Last week was a busy one for innovation in Rochester. The last BioAM Founders Series was held Tuesday night. Three Techstars++ companies- LiquidLandscape, Nebulab, and Solenica- and Techstars++ interns spent the week interfacing with the Rochester community. Techstars++, Mayo Clinic, and DMC also brought in Troy Henikoff to speak and impart some wisdom and advice from his many years of experience building up Chicago’s entrepreneurial ecosystem.
When Troy struck out on his own, Chicago was an entrepreneurial desert. There were entrepreneurs. But they had no supportive infrastructure for business growth. Troy built up a design consulting company from scratch in this environment, which was eventually acquired by Medline. He built and ran three more startups afterwards- SurePayroll.com, Amacai, and OneWed.com. SurePayroll was acquired by Paychex for over $100M in 2011, which was huge at the time for Chicago. But even at the time of this exit, there was no real support structure for Chicago’s entrepreneurs. Companies born in Chicago were leaving to build their businesses elsewhere. Troy, and others in the community, felt there had to be a way to keep these companies in Chicago.
Troy was always an entrepreneur. As a boy he cut lawns, delivered papers, and did whatever he could to raise $87 and buy half of a sailboat with a childhood friend, a passion that would consume him until his early 20s. While in college, Troy thought that designing sailboats might not be the best way to make the world a better place. He briefly considered designing helicopters and submarines, until he discovered this involved sitting in a cubicle all day, spending eighteen months to design a single hinge. It just didn’t seem all that appealing any more.
Troy decided to take a huge leap and open up a design consulting firm in Chicago, where he was born and raised. He was twenty-one-years old, straight out of college, and had no real opportunity costs. What did he have to lose?
This was in 1986. The word entrepreneur was not thrown around in Chicago all that much at the time. This was twenty-three years prior to things like Shark Tank. Without any entrepreneurial infrastructure, Troy built up his companies in Chicago.
During this time, he mentored a group of students at Northwestern University who created a company called Next Big Sound. He watched the company struggle for a year to gain momentum before they were accepted to the Techstars Acclerator in Boulder, Colorado in 2009. Next Big Sound left Chicago and never came back. The company was very successful and was recently acquired by Pandora.
Next Big Sound wasn’t the only startup to speed out of Chicago and never look back. Troy continued to see Chicago-born startups leave to build their business elsewhere because the city had no support system, no real depth, to support entrepreneurs. It was time for a change.
Troy co-founded Excelerate Labs, in a sense a startup for startups, to being to accelerate entrepreneurial growth in Chicago and keep Chicago talent in the city. Excelerate began to build up that innovation ecosystem and infrastructure that was lacking. For the first time, Excelerate offered entrepreneurs exposure to leading experts and investment opportunities. Excelerate facilitated knowledge flow from experienced business leaders to Excelerate Founders. Thirty companies graduated from the accelerator in three years, netting $35 million in capital.
Excelerate Labs became Techstars Chicago in 2013.
If Excelerate Labs laid the groundwork for entrepreneurship in Chicago, 1871 raised it up into the rafters. 1871 opened up in 2012 and to date is the largest coworking space in Chicago. Two thousand entrepreneurs work out of this massive space on a daily basis, and Troy runs the whole thing.
Chicago has transformed since Troy first launched his entrepreneurial career there. The city has rapidly grown over just the past five years from an entrepreneurial desert to an oasis. Now Chicago has 1871. They have Built In Chicago, a news platform that serves as the voice of the Chicago’s startups and has unified the community. They have investment funds like Impact Engine, FireStarter Fund, and The Starter League. Chicago’s startups have created real economic value in the city, generating over $80 billion in transactions over the past few years.
Troy has witnessed a revolution in Chicago’s startup scene and has a pretty good idea of what it took to change this landscape.
He says a community needs all the right ingredients for the startup ecosystem to be successful. This includes a mix of universities, funding sources, entrepreneurs, and big corporations. And these pieces should all have some sort of presence in one space, like 1871.
Successful startup communities also need to have entrepreneurs as their leaders and should not rely on legislation to cause change. Entrepreneurs work on a different time scale and think in terms of long, even generational, commitments and not in terms of individual transactions, which can be especially demoralizing for entrepreneurs working without pay. The payoff is in the long run. The value is in the stable, robust ecosystem being created.
Moving away from this transaction view is key to encouraging all the different factions- the entrepreneurs, the corporations, the city councils- to work together to build a successful startup ecosystem. Everyone benefits from an economically strong community in the long run.
The Chicago startup scene went from pretty much nothing to a robust ecosystem in only five years. Why can’t we do that in Rochester? What’s stopping us?
As an entrepreneur myself who recently moved back to Rochester for the opportunities which I believe lie within this city, for the opportunities housed in this movement to build the startup infrastructure, it was encouraging to look around a packed room at Troy’s talk and see so many other faces inspired to take this journey.
It may take us more than five years to reach whatever entrepreneurial success looks like to Rochester, but we’ll fight to get there.