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Young business leaders ignite startup scene

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Articles - August 2010
Wednesday, July 21, 2010
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THE NEW DEAL

STORY BY BEN JACKLET // PHOTOS BY ANTHONY PIDGEON
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Left to right: John Friess of Starve Ups, Mark Grimes of Ned.com, Eric Doebele of ReliableRemodeler.com, Josh Friedman of NedSpace, Nitin Khanna of MergerTech and Ryan Buchanan of eROI and the Software Association of Oregon. All are involved in a multi-pronged effort to boost Portland’s startup scene.

 

Eric Doebele timed his first major exit nicely.

In 2007, the Beaverton web company Doebele co-founded with his business partner Jack Phan, ReliableRemodeler.com, was one of the nation’s fastest-growing private companies. By the following February, just as the economy was poised to crash, Doebele and Phan sold their company to the online marketing giant QuinStreet for $25.5 million.

The moment the deal closed, Doebele’s life was changed. But the 37-year-old entrepreneur, born and raised in Kelso, Wash., did not leave Oregon. Nor did he step back from the business world to pursue other interests. Instead he immersed himself locally, tapping into Oregon’s angel investing community and looking around for companies to invest in and mentor. Before long he had compiled a portfolio of a half dozen burgeoning Portland technology companies to support. He invested between $25,000 and $50,000 in each of these businesses, to keep them going but also keep them hungry, with the ulterior motive of giving the economy a boost.

“When you invest money in a startup, that money goes right back into the economy,” says Doebele. “When an entrepreneur gets money in his hands, he’s hiring somebody. He’s putting somebody to work the next day. It’s short-term job creation that’s local. But you’re also creating something for the long term. Small business is what drives the economy. And you’re planting the seeds for tomorrow’s mid-sized companies.” Doebele’s investments were particularly welcome given the difficulties so many small businesses are experiencing getting access to capital in the still-sluggish economy. Not only has he boosted the prospects of several nascent Portland businesses with serious potential, he has deepened his ties with an energetic team of young business leaders with big ideas about how to jump-start the state’s startup scene.

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Eric Doebele decided to stay in Portland after his successful exit from ReliableRemodeler.com in 2008. Since selling that business he has been investing in and mentoring a half dozen promising Portland tech startups.
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Nitin Khanna built Saber Consulting into a 1,500-employee business in less than a decade before selling the company for $420 million in November 2007. He is launching an M&A firm, MergerTech, and investing in five local startups.
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Mark Grimes, co-founder of the shared work environment NedSpace, has launched four businesses and invested in a dozen others, as well as helping to organize a Maker Faire in Ghana and launching a philanthropic water service.

Doebele and his informal partners in this quest — Josh Friedman and Mark Grimes of NedSpace, John Friess of Starve Ups, Nitin Khanna of MergerTech, and Ryan Buchanan of the Software Association of Oregon, just to name a few — make a lively team. They spend a lot of time at the Backspace Café in Portland’s Old Town, a quirky establishment with abstract art on the walls, video game terminals and vegan baked goods on the menu, and whether it’s a result of all the caffeine or their inherent enthusiasm for ideas and action, they tend to speak extremely quickly and cover a great deal of philosophical territory in their discussions. They are the sorts of interview subjects who can barely wait for the question to finish before letting loose with an answer. Their discourse ventures far and wide, but strong themes rise to the top: the power of collaboration, the importance of peer mentoring and the need for more entrepreneurial support in Oregon.

Perhaps more important than their shared traits and ideas are their shared experiences, of starting a business from nothing, building it into something of value, and, if and when it becomes possible, selling it at the best price, to begin the cycle again, from a position of greater power. They dove into the technology sector during a time of great opportunity, survived the Internet crash one way or another, and have survived the Great Recession as well. They’ve learned how to do a lot with a little bit of money, but they also recognize the importance of fast money, delivered early in the process when the entrepreneur needs it most.

Oregon has never been known for fast money. Compared to robust West Coast startup scenes in Seattle and San Francisco, Portland’s has suffered from lack of capital and aversion to risk. Relatively few venture capital funds operate here, and individual “angel” investors are understandably cautious about pouring their savings into unproven enterprises. Fewer risks mean fewer rewards, fewer millionaires pouring their newfound wealth back into the economy by launching new enterprises or supporting fellow entrepreneurs.

The problem is long-standing and well known. What to do about it?

One idea espoused by Friedman and Grimes of NedSpace involves setting up an aggressive new seed fund supported by the City of Portland to finance multiple early- stage businesses quickly and systematically. Another idea, articulated by Khanna, involves building local startups into acquisition targets and setting ambitious goals for dramatic payouts. Yet another idea, embraced by Friess and the Starve Ups crew, involves collaboration between the founders of local technology businesses and an almost Masonic dedication to a cycle of creating businesses, growing them, selling them for maximum reward, investing those rewards and creating again.

Taken as a whole, their ideas add up to a compelling master plan for reinvigorating the startup scene — and the economy.



 

Comments   

 
Kent Lewis
0 #1 Build & KeepKent Lewis 2010-08-09 07:56:42
Excellent article, and kudos to the entrepreneurial team featured in this article. As a friend, vendor and partner of many of the entrepreneurs in this article, I can say the cause, and their achievements are legit. Looking forward to seeing more funding and entrepreneurial resources available in Portland in the near future.
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