The Startup Revolution Series Part 4: The Critical Role of the Startup Ecosystem

— by Max Marmer and Cheyenne Richards

In our previous posts (The Great Transition: Industrial to Information Revolution, The Decline of the Blue Chip and The Rise of the Startup), we’ve argued that we’re in the middle of an epochal societal transition from the Industrial Age to the Information Age, that blue chip companies are becoming less and less able to be the primary drivers of the global economy and that the startups rising in their place are the only creators of net new jobs.

So if our entire global economic future rests on our ability to support the growth of startups, how do we help them thrive? With a flourishing local ecosystem.

Wait... what? Aren’t internet businesses inherently global? Haven't tools like Skype and Basecamp made location meaningless? If successful traditional businesses get started every day around the world, why do startups need the special support of an ecosystem?

If you’re an experienced entrepreneur, the challenges described below may seem all too familiar and we invite you to provide your own thoughts in the comments section. For the rest of the world, still trying to understand the complex and unique drivers that either support or suppress startup growth, we hope this provides some additional perspective on the importance of the ecosystem.

High growth technology startups are very different from other businesses.

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How Much Should You Pay Your Engineers? (Infographic)

by Cheyenne Richards

With the world’s ever-expanding appetite for great engineering talent, hiring is becoming a larger and larger challenge for tech companies. Never has it been more critical to know just how much you should pay that promising candidate. 

If you're a startup -- How do your salaries compete with more traditional IT firms? Where in the world is the cheapest place to source talent? And if you're bootstrapping development, which are the least expensive programming languages to work with? 

If you're an IT firm -- Are freelance or in-house resources more cost effective? What is a benchmark career path for an engineer? 

Whatever your situation, the following insights from the Research October 2014 survey of engineers around the globe, may prove helpful. In addition to data from our own members, for this report we reached across the web for comparison data from oDeskElanceToptalGlassdoorAngelList and Payscale. In the process, we owe a special shout-out to the folks at Elance-oDesk and Toptal, who helped us access and interpret their data. 

The Startup Revolution Series — Part 3: The Rise of the Startup

By Max Marmer, Compass Co-Founder Emeritus and Cheyenne Richards, Compass Writer and Marketer

This is the third installment in the Startup Revolution Series. In the first post, we suggested humanity may be approaching—or have already passed—the tipping point between the Industrial and Information Eras. In the second, we provided data that demonstrates fairly conclusively that Industrial Era-focused blue chip companies have lost significant value over the past 50 years, as defined by return on assets.

So what is rising in their place? This post will focus on the Information Era businesses that are best adapted to this new Darwinian business environment: Startups.

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CrunchBase and Compass (formerly Startup Genome) Partner to Rank Global Startup Ecosystems in 2015

The survey for the 2015 Startup Ecosystem Report kicks off today — in a partnership by CrunchBase and Compass. Participate here.

San Francisco, CA, 4 February 2015—CrunchBase, the world’s most comprehensive dataset of startup activity, and Compass, creator of the most extensive benchmark data for startup performance, announce the kickoff of a collaborative project that is as critical to the global economy as it is ambitious. Since the groundbreaking results of the Kauffman Study, which demonstrated that “Startups that develop organically are almost solely the drivers of job growth,” there has been an increasing demand for information about how to create thriving local ecosystems.

Beginning today, startups around the globe may access the Startup Ecosystem 2015 Survey to provide their data to help measure the health and growth of their ecosystem relative to as many as 40 others. They will also be able to benchmark their individual results with their relevant peers, providing a highly useful perspective that enhances decision-making.

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The Startup Revolution Series — Part 2: The Decline of the Blue Chip

by Max Marmer, Compass Co-Founder Emeritus

This is the second post in the Startup Revolution series. The first may be found here.

In the last post, we suggested humanity may be approaching—or have already passed—the tipping point between the Industrial and Information Eras. Now we will delve deeper into why the old wisdom no longer seems to apply and blue chip companies are far from the reliable investments they used to be.

Let’s start with the good news.

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The Startup Revolution Series -- Part 1: The Great Transition: Industrial to Information Revolution

-- By Bjoern Lasse Herrmann and Max Marmer

For the past decade or more, Max and I have either heard or experienced endless stories of startup failures. We took as a given that more than 90% of startups go bust instead of bang, but we were also inspired by the amazing success stories — from Salesforce to Google to Kickstarter — that built new industries, created tens of thousands of jobs and transformed society.

And so we asked ourselves one day in the backyard of a house in Atherton: What if that failure rate could be reduced by even a small percent? How much could society benefit if 1% fewer startups failed? 2%? We became bolder. If the code could be cracked on what factors led to more favorable outcomes, could we actually help maximize success rates??

The following series of posts is a detailed look at why, at this unique moment in human history, we firmly believe that nurturing startups is critical to the well-being of our world.

So we reached out to entrepreneurs across the globe, and over the past several years have been overwhelmed by the tens of thousands of people who have shared their data in service to the entire startup community. The findings from our communal efforts have been published in reports, articles and blogs, have been incorporated into the curriculums of hundreds of universities and have been referenced by the Obama Administration, Chancellor Merkel and leaders in dozens of countries.

Then we built benchmarking dashboards to help individual companies, partners and ecosystems make more informed choices, given their unique circumstances and peer groups. We continue to refine Compass Benchmark, Compass Monitor and Compass Ecosystem, and have many releases in process.

Does this mean we’ve achieved our mission? Hardly. For all we’ve achieved as a community, there are always more questions to be asked, more data to be analyzed, more algorithms to be refined. So we continue to chip away at the code of startup success, with a special focus on delivering an updated version of The Startup Ecosystem Report in spring of 2015.

In the meantime, here is a look at the series of posts that will lead up to its release.

As we begin the new year, we wish you the greatest possible success with all your ventures.

— Bjoern Lasse Herrmann, CEO of Compass

The Startup Revolution Series Overview

Part 1: The Great Transition: Industrial to Information Revolution

Part 2: The Decline of the Blue Chip

Part 3: The Rise of the Startup

Part 4: The Critical Role of the Startup Ecosystem

Part 5: Startup Ecosystem Report 2015 (coming soon)

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How to drive dynamic decision-making and action: From fixed to relative performance contracts (Part 1)

by Niels Pflaeging, Founder, BetaCodex Network

Participate in Compass’ Q2-Q3 2014 financial benchmarking study and inform your financial planning and resource allocation decisions.

Join the free Proformative webinarUsing Real-Time Financial Benchmarks to Drive Dynamic Planning, and Real-time Decision-Making” on 11/25/2014 at 11 am PST. 

For decades, organizations of all sizes and from all kinds of industries have curated and perfected management practices such as fixed target setting, target negotiation, planning, budgeting, forecasting, plan-actual variance reporting, incentives-setting, and individual performance appraisal. Now, things are changing: Those practices, usually combined under brands such as Management by Objectives, Merit Pay, or Pay-for-Performance have recently come under fire. If markets and work are becoming ever more dynamic, how can static, annual rituals remain effective and appropriate to improve or even control performance?

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Compass Raises Fresh Funding and Launches Compass Monitor!

We have two exciting news to share!

1. We raised more than 2 Million in a second round of funding from first institutional Investors including NEA, Profounders and Crosslink and strategic investors including Tom Glocer (ex-CEO of Thomson Reuters), Banca Intesa and Oliver Rothschild joining existing Compass investors, including Steve Blank, Allen Morgan, Roger Krakoff, Rhodium, Erik Jansen and Amir Banifatemi (see full list here: to fund our mission of minimizing business failure by providing automated, crowdsourced benchmarks and industry insights. This totals our investment to date to ~3 Million US Dollars.

See press coverage here:

2. We just launched Compass Monitor that allows companies to securely share selected data with investors, advisors or consultants. Compass Monitor pulls data directly from various data repositories (Google Analytics, Stripe, Quickbooks, etc.) to automate the continuous delivery of selected data. It saves hours of collecting sharing and reviewing data every week for the investor and entrepreneur.

One of our first beta tester Marcin Szelag from Innovation Nest said: "Compass Monitor solves a major problem for investors. On top of that it is easy to use and looks good."

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The Compass (formerly Startup Genome) Tech Startup Salary Survey 2014

Hiring is one of the biggest challenges a company faces. In a recent article by David Smooke, 50 entrepreneurs shared their biggest hiring challenges, most of them expressing concerns around salary, equity and benefits for employees. Figuring out what to pay an early startup employee is difficult. This is a problem that we, at Compass, have faced in our efforts to expand our small team, and is often echoed by most of our users. The prevailing popularity of this challenge made us dig deeper into the issue and we are determined to find an answer by conducting a survey for employee salary and equity in tech startups.

Employers: Click here to take the survey

Tech employees: Click here to take the survey

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