The Clownshow that is Hawaii’s Tech Scene

This post will probably rub a lot of people the wrong way. I don’t really care, because it needs to be said.

There is way too much celebration of mediocrity and non achievement in Hawaii’s tech entrepreneur scene. There are also too many (not all, but too many) frauds who have no idea what they are doing very vocally leading the charge. I get it, people have egos that need protecting but this isn’t high school or college. This is the real world. This is business, not fantasy startup land where everything comes easy and everything always works out. Here are my three biggest beefs (I have a lot of them, but I’ll spare you).

The “Acquisition”

I’ve seen it over and over again, people get “acquired” and the local media writes all about that shit. If you’ve ever run a real business for any substantial amount of time and take even just a few minutes to investigate the details, you can read between the lines and see the truth. These companies failed and are being bailed out by someone who doesn’t understand what is really going on or feels sorry for them. They are buying toxic assets. Maybe the media doesn’t understand? More likely they don’t care and are fine with rehashing press releases that sound cool.

Failure is part of business. 90% of businesses fail so I’m not condemning failure itself. I’ve personally failed a ton. But every time I did fail, I never expected anybody to tell me “Good job!” or “Congratulations!”. This congratulatory attitude towards failure is toxic and it is absolutely the LAST thing we need here if we want to build a sustainable ecosystem. You seed false hopes into future would be entrepreneurs and even worse, you set a standard of masqueraded failure as acceptable or even praise worthy.

Funding

I’ve written a whole post about it before, but it wasn’t aimed at anyone in particular. This time, I’m fire shots. Most tech investors / angels / VCs in Hawaii (the ones who are investing in Hawaii companies anyway) have absolutely no idea what they are doing. And it PAINS me, because these people are literally throwing money away. literally. And most of the time, it’s not even their money!

The facts are, 99% of funded startups fail (maybe this is why everybody celebrates the acqui-hire / bailout). The few that make it usually have a stacked deck in their favor. Yet for some reason people here that more funding is the answer.

Here the only investment in Hawaii that would make sense to me, and its not rocket surgery.

1. A company that is already showing major (and I mean major) traction pre angel round. They already have something built and running before asking for money. Their product / service has so much traction that their costs to operate (servers, apis, etc) are on the verge of killing them. I don’t understand why this isn’t common sense.

2. In the round of funding there are other legitimate investors who can leverage their connections to aid a startup with the areas they need the most help.   Not an entire round of dumb money.

3. This help should be majority connections and introductions and deal making to scale growth / profitability and movement into other verticals or markets. Investors should always offer more than money.

I do not see this shit happening with the tech startups in Hawaii. Instead I see people who have such a poor grasp of where the world is going investing in the things they can understand. Which by the way all happens to be things rooted in the past.

The (Want)”Entrepreneur”

The “entrepreneurs” are to blame as well. I see a perpetuation of the plantation mentality that people here have blamed for generations. Waiting for someone to give them approval to build their business. “We can’t build our company because we  can’t get funding…” “I need to find a technical co-founder”. If these things truly stop you from building your business, good, you’re not cut out for this line of work anyway.

For the ones who do get funding, congratulations, you made it to the starting line of the marathon. Now run! Funding gets you to the STARTING LINE. Why don’t people realize this. Getting funding means the real work is now to begin. Stop celebrating! Get to work!

To me this shows what the real problem is here, it’s not a lack of funding or opportunity, its a lack of real entrepreneurs in the tech sector (we have them in the tourism industry). There are a few that I have met that I think have built / can build real companies, but they are few and far between and most of them are bootstrappers like me and don’t issue press releases because they’re too busy serving their customers.

If we’re to truly build a sustainable tech / startup ecosystem in Hawaii, we need to be honest; publicly but more so with ourselves. Everyone, the entrepreneurs and the investors. We need to stop seeking out approval (funding) to build businesses. We need to stop celebrating failure. We need to stop being dumb with other people’s money. Show entrepreneurship for what it really is.

 

Entrepreneurship is not cool. It is hard and shitty a lot of the time. If you really want to do this, be prepared to sacrifice a lot of your life, your time, your friends, your ego, your pride.  It’s not for the weak willed. But for those who seek it, it’s the truest form of self expression available. Then maybe we’ll have the right people come out to grow this thing.

22 comments

  1. Spencer Toyama   •  

    Well said. My early experiences in tech were pretty much the embodiment of this rant, but I’m lucky to have good friends that were able to help guide me. Keep bootstrapping, and keep up the good fight. You are not alone, sir.

    • Ryan   •     Author

      Thanks for reading Spencer. The frustrations are shared by many others I talk to, but I’m the only asshole who publishes it publicly. So much for my new years resolution of not being an asshole. :P

  2. Peter Kay   •  

    There is much truth to what you say here but I would add that it applies to very specific companies/investors/media only. It’s not an accurate generalization. Yes, there are some stupid celebrations of bogus acquisitions, but that’s the exception and not the rule. Yes, there are some clueless investors, but it’s the exception. And yes, there are some clueless entrepreneurs, but in terms of the ones really doing real work, that’s the exception.

    So to me, this comes across as an empirical rant and a frustrated dump. Nothing wrong with that, but I don’t think it’s particularly insightful as to what ails the industry.

    That all being said, it’s always good to get more voices in the conversation rather than less.

    • Ryan   •     Author

      Thank you for reading Peter, you’re right, it was a rant out of frustration, but I am glad it has sparked conversation which is proving to be very insightful as to what can really be done to help grow the ecosystem. Some have challenged me to do more to give back to help others who are starting out so this is something I probably should put more effort into.

  3. Elyse Petersen   •  

    I’m ashamed of this post and the support of this post. Not because I don’t agree with the statements made, but because it was the most wrong way to express the message. There are problems but insulting people will only spread us farther apart, and how the heck are we supposed to improve our situation and future if we don’t work together. Hawaii is hard, it is so hard that I had to move my company to Vegas, but I will continue to do everything in my power to improve it and inspire the connections that will bring the education, experiece, and energy to make a successful tech scene.

    • Ryan   •     Author

      Thank you for your reading Elyse. I am hoping for your success with Tealet. I’ve always said what Hawaii needs more than anything is a success story that people can gravitate to and I see Tealet as a potential candidate to do so. Though this post was a rant out of frustration of seeing the boom bust of Hawaii’s tech entrepreneurship sector for close to 10 years, I am glad that it has started some conversation from many entrepreneurs I respect into what we can all do collectively to help improve the scene. I’ve been challenged to personally do more to help up and coming entrepreneurs instead of selfishly keeping to myself and taking jabs from the comfort of Kauai like a crotchety old man. I guess if I’m going to make a big stink, I need to step up as well.

      • Elyse M Petersen   •  

        Ryan, thanks for the comment about Tealet. I am more than happy and motivated to create a tech success story for Hawaii. I hope that our story will show the real value that Hawaii has to offer our entrepreneurs; real problems. I have been saying this for the past few years now since I was a part of UH’s Solar Decathlon project. Hawaii is facing BIG environmental, economical, and social problems at a much faster rate than the rest of the world because of our isolation. Tealet is a solution for our agriculture problems (it’s not just about tea, it’s about bringing the benefits of the farmer market on the internet so agriculture business can scale in Hawaii, and around the world). You want to help entrepreneurs and get rid of the wantrepreneurs? Tell them to volunteer in the community to discover these problems and stop thinking about their business as a feature, but as a real solution that is solving a real problem. Let’s take advantage of our problems and build incredible business. Hawaii is perfect for growing social entrepreneurs. You can read on my thoughts on this here: http://www.thenextwomen.com/2013/02/15/world-will-be-saved-social-entrepreneurs

  4. Doc   •  

    Ryan,

    You Sir are absolutely correct. The criticism you may get from posting this is exactly what is wrong with the whole scene. Everybody has the Gen “Y” it ain’t fair unless everybody get to play and we cant say you suck even if you do “PC” mentality. You called a Spade a Spade and good on you. I have been saying for years we celebrate mediocrity, half assedness and weak sauce for way too long especially with the it’s “good enough for Hawaii” shit.

    Hawaii does need a WIN* but not with an asterisks.

    • Ryan   •     Author

      Thanks for reading Doc.

  5. Dan Freedman   •  

    With the exception of Silicon Valley and only a couple of other places, your post could have applied to anywhere in the world. It’s not Hawaii-specific at all.

    What I think you might be missing is that to achieve the level of excellence available in a top startup city, a very broad spectrum of people must learn how to create winning scenarios: entrepreneurs, salespeople, angel investors, fund manager, accountants, PR people, programmers, and so on.

    From Silicon Valley, one of the more notable quotes is “It takes $20m to bring a new associate up to speed at a Venture Capital partnership.” This means that even in one of the best places in the world for startup investments, those without experience will expend significant capital on their route to gaining that experience. You might think that in that epicenter of the startup world, it would not be necessary to “waste” $20m on each new associate, but those in the heart of the game tell us otherwise. It is necessary to experiment and make mistakes, even there.

    In Hawaii, we have been experimenting for over 10 years with the high technology ecosystem. Remembering that in the very best startup environments in the world such as Silicon Valley, more than 90% of startups do not return significant capital to stakeholders, it should come as no surprise that the same is true in Hawaii. And indeed, it is true. Most high-tech startups in Hawaii fail, just like in Silicon Valley. One difference is that we don’t have very many here, so the highly successful <10% are very few in number. And remember, like most non-epicenter cities and states, Hawaii is trying to do something quite difficult — create an industry where no built-in advantage previously existed. Only a few cities, such as Austin, Texas, and Boulder, Colorado, have been successful here. … But Hawaii would like to join that group, which is why we keep trying, building, experimenting. When will we reach critical mass? If you can tell me that, your crystal ball is better than mine.

    Dan

    • Ryan   •     Author

      thank you for reading. this is a great comment that I agree with 100%. Maybe the goal shouldn’t be to become a new SF or even compare ourselves to them. SF is Hollywood for developers and tech entrepreneurs and even today there is only one Hollywood. Maybe we should shoot to be more like Israel’s tech startups scene. Similarities as far as isolation but they seem to have figured something out.

  6. Dan Freedman   •  

    Postscript to my previous comment:

    I think your frustrations may be more with “the game” itself, rather than with the way Hawaii is playing the game. As one who has played “the game” for my whole adult life, and has done so in several geographies, I can tell you that there is a remarkable consistency to how difficult it is to pick winners from losers in the high tech world. When one can do that 10% of the time, but the 10% that win produce 100x return on investment, and create long-lasting jobs held by people who make a difference in the world, it’s a good game to play. But even those at the very top of the game would tell you that the majority of the investments they make still fail. Fortunately, the remainder make the game worth playing.

    Dan

    • Ryan   •     Author

      It’s a bit of both. I understand the value of the “funding game” in its ability to create life altering companies, but some of the efforts here seem a little rushed as if we’re trying to catch up. Things work in established ecosystems because the ecosystem is established. In a sense I feel we may need to learn to walk before we can run.

      I do agree though that picking winners is incredibly difficult no matter where you are as an investor and I can imagine even more difficult when choosing from an even smaller pool. I think Gary Vaynerchuk gave a pretty good reason why it is so difficult to do so. He has said the reason its hard to pick winners is because investors, especially angel investors, usually are executors and have had success building businesses. When they hear a good idea, they see the potential upside as if they themselves were doing the execution. However, the success of the company lies in the founders hands and many times they cannot execute as well as the investor which leads to the disappointments and “misses”.

  7. Steve   •  

    Nice to know folks here care about entrepreneurship. Me? I’ve always been one to run with chopsticks in the mouth… Live large, smile big – whether or not you get your teeth knocked out. ;)

  8. Tara Coomans   •  

    Lots going on here, great conversation. I recognize your intent with this post and applaud you for saying what you need to say. Strong voices, including critical are needed to grow any community.

    One thing that I’ve never understood about our entrepreneur/startup community is the singular focus on what a startup should look like. With exception of a few (Tealet,Volta), almost all of them are app or web based. Not that I don’t support those endeavors. But,why are we measuring success in an area that is already dominated by other cities like SF, Austin.

    Imagine a Hawaii where the Startups are reflective of OUR culture, community and people. Where instead of celebrating what works in other places, create our own definition of startup culture, creating businesses that work in the real world, but are born here and stay here. Rather than reinvent ourselves as the next SF or Austin, we have opportunities to create stand in the startup shadow, be our own space for Startups with a different emphasis for creative, tech base entrepreneurialism in areas like sustainability and community. We have a lot of creative thinkers in Hawaii, as you reference, only a few will ever be successful Entreprenuers, but the definition of entrepreneur shouldn’t be limited to creating an app or a website and if we we’re focusing on supporting & building entrepreneurship that CAN grow here and has benefits of growing here as opposed to having to move, like so many of our Startups do. We can celebrate success when we define it for Hawaii, and I really feel that we haven’t defined anything, we’re too busy trying to be someone else.

  9. Elliot   •  

    Thanks for starting up this discussion.

    Firstly, I’d like to say that after moving here from Silicon Valley, I see so many opportunities that we could engage in right now, and the picture grows every day. If ideas aren’t being implemented, it’s not for lack of options.

    There are many types of “entrepreneurship” besides economic, such as social end environmental entrepreneurship. Because of strong cultural values, Hawaii has a legacy of social impact on much of the rest of the country, and even world. Driving innovation to improve the quality of life on social and environmental levels are strengths of the Hawaiian people, and we should leverage those strengths.

    I’m not sure what experiences Ryan has had, specifically, but I can expand that this is not a regionally localized problem. After a life-time of medical device research and development, I can tell you that not every endeavor will succeed. However, a “good” entrepreneur (one who “commits and begins”) is not just someone who is successful at starting businesses. Rewards to society do not flow merely from the accumulation of personal wealth. The dissemination of beneficial technologies, whether they affect our families, our communities, or our world, should be the real measure of success.

    Those who complain at the inability to get things done should just be left alone. There’s not time in this life to argue with nay-sayers and detractors. If you have something of value, then promote it, work hard, and dig in, because there’s going to be opposition. If you don’t get your fare share of the pie, become a baker and make your own.

    There’s no shortage of money being printed. People with money are constantly looking for good places to invest. Good ideas, and the people who can turn them into a deliverable product, are what investors are really looking for. An idea without a leader is hard to back, and a leader without an idea is just another unemployed entrepreneur.

    Walking begins with a small amount of falling forward. Without the risk of falling, you would not walk forward very well. The same applies to business; you won’t succeed unless you risk failure. Thomas Edison took years to develop a successful light bulb, and concluded, “I have not failed. I’ve just found 10,000 ways that won’t work.” If you’re not ready to commit, and begin, don’t try to be an entrepreneur.

  10. Aaron Landry   •  

    Scratch out “Hawaii” and say “most anywhere.” There’s a lot of fucking idiots and a lot of people who are investing in shit and there’s a ton of money that’s just pissed away. Silicon Valley, New York City, and where I grew up (and had a couple startups) in Minneapolis too. And there’s a ton of people everywhere who have a disproportionate amount of reverence because they had a single success or had a lucky break. And there’s a ton of small isolated towns everywhere who think they’re unique and trying to have a startup scene. Hawaii is not unique.

    The best thing for all of us to do is to put our heads down, get to work doing good things and let everyone else continue to try – and encourage them to keep trying. Just because the majority of people out there might be doing it wrong doesn’t make them worse than the people who aren’t doing anything. The only bad thing they’re doing is setting our bar too low.

    Ignore their bar and do big things.

    • Ryan   •     Author

      Good stuff Aaron. You’re right we’re not alone in our follies. We’re not unique in that sense. Thank you for reading.

  11. Rechung   •  

    I was pleasantly surprised to come across this conversation this morning. A lot of real insight here particularly from Dan and Tara.

    Ryan, your last paragraph is spot on.

    It’s been interesting to be on both a first time bootstrap entrepreneur and to work with investors and their companies at the same time. It’s also interesting to hear the conversations people are having amongst friends out here in the open.

    A lot of how the startup world works doesn’t make sense to me either, just go on any tech blog and the amount of companies that have the “dumbest” ideas are getting loads of cash. It seems pretty crazy to me. That being said it’s a learning curve, out here and I am seeing a real evolution in the way that companies are being picked at least at Blue Startups. I wouldn’t say it if I didn’t think it’s true.. and I know that we have a long way to go. A key ingredient in evolution is time.

    I know that having solid companies apply is key to having solid companies get funded in the current model at Blue.

    There are all kinds of nuances that I can’t really go into right now..

    I’m very hopeful for mBloom. They get it in many ways.

    We do have a need for more smart money in Hawaii. Well they’re here but it’s a place for them to relax not invest. How can we get them to become interested in our best companies? Also how can we get those who have been able to become successful on the mainland reengage with our local startups?

    We’re lucky to have guys like Dan spend hours and hours of time adding real value to companies for nothing but paying it foward. There are others but since he’s talking on here it should be noted.

    I’ve seen wantrapreneurs become full fledged, force of nature entrepreneurs. Most of them don’t but a few of them do. That’s what JumpSchool is for. To help people get the tools they need to bootstrap and become fundable if they wish to go that route. As you said Ryan this shit is hard. The rest will weed themselves out.

    I agree whole completely with Tara. What makes sense for Hawaii? Let’s do that.

    A few years ago there we’re a lot more gaps in our ecosystem. I see a lot of people stepping up to the plate to patch them up.

    This is still the first quarter. The clock is on our side.

    • Ryan   •     Author

      You’re right Rechung, although we’re 10 years in already, we still have a long way to go.

  12. Ian   •  

    Ryan,
    I think your view is limited…but you make some great points.
    Keep putting it out there!

    • Ryan   •     Author

      Thanks for reading Ian

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