Rochester Entrepreneurial Roundtable Discusses Future of City's Startup Ecosystem: Part 1

A few weeks ago we sat down with some of Rochester’s entrepreneurs for a roundtable discussion about the startup and entrepreneurial ecosystem in Rochester, where the community is headed, and what it will take to get there.  This is part one in a three article series covering the conversation. 

Our esteemed entrepreneurial panel:

  • Mike Rolih, Founder and CEO of GoRout, a sports wearable display and sensor company and recent graduate of the Mayo Clinic Business Accelerator.
  • Xavier Frigola, Director of the Mayo Clinic Business Accelerator that houses twenty-two life science companies.
  • Nate Nordstrom, Founder of BrandHoot, a company that designs websites, mobile applications, and additional products.
  • Hunter Downs, Founder of Area 10 Labs, a hardware and software product development company, and Co-owner of Café Steam.
  • Chris Lukenbill, Founder of AbleBright Agrotech software to connect produce farmers that have the passion grow, with the knowledge they need to be successful.
  • Jamie Sundsbak, Founder of BioAM and Program Director at a new coworking and business incubator space called Collider.

 

We opened the discussion by first defining a startup and startup ecosystem.  The room as a whole agreed that a startup is an organization that is still looking for the right business model.

“So you’re not established.  You don’t have that history of what you are creating.  You just have an idea or ideals of what you’re trying to get to or maybe what you’re trying to create,” explained Chris.

A startup is something that’s likely underfunded and just trying to survive long enough to figure things out.  Startups begin as an idea and hopefully become some product or service, but they are not a full-fledged business.  Running a startup is a bit of “semi-organized chaos”.

“You’re just this thing that’s doing this one thing and solving this one thing.  And you’re trying to survive long enough to figure out that happy path so that you can become a company and make one thing, more things,” said Mike.   

A startup is an entity that’s even a little bit naïve.  It’s something that “doesn’t know what it needs yet, in terms of resources,” explained Hunter.  Sometimes that’s the draw to launch a startup in the first place.

“But that’s one of the beauties of startups, right?  Is that naïve ability to just overcome things because you don’t know what you don’t know, until you get slapped in the face forty times,” said Mike.

Being classified as a startup is completely independent of time.  Some companies just rocket out of the gate or can be built and have all the cogs in place over a single weekend.  Whereas others, like Fitbit, take years to get off the ground.  And look where they are now.

Some parts of a business can even be more “startup-like”, while others are more mature.  Nate Nordstrom explained how some people classify BrandHoot as a startup, but it’s more complicated than that.

“But some part of me says, well, in some ways we’re not a startup.  And maybe the reason that I think that is because parts of our business are pretty well ironed out.  They’re figured out. …Some parts of our business, within the product development stuff we’re doing, those to me definitely fit the definition of a startup.  They’re kind of fuzzy.  We’re trying to solve a problem.  Not really sure exactly how it’s going to pan out.  Other parts of the business don’t feel like a startup to me anymore.”  

A startup is in a different category than “new business” because it involves a high risk, high reward element and has a strong component of innovation.  As opposed to a new business, a startup involves, “Doing something differently.  Trying to solve a particular set of problems in a new way,” explained Nate.

The panel made an analogy in the food industry to illustrate this difference.  Most consumers probably don’t think of restaurants as startups.  The gathered entrepreneurs generally did not consider a restaurant franchise to be a startup.  While opening any new business is a risk, something with a set business model and defined products does not really add that element of innovation.

But some restaurants are highly innovative, like Asian fusion restaurant inamo Soho in London where menus are projected onto table tops, creating a virtual reality experience.  Carnivale is a disruptive, innovative restaurant in Chicago were diners are served under a big top.  “And the people that are serving you are dressed up like carnies and it’s freaky.  And if you’ve had too much to drink, it’s not the place to go.  But, it’s innovative and they’re taking a risk because people might not want to dine in that type of environment,” said Mike.

The startup ecosystem, in turn, contains all the components that provide support and resources to the developing startups and help them to navigate and overcome barriers.

 

What might be some key ingredients that Rochester needs for our startups to succeed?

The panel agreed that Rochester needs more youthful enthusiasm to propel the startup and entrepreneurial community.  And this rigor doesn’t need to necessarily be from those young in age.  This mindset can be in anybody with a willingness to create, take risks, and go a bit against the ingrained mentality in Rochester.

“Part of that environment requires people who don’t fit the nine to five model. …Who really have come to the conclusion ‘A’, I can’t work for anybody else and ‘B’, I think I can offer something bigger and better to the world that hasn’t been offered before,” explained Mike.

But younger people typically have less to lose.  They usually don’t yet have families or mortgages.  They’re generally more malleable and don’t have a set way of thinking.  If they try to build a startup and it fails, who cares?  There’s always something else to try.

The problem is, there’s not a broad, large, higher education system in Rochester to draw this young talent to the city.  We don’t have a large university system, like in Boulder for example, pumping in people who are able to take those risks and play a vital contribution to the workforce and startup scene.  And it doesn’t seem like this will change any time soon in Rochester.  That working population is being competed away to areas like the Twin Cities or other regions where these students attended college.  In this sense, the workforce in Rochester is severely lacking.

Change in mentality is another key ingredient for Rochester’s startup success.  We need people who break the chain of A: going to school, B: getting a job in the field that was studied, and C: staying in that single job or career until retirement.  We need people who are willing to take risks and not follow this traditional paths for our startup community to grow.

“The community needs to have a ‘Why not?’ mentality versus a ‘What can go wrong if you do this?’ And I think that’s part of what we do here.  The ‘Let’s do this thing.’  What’s the worst that can happen?  It could work?  And that’s two very important things that the community has to do.  Just to release the old ways of thinking, ‘How much trouble could I get into by doing that?’ versus ‘How many good things can come out of it?’” explained Xavier.

It seems pretty obvious, but this mentality changes simply by Rochester residents just “doing stuff”.  People interested in starting a business who may be sitting behind their desk asking, ‘Why am I still doing this?’, need to just stand up and starting doing something to break this mold. 

“Midwesterners pride themselves on tenaciousness.  But you have to have tenaciousness in that adversity that’s nontangible.  It’s not like the tornado just wasted your building.  It’s like somebody just denied your permit or something like that,” said Hunter.  Even though we are a tough bunch, there are always roadblocks in building startups.  The minute things get really dicey, we have to dig into that tenaciousness and problem solve instead of backing down and retreating to something more familiar.

“That’s where we can succeed.  Is that, you don’t have that ‘well it didn’t work, abandon it’ type of mentality in this town.  And I think that’s what we need to foster and build on,” summed up Hunter.  Most of the panel agreed again that this change in mentality is dependent on attracting that younger workforce or people with that youthful enthusiasm to fuel our startup system. 

When we do have all the ingredients to create this strong ecosystem in Rochester, people need to know about the entrepreneurial community.

“It needs to have some sort of identity. …It needs to be out there that the opportunity is here.  Or that there are places you can go if you have that mentality.  Because there’s hundreds of people that are sitting at their desk thinking, ‘What am I doing here?  This makes no sense for me to be here.’  And I’m assuming most of us were in that situation at some point,” said Chris.

That’s exactly what we’re trying to do with Rochester Rising.

 

Want to learn more?  Click here to listen to Part 1 of the podcast of this discussion.