Can Eugene, Oregon become a haven for startups?

 

This May, 30 game developers were laid off at the Zynga videogame company office in Eugene, Oregon. But soon after, Joe Maruschak spoke at the Barn Light coffee shop on how to launch a startup business.

Game developers crowded around the tables. Maruschak, chief startup officer at Eugene's Regional Accelerator and Innovation Network, encouraged the group to live on unemployment benefits while they start a company: "Don't make a game; start a company," he advised. "Start with a very, very small company."

Maruschak represents a rising high-tech startup community in Eugene that welcomes anyone who wants to launch a business. Other mentors give free advice at downtown startup incubators — CodeChops, Eugene Mindworks, FertiLab Thinkubator — where enthusiastic tech entrepreneurs network, brainstorm and imagine new companies with other enthusiastic entrepreneurs.

The rise of Eugene's startup community adds evidence to what's been called the "Boulder Thesis." Proposed by Colorado entrepreneur Brad Feld, the theory holds that a vibrant startup community can flourish in any city. The key is to grow the community organically, in an environment without hierarchy or authority. It requires mentors who, like Maruschak, make a long-term commitment to the community. And it requires entrepreneurs who are committed to generous and inclusive values: "give before you get"; "all who are interested are welcome"; "embrace weirdness."

One sector of Eugene's economy has embraced these values for decades. Starting in the late 1960s, San Francisco hippies fled police crackdowns in the Haight-Ashbury to form dozens of rural communes outside Eugene. To serve the communes, enterprising hippies launched alternative businesses inside the city — food co-ops, head shops and a People's Gas Station.

Eugene's underground newspaper, The Augur, described the 1970 commercial ethos: "The people's community in Eugene is one of the most together in the country. People here really care about each other and want to help each other out. This is obvious from the service and vibes you get when you go to ... any of the hundreds of places you go when you need things, services, supplies, advice or help."

In those days, innovation in Eugene embraced the low-tech — twisted-wire jewelry and improved tie-dye methods. While many hippie innovations have fallen from style, one local company, Toby's Family Foods, changed the snack world forever with the creation of the first spreadable tofu dip.

Today, Eugene's startups tend to go high-tech. Game producers, biotech firms, and a website called ManageMyCoop.com help a buying group purchase organic food directly from farms. Another website, MJCharts.com, streams a proprietary Cannabis Price Index for medical marijuana.

As in the 1970s, optimistic newcomers come to Eugene to escape the San Francisco Bay Area frenzy. Robert Schanafelt, 41, moved here last fall. The lower cost of living gives Schanafelt breathing room to dream up ways to use the Internet for a startup with global reach.

"I register a domain name, and anybody can get to me," he says. "I can serve the entire world." He plans to serve the world while enjoying Eugene. "I don't have billion-dollar valuations in my eyes. I don't want to work 80-hour weeks for 10 years."

Schanafelt also finds that Eugene's startup community has a more humane vibe. Back in San Francisco, he squeezed into meet-ups with 300 attendees. "I couldn't connect with anybody."

At a recent Eugene Programmers Meetup, he and eight other programmers knocked around ideas for an educational robotics game. While Schanafelt generously shares tech inspiration, he also thinks such events could improve their focus, especially ones that advertise nothing more specific than: "Come to my meetup. We're all going to hang out."

A lack of sophistication could stigmatize Eugene's young startup scene, particularly in the eyes of Silicon Valley investors. No major venture capital firm has moved to Eugene. Perhaps investors are put off by old stories of the city's progressive, sometimes anarchist, politics. More likely, it's the tendency for Eugene entrepreneurs to favor what are called "lifestyle businesses." Entrepreneurs who start a lifestyle business hope to earn a decent living but are generally driven more by passion than profit. Lifestyle businesses are ignored by the kind of investors who are looking to a make a killing.

But Todd Edman, a Eugene software entrepreneur, believes this bias overlooks a key element: The ambitious idealism that originally drove the hippies and that drives all startups everywhere today. "All entrepreneurs have a little seed of self-delusion that makes them think they can change the world," says Edman. "It's the same if they're in Boulder, Silicon Valley or Eugene. A lot of them fail, but some of them do change the world."

Jourdan Arenson is a contributor to Writers on the Range, the column service of High Country News. He writes in Eugene, Oregon.

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