Our Housing and Community Development Commissioner asked that I make a quick presentation about startup spaces; here are my notes. I'd love to hear thoughts.
What Are Startup Spaces?
Physical places where otherwise unconnected people gather to work out their ideas, get work done, and connect with others.
Are there different kinds of startup spaces?
Yes, we can differentiate at least three:
What is a makerspace?
Makerspaces emphasize hands-on design and fabrication through the use of workspaces and shared equipment. Makerspaces are ideal for taking ideas through the prototyping process, even serving as a hub for small-scale manufacturing runs. They can be inclusive of many industries including the arts and crafts. They are often typified by a strong do-it-yourself ethos and a collective aptitude in electronics and engineering.
What is a coworking space?
Coworking spaces are open work environments where freelancers, telecommuters, entrepreneurs and others in the independent workforce work together. Coworking spaces can be highly fluid, with startups “graduating” through expansion and freelancers coming and going on a month-to-month basis. Coworking spaces tend to be inclusive of many sectors, emphasizing the ability of members to carry out their principal work using a laptop.
What is an accelerator?
An accelerator is a curated workplace environment where many, often tech-related startups are seeded by low overhead, investment capital, close mentorship and a fixed timeframe in which to grow their enterprise. The word “curated” is used to describe the often competitive entry requirements. Startups typically “exit” an accelerator with at least three things: a minimum viable product, basic business infrastructure, and a well-defined go to market strategy.
All of these spaces seek to nourish social aspects of work while fostering the success of independent endeavors.
So what's the big deal?
Each of these archetypes of a shared work environment offers a solution to the problems of the startup economy: diffusion, access to talent, reduced overhead, concentration of resources, access to expertise, marketing, etc. One of the most important aspects of startup spaces is that they lower the risk associated with failure, including costly capital investments, fostering the kind of “churn” necessary for innovation in the marketplace.
What do startup spaces look like in Vermont?
The first accelerator, VCET (vermonttechnologies.com) was founded in Burlington in 2005. The first coworking space in Vermont, Office Squared (http://officesquaredvt.com) was established in Burlington in 2009. Today, we know that:
There are at least 6 maker spaces, in Burlington, White River Junction, and
There are at least 9 coworking spaces, in Burlington, White River Junction, Middlebury, and Montpelier
There are at least 3 accelerators in Vermont and 1 in Hanover, NH
Where do startup spaces work best?
Startup spaces have different needs, and are really driven by the culture and the opportunities identified by their founders. They tend to pop up where people want to gather anyway – for example, healthy downtowns – and where there is a sufficient energy and momentum behind new ideas – for example around colleges and universities. The most successful tend to be powered by institutions with strong research centers. Finally, startups spaces tend to work where there is enough slack in the local real estate market to make sites affordable.
So how can state government help?
State government can play a few important roles, but they might not be what you expect. Here are three ways state government can help:
Carry the message: champion and promote these spaces to the right audiences. Encourage entrepreneurs to seek them out and experience them directly. Serve as a marketing platform to get the word out; this also goes a long way to legitimize the model and the movement.
Foster density: through efforts like the Downtown Program, fiber policy, tax credits, and commuting programs help drive development in areas where it becomes easier for startups to concentrate and feed off of one another – through ideas, talent and networks.
Network: help connect these spaces to markets of ideas, talent and capital by fostering activities such as angel and VC tours, innovation and business plan competitions, and TED style celebrations of audacious people, ideas and companies.
Everything sounds groovy. What should I be worried about?
There are a few ways the state can overshoot its role in supporting startup spaces; as with everything, the right touch is key. Here are three cautionary rules:
If your first interaction with someone is, “I need a grant,” be suspicious. Chances are it’s a non-profit or local government entity that has gotten religion and wants to create a startup space. These spaces need to led by entrepreneurs solving their own problem.
Resist the “build it and they will come” mindset. Chances are, if the initiative is being led by an entrepreneur or group of entrepreneurs, they should be able to demonstrate with hard numbers that there is a real market opportunity for the startup space they propose. Ensure that you have good evidence of critical mass.
Culture is queen, or king. Every local space is going to be solved in a unique way; resist the urge to formulate cookie cutter responses to the opportunity to support startup spaces. Listen to their needs and find ways to bring state resources to bear vs creating state resources that you think startup spaces should use.