The Washington Model
In 2004, I co-founded Blue State Digital with Jascha Franklin-Hodge, Joe Rospars and Ben Self. The four of us knew from the start that we’d attract no venture capital. On paper, Blue State was a terrible business for an investor — a professional services firm in politics that caters only to the left. Without some really smart strategy, the company would never go public or get acquired and thus provide no exit for any investor.
We also didn’t want any venture capital. We wanted to maintain control over our business and was a reflection of our values. To start, Only the four of us, gave the company its seed capital — as I recall, a total of about $6,000. I hit the street selling a product we were in the middle of building, and we got the capital we needed in order to grow from paying customers. Now Blue State’s a multi-million dollar agency with multiple offices and a hundred or so employees. Last I checked, they were approaching Inc. 500 territory.
Blue State’s story is a story of success for a particular kind of company that thrives in Washington. I call them Washington Model companies, which is different from the Silicon Valley model or the New York Model. The Washington Model relies on bootstrapping and getting to profitability in a matter of weeks or months. Usually Washington Model businesses start out as professional services firms, and grow into product and service hybrids. They don’t attract a lot of investment dollars, but they do attract good, smart people looking to disrupt the status quo much like we did at Blue State with technology and politics. And while Washington model businesses exist in other parts of the world, they seem to especially thrive here.
Other great examples of Washington Model businesses are iStrategyLabs, JESS3 and EngageDC. They’re firms that are innovative, nimble, and filled with smart people. It’s unlikely that they’ll ever be acquired, but highly likely that they’ll create a lot of wealth for their founders. They’re disruptive for good, too. iStrategyLabs, run by Peter Corbett, has managed to bring contest-model acquisitions to government. JESS3 is making data visualizations like the recent foursquare vote visualization — which, while in its infancy, showed tremendous promise in being the first, stable and sustainable real-time vote reporting tool. EngageDC founders raised millions of dollars for their candidates, and built a platform for conservative candidates to get the most out of their use of the Internet— they’re, in three words, Red State Digital.
What’s most remarkable is that all of the companies took zero investment, and are all highly profitable. The Washington Model business has bootstraps in its DNA. They’re great small businesses that are generating wealth and change. But because they’ll likely never get that big IPO or acquisition the Washington Model businesses fails to attract VCs or angels looking for their traditional windfalls. That’s probably served the founders of the successful Washington Model businesses well — they don’t have the pressure that many traditional model tech ventures have in acquisition or public offering. Washington Model businesses are founder-controlled, nimble, and profitable. And these kinds of businesses exist outside of Washington, DC-- but Washington's unique position as urban center without lots of venture investment has made it so that companies like this tend to flourish. The town is filled with hustlers.
I believe the Washington Model represents a big window of opportunity for growth. For every Peter Corbett or Mindy Finn, there are a dozen entrepreneurs who could be starting businesses and generating wealth and change. They just need a little support, coaching, and access. Moreover, they could be working with each other and learning from one another— creating economies for themselves and their customers. With some support and mentorship from people who have started successful Washington Model businesses, they could be increasing their value. And while they may not going to go public or get acquired, that doesn’t mean they cannot provide substantial wealth generation for their founders.
That’s the value proposition of my next project, Big Window Labs. We help Washington Model entrepreneurs start and succeed by making bootstrapping easier. It’s a different model than the Y-Combinator model — our goal isn’t to fund and incubate companies, it’s to find talented entrepreneurs, build ideas and teams and cofound companies with them. If they need funding, we’ll help them find funding, but we think the best kind of funding is revenue. It’s our job to help companies get to sustained profitability — where they can acquire enough capital to be truly disruptive in the nexus of what makes Washington a great place to live: politics, government, and media
In its first year, it’s our goal to co-found three Washington Model companies. Companies founding with us will be provided desks at our beautiful new office space here in Washington, bandwidth, legal services and Big Window Labs as a minority stake cofounder. The goal is to get you out, and profitable enough to have your own offices in under six months. We’re looking for Washington Model companies— ones that can get to profitability and grow quickly. I’ll be honest— if you think you’ve got a business that can go public, or get acquired by one of the technology giants, Big Window Labs probably isn’t the right place for you. You should consider applying to YCombinator or talking to our friends at O'reilly Alpha Tech Ventures. But if you’re looking to create a smart, small and profitable venture with a bright future (and to retain most of the equity in it) — Big Window Labs may make a big difference for you.
While ideas for startups don’t hurt, what we’re most interested in is working with good people with integrity and the entrepreneurial spirit. You don’t even need a team— we may be able to help you build one. We can work out the ideas together. So— don’t search for a new job, make jobs. Apply to be in Big Window’s first class of co-founders.