I Want My CIC! … The Benefits for Startups to Be Co-Located
[if you’re not old enough to get the reference between this image and the title you can click on the image for a prompter]
This past December I spent a week in Boston to try to get to know some of the local VC’s and entrepreneurs a bit better. One of the meetings I had (organized by my good friend Jeff Yolen) was with New Atlantic Ventures held the at the CIC, aka the Cambridge Innovation Center (no prizes for guessing where it’s located).
As they showed me around the CIC I was instantly envious. I recently wrote a blog post about why I believe that startup teams in close proximity perform better. I believe that first-time entrepreneurs also benefit hugely from working in close proximity to other companies. VCs constantly share cross fund information and are therefore always getting dialed into what is going on in the industry. We know prices of deals, compensation, who’s doing well / poorly, etc. Entrepreneurs need to share more information with each other. I’m surprised how few people talk about valuations, term sheet terms, how much to pay recruiters, etc. A tech lab is a perfect hub for this kind of cross-company fertilization.
I once mentioned this idea to a fellow SoCal VC when I told him I wanted a CIC in LA and he said, “Co-location is dead. We don’t believe in it anymore. These days we all use Skype and collaboration tools. We’re recommending to our companies that they be distributed.”
Uh, I guess he won’t be co-sponsoring a technology lab in LA with me then? I found it shocking that it didn’t seem like a worthy endeavor to him to have a central hub of tech companies on the Westside of LA. I guess I shouldn’t be surprised — I got a similar lukewarm reaction when we started Launchpad LA and that seems to be going pretty well.
I’m 100% certain this would benefit our community and not just the entrepreneurs that work there. VC’s and more experienced entrepreneurs would have a central hub in which to gather. Now I gotta go and build it just to prove him wrong.
The CIC, founded in 1999, is located adjacent to MIT and has more than 100,000 sq ft of space for nearby startups that qualify to be housed there. And you can tell that the founders have thought greatly about creating the right kind of space for startup companies. You can start with as little as one person and sit in a shared space that sort of feels like a coffee house. In this space you don’t have a pre-assigned space but rather book space like a hotel. You will be surrounded by loads of like-minded people all looking for work space at an affordable price and all, presumably, interested in meeting and interacting with other startups.
You can pay a little bit more to have your own dedicated space and you can even rent a “pod” which is sort of like a small office at a more affordable price. In fact, this is the set up Jeff had as he was between gigs. You can also get traditional office space for your team but you still feel like you’re part of a bigger tech zone. It’s sort of like Amazon AWS auto-scaling — you can scale up your office space as your team size grows (and vice versa, but let’s hope not).
But the real benefits of being somewhere like the CIC is this interaction between entrepreneurs. It’s what Silicon Valley / San Fran entrepreneurs get for free. If you live in SoMa all you have to do is walk to the nearest Philz Coffee (which totally rocks, by the way) and you’ll bump into somebody building on top of the Twitter API or integrating with Force.com. Or you can have a debate with your neighbors and hear how their implementing Cassandra or Hadoop. It’s true that being in a lab can also have distractions but I believe this is far outweighed by the knowledge sharing benefits.
These kinds of office space arrangement are often called “technology incubators” or “startup labs” or something similar. These are not to be confused with incubators like YCombinator or IdeaLab which look to invest in your company and take equity positions.
Probably the best known tech center in NorCal is the PlugandPlay Technology Center owned by industry veteran and insider Saeed Amidi. Like most centers PlugnPlay hosts industry events, brings in speakers & venture capitalists and gives companies more visibility than being on their own. By being in a facility like this you have a ready made peer group to ask about things like recruiting, technology, PR, venture capitalists or banks. You also have a steady stream of VC’s passing through looking for the next big thing. It’s far easier to stroll through such a center and see 20 companies than to travel around to them all individually.
The latest technology lab that I came across was dogpatch labs run by Polaris Ventures. Dogpatch was the brainchild of Mike Hirshland, partner at Polaris. If you want to get to know him a little bit better you can check out this interview I did with Mike. Dogpatch has offices in Cambridge, New York and San Francisco where it houses more than 35 companies (about 50 people per location if I remember correctly). I spent a day at Dogpatch San Fran and loved the vibe. We then held the Open Angel Forum there in the evening. It has big wide open spaces for such events. I also had lunch there which was served buffet style with the rest of the office, which apparently costs $5 / day and you just let the office manager know in advance so they can plan numbers.
As I said, I’m seriously bummed that we don’t have something like this on an industrial scale yet in LA. I’ve been to the CoLoft in Santa Monica and it’s certainly a great start. CoLoft has similar features in that it is managed office space with other tech firms and they run regular events in their offices. But I now want something more industrial scale — the next size up. And I’m going to put my brain (and maybe some dollars) into fixing this problem. I don’t think having a few facilities in a city is competitive — hopefully we’ll find a way to make it collaborative.
If anyone has experience, advice or dollars and wants to help please be in touch. Anyone have positive or negative experience in such an incubator? Do tell …
