15 January Leading Accelerator 1776 Brings Innovation to the Washington, DC Startup Scene January 15, 2014 Josh Cohn e-Gov, Enterprise, Startups startups While Silicon Valley is widely considered “ground zero” for technology startups – and rightfully so – one of the things that has always annoyed me a bit is that many in the tech press do not realize that Silicon valley is not the be all and end all for startup ecosystems. If you dig a little bit deeper, its’ easy to find other US cities with impressive and vibrant startup ecosystems of their own. Here’s a question: Do you know which city in the US has more startups per million residents than any other in the country? The answer is Washington, DC. Yes, as much as DC is considered a “government town”, over the last several years a deep and vibrant tech scene has developed there. To learn more about what’s going on in the DC startup scene, I went down to meet Donna Harris, a Cofounder of a new startup hub called 1776. 1776 located on the corner of M and 15th Streets, right across from the venerable Washington Post newspaper, and a few blocks from the White House. I’ll admit upfront that I went in with fairly moderate expectations of what I would see there. While Donna has a very impressive background, 1776 only launched officially last April, and I was expecting a small space with maybe a couple of rooms and a few hipsters dashing about, essentially, something more in the concept and development phase. Boy was I wrong about that! Instead, 1776 occupies a full floor of a large Office building, there were hundreds of people there, and the buzz was simply unbelievable. Eager to understand more, I sat down with Donna to ask a few questions. IT Specialist: Donna, that you very much for taking the time out to join us today. To start with, can you tell me a little bit about your background and bio? Donna: Sure. I am a four time entrepreneur. I’ve been involved in two edtech startups, one health care technology startup, and one public relations startup. I’ve been lucky enough to have a series of successful exits, and have learned a great deal in the process. In addition to running 1776, I am also involved with Steve Case’s Startup America Initiative. More on my background here. (Editor’s Note: We recently profiled Case’s latest VC fund that will invest in non-Silicon valley startups). IT Specialist: What made you start 1776? Donna: I had been thinking about something like 1776 for approximately one and a half years. My belief is that the DC area, because it is so international, can be a global hub for entrepreneurs from around the world to make connections. We also have tons of technical talent, as well as a deep expertise in certain core areas that a place like Silicon Valley may not possess. Our objective is to make 1776 a platform to reinvent the world by serving as a global hub connecting the hottest startups tackling major challenges in education, energy, health care, transportation and government with the resources they need to excel. IT Specialist: I definitely agree with you about the talent here, but how do you overcome the perception – and to an extent reality – that DC is so focused on government? Donna: The Washington area economy is obviously at least partially driven by government, and there is no doubt that many see DC as a government town. However, when we took a step back, we decided that rather than get defensive about the role of government in the DC area, we would actually “lean into” this fact, and turn it into a strength. IT Specialist: Sounds like an interesting concept – can you elaborate on how you’ve turned area’s focus on government into a strength for the DC startup ecosystem? Donna: Absolutely – this is critical to our conception of 1776. Rather than focus on consumer-based, B2C social startups a la Silicon Valley, we decided to focus on sectors that are heavily regulated and influenced by government and government policy. If you think about it, anytime you have an industry regulated by the government – whether Federal, state or local – you will likely find sectors that are ripe for new ideas and disruption to the existing order. Hence, we decided to focus 1776 on four markets which we see as subject to government regulation, and hence subject to outside disruption to existing ways of doing business. We decided to focus 1776’s resources on four sectors in particular, all of which are arguably highly influenced by government regulation government’s natural tendency to influence and guide policy. These four are: Energy; Healthcare technology; Education; Smart Cities – for example, transportation and citizen engagement – think e-Government for example IT Specialist: Can you give a couple of examples of how these are regulated sectors? Donna: Happy to. Think about healthcare. Surely at the top of regulated industries in the US – think Obamacare. I think the government’s desire to regulate healthcare is pretty undeniable. And let’s face it, when it comes to healthcare technology, this is not necessarily a core strength of government – as anyone who has been reading about the Obamacare website recently can attest to. Likewise, take transportation. Practically every city in the country has its own taxi commission, and let’s face it, the taxi industry is certainly one of the more protected industries you could imagine, lots of entrenched interests there. Look at what happened when Uber launched. In every city they went into the local taxi companies and taxi commissions tried to block them. Or education. Again, heavily regulated and controlled by local governments and Boards of Education, combined with a heavy dollop of Federal regulations, standards and grants on top of that. By contrast, compare the sectors we focus on to the B2C sectors that have been so successful out of Silicon Valley. Facebook, Twitter, Instagram – these companies went viral quickly as they were heavily driven by the millions of consumers who gravitated to these social media platforms, and government regulation has been practically non-existent. Now, one of 1776’s strategies is to take that same power of Internet, mobile, and social technologies and use those millions of consumers to build support for efforts to disrupt the status quo of these regulated industries. We are looking to assist companies in energy, healthcare, education and transportation to build the scale, expertise and resources to work around some of the challenges that government regulation creates, and one of the ways startups in these sectors can do this is by leveraging the power of social media. Look what happened when Uber went into Washington, DC. The DC taxi commission tried to keep them out, and tens of thousands of Washingtonians who had grown to love Uber went ballistic on social media to take on the regulations, and eventually the DC Taxi Commission had to back down. We want to help startups that bring these kinds of disruptive models to the table. IT Specialist: Can you give an example of the types of resources the DC area has that can help startups in regulated industries handle the challenge of government regulation and prevent this from being an impediment to growth? Donna: Reinventing how these regulated industries function inevitably results in clashes between those driving change and those defending their status quo position. Luckily, the Washington, DC region brings tremendous assets for startups committed to reinventing highly regulated industries. IT Specialist: Can you list two or three of the particular types of resources DC possesses that can assist startups looking to reinvent regulated industries? Donna: Let me mention a couple here. Let’s consider the lobbying industry. Think of the famous (or infamous) K Street lobbying firms, or the law firms with thousands of lawyers whose sole practices are based on an inside knowledge of government administrative agencies. These people understand the inner workings of government and government regulation better than even the smartest technology entrepreneur ever could. Our vision is to draw on these resources and insider insights that K Street and the law firms have, and link up K Street experts in regulatory policy with innovative startups that need help navigating these regulated environments. And, there are many people in K Street lobby firms and law firms that love the idea of assisting startups in regulated sectors, and many are serving as mentors and advisers to startups. Likewise, the DC region has the highest concentration of experts in the science, economics, and policy of these regulated industries. Many of these people have PHDs and years of experience in their areas of expertise – and again, many are willing and excited to share their vast knowledge with the DC startup community. IT Specialist: What is the best way for an aspiring entrepreneur to make the initial connection with 1776 Donna – is there an application or review process? Donna: We have a basic application process consisting of two ways we evaluate companies for joining the 1776 family: First determine if your startup fits within our core sector of disrupting regulated industries, and has a viable business model. Then, we determine if your startup can scale and build a viable business with real revenue. Once we accept a startup to 1776, they get access to our full panoply of resources. This includes mentoring, including advice from the legal and lobbying resources needed to deal with the regulation in your chosen vertical market; classes and training; help locating staff as needed; introductions to investors; and generally speaking, helping you find ways to comprehensively shorten your startup’s success cycle. We will also be launching a startup Accelerator shortly as well. IT Specialist: Are you focused solely on the DC metro area, or are you involved in other US cities and/or internationally as well? Donna: We are based in DC but we are definitely global. We now have over 185 companies who have been accepted into the 1776 community, and quite a few are from outside the US. We have also held events across several other US cities, as well as in Moscow, London, Tel Aviv and others. We have also held numerous events at our DC campus with an international focus – just to take one example, we recently put together a very well attended event on the growing Middle East startup ecosystem. The reason we decided to be international as well as DC-focused is that if you think about it, the challenge of disrupting the regulated industries of energy, healthcare, education and transportation is a global issue, not simply an American one. Different countries may have very different regulatory structures and have strengths in divergent vertical markets, but at the end of the day the common theme is how we can assist startups to manage the regulatory barriers they face to success, whichever country they are in. IT Specialist: Donna, are there any particular events upcoming you would like to highlight? Donna: We have multiple events on a regular basis. Our major initiative for the next several months however is our 1776 Global Challenge Cup. We will visit 16 cities, and hear pitches from startups in each one. From each city we will select four startups that will join a group of 64 finalists. A few of the cities have already had their competitions, but let me list all 16 cities with the dates for each one so far: Washington, DC October 29, 2013 Chicago, November 4, 2013 Moscow, November 9, 2013 Berlin, November 13, 2013 London, November 20, 2013 Los Angeles, December 4, 2013 New York City, December 11, 2013 Boston, December 18, 2013 Austin, January 17, 2014 Denver, January 23, 2014 Cape Town, South Africa, February 1, 2014 Sao Paulo, Brazil, February 6, 2014 Tel Aviv, Israel February 11, 2014 Delhi, India, February 15, 2014 Beijing, China February 21, 2014 San Francisco, February 27, 2014 IT Specialist: That sounds like its been a very ambitious schedule, almost like a Techcrunch Disrupt competition but on steroids! What happens with each of the 64 startups – the four from each city – who are selected as winners? Donna: All 64 will receive automatic membership to 1776. Then, in May of 2014, we will host a global festival and competition for all 64 startups at 1776. At that point, there will be a competition between these 64. In fact, for those fans of college basketball, you’ll be pleased to know we are actually running our May competition like the NCAA tournament. We will actually have brackets, and the list will gradually be winnowed down: 64 ->32->16->8->4->2->1. The winner will receive a good sized capital investment, and of course the global visibility which comes from having won the competition. IT Specialist: Turning briefly to 1776’s structure, may I ask where you were able to raise the capital necessary to jump start your organization? 1776 is clearly not a small endeavor. You've already got one giant floor for your campus, and as I understand will be continuing to expand 1776’s campus size? Donna: Actually, we are expanding to four more floors, for a total of five, so we will have quite a large campus indeed. Our capital has come from four sources: The founding team -- myself, my Cofounder Evan Burfield and a few others, put in some initial seed capital; We received a grant from the Washington, DC government; We have a great list of generous corporate sponsors – including such companies as Microsoft, Comcast and others; Finally, the membership fees of our rapidly expanding startup members. All in all, we consider ourselves well capitalized and primed for future expansion. IT Specialist: Finally Donna, for those interested in learning more about 1776 and in particular tracking your various events and activities, where can they go? Donna: To keep it simple, let me list the locations on our website where people can follow our activities: · Our Ongoing Events · Twitter and Facebook feeds · Our blog · News of activities IT Specialist: Thank you for taking the time out from your busy schedule today Donna, 1776 sounds like an amazing initiative and I’ll certainly be keen to track your progress and certainly your Global Challenge Cup competition (I love the NCAA bracket analogy by the way). And for any of our readers who are startup and tech aficionados, I’d definitely encourage you to stop by the 1776 campus when you are in the Washington, DC area. Related Acceleprise Becomes the Leading Accelerator For B2B Startups As regular readers are aware, IT Specialist has focused on highlighting what we believe are many of the most interesting B2B startups out there. Although B2C startups may be more visible across a wide, non-IT audience, the real innovation is actually happening with enterprise-IT startups. 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