable community that is led by founders for other
founders as we go forward with certain Klee we've started to see small groups of
people who are spinning out and doing other things and we love it No, we don't
want to run that we want to see that happen and that's ultimately my goal I want
to see people really get to know each other support each other and have a
continuous dialogue
Let's discover the Cleveland entrepreneurial ecosystem. We are telling the stories of
its entrepreneurs and those supporting them.
Welcome to the Lay of the Land podcast, where we're exploring what people are
building in the land. I'm Jeffrey Stern, here with my fellow cartographer, Dee Tagan.
And we're coming to you live from Cleveland, the first city to be lit by That's
got to be the same electricity that is powering this podcast here today and the
energy that we'll be bringing into this conversation. Wow! Powerful and electrifying
things start in Klee. Do you mean start in Klee? No.
That would be the company founded by today's guest. Ah, yes. Ed, a product leader,
a three -time founder, a startup mentor, and a design aficionado. Ed has more than
20 years product leadership experience with multiple B2B and B2C products.
He's here with us in Cleveland and we're very excited to talk with him and we'll
get to that interview right after this message.
Hello, everyone. A brief note before the show today. Since we've recorded this
podcast, Ed has announced to the world he will actually be relocating to the San
Francisco Bay area in 2021. And as a steward of starting Klee and building up the
founder community here in Cleveland, I wanted to share some of Ed's parting thoughts
as a preamble to this episode. For Northeast Ohio's startup community to continue its
positive trajectory, Ed is encouraging us to think about three things. The first is
to do something. Talk is cheap, press is superfluous, social a post are
inconsequential. Actual impact comes from action. In community building, action comes
in the form of organizing, advocating, and connecting. Bring people together, give
them a voice, and facilitate their relationships. The second is to be selfless. If
you're stepping into this with an expectation to boost your profile, improve your
image, find customers, develop deal flow, or any other selfish outcome, then you are
likely the wrong person for the job. You will hurt the community by trying to be
involved. Founders are smart and nothing is more precious to them than time. They
will sniff out motivations and they will avoid you, your events and your
machinations. Only the uninitiated or uninformed will fall prey and shame on you for
taking advantage of them. And the third is to protect and to advocate. In developing
communities, one of the vital and lacking resources is tribal knowledge about who is
safe to work with and who is going to try and take advantage of you. If you want
to help lead our community, use your platform and voice to call out instances of
abuse, conflicts of interests, and misinformation. Expose unfortunate truths,
like how Ohio's seed stage valuations lag behind nearly 40 other states and address
the challenges we face head on. It is imperative for the future of our region that
we protect founders, that we serve founders, that we fund founders and that we
attract more founders. It is up to us to make this happen. With that, please enjoy
our conversation with it.
Welcome Ed. We're so happy to have you here on the show. Hey, thanks guys for
having me. It sounds like a lot of fun. Yeah, I was actually listening to your
podcast just before this. And you taught me how to build a product in seven days.
Crazy. Yeah. Well, I started to teach you. I got a long, a long ways to go with
that series before it's really worthwhile, I think. It kind of made me think about
your background where you started out in products and now you are really diving into
entrepreneurship. As we know, What kind of led to that? - Yeah, so I actually
started my career in customer service. Like I joined my first startup as a customer
service person, answering support chats in like the year 2000 before support chats
were really a thing. So I basically grew from there to being more technical and
then eventually running the product organization at that company. And that's sort of
how I got started in into both product management and entrepreneurship. You know,
they kind of came hand in hand for me because that company was growing and needed
product leadership, but it was a startup. So, you know, to me, and I might be a
special case, but I kind of view, you know, product management to a large extent,
almost as being the CEO of a product, right? Like the process of creating a
product, maintaining it, improving it, actually usually aligns pretty well with what
you go through CEOing a new startup. So I think they go along together pretty well.
I would have to agree having spent some time at tech startups myself and can see
how of service is really enhanced with technology just on the way that systems are
designed. And so to you, what does it mean to be a designer? I think being a
designer is about, you know, it's really being someone who thinks about design
actively, right? Anybody really can be a designer. There's sort of a mentality that
comes with it more than any specific thing you do. It's do. It's more about seeing
a car driving down the road and going, "Hey, I think I could improve that." Or,
"Wouldn't it be cool if it looked this way?" Or, "Website, the same sort of thing.
I wish it acted this way." Or, if you're more artistic going in that sort of
direction, I think design is really a state of mind.
To be a designer, there are so many different types of designers out there.
To me, I worry very much about software design, right? And so, again,
it's really seeing the application we're in right now, recording this podcast and
seeing three or four different ways to improve it and being able to put pen to
paper to create something new. That's how I think of a designer. Amazing. You have
all this experience from technical to design to being a podcaster.
Tell us what have you built. Yeah so I've been doing this and by this I mean you
know waving my arms around being an entrepreneur for just over 20 years now.
So you know I've I've been part of three startups startups that, you know,
I helped start or started myself, you know, to two companies that acquired two of
those startups. Now, a non -profit and a podcast and so many different things,
it's kind of hard to quantify it or really encapsulate it into a short answer.
To me, I really love building things that help people, whether that's a software
product or, you know, a piece of content or an organization like Westart & Klee.
Um, so yeah, that's hopefully someday when I retire, I can look back and say,
you know, these are all the different things I built and this is how it helped how
they helped people because ultimately that's my goal. Yeah. So it seems as though
you're really inspired to build to help others and that has brought you to a lot
of different industries. What's the hardest industry that you've worked in and what
are some of the things you've learned? - Yeah, so most of my career has been in
fintech, right? So like B2B enterprise financial technology software.
It's not a real sexy space, right? Like it's kind of a space that a lot of people
think about as behind the scenes almost, right? It's not a cool consumer product
that everybody has to use. So, you know, it can be a bit more challenging to me
to build those types of products because it's even harder to sort of communicate
what you're doing and what the value is. So yeah, to me, the hardest space is
FinTech and that's because you have like this triumvirate of security is a huge
concern right like financial data or money itself is an incredibly dangerous thing to
be touching because you know hackers or mistyped account numbers or whatever the case
might be and then you have like this accuracy challenge Challenge, right? Everything,
software is inherently held together with duct tape and string, right?
Like it's usually something that you build fast and get out there.
That's the whole point of MVP and lean methodology. But in FinTech, that kind of
goes against the grain because if you have a mostly functional prototype, it's not
gonna work for a for a financial technology company. And then the third case is
like the capital requirements for FinTech are really difficult because you have this
level of accuracy and security and completeness to the application that's required.
That means you need more time to bake it in the oven, which means you need more
cash to put into developing it. And so that makes it an extra Challenge on top of
the others, but it can be really rewarding and and ultimately, you know, I think
the especially for small businesses or Enterprises the financial aspects of of the
businesses really can benefit from software a ton, right? if you look at QuickBooks
and Accounting right like how could you even run a business nowadays without the
software that exists around accounting. It's ultimately the thing that keeps the gears
turning in society, right? Yes. Having some experience in fintech,
I know my way around pivoting quite a bit. And I also think about the goals within
my business quite often. And for you, someone that has spent time as an entrepreneur
and has experience maybe exiting a company, what are your goals going in and what
experience have you had when leaving a company? Yeah, so there are many ways to
part ways with a startup. There are the kind of kind shutdowns where no one gets
hurt and you just walk away and then there are the, I've raised $2 million of
investor capital and I have to shut this down and dealing with the issues associated
with that, which I could do a whole podcast on. I actually think I am. And then
there's this like Aquahire nature, right, of potential exits where you have a great
team who's built a cool product, but didn't really figure out how to achieve market
sustainability. And you get acquired by another company who simply wants you for that
team and maybe a little of the tech. And then, you know, on top of that, you've
got your sort of full out, you've built something amazing, lots of people are using
it. We want that technology and your team and all of the customers as part of our
company. And so they're like these varying degrees. You know, I've taken part in,
I think, all four of those and a little more at this point in my life. And I
think, You know, being acquired as a phrase is not what you expect it to be,
regardless of how you think about it. You know, if you're lucky enough to be
making, you know, $100 million on the sale of your company, maybe you don't care,
but it's gonna be hard. You know, the process is long and you need an incredibly
competent lawyer that you trust or set of lawyers that you trust to be able to get
through that process. You never know what's going to happen. As I say, with
fundraising, it's the same with acquisition. Don't pop the corks until the money's
already spent because you don't know what's going to happen. I've been part of
multiple transactions, both fundraising, exit partnerships, where the ink is dry and
the papers have been signed but it falls apart. So it's definitely not what you
expect and it usually ends up hurting one way or another. I want to draw on
something that you mentioned there because I don't want it to get lost. You say you
might want a lawyer or a set of lawyers and after talking to one lawyer you might
understand why you want to talk to a couple. Can you really dig into that
experience on how important it is for founders to do their due diligence when making
financial decisions. - Yeah, absolutely. So I'm not being paid by any lawyers to talk
about this, but from my experience, there's a couple of things for founders who are
reaching the stage of a company or are reaching the stage in their career that they
need to think about. First off, like we talk about all the time and you and I've
talked about taking, you are not your company, right? No matter how embedded you are
into the business and how much you think about yourself as one entity with the
company, that is not the case. And you need to take care of yourself first and
foremost. And so, you know, to me, having a really great lawyer that you can rely
on as an individual, as a business person, I think is really important because your
job as your job as CEO of a startup, really you have a fiduciary responsibility to
do what is best for the investors in a whole sense, like as a whole, but you also
need to be thinking about yourself. And so understanding the dissonance that exists
there and having a lawyer that is not your corporate counsel as a personal counsel
is really important when you get to, you know, discussions about being acquired or
having a, you know, a painful breakup of founders or whatever the case might be.
And then, you know, one reason why I really advocate for startup founders to have a
firm that they work with, you know, first off, any startup lawyer that you want to
work with hopefully has startup experience, right? Like they have helped companies
raise money and they've helped companies exit and they've helped shut companies down
because that experience is how they know what to tell you to do and how to help
you. If they don't have that experience because you hired a family lawyer, guess
what? They're not going to tell you to do the right things. And I've lost a lot
of money over things that I had the wrong lawyer for early on in my career and
I've learned that lesson. It's better to spend the money now and do it right than
it is to lose it later because they didn't tell you to file a thing or they told
you, you know, the wrong change to a document. So having a firm or having an
individual lawyer that has experienced is great, but I also advocate for having a
lawyer that's part of a larger firm because not every lawyer is an expert in all
aspects of being a counsel for a startup. A really great business lawyer who can
help you raise money and do partnership deals may not know how to do employment
law. And so when you have to fire your co -founder or something like that, they're
not going to have the right answer necessarily. And so the great part about having
a lawyer who's part of a firm is they can refer you to another lawyer within That
same cover in the same firm and really be able to help you Honestly, the biggest
advice I can give around legal counsel is pay for The best that you can get like
you're gonna get what you pay for and it really is important unless you're Unless
you're just so early that you're not even sure you want to do this like it's worth
it Yeah, I'm an early -stage founder and just the other day I was thinking I might
have to start a law firm one day because I mean like 10 lawyers. Yeah, yeah, it's
it's definitely there are lots of lawyer jokes we could tell, right? But honestly,
there's there's just there's nothing better than having a really good lawyer who's on
your side. They not only can tell you what you're doing wrong in a constructive
way, which I've been told many, many times, but they can help you navigate when you
have done something wrong. And it's just really important. Ed, there's one thing you
mentioned there I wanted to dive a little deeper on in the way that entrepreneurs
are not their startups. I've seen that in people before.
It's a hard thing to reconcile, I think. How do you advise entrepreneurs who are
simultaneously tasked with selling themselves in often as the company and vision,
but maintaining a healthy distance from it at the same time. Yeah, so there really
is this cognitive dissonance that comes with being a founder. You have this sort of
yin and yang of wanting to have your business appear as though it's got incredible
momentum and is doing really well while also knowing that it's falling apart around
you at all times. And That applies to all aspects. I mean, you are a human being
who has a family and needs to pay the bills and needs to buy milk bones for your
dog. And so you have needs, not only financially, but emotionally.
And the business is extremely demanding on all of those aspects.
Your time, your personal finances, your sort of personal mental bandwidth, your
emotions. And so what happens fairly quickly for someone who's extremely excited about
starting a company is they pour their self into it. They pour their whole worth
into the company because honestly, that is the magic of being a founder of a new
startup is you can do that and move things more quickly than anyone would ever
expect. And so that's amazing. The problem is that if you do that for an extended
period of time and you do it too long, which is an unquantifiable date,
right? Then you start to run into the issues associated with that. You start to
say, this customer canceled, I must be bad at my job, right?
This investor decided to say no after I thought things were going really well, I
must not be competent. My co -founder decided to leave. And so taking all of these
things and applying them to yourself is just not a healthy thing. It's not something
that anyone should be doing. But I've been there multiple times over, and it is
sort of the nature of the beast when you've put so much of yourself into it. So
figuring out a way to separate that and really encapsulate or,
I'm not sure what the word is, separate yourself from it, right? Like insulate
yourself from the business and have the ability to step back and understand that is
important. You know, to me, you guys have probably met Anna, my wife and I have
been together since, you And I joined that first startup, and honestly, she's been a
really great sounding board and reminder to me to not let those things happen.
I've built a really great network of some mentors, some investors who've turned into
mentors and friends, and they have objective angles that they can tell me the truth.
And I think that is honestly one of the most important ways to escape that issue
is to just have people who are not involved in the business who can sort of call
you out for it, because it's hard to see that pit before you fall into it. Yeah,
absolutely. I want to just actually kind of pull on a few of the threads I think
we've we've tugged on here, you know, speaking to support for founders and kind of
the arc of your career. When you tie it together, I think it transitions very well
to talking about starting Klee and the work you're doing now. And so I'd love if
you could just tell us a little bit more about the problem that you've identified
and the work you're doing with starting Klee to bridge the gap and solve it. Yeah,
absolutely. So I started my career a long time ago now. And it was in Northeast
Ohio, it was in Worcester, which is my hometown. that's how I got started at that
first company. So I've been part of this ecosystem for as long as the startup
ecosystem here has existed largely. And to me, I've moved away a couple of times.
I lived in Chicago for a while. I spent a bunch of time in the Bay Area and
Boulder in Austin in New York and a few other places.
And what amazes me, and continues to amaze me today, is that each of those areas
has a very distinct culture amongst its startup community. And those cultures actually
have a much more deeper sense of being developed, and what I mean by that is they
have more companies or they have more larger companies. That may be true or may not
be true, but what they have Because they have this community sense, they have
founders who are actually spending time to get to know one another, to help each
other. And they're doing it on a continual basis without anyone telling them to do
it, right? It's this grassroots organization of, you know, 15 founders in Boulder who
came out of a Techstars company, who get together or came out of a Techstars
accelerator program and get together every week for a dinner, right? Like no one
told them to do that. They're doing it because they are getting something out of it
and they're being able to help others while doing it. And, and so as I spent time
in these other cities, you know, I really grew to understand that these things
exist. And then when I, I moved back most recently in 2013,
what I really noticed was even after at that point,
13 years of being part of this community, we still didn't have it, right? We still
didn't have anything like it. We had pockets of it, we had tribalism, pretty rife
throughout our ecosystem, where you'd have, you know, a start market community of
people who get together there, launch house, is maybe the jumpstart network where
these little groups of people would get together, but everything's a numbers game and
in this case, if you've got 20 companies taking part in a co -working space and two
or three of them, which is a good conversion rate, are getting together on a
periodic basis, that's not really useful. Because you had all these little pockets of
organizations and communities within them, nobody was really getting much out of it.
And so one of the things that I sort of set out to do around 2013 was try to
bridge those gaps. So I was mentoring at some of the accelerator programs here in
the area. And it was amazing to me that, you know, almost all of the companies in
each of the programs did not know any of the companies in the other and, you know,
they were like four blocks away from each other, but somehow they didn't know each
other and they never even talked. So, what I started to do back then is I started
to do a weekly coffee where I'd get, you know, 10 to 15 founders together to meet
for coffee and to sort of talk through things. Now, unfortunately, I started a new
company. I started ExpenseBot at that point. And so, my ability to be able to
really keep that together, win away. But after shutting down ExpenseBot in 2017,
I was back to being unemployed or fun employed, as we call it. And I said,
why don't I dedicate the next few years to try and making this sort of overall
grassroots community more of a thing? And so that's what I've done. My friend Rakesh
Guha, who you guys maybe know, and my wife. And I, you know, just at the very
beginning, we just invited 17 of our friends who were involved in startups to get
together for dinner. And we kind of expected it'd be sort of a polite hour long
dinner on the patio back when you could actually go places and eat. And we ended
up literally closing prosperity social club after like four hours of eating and
drinking and talking amongst that group and what struck me is at that dinner which
you know was an unmitigated success and a surprise to us but what struck me is two
or three people that I am good friends with did not know each other at all and I
was shocked by that fact because you know they should because they had startups that
were in the same space or whatever the case might be. And so after that,
you know, Rakesh and Anna and I sort of looked at each other and went, "Well,
maybe we need to do this more often." So, you know, we kind of just started to do
those dinners every month. And from that point on, we had one of those dinners
literally every month from August, 2017 until, gosh,
I think February of 2020 was our last one before COVID.
And so we had one every month. And after this whole global pandemic thing is over,
we'll go back to having them. But in addition to that, we started to do other
events like co -founder speed dating where we take 30 people who are interested in
starting a company and literally give them four minutes with each other person. So
it's like, you know, speed dating, but for co -founders and is loud and raucous and
fast. And it made a lot of connections between people who that would have never
existed. We started to do mentoring events where mentors could get together for
coffee with people. We started a mentoring program where actual founders of companies
recently could mentor other people who are starting companies. Because peer mentoring
to me is a very important tool. It's great to have a mentor program where someone
who's been, you know, leading a marketing firm for 30 years can give you some
insight, but they don't remember what it's like to try to make payroll. And so it
has somewhat of a limited effect. And we hold a big annual event called Founder
Fest, where I think last year we had 130 some founders come together for most of a
day and evening, you know, have dinner and we had, you know, panels and programs
throughout the afternoon and evening, really with one purpose and that all of these
things have one common denominator and that is it's really just meant to give a
safe space for founders to support each other, get to know each other and learn
from one another, which is if we go back to that original sort of thesis I laid
out of other areas having grassroots communities, that's all we're trying to do.
We're just trying to build a sustainable community that is led by founders for other
founders. And hopefully, as we go forward with starting CLEE, we've started to see
small groups of people who are spinning out and doing other things, and we love it.
We don't wanna run that. We wanna see that happen, and that's ultimately my goal.
I always joke about, I don't wanna be the linchpin of our startup community. Like,
I don't wanna be in this position where I'm literally holding myself as a bridge
between two gaps. I wanna see that sort of divide /heal, and I wanna see people
really get to know each other, support each other, and have a continuous dialogue,
and we're getting there. I'm excited about it. We seem to be getting closer and
closer every day, so hopefully, you know, once we're allowed to be in the same
rooms as one another, that will get back on track. Yeah, I look forward to that
day, sometime soon, hopefully. I'll throw some personal gratitude your way as a
beneficiary of starting CLEE. Have you moved here myself about four years ago now
and joined the entrepreneurial ecosystem here from scratch, if you will,
without any prior context or experience. I always came to view the work you're doing
as really important because the space is a little disconnected to someone new coming
in. I always appreciated how you're not afraid to say that perhaps Cleveland,
in parallel to some of the other cities, is already a startup hub and that we just
need to get on beyond this pessimism of saying maybe we'll turn it into one someday
and instead recognize those that are building, creating, succeeding here. In many
ways, I think that's what Tegan and I are trying to do with this podcast is tell
the stories of people building here. With that aside, I know you mentioned you did
not want to be the lunchpin of bridging the gap, but I wanted to ask you about
kind of a public role you've taken as like a defender of risk and a celebrator of
failure in a way that I have not seen so ubiquitously amongst other people in this
space. But I've seen you time and time again, just put yourself out there against
the grain pushing a mentality and a message that for some reason doesn't quite
resonate in the way that I would expect it to. And so I'm just curious, what is
going on? Why, what's going on here? - Yeah, so I think there is a certain
population of people who maybe view that advocacy, which is how I think of it as
trolling, right? Or just being contrarian. But honestly, to me,
you guys don't know me that well. If you did, you'd know how deeply I feel about
this. I absolutely despise people who look down on entrepreneurs who fail because it
is just, I grew up in a family of small business owners. On both sides of my
family, my mom's side and my dad's side, my dad was owner of, I think,
fourth generation of the family plumbing business. Small business people work their
asses off to just make a living. And entrepreneurs,
from a startup sense, are doing the same thing. They're putting themselves out there,
they're taking a risk, and they're trying to make something happen. And yes, they
are looking forward to benefiting financially and personally from that, but they're
also doing something that is necessary for our economy to have any modicum of
growth, right? Startups are the biggest driver of growth in any economy.
Literally every study you can read says it. So when we put down founders who are
not doing as well or accuse them of wrong doing because they can't pay a loan that
they took out or call them charlatans for losing investor money, that is not how
the rest of the world, at least the successful parts of the world, think about it.
They think about it as missed growth opportunities, and they view the entrepreneurs
as the catalyst. The only growth opportunities or the most important growth
opportunities come from that catalyst and so let's empower them. Let's support them.
Let's give them the things they need. If their idea makes sense or they have any
amount of traction, let's invest in them. Let's push these things forward. There are
too many parties locally who spend a lot of time talking down to startups rather
than talking with startups and that is what has to change. Now,
if you ask why I'm able to do that. Frankly, it's because I have no intention of
ever raising money from anyone locally ever again. The idea of pissing off the
powers that be has no consequence for me because they're not going to hire me.
They're not going to invest in any startups that I start. I can say the things
that a lot of other people are thinking and believe you me, a lot of people are
thinking them, but there is a certain amount of fear of retribution and belittling
and, you know, consequence to being honest and that has to change or nothing is
ever going to change in our ecosystem. It's just gonna be this continual, you know,
leaning on a crutch. But I think we have a long history in the Midwest of
utilizing economic development initiatives and incentives either from an investment
perspective or a real estate perspective or attacks the deferral perspective to spur
new business, to spur startups, to spur economic growth. And that works.
I mean, absolutely it works. But from my perspective, it's a bit like a crutch,
right? And if you break your ankle, having some crutches is pretty great to keep
you going. But once that ankle starts to heal, if you're still leaning on those
crutches, you know, you're never gonna walk right again. And to me, as I've seen
other healthy ecosystems who move along swimmingly without development initiative as
being the primary focus of the ecosystem, that's what I want for our region. I want
the founders and the grassroots aspect of the startup community to be the leaders.
And I think it's high time for that. I think I covered most of what we were
talking about. Yeah, I think we caught it there. I'm curious,
then, With all those items you've identified, the aversion to risk, the parties that
be, if you will, and having experience in all these other cities around the country
that have their own different ways of operating, why is it that you've chosen not
only to do this here in Cleveland, but to vote really all your efforts and starting
CLE to help others do that as well? Yeah, it's a simple answer because when I was
getting started, I didn't have that. I didn't have a network of entrepreneurs that I
could lean on or learn from. I didn't have an actual no -nonsense,
up -to -date source of information or guidance or mentoring. And so,
you know, when I started my first company in earnest as a founder, which I think
was in 2008, after being at the first company I was at for eight years. I had a
lot of books that I had read and some podcasts, well, yeah, not really podcasts
back then, and blogs that I had read, but I didn't have much else.
And so I did a lot of floundering. I mean, one of my earliest giant mistakes was
I printed out a big long 80 page business plan for my first idea, marked it
confidential and send it off to like 20 VCs based in the Bay Area.
And I didn't know that if something's number one, marked confidential, they're not
going to read it. And number two, they're just not going to read it anyway because
it's an unsolicited business plan. Unsolicited? Yeah, unsolicited business plan and I
didn't know that. And so just having somebody to tell me not to waste my time on
that would have been amazing. And so that's all I want is I just want, you know,
with my personal mentoring, you know, I'm probably mentoring 15 companies at a time
anymore with my personal mentoring. Like that's all I want to do is just give a
source of information, a shorter to cry on, somebody you can text at 1 a .m.
about something that went wrong and I'll help any way I can. And sometimes the best
way I can help is to just listen. So that's all I'm trying to accomplish. But for
starting CLEE, my goal, and I alluded to this, my goal is that in the long -term,
we'll have lots of leaders who take initiative and take their learnings and take the
funds from the companies they've sold and take a portion of that and contribute it
back to the community and help new startup founders who are struggling, help students
who are interested in entrepreneurship, help startup founders who are later stage and
are looking at being acquired and don't know how to deal with that. That is what
We should all hope for is like this virtuous cycle of Entrepreneurs who just keep
helping one another until you know, we get to wherever we're going I do have a
couple thoughts on why people leave the city a good friend of mine who we mentioned
earlier Rakesh Guha who started starting CLE with me moved to the Bay Area last
year late last year And you kind of have to look at him and say,
here's a guy who's an incredibly talented developer, you know, bought a house here
and rents it out, has tons of friends here and is working very hard for the
benefit of our region with Start and Klee. And ultimately, ultimately made the
decision to leave our region for the Bay Area. And so, you know, a lot of people
have asked me not only about him, but he's a good example, like why are so many
promising entrepreneurs leaving our area. And to me, I've had conversations with so
many of them that a couple of themes have really come to the fore.
And I harp on these a lot, so forgive me. But the first is top line income. So
if you look at startups, a lot of the most successful startups, look at Uber, are
only worried about top -line revenue, right? They don't care about profit. They don't
care about really anything except for that top -line number of revenue. And that's a
certain mindset that exists, right? That mindset exists in people as well.
And so, if we look at these incredibly successful startups who are only focused on
top -line revenue, and we want to have them here, which is, I think we can all
agree, is something that everybody wants, then we need to appeal to those people
with that mindset. And what doesn't appeal in that case is a low cost of living
with a low income. So, yes, proportionally, we might pay less of our income on rent
or on owning a house here. But because the cost of living is so low,
our incomes are so low. And so when a new college graduate who's in an engineering
program and trying to figure out what they wanna do with their life looks at that
and they say, okay, I can make $80 ,000 a year out of school as a,
you know, entry level, associate level developer at progressive or whatever the case
might be. And then they look at associate engineer levels at Google or Facebook or
Twitter or Uber or any of these other companies and they say, "Oh,
I can make $150 ,000 a year right out
$50 ,000 to $100 ,000 a year in stock, in a publicly traded company in several
cases. So even though that person is going to have to pay $2 ,000,
$3 ,000 a month or have some roommates in South Emission in San Francisco or San
Jose or wherever, that's not even in their minds. They're not even thinking about
that side of things. What they're thinking about is that opportunity for them to
generate wealth for their life immediately out of school that they do not have
working a day job with no equity opportunity for 70 or $80 ,000. And so that's
number one, that's just pay people more. Like that's the number one thing we can do
is just pay people more, not that hard. I mean, it's hard, but it's not that hard
to understand. The second thing is valuations. If that same person five or ten years
into their career says, "I want to start a company," well, then they've got some
interesting data to look at because my study, which is non -scientific but accurate,
into average valuations by HQ state of the company, like what state the company is
headquartered in, Ohio is 41 out of 53 with the territories.
That is incredibly bad. If you start a company here or start the same company
theoretically in the Bay area, we are a far cry from the same situation.
If I'm going to start that new company and I can get a $1 million valuation for
that new company here, I'm very likely to be able to get a valuation something like
five or seven million dollars for that same company in the Bay Area. Again,
not purely scientific. It's hard to have one -to -one data on that, but it's
undeniably different. So I'm not sure how you keep a startup founder who's mostly
worried about what kind of outcome financially they're gonna have from their company.
And the third thing we all know, which is quality of life, right? Transit is
incredibly important. We don't have enough of it. City services, even if you live in
the suburbs, are challenging. You know, all of these same things that anybody would
want. You can look at the indexes. You can look at the best places to live lists.
We're not at the top. And so, I, unfortunately, when I look at and Klee and all
the efforts that we have around helping entrepreneurs. One of the things we think
about a lot is retaining talent and retaining entrepreneurs who want to start
companies. These three things, particularly, really are putting us behind the eight
ball. I'm not sure what exactly we can do about it in the short term, but we
really do need to address them. on the flip side of that coin, you know, painting
an optimistic picture. How do you think about the things that Cleveland is doing
particularly well? Yeah. So we have, we have a couple of great industries, right?
And this is really, this is a focus we have, right, around healthcare, around
insurance, around XYZ. But these particular industries that we're extremely strong in,
that strength can attract companies from all over, right? Like Youngstown is doing
with 3D printing and material science, you know, is attracting companies from outside
a region. I think that's really important. I mean, if you have family here, then
you have an incredibly good reason to be here. If you have an interest in, you
know, sports, we've got three major league teams here, right? Like we're great sports
Mecca, but we're a sports Mecca. There's definitely a good quality of life to be
had if you wanna raise your kids in a safe place that's clean and the air is not
very poor quality every day. Like this is a great place to be. And we see that
more and more, like we're seeing more and more people who have fully remote jobs or
run businesses that are remote and those organizations or customers don't care where
you're located. That's an incredible opportunity to live somewhere like Cleveland where
you've got a really low cost of living, the ability to have a mansion for all
intents and purposes compared to other places in our country for a small amount of
money. And to raise your kids in a safe place that has great culture. We've got a
ton going for us. It's just in a very particular focus when you look at startups
and high -growth startups, you have different indices that you need to look at than
these areas that we're really strong in. So, I'm not pessimistic on Cleveland, don't
get me wrong, I've been here and stayed here for a long time, but going back to
one of our earlier discussions, as a product manager or a designer, I'm constantly
thinking about how we can improve. What are the areas that we can make things
better? How can we bring these numbers up if we want to? And there's no point in
not facing the realities associated with them. There's no point in setting those
aside. It's much better if we address them head -on. Yeah, for me, Venture for
America brought me to Cleveland, and after being for a little due to COVID team.
I'm still choosing to stay here for a lot of those reasons that you say people
choose to move to cities and grow businesses. And so for you, how do you see the
city of Cleveland growing? Because that's something that I'm excited to be a part
of. Yeah, I think we've got a lot of really good momentum on our side in a lot
of areas. I'm actually really excited to see our response to the pandemic.
Like I've actually honestly been fairly surprised about how it's been handled and
that's exciting. You know, I think we have a lot of really interesting developments
happening in downtown. We've got increasingly more community,
not only in startups, but just generally bridging the sort of East -West divide. I
don't know if you guys have been Cleveland long enough to sort of know that there's
like this unspoken don't make someone who lives on the east side drive to the west
side because they won't sort of dynamic here. But I think that's getting to be less
and less strident every day. You know, to me, one of our biggest strengths here is
parks. Like I love being outdoors and especially in the situation we all find
ourselves in being able to be outside and safe, having fresh air is incredibly
important. Even before COVID, it was a situation where I can, I live on the west
side out by Cracker Park and I can be at five parks in 10 minutes.
And I mean, parks where I can hike, you know, and that's amazing. I don't know
many other areas where we have that opportunity. Is that the national parks or is
this something different? It's all state and county parks. So I live just on the
border of Cuyahoga and Lorraine counties. And Lorraine metro parks are really great.
And then, you know, obviously like Lakewood has a Lakewood park with solstice steps.
And there's just a ton of really great places to go that honestly, I think a lot
of people just don't even know exist. There are so many people who I've kind of
been a tour guide for and that's one of my favorite things to do is to take
people to a park on the lake and they just don't understand how big Lake Erie is
and it's always fun to watch them sort of realize that situation or you know being
able to ride a bike along a river for you know, hours and hours on end is
surprising to people sometimes. So, you know, I think we've got a lot going for us
in that regard, too. Our hope is that over time, we will paint a collective collage
from our participants of what resonates with them most about Cleveland. And you
certainly just touched on a handful of items there. But if you had to drill down
and pick your favorite component, what would that be? Yeah, I mean, I would say
parks, but I do like to eat. And when when we're allowed, you know, I think our
restaurants are, you know, having lived in Chicago for a while, which is also
midwestern city that has incredible restaurants. Like, I honestly feel like we have
so much to offer in that regard. And I absolutely love it. I think a lot of
people will say that for you as you as you go through this process, because it's
just, you know, a standout. But aside from that, parks are just amazing. Have you
guys lived in other cities of equal level of Cleveland? I grew up in New York
City. I grew up in Atlanta. So you're both, you're both, you've both experienced
cities that are a tier higher than Cleveland, right? New York may be a few so.
So, yeah, I mean, it's hard to argue with New York food, right? But, you know,
there is a different sort of way of living associated with Chicago, New York.
I haven't spent too much time in Atlanta, but I assume is very similar. Houston,
LA, San Francisco. Like, there is a laid -backness to Cleveland,
sort of a calm, comparatively, and a friendliness that exist that I haven't really
experienced anywhere else. And I think that's really indicative of just who we are.
That midwestern nice is kind of really true. Like it's a thing,
at least from my perspective. So yeah, I'm interested to know who else you're going
to talk to and what they say, but I'll get to hear as they say it. Before you
go, if people have any questions of things they'd like to follow up with you about,
where can they find you? Yeah, so I'm just eBooHolts on Twitter, E -B -U -C -H -H -O
-L -Z. Gotta get both H's in there. And I usually, my DMs are open and I usually
respond. Otherwise, you can hit me up at ed @startinclea .com,
is my direct email for Startin' Clea. And then, you know, feel free to check out
Running Out of Runway. It's written content with a podcast and a YouTube channel of
all the same stuff So anyway, you like to enjoy that it's there for you And you
know I basically just tried to take a lot of the learnings that I tried to impart
when I'm mentoring companies and Put it in sort of a package that anybody can see
and and look at when the time is right for them So, You know, if you've got a
question like, "Should I start a company with my best friend?" We tried to cover
that topic as an example. So it's important, I think, to just have perspectives. So
yeah, feel free to hit me up on any of those. I'm always happy to be helpful
where I can be. Thank you so much for coming and sharing your background and story
today. We really appreciate having you on. Thanks so much for having me. It was a
lot of fun, and I'm super excited for what you guys do in the future. That's all
for this week. Thanks for listening. We'd love to hear your thoughts on today's
show, so shoot us an email @layoftheland at upside .fm, or find us on Twitter
@podlayoftheland, @vtagan, or at sternhefe, J -E -F -E.
We'll be back here next week at the same time to map more of the land. If you or
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