“It’s almost embarrassing how little I knew as a founder,” admits Josh Riedy, CEO of Thread, in a recent episode of Category Visionaries. His candid reflection offers a revealing glimpse into the unique challenges of building a tech company far from traditional startup hubs – and the crucial lesson he learned about the true value of networks.
Why Second-Time Founders Have an Edge
Josh’s reflection begins with an observation about investor preferences: “I better appreciate today than ever before why investors like second time founders.” He references an intriguing insight about founder experience: “One of the best prospects is a second time founder who didn’t succeed the first time.”
The Midwest Funding Desert
The numbers tell a stark story. “Circa 2018, less than 1/2 of 1% of domestic VC came to the Midwest,” Josh reveals. For North Dakota specifically, venture capital was “virtually non existent.” This funding desert shaped Thread’s early trajectory and highlighted the importance of building networks beyond regional boundaries.
The Pandemic’s Double Impact
For Thread, the timing couldn’t have been more challenging. Just as Josh recognized the need to expand his network, the pandemic hit. “Unfortunately, that is about when the pandemic occurred,” he explains. “And so it was really driving a startup forward in a bubble, if you will.”
The Exchange Program for ‘Geographically Disadvantaged’ Founders
Josh coins an interesting phrase when describing Microsoft’s TechSpark program: “I call it the exchange program for geographically disadvantaged founders.” This initiative helped Thread bridge the gap between North Dakota and the Seattle tech ecosystem, showing how corporate programs can help regional startups overcome geographic isolation.
Two Critical Pieces of Advice
1. Network Development is Non-Negotiable
Josh’s primary advice focuses on network building: “For me it would be developing a network faster and more robust.” He emphasizes that while the pandemic complicated this effort, the importance of network building cannot be overstated.
2. Leverage Existing Resources
His second piece of advice is refreshingly practical: “When you were young, make the most and best use out of Y Combinator and Tech Stars and all of the documents they have.” He adds an important caveat: “If you can’t use one of their templates, you’re probably involved in a legal situation or an agreement situation that is too complex for your stage or of development.”
Learning from Others’ Experience
The power of this advice lies in its ability to help founders avoid common pitfalls. Rather than reinventing the wheel, Josh suggests leveraging existing resources and networks to accelerate learning and growth.
Key Takeaways for Founders
- Recognize the Network Gap: Understanding that being outside major tech hubs creates a network deficit is the first step in addressing it.
- Start Network Building Early: Don’t wait for a crisis or funding round to start developing your network.
- Use Existing Resources: Take advantage of resources from Y Combinator, TechStars, and similar organizations, even if you’re not part of their programs.
- Seek Corporate Programs: Look for initiatives like Microsoft’s TechSpark that can help bridge the gap between regional and coastal tech ecosystems.
The Future of Regional Startups
While the challenges of building outside major tech hubs remain significant, programs and resources are emerging to help bridge the gap. Thread’s experience shows that while location can create initial hurdles, they’re not insurmountable – but they do require deliberate strategy and action to overcome.
For founders building companies away from traditional tech centers, Josh’s reflection offers both a warning and a roadmap. The network gap is real, but with intentional effort and the right resources, it can be bridged. The key is recognizing the challenge early and taking decisive action to address it.
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