Thank you for coming to visit us today. We are honored to have you here and to be able to share our story with you.
My good friend Dr. Bob Metcalfe, the inventor of Ethernet, founder of 3Com, and now Professor of Innovation at the University of Texas, says we should “Celebrate our entrepreneurs like we celebrate our athletes.” What you are doing here today is an example of just that. I guarantee you that a new startup company will be founded in Austin by an entrepreneur inspired by your visit. Someone might already be coding on it right now.
The day before your visit, CTO of the United States Todd Park said that “we’re looking forward to showcasing the innovative spirit of Austin as a model for the rest of the country.” I hope your visit reinforced that message.
Capital Factory is a blueprint that other communities can learn from and replicate. There are 3 key parts:
- Physical space for startups to work, intermingle, and play. This is all about density.
- Community leaders to organize the meet-ups, hack-a-thons and other events
- Angel investors that were previously entrepreneurs who can mentor and invest in first-time entrepreneurs
All together, this is a virtuous cycle that gets better and better over time. It starts with the big success story, which trains, funds and inspires a next generation of startups.
One or more universities to supply a pipeline of fresh talent is table stakes for any city that wants to be in this game. Nothing happens without talented and experienced employees. Austin is fortunate to have the University of Texas at Austin, St. Edward’s University, Texas State University and Austin Community College – not to mention many other universities in Texas.
The numbers say it’s working.
- 250 entrepreneurs work here
- Almost 100 startup companies
- 30 successful entrepreneurs that mentor and invest
- 2 large meeting spaces are booked every night of the week
- Thousands of talented engineers coming through each month
- Our successful companies are attracting venture capital, creating jobs, and staying in Austin
While you were here you met with the Capital Factory Mentors – 30 successful entrepreneurs who collectively contributed millions of dollars to open our facility and invest in first-time entrepreneurs. Each of them are entrepreneurs who have built large companies and now spend a significant amount of their time and money helping first-time entrepreneurs. Most are doing this while still running their own company. Collectively this group has created over 10,000 jobs in Austin.
For example, Rony Kahan founded Indeed in 2004 and now has 750 employees. Indeed is the largest online job board whose product has helped millions of people find jobs.
Ross Buhrdorf is the CTO of HomeAway, which employs 1,400 people. Brett Hurt is the founder of Bazaarvoice, which employees 800 people. Both are public companies and some of their best employees have gone on to found many other startups, which is a common pattern in the healthy startup ecosystems like Austin.
No startup ecosystem exists without Angel Investors. Each week at Capital Factory about 50 entrepreneurs and mentors are matched for “office hours.” Austin is also fortunate to have CTAN, one of the most active Angel investor groups in the country.
This is what makes startup ecosystems work… and this can be replicated in other cities.
THIS IS WORKING
Here are 3 examples of recent success stories at Capital Factory that are creating jobs and contributing back to the Austin startup ecosystem.
The first is my own. My startup OtherInbox, the cure for email overload, was acquired a year ago by Return Path. With hundreds of employees in New York and Denver, you would think they would have shut this office down. But instead we have doubled to 20 people and have made Austin the home of our new Labs Innovation team.
The second is WP Engine, the leading service for hosting WordPress websites. Jason Cohen founded the company just over 2 years ago and they just recently added serial executive Heather Brunner to the team. They started in Capital Factory and now are the largest company with more than 30 local employees. They are out of space and will be moving into their own 14,000 square foot office a few blocks away – effectively “graduating” from Capital Factory.
The third is Sparefoot, the place you go to find and book a storage unit. We moved Chuck Gordon and Mario Feghali to Austin right out of college in 2009 and now they have 80 employees and will double in the next year. They are located right across the street, contributing to the density of the downtown Austin “Startup District”.
AUSTIN IS THE MODEL
When you talk about tech startup cities, everyone first thinks of Silicon Valley.
Silicon Valley is clearly the leader, but it’s unique – it’s a unicorn that can’t be re-created elsewhere (plus it’s in California). You can’t replicate Stanford and you can’t replicate the VCs on Sand Hill Road. But you can replicate this blueprint of Physical Space, Community Leaders and Angel Investors. Nick Longo is doing it in San Antonio and Tony Hseih is doing it in Las Vegas. There is 1871 in Chicago and 1776 in DC.
WHAT WE ASK OF YOU
- Celebrate our entrepreneurs like we celebrate our athletes. Support Startup America’s mission to highlight and inspire the next generation of America’s innovators.
- Keep Capital Gains tax low to encourage angel investors. Make it zero if you hold an investment for more than 5 years.
- Reduce immigration friction so that we continue to attract the world’s best entrepreneurs and talent
- Make sure we deliver on the JOBS Act
- Support initiatives like SHIELD to stop patent abuse and encourage innovation
- Keep the Internet working by opposing initiatives such as SOPA & PIPA
- Protect our privacy by opposing initiatives such as CISPA
Mr. President, thank you for visiting Austin and for highlighting all of the incredible entrepreneurs and mentors at Capital Factory.
p.s. In 2017 when you’re unemployed, you should consider coming in to pitch a startup idea to Capital Factory!
Categorized in: Austin
This post was written by Joshua Baer