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Wednesday, April 14, 2010
How I See It
Incubators – Not just office space, but mentorship
By Richard Banfield, Special to Mass High Tech
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With the announcement that both the Dogpatch Labs and the Cambridge Innovation Center are expanding, the topic of incubation, or shared office space, pokes up its head again.
Incubating innovative startups successfully has been one of the Holy Grails of entrepreneurship since the Medicis started funding artists and trade leaders in Italy in 1500s. It appears that incubating creativity has been more of an art than a science.
The recent attempts in Silicon Valley and here in Boston during the dot-com years were better known for their failures than their successes. Y Combinator and TechStars are the rare examples of sustained successes. It might be too early to tell just how successful the TechStars model is, but it appears to have the right ingredients.
There has been some debate as to the logic of sharing space as the basis for creating an incubator model. Earlier incubation models insisted on sharing physical space so they could amortize the costs of rent, printing, etc. Jon Frisch, of T3 Advisors, a tech-focused real estate brokerage and consulting firm in the Boston area, says, “the space needs to set the culture of collaboration or else it’s no better than working in a library or a Starbucks.”
Sharing in the cost of rent, connectivity, utilities, some legal fees and sundries is interesting, but that’s not the real benefit to being together with other startups. Frisch reminds us that an incubator or shared office needs to have a steady flow of mentorship and events that bring the startups in contact with successful entrepreneurs and investors. He says a traditional cubicle-farm arrangement won’t work for a incubator. It has to be “open and slightly funky to breed the right culture.” That speed of interaction and decision making is critical to maintaining momentum.
One question remains: If there is such a need among startups for incubation space, why haven’t more properties and investment groups taken advantage of that? On the surface there is the need for affordable short-term space and the need for startup support such as mentorship and access to investors. Having discussed this with several entrepreneurs, those opportunities are really the same thing. In the eyes of the startup, office space has no value without mentorship.
If all a startup needs is space then Boston has plenty of that. Chad O’Connor, adjunct professor at Emerson College, asks why states and local government don’t just rent out unfilled space cheap — “on 180-day leases.” O’Connor believes that an executive order from the governor could make that happen.
If the entrepreneurs are right, then success for startups is about more than space.
“Listening and engaging with others on their projects keeps me from burnout after the honeymoon phase,” says Chris Merrill, CEO of Web-o-Matic. “Watching others’ success motivates me to push the company along. I’m surprised that there are not more true incubators in the Boston area.”
The question is whether there is a scientific process to creating successful businesses in an incubation setting. Looking at the Dogpatch and TechStars approaches, there might be. To get an idea out of somebody’s head and in front of prospective customers, you certainly don’t need a lot of office space. But you do need support from people who have done it before. After all, if simple space and money requirements were all startups needed, then the mentoring and support they get from other entrepreneurs would have less value. In a world where server space and crowd-based resources are cheap and easy to get, the experience of others becomes the treasured resource.
Incubators are back, and they are growing. The limitation on how many, and how big they will be, is whether Boston can provide the experienced entrepreneurial support startups need to be successful.
Richard Banfield is a regular contributor to Mass High Tech and CEO of Fresh Tilled Soil.
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