2013: Year of the Innovator

ORIGINAL ARTICLE: Philadelphia Regions Business

Staying in Town

Philadelphia’s task isn’t to foster innovation, but to keep it in town.

The move of First Round Capital into the city “highlights the recent legislative change to our tax code that City Council passed which made Philadelphia attractive for venture funds,” according to councilman David Oh, Chairman of the committee on Global Opportunities and the Creative/Innovative Economy. “This move sends a signal that they recognize the talent in Philadelphia and the fact that as a city we are at or close to a tipping point of becoming the next big tech city.”

It’s also in line with the long term goal of keeping companies and business leaders in the city. For too long, Philadelphia has been a launch pad for startups before they head to greener pastures. Take the example of Warby Parker, the disruptive eyewear retailer created by friends from UPenn’s Wharton School of Business. They immediately moved their company into New York City to raise their first rounds of capital. This fall, they secured close to $40 million in funding and are off to change the world of online retail and how people think about buying eyewear, battling the monopoly and donating a pair of eyeglasses to the needy for every pair sold to a hipster.

Luckily, some companies are starting to stick around. Popular rising companies like The Neat Company, DuckDuckGo, and Monetate are staying true to their roots, turning down New York for the community they’ve found in Philadelphia.

That’s part of what the Mayor’s StartUP PHL project is all about. The highly publicized Seed Fund is a proposal for a public/private venture fund to make seed-stage investments in Philadelphia-based tech startups. The Philadelphia Industrial Development Corporation (PIDC) will seed the fund with $3 million to be matched and managed by a private investment firm that will make investments on behalf of the fund. There is a counterpart Call for Ideas that will fund up to a total of $500,000 to entrepreneurs with smart ideas to help the city grow.

Councilman Oh is happy to finally see a program like this come to fruition. “While our entrepreneurial community has been growing organically, having this type of support and commitment from the City shows how much we value this community and see the potential for these companies to grow and create jobs in Philadelphia.”

Of course, it’s not all about the money. Alex Hillman is the co-founder of Indy Hall, the largest co-working community down on N3RD Street, a hub of Northern Liberties where the like-minded, digital gurus, and entrepreneurs of Philly have claimed as their camp. A natural and outspoken leader, Mr. Hillman was originally put off by the program and what he saw as it’s narrow focus on just getting cash to innovators. He wrote on his blog, dangerouslyawesome.com, that he was “underwhelmed” when he first heard of the program. When he declined to be involved, he says that Bob Moul, president of Philly StartUp Leaders and former CEO of Dell Boomi,  challenged him to sit down and talk about why. And that was when Mr. Hillman’s mind was blown.

Mr. Hillman says that he and Mr. Moul are like “yin and yang.”  Mr. Moul is “hardwired for growth.” Mr. Hillman and his Indy Hall peers are hardwired to focus on growing deep, creating a tech community in Philadelphia that is as focused on growing up as it is about remaining plugged into the city, its roots, and making it better.

“What we realized is that it’s not an either- or [situation]. They are symbiotic only if they listen to each other and share a common set of goals and beliefs about why you start a company and what you do with it,” says Mr. Hillman.

And so Mr. Hillman was convinced. He has come to see StartUP PHL as a “good start to a conversation that’s barely the first page in a long, new book.” He says he was “pleasantly surprised” to learn that the institutions were more interested in getting feedback from the existing tech community about how to move forward with the StartUP PHL project than just asking them to come along for the ride.

“I’m glad the city is standing beside [the Philly tech community] in support and I think there are a multitude of ways to do that that are more valuable than money,” he posits. Although, “of course,” he adds, “money makes things go faster.”

A Community, Not a Scene

Mr. Hillman used to be one of those people who almost left the city. After leaving Drexel University to work as a freelance developer in 2006, he had trouble settling into the city. He looked around for others like him and couldn’t find them on the streets, so he found them online.

From one tech meet-up to another, he eventually landed in San Francisco, an obvious choice. There, he found a community of people doing things the way he wanted to do them. There was a longstanding tech community. There was capital. There was cooperation between the bureaucrats and the innovators. He was introduced to co-working, a very particular consequence of the digital economy, places where people can pay a membership fee for a desk to write code or their business plan, and network both professionally and personally. Mr. Hillman was inspired.

Unforeseen circumstances caused him to eventually not settle down in Silicon Valley. Luckily, Mr. Hillman came back to Philadelphia and worked to find other people in the city. It was hard, but he found them. And in 2007, they founded Indy Hall together, the fastest growing co-working space in Philadelphia, nestled on N3Rd Street.

The Indy Hall story is important to the newer story about Philadelphia becoming more tech and entrepreneur friendly in the headlines. Those headlines tend to focus on a tech “scene,” whereas Mr. Hillman and his peers like to emphasize that it’s more a tech “community.” This community is just as focused on helping you figure out how to get a first round of seed funding as it is civic minded and making the city accessible to newcomers looking to get down to work.

The community they have systematically built has grown “explosively,” says Mr. Hillman, and fostered other core groups in the tech scene. It’s that kind of community that can convince entrepreneurs to stay in the city.

“There is a bubble-like quality to the talk about Philadelphia [right now],” Mr. Hillman said. “We want to make sure that when people arrive, let’s make sure the story they hear is about the community, about making Philadelphia better. And then we all win over the gold rush mentality.”

“You need ‘big’ companies, for talent and capital, but it can’t just be two dimensional. We have to make sure we’re all dumping our resources into the same pool to make Philly better.”

That sort of mentality is at the heart of disruptive technologies and entrepreneurship. It’s also at the heart of SEED Philly, another collaborative for local entrepreneurs. SEED Philly, a non-profit,  provides the “ecosystem” and resources new companies need to get started. Like everything tech-minded, it’s all about collaboration, there too. Education, vetted community directory, and shared workspace to help get start-ups off the ground, but keep them in Philadelphia.

Local entrepreneur AJ Bubb has been spending his time helping with tech support for startups at SEED Philly when he’s not consulting through his own company.“If there’s one thing Philadelphia is good at it’s cultivating hard core fans,” Mr. Bubb jokes. “There’s less population per capita here. But it’s about quality, not quantity. There are angel investors here, venture capitalists, here, you just have to work harder to find them. You have to be better at what you do.”

If You Can Make it Here, You Can Make it Anywhere

Philadelphia’s universities have started to shift their focus to help young entrepreneurs be better at what they do. While SEED Philly and StartUP PHL focus on getting a start-up off the ground, more business schools are helping students focus on how to think outside the box and foster innovation.

Temple University’s Fox Business School’s Innovation and Entrepreneurship Institute (IEI) is partnered with the university’s Small Business Development Center to support entrepreneurship at a multi-disciplinary level across the university.

The IEI’s Innovation Center provides a space on campus where students can tap into a large network of business advisors, mentors and faculty at Temple’s Fox Business School to provide consulting for students with a business plan in mind.

Aside from providing a space to be inspired, they also host competitions like the Be Your Own Boss Bowl, where undergraduates enter their “vision” to be matched with a mentor to work on a full blown business plan. The grand prize is $115,000 in cash, Microsoft products and professional services. More than just a way to win some money, the purpose of the competition is to “encourage the launch and sustainability of new small businesses and scalable entrepreneurial ventures by the Temple community.”

While the IEI and its contests are backed by Fox Business School, past grand prizes for the most well-thought out, strategic business plans have been awarded to  College of Engineering, College of Liberal Arts, School of Tourism and Hospitality Management, Tyler School of Art,  and Beasley School of Law students.

They also work with the Temple Accelerator Program (TAP), “an uber business incubator designed to take early-stage Temple affiliated businesses and infuse them with additional manpower on strategic, well defined projects so it can achieve progress to the next level of sustainable growth.”

Each year, two or three businesses are selected and staffed with IEI students and members of Fox’s Entrepreneurial Student Association. The students work to bring the business to fruition – outside of the classroom. They receive counseling on everything from creating a management team and business model to branding and accounting strategies.

Business school just isn’t what it used to be. West Chester University, too, works with savvy students at its Cottrell Entrepreneurial Leadership Center Apart from advising students and providing a space for their ideas, the center’s most successful program, according to Monica Zimmerman, the Director , is the intern program in which they place students in small or start-up companies.

“The university funds interns to work in small and startup companies. Without this funding such companies might not be able to host an intern. Companies miss out on young talent and students miss opportunities to experience working in a small or startup company.” she says.

This is key to most students. While some have their hearts set on being the next Mark Zuckerberg while in school, the majority want the experience of working at small and new companies before launching their own business plan, seeing all the work that goes into creating a company means a better plan later on.

UPenn’s Wharton Business School students have been focusing on innovation as well. The Wharton Innovation Group was founded in 2010 to “take advantage of the wealth of emerging opportunities for innovation in education and scholarship created in part by globalization and technological change.”

The group “provide[s] early stage small grants to help students turn their idea into a prototype, or take the initial steps in a new venture.  It complements the work of Wharton Entrepreneurship, the Weiss Tech House and other programs providing a range of incubator services,” according to Don Huesman, Managing Director of the Innovation Group.

They also send second year MBA’s to San Francisco for a semester – a new twist on “studying abroad” – where students benefit from the “strong presence in the Bay area of major technology firms, a well-known entrepreneurial culture, firms specializing the finance of innovation, and thousands of Wharton alumni living and working in the Bay area,” he says.

A curriculum focused on innovation is nothing new, but Mr. Huesman admits that there is a different sensibility to the need to teach it now than there was a decade ago.

“There does seem to be something happening at Penn just now.  The exciting robotics work in the engineering school and new Nano-technology center, new educational ventures coming out the Graduate School for Education, the Weiss Tech House, the Y Prize, Wharton’s expanded entrepreneurship programs, this year’s new Coursera open learning initiative in which Penn was a founding partner, and in which Penn leads among our partners in the scale of engagement, reaching a global student body numbering in the millions,” he says.

Councilman David Oh feels the buzz, too. “In Philadelphia it is a somewhat new phenomenon to see our city government working closely with our universities to achieve these results and brand our city a top place for innovation and creativity.”

This just means better collaboration. Continues Mr. Oh, “In my opinion, the role of University City as it relates to City Hall is to provide an environment where very smart and talented people are encouraged to brainstorm and come up with ideas for new things that can impact the world we live in and City Hall is the place where the legislation and policy is developed to support and encourage these people to stay in Philadelphia and build thriving businesses.”

Come Together

Too often, we think of the entrepreneur as a lone genius, off to make his fortunes. But it takes more than that. If there’s something to celebrate in Philadelphia right now, it’s the fact that a multitude of forces are coming together to make entrepreneurship easier- to find the funding, to find a team, to fine tune the idea – all in the same place. And of course, it’s not just about being the next Silicon Valley, but participating in a new global, economic shift.

Says Mr. Huesman, “Let’s face it, San Francisco has that beautiful bay and gorgeous weather – we’re not going to win on that.  What we have is what brought Franklin here – a thriving, diverse, urban community with a passion for the professions.  We’re an hour train ride from the markets in New York and the policy centers in Washington … I think we should acknowledge and deepen our access to the global networks that foster innovation.  It’s not just Silicon Valley – it’s Tel Aviv and Shanghai, Boston, Milan and Stockholm, to mention a few.”

That’s something both City Hall and Indy Hall could agree on.

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AJ Bubb

AJ has over a decade of experience leading and managing technical projects. Focused primarily on the .Net stack, AJ has been part of several start ups, and worked with multi-national companies. In his free time, he is a scuba diving instructor, outdoor enthusiast and idea hacker.

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