Why we need another kind of incubation.
You would need to have been living somewhere pretty remote to not have noticed the boom in incubators in the UK and elsewhere, especially in the US. Universities have set them up. Banks have set them up. Corporations have set them up. These days everyone and their dog runs an incubator/co-working space. Even Accountants offer value adding services for startups, Tesco is backing one, the Science Museum is running one. The London Stock Exchange gets a look in with its Elite programme, which has been in the news recently. Its a busy space of interested parties encouraged by the pace of development, the hopes of large profits, and lots of cash.
People in the UK have wondered long and hard about “Why we can’t make it happen like that (the Valley) here” — as if the fact that we don’t makes us inferior or plain unlucky. Close examination of the forces, mindset and resources that have been available to people developing new technologies over there, shows that the Valley ecosystem is a machine for making startups that is both immensely fortunate and also, to a degree, well-managed serendipity. Credit is due to Arm and Autonomy for their successes. Whilst books and articles have been written about why the UK does not have its own Valley, no value is gained by comparing ourselves to them. But things have changed significantly in the past 3 years in terms of what kind of support is available for startups in the UK, EU and the US.
In 1980, there were only a dozen business incubators in the U.S., according to the National Business Incubator Association.
As of October 2012, there were over 1,250 incubators in the United States, up from only 12 in 1980. NBIA estimates that there are about 7,000 business incubators worldwide.
More recently we have seen a rapid burst of incubator growth outside of Silicon Valley, spread across the US and the EU, in major cities : New York, London, Berlin.
Following from our initial review of incubation in the UK, 18 months ago we performed a follow-up review of this splurge of incubators and accelerators in the US. Now we see a variety of terminology, and different offerings emerging. A diversity of incubator types has increased with more specialised forms. We are going to attempt to explain some of this diversification, and why we think the world needs yet another one.
What about the UK?
On returning to London in 2013, we wondered if the UK startup scene was well-enough served already with incubation and acceleration programmes. There are approximately 300 business incubators in the UK according to these guys. Naturally, the numbers change every day, and every day sees new kinds of incubators. Every city wants to be the space where this happens, and indeed to be the new Valley (particularly Cambridge). Now, more and more organisations have got the bug of growing some high value entrepreneurial talent locally. This is matched by an abundance of startup incubators (more co-working space plus a bit of cash) and accelerators (3-month pressured sprints of activity coached by experienced mentors and a bunch of cash) from St. John’s innovation centre in Cambridge to Y Combinator in Palo Alto, from Tech Cube in Edinburgh to Hub Westminster to Seedcamp investment and mentoring.
Places where entrepreneurs flourish get re-branded as Silicon Fens, or Roundabouts but the nearest we get to actually creating a viable and active new local ecology is in Boulder, Colorado. It has a wonderful local swarm of entrepreneurs and VC’s operating successfully outside of Silicon Valley. It is an inspiration to other cities who may be trying to create their own resilient network of businesses, or simply attempt to recover from recent financial peril. It’s a modest phenomenon, but a successful one. It includes local component suppliers and manufacturers Sparkfun right next to Techstars in the city. Their poster boy is Brad Feld and his popular lean-startup approach — all in proximity to where Sparkfun will make your custom microcontroller boards.
There has also been an explosion in new collaboration formats — for gathering together and thinking about how we work; or to have an intense session around an idea or theme; or to make and explore things — hackdays, hackathons, meetups, bootcamps, social innovation camps, service design jams. (What happened to unconferences, foocamps, pecha kutchas and bar camps?).
The same has happened with the support structures that exist around developing and commercialising new business ideas. Way way back in 2004 we did a UK study of what was back then being labelled as “incubators”. These ranged in their offers from, on the one end of the spectrum, a cheap workspace, through to structured programmes and a mentored service offer in support of starting up. The term incubator was very stretchy, and managed to make all kinds of things appear startup friendly. Others harnessed local regional money, to create an interface for larger industries that could not work directly with smaller companies, but could buy and absorb them. There were many reasons for these different models existing, even if they did not share the same ethos or purpose. We repeated this exercise in the US last year, comparing models and costs. Its all good stuff. The term incubation continues to vary widely in its meaning: some incubate the person, some the team, others the idea. Here are some patterns.
The Academic sector
Since the early 2000's UK Universities have worked to unleash the value of their IP through what they call tech transfer; which is actually more about them making cash than it is about supporting students to make enterprises with their work. In the UK the institutions themselves often own the IP that gets created by students, so it is seen as a potential revenue-generating nest egg for universities to commercialise. Well, that’s the theory. The practice is a little different. In the US universities don’t necessarily own the IP, and as a result work to support students is far more developed, as not all institutions make a claim on the IP developed through students work.
Academics and universities have been talking for some time about tech transfer and doing their version of incubation combined with technology transfer so they may benefit from the brains and the knowledge created in their spaces. Cranfield. Stanford University and NYU Stern have done this for some time, often these are more in the form of cash competitions for ideas, plus some space. Imperial Innovations, Oxford University and Essex University have also offered some incubation for some time now. One of the oldest incubators is St. Johns in Cambridge, based on the Science Park.
The best in this space with a focused design direction is undoubtedly Pratt Design Incubator in New York. This sustainable design and social innovation incubator has been run for some 11 years now by Debra Johnson. Design London is the joint offer between the RCA and Imperial College. Central St. Martins in London has successfully collaborated through its design incubator with Method, in an academic-commercial collaboration: Method DesignLab. The Pervasive Media Studio has been running in Bristol for 7 years, and operates as a successful incubator of ideas and creative technology with new collaborations between academics, designers & makers, writers, dramatists, & engineers.
In-house incubators or innovation labs allow corporations to explore new ideas or technologies, or simply retain talent that might go off and start their own companies. It gives their staff space to explore their ideas or work on new areas they are interested in, and the company benefits from people bringing new thinking into the company and sharing it to inspire action. Ogilvy have a lab, to “Educate, Inspire and Change” their office. The notion of a lab as a space to do things that you can’t in ordinary working life is a common one. Some aim to develop new areas of work or knowledge like Telefonica; or new products and technology applications, the aim of Citrix’s Startup Lab.
In London a boom occurred around space and services for startups, attracting Google Campus who brought a space to co-locate others such as the Techhub accelerator and their co-working space offer Central Working. This has built upon the opportunities created by co-working spaces like The Trampery who bring their brand of extended co-working to sites across London, a recent collaboration is with the multi-arts venue, the Barbican with their Fish Island Labs.
The social sector in the UK has kicked up a storm in recent years. Spaces for social innovation work, funds and incubators have grown also, fuelled by the 2008 financial crisis and the need to do more with less, and endorsed by the Big Society rhetoric.
In their partnership with UnLtd, WAYRA, Telefonica’s global tech start-up acceleration programme, is 50% funded by the UK Government, aimed at start-ups that make a positive social impact. The World Bank has an ideas incubator. Grameen Creative Labs incubate ideas in locations around the world. In New Orleans Propeller offers social innovation incubation and acceleration. Smaller more flexible and more localised services for social startups like Nightriders in Glasgow or Fieldwork by Civic Foundry in Birmingham are bringing a really refreshing new approach to small-scale social entrepreneurs.
The Public sector
Public sector spaces for incubating new ideas have been patchy in the past, with initiatives such as the now defunct NHS Innovation Lab. In contrast, the regional BBC Innovation Labs were somewhat successful at external relationship development. Less a space for startups and more a format for connecting small-companies-with-ideas to a big institution with a need for innovative thinking, but which found it hard to pilot internally. It’s three year life was fruitful in many ways.
NESTA have been engaged in this space for a long time. As a supporter of innovative work, they have created multiple vehicles to do this, such as the Dreamtime Fellowship, or the Pioneers initiative, sponsoring individuals through other programmes, and now directly funding specific themes. Start up Britain by the Centre for Entrepreneurs did the country-wide campaign tour to get people excited about being an entrepreneur. If you are unfamiliar with this space it is still confusing; and we think there are many ‘hidden’ entrepreneurs out there.
Lets speed things up a little
Now, incubators are being superceded by the development of accelerators — organisations that put the company and the idea through a high-pressured space and time to get them to investor-readiness and product-honed perfection. It is a process that works well for high-growth high-tech startups, and a million apps have been launched with this approach. Startups compete to enter and get a whole host of benefits in return. There is a core set of services that are common to most: focused time to work on the idea; experienced advisors around; pressure; talent; ideas; cash; networks. The reality can be different. A great review of what accelerators do and don’t actually do is here.
For those who cannot either get in to an acceleration or incubation programme or commit to one, there are classes to start people on their way in fairly new ventures such as General Assembly.
Each programme has its own expectations of return on investment, and a range of forms that this can take. The aim is often getting the startup to the next round of funding, and scaling-up. However, research shows that the things that startup companies seek out in becoming part of these accelerators: (well, apart from the money) for example, mentorship and advice, are not always what they get.
And now with added hardware
The recent boom has been almost exclusively in the world of software and app development. As recently as 12 months ago there was little interest in hardware startups. However, as interest broadens as to where the next big thing will come from, new hardware incubators and acceleration programmes have been established. Two examples of incubators focused on investing in the hardware space include the Chinese HAXLR8R and Highway 1.
So, who’s missing from this picture?
The common assumption amongst tech startup communities is that, if you work with the ‘best’ brains, you’ll get the best startups. We are unconvinced about this. We want to see not just the young highly-educated usual suspects being encouraged, but also others — the people who might actually perceive and understand a different market dynamic than the Valley template allows. We want to see a rich landscape of interconnected micro-businesses, run by a diverse set of people, who dream of making a living more than a killing.
However, there are currently a lot of bright people out there making the kinds of businesses that create narrow solutions which fit themselves, but with no broader market appeal. Gawker blew the lid on this dominance of an entrepreneurial ‘type’: “people who do not fit into the archetype of the precocious programmer are routinely dismissed as unworthy” Startups are only for geeks? I don’t think so. Engineers have had enough of the action, and we want to create some space for the designers and makers (and others) who are the not the usual suspects, like, oh, mums: Mumpreneurs. Like, you know, ordinary people.
As a result of ‘ninja-think’, much of the output from west-coast accelerators, and increasingly elsewhere, are software apps designed only for the people who create them, and this is increasingly becoming a bubble of self-regard and self-interest. Within these programmes, there is more than just a hint of a lack of women and people of colour in the cohorts; and those who do attend find themselves experiencing odd and/or discouraging treatment that alienates them.
And also with added designers?
With the growth of recognition of the importance of design as an innovative approach, many designers have become founders themselves. We think this is a very positive development— Nest, Flickr, Plumen, Makie and Sugru are all examples of designers who have gone on to found their own companies.
One of the reasons its easier for them to do so is the fact that the tools are now here — for making, prototyping, distributing. This makes being a designer-founder so much more than a vague possibility. It makes starting up an idea, prototyping, and getting customers all so much easier. But in our design schools and universities we don’t yet encourage young designers to go out into the world and create powerful companies that change the world. We send them out to help others do so. But there is no conflict in being a designer and an entrepreneur.
We don’t yet give them the kinds of entrepreneurial skills they might need in order to take their idea and turn it into a business. But we could. And there could be two impacts of doing so:
- new businesses, with the potential to grow
- new entrepreneurs, with the confidence to develop new ventures, and do so again.
We’re not alone in our thinking. A group of universities, Google and Hyper Island in NYC have gathered together to set up one for students in the city called 30 Weeks. Method and Pratt Design Incubators are making things work.
The Designer Fund is the first of its kind fund set up in the West Coast that is directly aimed at designers with business ideas, and also extends that by setting up designers with startups. Meeting them, we understood that there is a whole world of new opportunities out there for designers, creatives and makers that are not yet connected up. Startups are no longer only for tech heads or geeks, and designers have started to get in on this game, rather than just be designing for someone else.
There is much to be gained from a blooming garden of new startups aimed at multiple and intersecting markets, but who mutually support each other. Governments are at last starting to acknowledge and measure the contribution that creative businesses make. “Official statistics published today reveal that the UK’s creative industries are now worth £71.4 billion per year to the UK economy” the DCMS report.
But these creatives are not usually encouraged to do their own thing directly. To both make their work and make it make money for them. Designers and makers needs are different, because they (are trained to) think differently. The core skills they have and the approaches they use are perfectly tuned for starting up. They can also think like entrepreneurs, given the chance and the opportunity:
“the design community is saturated with great commercial minds that have never been put into roles with deep commercial responsibility” ThinkTiv
At Plot we have always had to work behind non-dislosure agreements, some lasting for many years, which limits our ability to share what we have done and, as a result, what we can do with others. It has been like working in the backroom. We want to be able to give our experience and knowledge an airing in public. We know much about the creation of and value of strategic design for early-stage startups (our Design Council work), and the role that plays in helping entrepreneurs to manage the tension between thinking big and thinking in detail.
Our ambitions are also big — we will get our own money too, to give our startups the chance to leap into the future.
We’ll deliver what we do in all kinds of formats, and go to where they are, not a building that we need to keep full. We will help them make the kinds of businesses that they can manage, that makes the kind of changes they want to make in the world, and that makes profits in the process. We want to connect them with the best quality advice we have or that we can connect with. If we can help them find the right incubator for their needs, we will be doing the right thing. Connecting is our role too.
So we thought about developing a futures-venturing arm, where we can engage our passion for working with people with new ideas, using the curriculum we have developed over years of working with all kinds and sizes of organisations; one where we are not held back by non-disclosure, or any other need to keep silent about for years whilst the strategy we worked on gets rolled out. We can work live, and now we will work in public.
We have many challenges both now and in the future. The first step is in establishing a path to making those changes. We will startup a new way of bringing design entrepreneurs into the world. We will bring the best available help to them, and give them tools and processes to help them design whole new markets, harness talent and resources to make that happen.
It feels urgent; like we need to get on with this. We can’t wait for organisations that, rather than open up what they know, hold on to knowledge. Or wait for corporations who are too conservative to bring the things we really need to market, and instead bury them. We will make new initiatives that encourage the kinds of businesses we will need in the future.
Hidden design entrepreneurs are out there with new ideas about services and products that need to get out into the world to replace the things that no longer serve us well. Products that reduce impact, services that create pleasure, or security, or improve on the quality of connectivity between us. We’ll connect them with the kinds of angels and business investors who equally have tired of financing simple high-tech growth, and are now looking for something a little more meaningful.
We have a nomadic incubation service, Upstarter, that comes in the form of a plug-in to other spaces where the hidden and recent entrepreneurs hang out, and where they might just get that idea off the ground. We have a sector agnostic approach to our work — combining commercial and also social and not for profit startups to work together. Our companies do not need to be high-tech high-growth; but high-imagination high-impact.
In the industry there is a phrase “eat your own dog food’ which graphically illustrates the point that if you are asking others to do something, you should be doing it too. So that’s what we are doing now. Prototyping the incubator.
Five pilots are in the bag, from London, Bristol and Barcelona. We used these to test out our ideas, and to see if there is a place for them. These first pilots focused on designers, creatives and new digital makers (although we didn’t say no to the foodies and the artists that came through the door). New components are running in new places, such as Economy of Hours, [space] and Fish Island Labs, with more in the pipeline.
We think incubation is a subversive act of reminding people of their innate abilities to create their own living.