(Bring up talking ambi)
It’s Friday, and it’s 4:30 at the Tech Brewery in Ann Arbor - which means it’s actually what they call Beer Thirty. Once a week the self-described tech geeks who are part of this informal business community gather for drinks. Dug Song is its founder.
We don’t call ourselves an incubator - if anything we call ourselves a startup coop.
Song has his own startup - Duo Security. He began the TechBrewery after being frustrated by traditional business incubators. He says they provide little more than cheap rent for lots of startups - instead of what it takes to get a company up and running.
A lot of folks get to a point where they don’t want to be in a hoteling kind of environment, which is a lot of what these incubators tend to be, they’re a little bit more isolated. I think, to be honest, it’s more fun to be here.
(beer opening sound ambi)
The lack of a hotel environment drew Victor Volkman to the Tech Brewery. He had been involved in other incubators where he says his business ideas went nowhere.
You have a biotech company next to a software company next to a something of completely different origin and we really didn’t talk to each other (laughs)
The biggest cost for startups is office space. That’s why most incubators provide free or reduced rent. But it’s not just about office space. Having the same type of companies together helps everyone grow.
Volkman left the traditional incubator environment because it didn’t work for him. That turns out to be a common sentiment.
The University of New Hampshire’s Kelly Kilcrease studied incubators across the country. Out of the almost 500 enterpreneurs he surveyed, Kilcrease found
Their opinion of incubators is lukewarm, at best.
Based on Kilcrease’s research, the happiest – and most successful clients - came from a specific type of incubator.
Those incubators that stress a certain type of clientele, delivering high quality services and those incubators who have professional managers are more apt to be successful than those that do not.
Kilcrease thinks an incubator’s true measure of success is its graduation rate. Those are the companies that actually make it on their own - apart from the incubator.
Many incubators - like TechTown in Detroit - don’t publish graduation rates. The Incubator in Evanston, Illinois is one of the oldest in the Midwest – it celebrates its 25th anniversary this year. They’ve helped more than 350 companies and only graduated 23.
Jim Cossler is the CEO of the Youngstown Business Incubator. They started in 1995 in what Cossler describes as a typical incubator.
You know, here's some cheap office space, here's a photocopier, here's a fax machine, we don't really care what you're doing, but please turn yourself into a globally successful corporation.
That didn’t work. They switched to focusing on just software companies in 2001. Today, the Incubator has four buildings full of with clients - including nine companies that no longer need the incubator’s help – now they pay rent.
Ten years ago this month, Turning Technologies walked into the Youngstown Incubator with its idea – adapt audience response technology to be used in classrooms.
Today, it’s a $50 million company employing 200 people. They’re one of the paying tenants. Mike Broderick is a co-founder.
I think the Youngstown Business Incubator is fairly rare in the level of success they’ve had as compared to other incubators and I believe one of the key reasons they’ve had is their focus.
Broderick said that’s created a level of expertise and a network of clients and other startups that everyone in the incubator has access to.
Broderick told me something that academic research backs up – he thinks the company would have succeeded even without the incubator. But the incubator’s network accelerated his company’s progress. And he thinks that’s the best an incubator can do – accelerate a potential company’s growth.
For Changing Gears, I’m Niala Boodhoo.
This story was informed by the Public Insight Network. Changing Gears is a public media collaboration between Michigan Radio, WBEZ and Ideastream in Cleveland.
